Index Linked Pay Increases
a company or works sports club) are subject to PAYE (Tax and Class 1 NICs).
Profit Related Pay (PRP) A PRP scheme had to be approved by HMRC, and was then subject to certain tax concessions. Tax relief was calculated for profit periods, which may or may not have been tax years, on the whole of the employees pay up to the lower of 20% of total pay for the period or the table rate. The tax concessions ceased on 1st January 2000. COPYRIGHT © 2021 THE CHARTERED INSTITUTE OF PAYROLL PROFESS ONALS Profit Related Pay Earnings Maxima Date from Maximum Limit £ pre 01/04/1989 3,000 01/04/1989 4,000 01/01/1998 2,000 01/01/1999 1,000 01/01/2000 Nil INDEX LINKED PAY INCREASES On 10th December 2003 the Government revised the formula for monitoring inflation by transferring the former linkage with the Retail Prices Index (RPI) to the Consumer Prices Index (CPI), previously published as the Harmonised Index of Consumer Prices (HICP). CPI is the measure adopted by the Government for its UK inflation target. In the June 2010 Budget, the Chancellor announced the Government’s intention to also use the CPI for the price indexation of benefits, tax credits and public sector pensions from April 2011. The state pension moved to a CPI linked increase from April 2012. In his budget speech on 11th March 2020 the Chancellor referred to the United Kingdom proposals to address shortcomings in the Retail Price Index. A consultation exercise is underway and measures are not expected to be implemented for some time. No printing, copying or reproduction permitted. Monthly Consumer Prices Index 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Jan 112.4 116.9 121.1 124.4 126.7 127.1 99.5 101.8 104.5 106.3 108.2 Feb 112.9 117.8 121.8 125.2 127.4 127.4 99.8 102.4 104.9 106.8 108.6 Mar 113.5 118.1 122.2 125.6 127.7 127.7 100.2 102.7 105.1 107.0 108.6
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