The Chartered Institute of Payroll Professionals
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In the interim, from April 2024, the Treasury intends to increase the threshold from £50,000 to £60,000 with the top end of the taper also increasing from £60,000 to £80,000.
While this process exists mainly outside of the payroll process, it may be that you want to consider the impacts on employees opting to salary sacrifice a portion of their earnings. It’s common for individuals to use salary sacrifice arrangements to minimise the impacts of the charge and, for example, pay into a tax beneficial pension scheme.
Would your business consider this policy direction to be a ‘significant lifestyle change’ and allow employees to make changes to their arrangements outside of your normal cycle?
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‘Small pots’ pensions Published: 6 March 2024 Emailed: 13 March 2024
While not a new announcement, or even an update to existing policy, Jeremy Hunt mentioned the future of pensions ‘small pots’ and the plans for employee ‘pots for life’.
The CIPP is working hard behind the scenes, alongside the Department for Work and Pensions, to help shape the future of these policy areas and ensure a proportional burden for payroll professionals.
Current plans include establishing a system in which small pension pots of under £1,000 that are inactive for more than 12 months are automatically consolidated. This aims to achieve better pensions adequacy for savers and to stop these pots being eroded by fees.
This work will also tie into the plans to allow a worker to nominate a pension scheme to pay all future automatic enrolment contributions into, reducing the proliferation of small pots.
These plans will likely take many years to come fully to fruition, however, the policy and process changes they bring will affect many payroll professionals across the country.
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New Investment Zone and Freeports information Published: 6 March 2024 Emailed: 13 March 2024
Hunt confirmed additional details of six investment zones, further information can be found here: Investment Zones - GOV.UK (www.gov.uk).
As a reminder, it will be possible to apply a zero- secondary rate of employer NICs for eligible employees’ earnings above the secondary threshold (£9,100 per annum) up to and including an upper secondary threshold (£25,000 per annum) equivalent to the freeport upper secondary threshold, where the conditions to claim the relief are met. The balance of earnings above this upper secondary threshold will be charged at 13.8%. However, the calculation of primary class 1 NICs is unaffected.
Extension to freeport tax relief in Scotland and Wales
Following on from the Autumn Statement 2023, in which Hunt confirmed freeport tax reliefs will be extended from five to ten years for English zones, he today confirmed this extension will also apply to Scottish green freeports and Welsh freeports, until September 2034. Details on the Northern Ireland enhanced investment zone will be published soon.
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