The Chancellor announced in yesterday's budget that the maximum level of statutory redundancy pay will increase from £350 per week to £380 per week. However, no date was given as to when this increase will take effect. The budget also contained announcements on taxation which we detail below.  


The Government stated in its budget report that the 'one off' increase in statutory redundancy payment was to support individuals who were made redundant. However, the burden of making the increased payments will fall on employers at a time when they can least afford it.


The main proposals which will affect employers are:  

  • Statutory redundancy pay to increase from £350 to £380 per week. Although no date was given for the introduction of the increase, it is likely that the Government will use powers in the Work and Families Act 2006 to effect a 'one off' increase in statutory redundancy pay which only requires approval by Parliament. However, no information was provided in the budget as to whether the increase will also apply to the calculation of other payments, such as the basic award for unfair dismissal. The Government is also considering introducing a 'floor' for statutory redundancy pay which would set a minimum level and that it would legislate on this in the next Parliament.  
  • The Government is to consult with the construction industry with a view to introducing legislation to deal with 'false self employment' in the industry.  
  • From April 2010 an additional rate of income tax of 50% will apply to income over £150,000 and the income tax personal allowance will be restricted for those with incomes over £100,000.  
  • From April 2010 tax relief on pension contributions will be restricted for those with incomes of £150,000.