“In 2011, 3.7 million taxpayers paid the higher 40p rate of tax. By 2014, five million will.”
Kwarteng and Patel says the Government should be raising tax thresholds proportionately with earnings. “We should increase the tax thresholds – the rate at which you start paying higher taxes – in line with wages. We should aim for a target of taking everyone earning less than £50,000 out of paying the higher rate of 40 per cent. This is not only fairer – it will help encourage hard work and enterprise.”
Download the report by following the link below.
Motivating the Middle - October 2012
PAYE TAX CODE CHANGE – TRIVIAL COMMUTATION
9 NOVEMBER 2012
In this week’s HMRC newsletter to stakeholders we have been advised of a change in the tax code applied to “trivial commutation” and similar one off lump sum pension payments from registered pension schemes from April 2013. HMRC reports, that under pension tax rules, for registered pension schemes, pension payers are able to convert certain small pensions into a one-off cash payment. Subject to certain conditions, a maximum of 25% of the value of most of these small pensions can be converted to a tax free lump sum. The tax code is then applied to the remaining taxable portion of the lump sum. Currently, pension payers are required to operate the emergency tax code (code 810L for 2012-13) on the non-cumulative (week 1 / month 1) basis on the lump sum pension payment. HMRC states applying the emergency code in this way results in many lump sum payments of this type attracting the higher, and possibly additional, rates of tax. And in many cases this leaves the payment recipient in a position where they temporarily overpay tax. From 6 April 2013, it is proposed that the basic rate (BR) tax code (operated on the non- cumulative basis) will apply. We believe this change will result in more individuals, in particular those on low to moderate incomes, paying the right amount of tax at the time the lump sum pension payment is made.
Trivial commutation and similar one-off lump sum pension payments include:
trivial commutation lump sums, trivial commutation lump sum death benefits, winding up lump sums, winding up lump sum death benefits, commuted equivalent pension benefits, certain small lump sum payments and ‘small pot’ commutations.
Draft legislation and a technical note relating to PAYE and Real Time Information changes, including this proposed change, will be made available for comment on the HMRC website for a period of eight weeks from 15 November 2012. You will be able to access the documents from the “What’s New” link on the HMRC home page. The CIPP will of course alert you when this facility becomes available. Note: The P53 form and process, used to claim any overpaid tax will continue to exist in its present form. However, HMRC are currently working with representative bodies to improve both the form and process for individuals, pension payers and HMRC.
CIPP Policy News Journal
12/04/2013, Page 172 of 362
Made with FlippingBook - Online magazine maker