Government plans to hike the income tax threshold to £9,205 could complicate the roll-out of auto-enrolment, experts have warned.
Chancellor George Osborne announced in yesterday's Budget that the personal allowance will rise from £8,105 to £9,205 next April.
The government aims to increase the income tax threshold to £10,000 before the next election, which was key Liberal Democrat policy goal.
Osborne told the House of Commons: "We are in touching distance of the goal of a £10,000 personal allowance that we all share."
However, PwC argued the move may have "unintended consequences" and create an additional burden for employers.
The consultant said the current earnings threshold for auto-enrolment is £8,105, which is the same level as the personal allowance for 2012/13.
PwC tax director John Harding said if the earnings trigger rises in line with the hike in the personal allowance to £9,205, employers will have to monitor the earnings of more of their workers.
The Department for Work and Pensions is set to publish the results of a consultation later this month into linking the auto-enrolment earnings trigger to the income tax threshold.
Harding said the change would "create still more administration for employers".
"This will be an especially big challenge for those employers in the retail and hospitality industry who have large numbers of part-time workers. In some scenarios it may mean that employers opt to bring forward their auto-enrolment date."
But Aon Hewitt head of the pensions tax team Tony Baily (pictured) predicted the exact opposite result - fewer employees eligible for auto-enrolment.
"The Chancellor's commitment to increasing the personal income tax allowance to over £9,000 by April 2013 could reduce the number of employees eligible for auto-enrolment, saving companies up to £100m each year in pension contributions," said Bailey.
"This will be welcome news for UK businesses that are already struggling to come to terms with the burden of auto-enrolment."
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