Tax penalties on retirement benefits after re-employment 22 January 2016
A complaint was made to the Pension Ombudsman relating to the failure of an employer to inform an employee of the tax penalties on his retirement benefits when taking subsequent re-employment.
The complaint came from a police officer, Mr Cherry against the Police and Crime Commissioner of South Wales and Capita.
The Ombudsman found that although the employer (the Commissioner), was not legally obliged to advise the individual officers and employees on their tax and pension liabilities, he did not consider that this was a matter of an employer giving advice. This was about the provision of relevant information to employees about the impact on his or her benefits following re-employment.
The Commissioner’s failure to provide information led to Mr Cherry incurring tax charges on his retirement benefits.
The Ombudsman found that it was reasonable to expect the Commissioner, as an employer with a duty of care, to have provided the relevant information to Mr Cherry about the implications of re-employment as contained in the Home office Circular 007/2006 about A-day and changes to Police Pensions Regulation 1987. Whilst not accepting any legal liability, the Commissioner accepted that it would meet the additional tax liability in question for Mr Cherry but that the liability is that of Mr Cherry and it cannot pay the amount due directly to HMRC as to meet an individual’s personal tax liability would be classed as an ‘employee benefit’ and as such would be subject to further taxation liabilities. The Ombudsman finally directed that within 28 days of receiving written proof from Mr Cherry of the amount of his tax liability, the Commissioner should pay Mr Cherry the amount due to HMRC in respect of the loss of protected pension age only. Since the Commissioner is not involved in the tax self-assessment process, any penalties and interest imposed by HMRC for delays in the process, is not be payable by the Commissioner as it is not a direct consequence of his loss of protected pension age.
Follow this link to read the full Ombudsman’s Determination .
Pension schemes newsletter 75: Scottish rate of Income Tax (SRIT) 2 February 2016
The Scottish rate was announced by the Scottish Government on 16 December 2015 as 10% which means for the 2016 to 2017 tax year Scottish Taxpayers will pay the same overall rate as the rest of the UK (RoUK).
The Pension schemes newsletter 75 published in January 2016, confirms that Scheme administrators operating PAYE must still ensure the S tax codes are applied via RTI for Scottish Taxpayers. HMRC will issue the relevant S tax codes via the annual P9 or daily P6 coding runs, as now, for all other tax codes.
The Pension Regulator publishes Innovation Plan Consultation 1 February 2016
As part of a Government-wide programme, The Pensions Regulator (TPR) is consulting on its draft Innovation Plan which sets out how they are looking to embrace technology and support innovation to help deliver better outcomes for retirement savers.
A consultation document Innovation Plan has been published. The consultation runs from 29 January to 12 February 2016.
The TPR are seeking the views on their proposed approach to innovative ideas and new technology. In particular they are looking to obtain a clearer picture of how innovation and technology is improving all aspects of pension provision and whether there is anything more that they can do to support this.
CIPP Policy News Journal
25/04/2016, Page 382 of 453
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