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Emergency Budget: comment from advisors on employment and pensions taxes

The income tax personal allowance will be increased initially by £1 000 to £7 475 with effect from 6 April 2011 with the Government’s published long-term objective being an increase to £10 000. Whilst clearly a welcome benefit for those employees with low or modest incomes higher rate tax payers will not benefit as a result of the Government’s announcement to reduce the basic rate limit and the national insurance upper earnings limit.

Although many will be disappointed that the increase in NICs of 1% for both employees and employers will be going ahead on 6 April 2011 it is encouraging that some changes were announced in the Budget to soften their impact. In particular the announcement that the level at which employers start to pay contributions will increase by £21 per week above indexation is to be welcomed as is the announcement of a national...

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