The new tax year is nearly upon us and from 2010/11 year there are two significant changes for higher earnining employees.
The first change is the highly publicised new 50% tax rate for income above £150,000. If you have employees paid at this level March sees your last chance to benefit from the lower rates in 2009/10.
There is a small window of opportunity left to apply a simple strategy. If you have any bonuses in the pipeline for your high paid employees you could advance them pay before 5 April 2010, with your employees benefitting by a 10% tax saving.
The second change that doesn't seem to have made the headlines as much is the clawback of personal allowance. This affects employees where total taxable income exceeds £100,000. An individual's personal allowance will be reduced by £1 for every £2 of adjusted net income over £100,000.
This means that there is an effective 60% rate of tax on income between £100,000 and £112,000. If you have employees in this earnings range we suggest that you review their tax position.
As ever please take advice on your specific circumstances before taking action.