On the fringe of the Budget
Budget: alternate surprises
So apart from the higher tax rate band rising to £36,000 (from £34,400), the budget had little in the way of surprises although the government has announced some minor changes which may well impact payments and benefits for some employees.
Occasional Working From Home Allowance
HMRC have announced that the occasional working from home allowance is to rise by 50% from £2 per week to £3 per week from 6 April 2008. For employees who occasionally work from home, the employer may now pay £3 per week allowance (or £156 per year) which is free of Income Tax and National Insurance. Not a major impact for employees but every penny counts.
Gift Aid reclaims frozen for 3 years.
After much lobbying by charities, the Chancellor of the Exchequer has put in place measures to continue to aid charities with a 28% reclaim for the next three years. The reduction in basic rate tax would have meant that charities could only reclaim 25%, a -10.7% drop in gift aid reclaim income. This concession allows charities to base their reclaim on the former 22% tax band with the 20% drop applying now from April 2011.
However, Give As You Earn or Payroll Giving employees who earn at levels to pay 20% tax will not benefit from this concession as their net charitable giving costs rise by 2.56%.
40% tax payers will see no impact as a result of the change.
Change of Implementation Date – Contractual terms of employment during Additional Maternity Leave
The government has announced a delay to the implementation date under the Sex Discrimination act and the Maternity 
and Parental Leave Regulations relating to contractual terms of employment during Additional Maternity Leave. The implementation date now applies for mothers whose baby is due from 6 October 2008.
Please note that this is a change to the original notified date (6 April 2008) published in the February edition of the HMRC Employer Bulletin and Ceridian update information issued (Tax Year End booklet).
The changes only apply where the medical evidence provided shows that the baby due date is from 5 October 2008. They do not apply for parents whose baby due date is prior to the 5 October 2008 no matter when parental payments may be being made.
Contractual non-cash benefits (such as Child Care Vouchers, Private Medical Insurance, Company Car etc) must continue to be provided by the employer during the Ordinary Maternity Leave and also Additional Maternity Leave (potentially 52 weeks).
Salary Sacrifice reductions are not permitted from Statutory Maternity Payments or other Statutory Payments. It is also important to note that Employer Pension contributions (or equivalent entitlements) must continue to be paid (or accrued) by the employer (including salary sacrifice additional employer contributions) during the paid maternity leave period as if the employee were in receipt of full pay (i.e. the full 39 weeks of maternity leave).
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