Budget 2009: Tax changes for high earners will affect relatively few people and have little impact on payroll

David Woods, 23 April 2009

Changes to tax rates, personal allowances and pension tax relief for high earners announced in yesterday's Budget will not have an impact on payroll, according to the Institute of Payroll Professionals (IPP).

The chancellor, Alistair Darling, announced a ‘supertax' on those earning in excess of £150,000, a tapering of pension tax relief (from 40% to 20%) for people earning more than £150,000 and the removal of personal allowances for those earning more that £100,000.

But the IPP has confirmed with HM Revenue and Customs (HMRC) that payroll software will provide for an extra band to cover earnings over £150,000. HMRC claims the changes affect "relatively few people" so no extra burden will be placed on employers, and it will recover any underpaid tax from individuals directly.