Mid Yorkshire Chamber provides an early update on new employment regulations taking effect next year.
Changes to VAT on salary-sacrifice arrangements come into force
1 January 2012
On 1st January 2012 the amount of an employee’s salary sacrificed in return for taxable benefits will become subject to output VAT. This will apply to salary sacrifice agreements made after 28th July 2011 and some agreements made before 28th July 2011 and continuing after 31st December 2011.
Parental leave increases from three to four months
8 March 2012
From 8th March 2012 The Parental Leave Directive will extend the permitted period of parental leave following the birth or adoption of a child from three to four months.
Changes to income tax come into force
From April 2012 the income tax personal allowance will increase by £630, bringing the total allowance to £8,105. The threshold at which employees will pay the higher income tax rate of 40% will be reduced by £2,400 to £35,000. The basic rate limit decreases to £34,370.
Contracting out of state additional pension abolished
6 April 2012
Changes Under the Pensions Act 2007From April 2012 individuals will no longer have the option to contract out of the additional State Pension into a personal, stakeholder or defined contribution occupational pension.
Qualifying period for unfair dismissal increases to two years
6 April 2012
Currently employees are only eligible to bring a claim of unfair dismissal against their employer after one year of employment. This qualifying period will be increased to two years from 6th April 2012.
Employer Pension Obligations
Changes Under the Pensions Act 2008
From October 2012 all employers must offer a qualifying workplace pension scheme and automatically enrol all eligible employees. Those who do not must enrol staff into the system of personal accounts, which will be launched to provide access to a lost-cost pensions vehicle.At least 8% of an employee's qualifying earnings must be paid into a pension, which is made up of 3% employer contributions, 4% employee contributions, and 1% tax relief.Staff will be allowed to opt out of schemes, in which case, employers will no longer be liable for paying employee contributions. Employers will be able to self certify that their existing workplace pension schemes meet the minimum requirements set out by the act.