This is a good year for high earners with the top rate of income tax coming down from 50% to 45%, with the treasury hoping for a larger tax take.   There is some relief at the bottom end of the scale with the tax free personal allowance rising to £9,440 (up from £8,105).   But this is not the end of “tax” for small earners as National Insurance of 12% is still payable on earnings over £7,748.

Also the adjustment of tax brackets means that more and more people will be pulled into a 40% tax bracket, once considered to be paid by only the wealthiest.  Now any one earning over £41,450 (£42,475 last year) – 1 in 6 taxpayers – is a higher rate tax payer!  25 years ago when the band was introduced 1 in 20 paid tax at 40%.

This month also sees the start of RTI – real time reporting of payroll data.  Despite denials from HMRC, this will hugely increase the work burden and cost for employers as the submissions need to be made online (via HMRC’s notoriously flaky computer systems) on or before payments are made to employees.  So employers like pubs and hairdressers, who pay weekly will find themselves battling to process payroll a least a day a week.  However there is no going back and employers will have to adjust to the ever increasing reporting burden.