MEMBERSHIP INSIGHT
On your behalf
Policy team update
Diana Bruce MCIPPdip, CIPP senior policy liaison officer, provides information on several significant developments
Scottish income tax We knew in November 2017 that on publication of the discussion paper The Role of Income Tax in Scotland’s Budget (http://bit.ly/2rumBMe) there was the possibility of a new tax regime in Scotland with up to six income tax bands. The Scottish draft budget (http://bit.ly/2zcPDl8) was published on 14 December 2017 with proposals to: ● introduce a new 19p starter rate of tax ● freeze the basic rate at 20p ● introduce a new intermediate rate of 21p, and ● increase both the higher rate and top rate by 1p respectively. One of our first thoughts was that with the changes proposed to come in from April 2018 would existing payroll software cope with such a short timeframe. We put out a quick poll question through the CIPP website and after more than 350 responses it was apparent that many people do not know if their software will cope (49%). If you fall into this category watch out for your annual update from your software provider and take the time to read and digest the relevant details. Of the remaining respondents, 9% said their software would not cope but, encouragingly, 42% said it would. We have since spoken to contacts within the payroll software development industry; Neil Tonks MCIPPdip, legislation manager at MHR, said: “Our system is designed to deal with any number of tax bands, so we didn’t have to do anything to cope with the additional ones. The only thing we had to make a software change for was the existence of the additional SD2 tax code which goes with the extra band which now exists above the basic rate band.
We discovered that when we made the changes a couple of years back to cope with the concept of Scottish tax, we hadn’t allowed for the possibility that Scotland and the rest of the UK might have different numbers of D tax codes (there are three in Scotland next year but only two elsewhere), so we had to fix that, but it was no great problem as it only affected the screen validation that stops people entering invalid codes.” ...relief at source for pension contributions will be unaffected... The 20% rate for Scotland is still classed as the ‘basic rate’ despite a lower rate being introduced. Various calculations are operated around the basic rate, so relief at source for pension contributions will be unaffected, as will the earnings assessment for employer-supported childcare (vouchers) as this is also based on the rest-of-the-UK rates and thresholds. However, the changes will affect pay as you earn settlement agreement calculations and record-keeping. If the Scottish Parliament sanctions the proposals, employers and payroll departments may receive a few more queries when the first payslips go out but that tends to happen anyway with statutory changes. The onus is on HM Revenue & Customs (HMRC) to ensure timely and accurate issue of tax codes. Address maintenance is key, and solely down to the tax payer who must inform HMRC when changing address. According to a report (http://bit.
ly/2rsZ3rb) by the National Audit Office maintaining accurate address records of the 2.6 million Scottish taxpayers remains the biggest risk facing HMRC in ensuring that Scottish income tax is assessed and collected properly. Enforcing GPG regulations To represent the views of the payroll profession, we mirrored the survey that the Equality and Human Rights Commission (EHRC) published in December 2017 to seek views on their planned approach to enforcing the gender pay gap (GPG) regulations. The survey included an area for any comments, with one respondent saying: “The emphasis needs to be on education rather than enforcement in the first instance otherwise we will get reporting without any indication of its accuracy. We want employers to want to comply and not simply see it as another bureaucratic burden.” To reassure anyone thinking along these lines, the EHRC’s initial aim is to resolve non-compliance through informal resolution and encourage compliance through a range of activities including promoting awareness and education. At the time of writing, not even 10% of the numbers of employers expected to report their GPG data had done so. Around 9,000 employers are expected to have reported the required information by either 30 March 2018 (public sector employers in England) or 4 April 2018 (private and voluntary sector employers in Great Britain). The intention of the EHRC is to focus on those employers that do not publish the required information by the due date. Following the reporting dates, the EHRC plan to assess the scale of non-compliance
| Professional in Payroll, Pensions and Reward | March 2018 | Issue 38 4
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