The number of workers auto-enrolled but not entitled to tax relief in net pay schemes could increase from April 2018, following the Chancellor’s Budget decision to increase the income tax personal allowance increases to £11,850.
Workers who earn more than the £10,000 earnings trigger but less than £11,850 will miss out on 20 per cent tax relief on their contributions if the scheme they are automatically enrolled into operates on a net pay basis, while those in relief at source schemes will continue to get the tax relief uplift, unless the threshold is changed or contribution basis restructured in the ongoing auto-enrolment review.
The Budget papers confirmed the lifetime allowance will increase from £1m to £1,030,000 to match CPI from 2018/19. The annual Isa subscription limit will stay at £20,000.
The threshold for higher-rate tax is increased to £46,350.
The national living wage will rise by 4.4 per cent in April 2018, from £7.50 an hour to £7.83.
The Chancellor also unveiled a tax evasion crackdown intended to raise £23bn a year.
The triple-locked basic state pension will increase to £125.95 per week, and the new single-tier state pension to £164.35 per week from April 2018.
The VAT registration threshold of £85,000 remains unchanged.
EIS are being limits doubled on certain investments.
Punter Southall Aspire managing director Alan Morahan says: “The increase in the personal allowance and higher rate threshold may have implications for auto-enrolment contributions but we await the results of the AE review which might drive what happens next in the continued roll out of this pension revolution.”
