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critical one ● 35% said it was not an important factor but with 4% recognising now that it should have been. The remaining respondents said it was not applicable to their situation. Members of relief at source (RAS) pension schemes who do not pay income tax, typically those earning less than £11,850 each year, are entitled to basic rate tax relief on pension contributions up to £2,880 a year. However, this tax relief is not available for non-taxpayers in net pay arrangement (NPA) schemes, which means that somebody in a NPA scheme, earning £11,850 and paying the minimum contributions required under automatic enrolment, is missing out on £34.91 in the current tax year as compared to someone in a RAS scheme. At the beginning of October, a letter was sent to the chancellor Philip Hammond by the Low Incomes Tax Reform Group (LITRG) calling on the government to use the forthcoming Budget and Finance Bill to act on the inconsistency in tax rules which means that more than a million people on low incomes could be losing out on tax relief on their pension contributions.
The CIPP together with several key stakeholders in the pensions industry, including two former pensions ministers: Steve Webb and Ros Altmann, were signatories to the letter (see https://bit. ly/2qvXgOw). ...for government to consider how best to provide
whatsoever of this subject, so we shall have to wait a bit longer for government to consider how best to provide fairness and equity for all through the tax system as it relates to tax relief on pension contributions. In its pre-Budget submission, LITRG proposed a solution that would see HM Revenue & Customs (HMRC) use pay as you earn RTI data to identify those making pension contributions under the NPA. Tax relief (where appropriate) could then be provided through an annual reconciliation process – whether that is through self- assessment or – as is more likely – the informal P800 process (i.e. the annual reconciliation HMRC performs to check whether those outside self-assessment have paid the correct amount of tax). n
fairness and equity for all through the tax system as
The Budget, held on Monday 29 October, provided an ideal platform for the chancellor to make a positive announcement for reform to support those on low pay who are affected by this situation. However, there was no mention it relates to tax relief on pension contributions
P11D, expenses and benefits
One day
Designed to give delegates clarity and confidence about how to process the P11D, P11Db forms, PAYE Settlement Agreements (PSA) and net to gross calculations.
This course covers: ● Statutory requirements and implications ● Common errors when calculating company cars and fuel ● Childcare ● Beneficial loans ● Relocations ● Travel and subsistence expenses
● Vouchers / credit cards / tokens ● Gifts and awards ● Retirement benefits ● Salary sacrifice and tax / NICs changes from April 2017 ● Flexible benefits schemes ● Pay As You Earn (PAYE) settlement agreements ● Taxed award schemes ● Grossing up from net payment
● Other expenses ● Entertainment ● Telephones ● Subscriptions
● Key forms and dates ● Penalties and fines
Book online at cipp.org.uk or email info@cipp.org.uk for more information.
cipp.org.uk CIPP_UK cip .org.uk @CI P_UK
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| Professional in Payroll, Pensions and Reward |
Issue 46 | December 2018 / January 2019
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