Another Late Budget for Payrollers

The Treasury has announced that the 2003 Budget Statement will be presented by the Chancellor to Parliament on Wednesday, 9 April. The March Budgets of recent years (e.g. 21 March in 2000 and 7 March in 2001) have allowed for changes to be applied from the first payday in or after week 7 of the new tax year, i.e. tax week commencing 18 May. This year, as in 2002, the April Budget means that implementation of new tax thresholds, allowances and any other changes will be in June.

In 2002, the Revenue unwisely applied the changes from 18 June, a date that was half way through tax week 11. This caused considerable problems for businesses using computerised payrolls as the P7X instructions could not be applied as instructed. However, the same mistake has not been made this year and the implementation date will be the first payday in or after week 11, i.e. tax week commencing 15 June.

Form P7X and a new issue of booklet E13 Day-to-day payroll, giving full instructions, should be expected in the Employer's Budget Pack.
Payroll Briefing 18 - 28 March 2003

Pre-Budget Statement

The Chancellor presented his pre-budget statement to Parliament on 27 November. Although his speech concentrated on the state of the economy and the Government's plans for employment, enterprise, public services and the environment, the supporting press releases and documents provided confirmation of many of the tax and NICs changes for 2003 that had already been announced, mostly in last April's Budget.

Income Tax

The personal allowance for people under age 65, currently £;4,615, will remain for a further year. As a result, the emergency tax code will stay as 461L and the tax threshold at £;89 per week. The age-related personal allowances will increase well above the inflation rate at last September, i.e. 1.7%. For people between 65 and 74, the increase is from £;6,100 to £;6,610, and for those 75 and above, the increase is from £;6,370 to £;6,720.

There will be no automatic uplift of tax codes at the end of this tax year. Instructions for all tax code changes will be provided individually on form P9(T) or equivalent. It should be remembered that the Children's Tax Credit is being discontinued as a tax allowance, so tax codes ending A and H will be reverting to L. The taxable pay tables that have been in use since June 2002 will continue to be used until any 2003 Budget changes are implemented in May 2003.

National Insurance Contributions

All of the changes that have been announced over the past year have been confirmed. The rates of NICs all go up by 1%, employees will pay 1% contributions on their earnings over the upper earnings limit, and the earnings threshold is fixed at £;89 per week, £;385 per month, to match the freezing of the tax threshold.

The new lower earnings limit will be £;77, up from £;75, and significant for determining entitlement for SSP, SMP, the new SAP and SPP, and entitlement to adoption and paternity leave. The upper earnings limit increases from £;585 to £;595 per week.

Statutory Sick Pay

The weekly rate of SSP increases by the inflation rate, from £;63.25 to £;64.35.

Other changes

The 10% supplement that has been added to employees' donations to payroll giving schemes for the past three years will continue for a further year.

The Chancellor also announced that he is considering new tax and national insurance incentives to expand employer-supported child care, and increased flexibility in parental time off, including giving fathers time off to attend ante-natal care.
Payroll Briefing 12 - 12 December 2002