Pre-Budget Statement - Headline announcements

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11 October 2007

The Chancellor presented his 2007 Pre-Budget Report (PBR) to Parliament on 9 October 2007. Most of the matters relevant to Payroll and HR were set out in supporting documents and press releases issued at the time. However, as the date of the PBR preceded the publication of the September 2007 Retail Price Index (RPI), no announcement was made about the annual statutory increases to NICs thresholds, tax allowances and statutory payments. The September RPI is due to be published on 16 October 2007.

Other payroll-related announcements, in brief, were as follows.

• From April 2009, contracted-out rebates will be be paid on earnings between the LEL and a new Upper Accrual Point (UAP), the first step towards the introduction of a flat rate State Second Pension. This change will require a new band of earnings to be recorded for each earnings period.
  
  
• The exemption from NICs of holiday pay paid via a third party is to be removed for all sectors outside the construction industry, and for the construction industry after five years.
  
  
• The Government has ruled out closer alignment of the PAYE and NICs by collecting NICs cumulatively.
  
  
• A consultation document will be issued in November 2007 on how best to introduce a system to tax benefits in kind and expenses through the payroll.
  
  
• The fixed figure on which the car fuel benefit is based will increase from £14,400 to £16,900 from April 2008.

A detailed reviews of these matters will be provided in next week's newsletter. The Pre-Budget Statement and the associated documents are available on the Treasury and HMRC websites.

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