Professional February 2020

Policy hub

low-income workers (mostly women) are being unfairly charged 25% more for their pensions as a result of the way their employer’s pension scheme operates. NPAG, which comprises pension providers, lawyers, tax specialists, payroll specialists, employers, consumer groups and policy experts, has warned that this issue threatens to damage public confidence in auto-enrolment, widen the gender pensions gap, and let down those who need to increase their retirement savings most. Many employer pension schemes provide the government-funded savings incentives (generally referred to as ‘tax relief’) through a system called relief at source (RAS), enabling employee members to get tax relief added to their pension fund automatically via HM Revenue & Customs (HMRC). However, some pension schemes operate the net pay arrangement (NPA) thereby giving tax relief on contributions through the payroll; which works well for most scheme members but not those who earn less than the £12,500 income tax personal threshold. This latter group neither receive tax relief on their contributions nor the amount paid into their RAS scheme by HMRC, and so are effectively worse-off when compared to higher earners in NPA schemes and those in RAS schemes. As a first step, the NPAG has called on the government to provide a firm timeline for its pledged review of the system and to commit to implementing a solution. It is urging the government to consider its proposed simple and comprehensive solution which requires HMRC to use the data it already collects via PAYE (pay as you earn) real time information to identify after the tax year end those who have contributed to a NPA scheme and have not earned enough to obtain the full tax relief on their pension contributions. HMRC could then inform the affected individuals of the amount via the P800 process, enabling either a payment (tax refund) or offsetting against other tax liability. (Those in self-assessment could claim relief via their annual tax return.) DLME call for evidence With so much consultation work with stakeholders grinding to a halt during the election purdah, it was always going to be interesting to see who would be first to get started again. Unsurprisingly

given the focus over recent years, the first out of the traps was a call for evidence from Matthew Taylor, director of labour market enforcement (DLME), to inform his strategy for 2020/21 (http://bit. ly/39sK8yQ). Taylor has also opened the bookings for his roundtable meetings. ...consider its proposed simple and comprehensive solution which requires HMRC to The focus for this year is to focus on four areas that are at high risk of low compliance: hand car washes, agriculture, social care, and construction. The consultation period ran from 16 December and closed on 24 January. Taylor will present the strategy to government by the end of March 2020. The consultation paper opens discussion about the risk of non- compliance in other sectors, particularly with a view to hearing about improvements that may have been made to the protection of workers’ rights. In conclusion, it also looks at the subject of future trends and emerging issues such as IR35/off-payroll reforms, umbrella and supply chain challenges and the growth of online apps for recruitment agencies. The CIPP policy team will feed into this work in due course, so watch this space (and News Online ) as we feedback our progress to you in future editions. Given the fundamental role that payroll has in delivering good compliance, your views and experiences have significantly impacted previous strategies of the DLME. We are confident they will continue to have similar effect in the future. BTA issues Early in 2019 we had been receiving anecdotal evidence from members, employers and tax professionals telling us that there was still much discontent with the accuracy and reliability of the HMRC’s Business Tax Account (BTA) or ‘dashboard’ use the data it already collects via PAYE...

as it is also referred to.

To comprehend the level of dissatisfaction of the results that the dashboard provides, we ran a poll on our website during May 2019, to which we received 300 responses. As you can see, 29% told us that in their experience the information on the dashboard was never accurate. When checking your PAYE for employers section of the BTA do you find that: Results are never accurate 29% Results are sometimes accurate 29% Accurate now I have established a regular pattern 11% I have never checked 17% I have given up checking 14% We passed the results to HMRC which took your comments on board. This resulted in HMRC extending an invitation to the policy team together with members to meet with them to discuss the accuracy and reliability of the PAYE for employers’ section. All who attended the meeting found it interesting and useful. Ahead of the meeting, members were asked to provide examples in which the BTA was providing incorrect information. However, it transpired that enhancements made to the BTA meant that many of the issues highlighted in the examples had already been resolved. There are, nonetheless, issues still to be resolved, one of which involves revocation of the employment allowance, which we hope HMRC will address before changes have effect in April 2020. We hope to bring you more information about the enhancements to the BTA in a future edition of Professional magazine but in the meantime please share with us your recent experiences of using the BTA by email to policy@cipp.org.uk . Have your say This article has focussed significantly on future legislative developments, all of which will be delivered with consultation, of varying measures. If you would like to be involved in any of the subjects, through survey responses and Think Tank roundtable attendance, or indeed you have a subject that you think we should be discussing, please email us at policy@cipp.org.uk . We look forward to hearing from you. n

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Issue 57 | February 2020

| Professional in Payroll, Pensions and Reward |

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