As the chancellor of the Exchequer, Alistair Darling, prepares for what has been heralded as the most important economic moment of Labour's 11-year stint in power, the weekend national newspapers focused on a potential VAT decrease from 17.5% to 15%. But here are some predictions that will have a more profound effect on HR.
- According to weekend news reports the income tax for high-earning employees (who have a salary in excess of £150,000) could rise from 40% to 45%
- On the other side of the pay scale, The Sunday Telegraph suggested the Government could extend for another year the £2.7 billion rescue package to help employees who lost out from the removal of the 10p starting rate of income tax
- The Observer reported yesterday the state pension could be increased by £4.54 a week for single people and £7.26 for couples. Due to damaged pension pots, Darling could also remove statutory obligations for pensioners to buy annuities at the age of 75
- The vehicle excise duty (VED) Darling proposed in April's budget and due to come into effect in April 2009 could be postponed. This would mean employers would not have to stretch their fleet budgets to pay the high tax band on older vehicles or ‘gas guzzlers'
- Corporation tax could be cut for small and medium-sized enterprises (SMEs) in order to help them through the downturn. The money they save could be invested in recruitment, training and skills. Business might also receive relief from tax they have to pay on empty premises and on dividends paid on profits they earn abroad
The Federation of Small Businesses (FSB) has also called for mileage allowances for staff using their cars for work purposes to be revised to reflect the increase in fuel prices. For petrol cars, the mileage allowance currently stands at 40p per mile.
The FSB also hopes the pre-budget report will abandon the workplace parking levy, due to come into effect in 2010, which would mean employers with more than 500 employees would have to pay an annual fee of £185 on each staff parking space they offer.
In the past two weeks Conservative leader David Cameron said employers recruiting staff who had been unemployed for more than three months should receive tax exemption on the recruitment process. But the Recruitment and Employment Confederation (REC) fears the pre-budget report might add costs to employment.
The REC is urging the chancellor not to withdraw the staff hire concession for temporary workers, due to come into effect in April 2009, because it estimates this could cost £400 million and risk 150,000 jobs due to tax being added to every temporary job within the finance, healthcare and charitable sectors.
