Employers make bonus choices as tax rate changes

A raft of tax changes is set to impact on employers and employees from April 2013.

Last month, after a media outcry, Goldman Sachs decided not to defer staff bonuses from 2009, 2010 and 2011 to make the most of higher-rate income tax being reduced from 50% to 45% in April.

But, on 21 January, insurance broker Aon said that it had offered senior staff this option and that 250 employees, 4% of its UK workforce, would receive their 2012 bonuses after 6 April, rather than in March, to take advantage of the tax change.

Although it is perfectly legal for employers to do this, it could have a negative effect on the reputation of larger organisations, said Mike Truman, editor of Taxation magazine.

Real-time information (RTI) reporting will also begin in April, when employers will have to make pay-as-you-earn (PAYE) information submissions to HM Revenue and Customs (HMRC) on or before the time payment is due to employees.

Lesley Fidler, associate director at Baker Tilly, said employers must ensure they are ready for the changes, especially how they relate to ad-hoc payments such as bonuses and expenses. These will need to be reported to HMRC under RTI but, in some organisations, such payments might be handled by someone outside the accounts department, said Fidler.

Car benefits will also change from April. The percentage of the list price that is subject to company car tax for cars with carbon dioxide emissions of 76g/km to 94g/km will be set at 10%. The rate for cars with emissions between 95g/km and 215g/km will rise in increments of 1% up to a maximum of 35%. The lower threshold at which staff pay the 15% tax rate will be reduced from 120g/km to 115g/km.