Expect Employee Tax Confusion After Mid Year Tax Changes

Sept. 8, 2008 - PRLog -- The Tax Advice Network is warning employers to prepare for confusion as the new Personal Allowance figures come into force on 7th September. The combination of the late change to personal allowances this year combined with the fact that PAYE tax is calculated on a cumulative basis means many employees will be thrown by the varying amount of tax paid in September and October as the changes take effect.

The £600 increase to the 2008-09 Personal Allowance takes effect on 7th September and will be backdated to 6th April. This means that the next pay packet (eg: at the end of September for monthly paid staff) will include six months worth of the increased allowance for the period from April to September.

“Staff will be aware that the increase in their net take-home pay will be because of the tax changes. However, the confusion will follow when they get their next pay packet as they will pay more tax than they did in September. This is because the October pay packet will only reflect ONE more month's worth of the increased allowance”, explains Mark Lee, Chairman of the Tax Advice Network.

“In previous years the change to personal allowances and tax rates normally takes effect from May so the contrast between the first and subsequent months of change is usually much less pronounced”, adds Lee.

The Tax Advice Network is UK’s first independent specialist tax advice network. For more information or advice on tax related issues visit www.TaxAdviceNetwork.co.uk
ENDS