Research File 72, January 2006

HR Tax Guide 2005/06

The latest edition of our annual tax guide for HR and personnel managers provides a straightforward guide to the tax regime as it applies to earnings, benefits, contract terms and severance payments. In plain English, the guide discusses the impact of income and capital gains tax, as well as National Insurance contributions, on all aspects of pay and reward.

There are separate chapters on:

• the general principles of taxation and National Insurance as they apply to earnings
• the regulations covering tax approved and unapproved share schemes including details of share incentive plans (SIP) and enterprise managment incentive schemes (EMI)
• tax approved and unapproved pension schemes including details of the proposed tax simplification
• the tax regime for company cars and fuel benefits including details of the new emission fuel benefit system
• other fringe benefits describing which are liable and which are exempt from taxation
• how tax applies to employment contracts, severance and redundancy and the self-employed.

In addition, the appendices cover:

• Income tax rates, allowances and NI contributions
• A specimen Share Incentive Plan
• An Enterprise Management Incentives specimen notice
• The main features of approved Company Share Option Plans
• Tax rules for occupational pensions
• Tax rules for personal pensions
• The 2006 pensions tax regime

The guide includes information on all the changes to tax and National Insurance featured in the April 2005 Budget.

Full list of contents