One of the recommendations arising from the Fiscal Strategy Review was to introduce social security contributions above the current earnings ceiling. As a result of this recommendation, the 2011 Budget report proposed a new 2% rate for 'higher' income earners.
Draft regulations were published earlier this week and are due to be debated on 18 July. I thought it would be useful to outline the new proposals for you.
2% employer contribution
This increase is less than anticipated as the 2011 Budget proposed to increase both employer and employee contributions by 2% with no earnings limit and similarly a 4% increase was proposed for the self-employed.
The reasons given for the change of heart are:
There are plans to draft new legislation for 2013 to provide for additional enforcement and anti-avoidance powers.
If you have any questions regarding these proposals, please do not hesitate to contact Justin Woodhouse or Garry Bell whose details appear alongside.