The "Emergency" Budget - Impact on Employers
The Chancellor’s ‘emergency’ Budget includes a number of factors that impact on business and the public sector. We outline the key measures below.
- National Insurance – the threshold at which Employers start to pay national insurance will rise by the rate of inflation plus £21 per week from April 2011
- Basic state pension to be linked to earnings from April 2011. Pension guaranteed to rise in line with earnings, prices or 2.5%, whichever is the greater.
- The government will accelerate the increase in state pension age to 66 - a "call for evidence" will be made later this week.
- The government will also consult on phasing out the default retirement age - to ensure those who want to work past 65 are able to do so.
- Former Labour Work and Pensions Secretary John Hutton has been asked to review public sector pensions. His report is expected before the autumn spending review.
- From 2011 the majority of employee benefits will rise in line with the Consumer Price Index rather than the Retail Prices Index. This is reported to save more than £6 billion a year
- Public Sector bosses are not to be paid any more than x20 those lowest paid workers within the organisation
- Any public sector worker earning more than £21k will face a two-year pay freeze. Those who earn less than £21k will receive a flat annual pay rise of £250
- Personal allowance before tax rises to £7,475 in April 2011
- Finally positive news for entrepreneurs in our region – New start up businesses will be exempt from £5,000 of NI contributions for the first 10 workers this should be in place by September
Robert Gibson - Head of Employment Law
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