Employees who do not earn £10,000 or above to meet the threshold for auto-enrolment but can ask to be added into a pension will also be affected. This is also true for individuals who don’t reach the threshold, but in some pay periods experience a pay spike, e.g. they receive a bonus. If this pay spike pushes them into the £10,000 earnings bracket for that pay period and there are further spikes in subsequent pay periods, then contributions will be taken in line with auto-enrolment legislation but, again, there will be no tax benefit to the employee if they have not have earned enough for tax deductions to be taken. On the other hand, in a relief at source arrangement, employees who are earning within the higher and additional tax brackets only receive a 20% top up to their pension pots from HMRC through payroll, as opposed to the 40% and 45% they are entitled to (21%, 41% or 46% in Scotland). In order to receive the extra relief due to them, these individuals need to complete a self-assessment tax return. Many of those affected by this may not be aware of the processes they need to follow to receive the relief or may not be aware of the additional entitlement at all. Although, in an unusual twist, Scottish taxpayers on the starter rate of 19% also receive the 20% top up. The government is concerned about the potential for a low-earning individual’s take-home pay to be affected by the method of pensions tax relief operated by their pension scheme, and is keen to explore this issue further to understand what deliverable options for change may exist. This call for evidence seeks to gather evidence on the operation of both main methods of administering pensions tax relief and what improvements might be made. Throughout the survey, we will concentrate on the two main ways that an individual receives income tax relief when saving some of their earnings into a pension. We look to cover the methods proposed to tackle the anomaly, and seek feedback from the payroll profession as to which method you believe would be most suited to tackle the anomaly and how each proposed method would affect your pension administration processes. The policy team appreciate how busy payrollers are at present, therefore, we really appreciate your feedback on this important issue. To have your say, please complete our survey which takes around 20 minutes to complete by clicking here.
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Reminder: CIPP Survey: Employer’s National Insurance Contributions holiday for businesses employing veterans 14 September 2020 HMRC is currently running a consultation, which aims to seek clarity on a number of details relating to the new employer National Insurance (NI) contributions holiday for employers of veterans, to support their transition to civilian life. Originally put forward as one of the pledges in the 2019 Conservative manifesto, the government committed to “reducing National Insurance contributions for employers if they employ ex-Service personnel”, and it has now been confirmed that, from 6 April 2021, organisations who employ veterans will not be required to pay employer NI contributions on their wages for the initial 12 months of their civilian employment. The CIPP’s policy and research team have collated a survey, and will be submitting a formal response to the consultation, which will include the opinions of members expressed within the survey. The questions include a mix of questions that explore the more specific details of how the new policy should be implemented and administered. The survey will take around 15 minutes to complete, and you have the opportunity to respond until 11:45 PM on 30 September 2020. Payroll professionals are consistently busy individuals, and particularly so at the moment, given current circumstances. We do really appreciate any time that you can dedicate to responding to the survey, and this is your opportunity to help to shape future policy that will impact the work carried out by payroll teams.
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The CIPP’s formal response: Tackling Construction Industry Scheme abuse
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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