The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal
CIPP comment
For payroll professionals working in the Public Sector, knowledge of the rules of IR35 must now be considered an essential knowledge piece, rather than a ‘nice to have’.
The CIPP Policy team have received confirmation that HMRC will publish legislation and customer guidance together with a summary of responses to the Off-Payroll working in the Public Sector consultation, and this is expected to be available from 5 December 2016.
HMRC will issue updates to help industry prepare for the changes in April which will include developments on the new digital tool to help engagers to determine employment status.
Termination payments
As announced at Budget 2016, from April 2018 termination payments over £30,000, which are subject to income tax, will also be subject to employer NICs. Following a technical consultation, tax will only be applied to the equivalent of an employee’s basic pay if their notice is not worked, making it simpler to apply the new rules. The government will monitor this change and address any further manipulation. The first £30,000 of a termination payment will remain exempt from income tax and National Insurance.
Pensions and savings tax
ISA limit
As previously announced, the government will continue to support saving by increasing the ISA limit from £15,240 to £20,000 in April 2017.
Starting rate for savings
The band of savings income that is subject to the 0% starting rate will remain at its current level of £5,000 for 2017-18.
Reducing the money purchase annual allowance
The pension flexibility reforms introduced in April 2015 included the ability to withdraw part of a defined contribution pension fund while retaining the option to continue making pension contributions. If a pension is accessed in this way, the annual allowance for tax-relievable pension contributions was reduced from £40,000 to £10,000, which was called the money purchase annual allowance (MPAA). The government proposes to reduce the MPAA to £4,000, with effect from April 2017, to limit the extent to which individuals could recycle funds and gain double tax relief.
CIPP comment
A consultation has been launched that will run until 15 February 2017 and is seeking views of stakeholders as to whether they agree that a reduced MPAA would minimise re-cycling pension savings and that, coupled with ongoing monitoring, the new MPAA will allow the continued successful roll-out of automatic enrolment?
Foreign pensions
The tax treatment of foreign pensions will be more closely aligned with the UK’s domestic pension tax regime by bringing foreign pensions and lump sums fully into tax for UK residents, to the same extent as domestic ones. The government will also close specialist pension schemes for those employed abroad (“section 615” schemes) to new saving, extend from 5 to 10 years the taxing rights over recently emigrated non-UK residents’ foreign lump sum payments from funds that have had UK tax relief, align the tax treatment of funds transferred between registered pension schemes, and update the eligibility criteria for foreign schemes to qualify as overseas pensions schemes for tax purposes.
Tax-Free Childcare
The Chartered Institute of Payroll Professionals
Policy News Journal
cipp.org.uk
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