The results of the research are somewhat contradictory as approximately three quarters of those who are self- employed hold the belief that it is necessary to save for retirement yet only less than a quarter actively save into a pension fund. As expected, over half of respondents would find guidance around saving for their retirement beneficial and find the idea of a share of their income being automatically placed into savings on their behalf appealing. The Minister for Pensions and Financial Inclusion, Guy Opperman commented, ‘We want to boost the future prospects of millions of hard-working self-employed people.’
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HMRC publish helpful information surrounding who pays the pensions annual allowance tax charge 22 October 2019 Pensions are currently a hot topic of conversation, particularly as the Queen cited the implementation of a new Pensions Bill in the speech she delivered last week. HMRC has published some interesting and useful advice surrounding where the liability lies for paying the tax charge where the pensions annual allowance is exceeded. The annual allowance is currently capped at £40,000 per tax year. Any contributions that surpass this figure will receive no tax relief and will attract an annual allowance charge. The allowance is spread across all of an individual’s pension pots and there isn’t a £40,000 allocation for each separate pension pot a person holds. The annual allowance can fluctuate based on individual circumstances so it may be lower if someone is classed as a high earner or if they have a pension that they have previously accessed. Similarly, in circumstances where the allowance is exceeded there may be the opportunity to bring forward any unused allowance amounts from the previous three years.
HMRC specifies that the pensions allowance tax charge must be stated on a Self-Assessment tax return to be completed by the affected party. This is irrespective of who pays the charge.
In certain scenarios, the pension scheme may pay the tax charge on the individual’s behalf. This can be requested by the person affected by the tax charge, and they can ask the pension scheme to pay some or even, all of the charge. This may be requested if: • The pension savings within the scheme are higher than the annual allowance for that tax year • The tax charge is more than £2,000 for that tax year • The individual tells the pension scheme prior to the deadline of 31 July of the year after the following tax year If the tax charge is below £2,000 and the pension scheme makes the decision that they will not pay the tax charge (which they are legally entitled to do), then the individual will be required to pay it. This is true even if the scheme initially agreed to paying the charge and then did not release payment. The individual would then be required to make the payment. Any late payments could potentially be subject to interest charges. Similarly, if the scheme makes a partial payment in relation to the tax charge, the individual will be responsible for settling the outstanding amount. Should the pension scheme make full or part payment in relation to the tax charge, the individual’s benefits will need to be reduced accordingly. It is the individual’s responsibility to check that this has been actioned or they will be liable for an unauthorised payment charge.
The article also indicates what information is required from individuals who are asking for their pension scheme to pay the tax charge and provides detail around completing the Self-Assessment tax return.
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DWP consultation concerning the General Levy on Occupational and Personal Pension Schemes 22 October 2019
The Department for Work and Pensions (DWP) has advised that it is conducting a consultation into the proposed increase to the General Levy imposed on Occupational and Personal Pension Schemes and is seeking the input of
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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