Government changes to impact employees' payment of earnings
Changes to the basic rate
One of the most visible government changes will impact employees for payments of earnings due from 6 April 2008, with the removal of the 10% tax band and the reduction of the Basic Rate from 22% to 20% - a full 2% reduction!
This makes the Basic Rate the lowest in the past forty years, having been as high as 35% (1975-1977). Higher tax rates had equally been as high as 83% (1974-1979) for the top earners.
As a result of the changes, some employees will pay more tax, others less 
than they’re used to.
So what’s so significant about this year, doesn’t it always change?
Payroll Managers may need to prepare for potential questions as employees see their tax liability change a little more significantly than the usual earnings band changes.
But the Basic Rate change impacts more than just the tax calculation. It also impacts other elements of employee benefits, remuneration, pension contributions etc.
Payroll Managers need to be prepared for an influx of enquiries around these changes. For more information, visit our Payroll Advice section, where Simon Parsons brings you up to speed with the more detailed implications of these changes.
If you’d like more input on how these changes could affect your organisation, please contact your Ceridian consultant, or make an enquiry today.
Corporation Tax News
New rates of interest covering quarterly instalment payments and early payments of corporation tax not due by instalments, in respect of accounting periods ending on or after 1 July 1999, took effect from 18 February 2008.
As a result of the recent movement in market rates, the rate of interest charged on underpaid instalment payments of corporation tax has changed from 6.5 per cent to 6.25 per cent.
The rate of interest on overpaid instalment payments of corporation tax, and on corporation tax paid early (but not due by instalments) has changed from 5.25 per cent to 5 per cent.
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purposes only. This information should not be construed as Ceridian providing legal, tax or other advice
to any specific individual or organisation. Please consult your appropriate adviser for specific advice.
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