Submission (FPS), from April 2022 onwards. From April 2022, the relief can be claimed in real time, as a payroll solution will be possible by that point. The reaction to this was that it seemed too complex, and that an existing NI category that provides employer NI relief in much the same way should be utilised, or even a new category set up, so that employers have access to the entitlement in line with the date that the policy is first implemented.
Some other key points raised included:
• Over 80% of survey respondents agreed that a consistent definition of armed forces applied by Government should be used for this policy, with 80% also in agreement that reservists should not be included as veterans for the purposes of an employer NI contributions holiday • There was unanimous agreement (100%) that amending the PAYE Starter Checklist to accommodate questions around this relief would not deter employers from employing veterans and claiming the relief • The majority (64%) of those who completed the survey felt that this new entitlement would not incentivise employers to take on more, or their first, veteran(s). From comments, it is apparent that businesses will employ veterans based on their skill set and experience, as opposed to an employer relief
Read the CIPP’s consultation response in full here.
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The CIPP’s response to HM Treasury’s consultation: ‘Pensions tax relief administration: call for evidence’ 14 October 2020
HM Treasury published a consultation that ran from July to October 2020 that wanted to explore how two of the main methods of administering pensions tax relief work, and to seek feedback on how improvements could potentially be made. The CIPP’s Policy and research team, having collated the views and opinions of payroll professionals through a survey and a virtual thinktank roundtable, has submitted its response, which can be located here. The call for evidence was initially announced in March 2020, within the Budget, and its aim was to address the issue of how a low-earning individual’s net pay could potentially be affected solely on the basis of how pensions tax relief is provided through their pension scheme. In relief at source arrangements, pension contributions are taken from net pay, and the pension provider reclaims tax relief from HMRC, ensuring that individuals enrolled in pension schemes of that type receive pensions tax relief. In a net pay arrangement, however, pension contributions are deducted from gross pay. The current tax threshold is £12,500, whilst the auto-enrolment threshold is for earnings above £10,000, so anyone earning between those two amounts will not receive the pensions tax relief that they would if they had been in a relief at source pension scheme. To address the issue, the consultation sought feedback on how successful four different potential approaches could be. Amongst the key findings were:
• Respondents to the survey confirmed that within their businesses:
- - -
25% operate a NPA scheme
24% operate via a RAS
41% operate both NPA and RAS
The majority of members that attended the virtual roundtable event also confirmed that salary sacrifice pension schemes were also offered within their businesses
• In terms of the approach that survey respondents felt should be taken to resolve the issue:
- 35% favoured approach one – the payment of a bonus - 0% felt that approach two – applying a standalone charge to RAS schemes would be most effective - 30% showed preference for approach three – the operation of multiple schemes - 35% felt that mandating the use of RAS for DC schemes would work best
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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