Profit-related pay relief cut

The significant number of design consultancies operating profit-related pay (PRP) schemes are to be hit by Chancellor Kenneth Clarke’s budget announcement on Tuesday of the removal of tax relief for PRP.

Clarke says the tax relief was introduced ten years ago to pump prime such pay schemes and, having worked, can no longer be justified. The 4000 threshold will be phased out between 1998 and 2000.

Clarke’s self-styled ‘virtuous budget’ also included the continuation of the freeze on business rates for small businesses.