The recommendations for legislative change, the report states, would remove complexity in the tax system whereas if the government were also to accept the recommendations for administrative change, this would simplify the system, making it much easier for pensioners to comply with their obligations and to claim their entitlements, which the report highlights, does not always happen now, due to a mix fear and a “lack of understanding of the tax system.” “There are significant lessons here for HMRC and the Department for Work and Pensions (DWP) about the need to improve communications with pensioners.” The report provides full details of all recommendations and makes for interesting reading. One recommendation which may be of interest to those of us approaching our tax year end, is “…that every April the DWP issues a P60 type form (DWP60) stating the amount of taxable income (from the State Pension and other taxable state benefits) which a pensioner was entitled to in the previous tax year. This would give pensioners an accurate figure for their taxable state income and enable them to check they are paying the right amount of tax…” The OTS have also recommended that HMRC introduce a single composite PAYE coding notice (form P2C) which would bring together the various codes for each source of income in PAYE and would provide reconciliation along with a clear explanation and the opportunity for pensioners to spot errors much more easily than is currently the case, which in turn should provide greater reassurance. The recommendation that the HMRC/DWP communication review, should also “ …include a review of current communications about how the State Pension is taxed, clearer information about how personal allowances, and tax codes operate and which documents and figures pensioners need to be aware of… ”
To read the recommendations in full along with Analysis and provisional costing assessments from HMRC and the DWP, please visit the HM Treasury website.
GOVERNMENT RESPONSE TO OTS RECOMMENDATIONS IN REVIEW OF PENSIONER TAXATION
11 April 2013
The OTS have published the government responses that have been made to their recommendations following the OTS review of pensioner taxation.
Back in January we reported news of the publication of the Review of Pensioner Taxation: Final Report by the Office of Tax Simplification. The report contained a number of recommendations which the government have recently responded to. The response can be read in full at the website of the OTS, however it confirmed that HMRC will be looking in to providing some form of annual tax statement to pensioners. It is likely to be rolled out as an online service in line with HMRC digital strategy.
HMRC will also review how composite PAYE coding notices could be delivered and will keep the OTS updated.
If you were thinking that DWP appear to have got off lightly in this response, they have formed a steering group with aims to review pensioner communications.
Confirmation was included in the response that the Blind Persons Allowance will not be abolished, in favour of providing a grant, however HMRC will explore what steps can be taken to make the process for claiming the allowance easier.
CIPP Policy News Journal
16/04/2014, Page 417 of 519
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