The review recommends a seven-stage programme to closer alignment as outlined below, to achieve a system more aligned to current and future working patterns, but cautions that the impacts need to be carefully understood and considered. 1. Move to an annual, cumulative and aggregated assessment period for employee NICs as happens with PAYE and income tax. This could mean many people paying more NICs and many paying less NICs. 2. Base employers’ NICs on whole payroll costs. This would be easier to understand and reduce distortions from fragmented hours. 3. More closely align the NICs position for the UK’s 4.7m, and rising, self-employed with that of employees. This would remove complexity and could potentially deliver more benefits. 4. Critically review the contributory principle, but first increase understanding of what it really does – and doesn’t – do; for example, finding people who believe that NICs pays for the NHS and that they need to have a full contributions record to qualify for NHS treatment is worrying. 5. Align the definition of earnings for IT and NICs and the reliefs available for IT and NICs to make it more equal for employees and cut the burden of managing the differences for employers. 6. In the same way, bring taxable benefits in kind fully into NICs to remove the distortions in the NICs treatment of non-cash pay. 7. Harmonise the rules governing the management of IT and NICs, and their administration, including setting up a method so that any changes can operate automatically for both taxes, to make it easier for employers and HMRC to administer the system and reduce unnecessary differences.
The OTS review concludes there would need to be a well-signposted path to this major reform with clear explanations to ensure all groups were well aware of the implications.
The CIPP Policy Team will be consulting with the payroll profession on this so watch out for a survey in the coming weeks.
Read the full review - Closer alignment of income tax and national insurance contributions
Pay awards for over a million public sector workers 11 March 2016
The Government has set out the pay awards for over a million public sector workers in line with the policy of an average one percent pay rise in 2016-17.
The government asked the following Pay Review Bodies to examine how an increase to base pay could be applied in line with the government’s policy of an average of 1% across the workforces:
Armed Forces Pay Review Body (AFPRB) Prison Service Pay Review Body (PSPRB)
NHS Pay Review Body (NHSPRB)
Doctors’ and Dentists’ Review Body (DDRB)
The government has accepted in full the recommendations for the following workforces who will receive an average of a 1% pay increase:
Armed Forces
NHS staff
doctors and dentists
The government has also accepted in full the recommendations for the prison service who will receive a slightly above 1% average pay increase - at 1.36%. This is an exceptional award for the particular circumstances this year of introducing highly ambitious prison reform. The public sector pay bill makes up over half of departmental resource spending, so continued pay restraint remains central to the government’s deficit reduction strategy. The remainder of the pay review body reports will be delivered over the course of this pay round and the government will respond in due course.
FPS late filing relaxation ends 5 April 2016 15 March 2016
A reminder that the 3 day relaxation for late filing of Full Payment Submissions (FPS) is ending on 5 April 2016.
CIPP Policy News Journal
25/04/2016, Page 306 of 453
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