eNews – November 2015
In this month’s eNews we report on expectations of issues likely to be covered in the Autumn Statement, NMW defaulters, state pension top up and auto enrolment research and advertising. We also include information on safeguarding against identity theft and results of HMRC’s recent campaigns.
Please do get in touch if you would like any further guidance on any of the areas covered.
Autumn Statement 2015 expectations
Tax credits have been in the news and this is one issue the Chancellor George Osborne is expected to review in the Autumn Statement. The House of Lords voted to reject the Statutory Instrument which contained the cut backs to tax credits.
He has promised to ‘continue to reform tax credits…while at the same time lessening the impact on families during the transition’.
The key changes originally proposed were:
- lowering the income threshold for Working Tax Credits from £6,420 to £3,850 a year from April 2016
- increasing the rate at which those payments are cut. Currently, for every £1 claimants earn above the threshold, they lose 41p. It was proposed that from April 2106, the taper rate would accelerate to 48p.
There are some tax issues which may also be progressed in the Autumn Statement these include:
- IR35 – following a period of discussion proposals are expected to be announced to reform the system and operation of taxation which applies to personal service companies.
- Pensions tax relief – limiting the amount of tax reliefs for pensions. The government has been consulting to establish whether the tax relief system provides incentives for individuals to save and that the costs of pension tax relief are affordable.
The Chancellor will make his 2015 Autumn Statement on Wednesday 25 November. We will update you on pertinent announcements.
UK tax gap falls to 6.4%
The government has announced that the tax gap for 2013/14 was 6.4% of tax due.
The tax gap, which is the difference between the amount of tax due and the amount collected, has fallen from 8.4% in 2005/06. The government estimates that this reduction in the percentage tax gap since 2005/06 represents an additional £57 billion in cumulative tax collected over the eight-year period.
According to HMRC the largest reduction is in the corporation tax gap which has halved since 2005/06, from 14% to 7% of tax liabilities. The downward trend applies to all sizes of businesses, with the overall reduction driven mainly by large businesses.
David Gauke, Financial Secretary to the Treasury, said:
‘The UK has one of the lowest tax gaps in the world, and this Government is determined to continue fighting evasion and avoidance wherever it occurs.
If the tax gap percentage had stayed at its 2009/10 value of 7.3%, £14.5 billion less tax would have been collected.
There is understandable anger when individuals or companies are perceived not to be contributing their fair share, but we can reassure the public that the proportion going unpaid is low and this Government is dedicated to bringing it down further.’
Internet link: HMRC press release
CBI warns government not to ‘tinker’ with pensions tax
The first industry-wide survey since the general election sets out businesses’ pensions priorities this Parliament.
The CBI has reported that according to the latest survey companies wish for stability on tax, policy and funding to boost pensions. The survey, which was carried out in conjunction with Mercer, reported that:
- Almost eight out of ten respondents are against further changes in pension taxation, while the majority cited certainty as the government’s top pension priority in this Parliament, as recent substantial reforms bed in.
- The percentage of respondents identifying the need to make auto-enrolment administration easier leaped to nearly 70% compared with just 41% in 2013. Two thirds also cited changing regulation adding to the compliance burden. And the vast majority indicated that increasing take-up levels among employees for existing schemes must be a priority, rather than raising minimum contributions.
Neil Carberry, CBI Director of Employment and Skills, said:
‘Recent regulatory changes, coupled with auto-enrolment and state pension reform, mean UK business leaders now crave stability.
Businesses want to focus on ensuring employees are making the most of what’s on offer, but there is clear concern about regulatory changes eroding incentives to save, which must be avoided at all costs.’
‘Businesses are clear that the current framework of pensions tax relief at the point of saving – while complex – is the best for encouraging pension saving.
Losing this would remove company incentives, as employer-provided pensions are the only way to deliver low-cost saving at substantial scale at levels above automatic enrolment rules. A change would cause damage to the fiscal position too in the long-term.
If you would like help with pensions please get in touch.
HMRC’s landlord campaign nets £50 million
HMRC have announced that a campaign aimed at helping residential landlords get their tax affairs in order has brought in more than £50 million making it one of their most successful voluntary disclosure opportunities.
As a result of the Let Property Campaign, which HMRC launched in September 2013, more than 10,000 landlords have come forward to disclose tax on previously undeclared income.
Caroline Addison, Head of Campaigns at HMRC, said:
‘The Let Property Campaign bringing in more than £50 million is further proof that our campaigns approach works. HMRC’s 20 campaigns have now together generated over £1 billion across a variety of sectors.
Throughout the Let Property Campaign, HMRC has written to over 80,000 landlords and over 50,000 customers have used the campaign’s online educational products.’
Please contact us if you would like advice on this area.
Internet link: HMRC press release
Identity theft – ICO guidance
Following the data security incident at TalkTalk with customer details being ‘hacked’ and many customers remaining unsure if they have been affected, an ICO spokesperson stated:
‘Any time personal data is lost there can be a risk of identity theft. There are measures you can take to guard against identity theft, for instance being vigilant around items on your credit card statements or checking your credit ratings. There are tips and information about identity theft available on our website.’
Please follow the link to the ICO guidance on identity theft.
Internet link: ICO news
‘State Pension top up’ scheme
A new scheme is being launched offering anyone reaching State Pension age before 6 April 2016 a chance to increase their State Pension by up to £25 a week.
People are eligible if they are entitled to a UK State Pension and have already reached their State Pension age or reach it before 6 April 2016. This includes men born before 6 April 1951 and women born before 6 April 1953.
The scheme will remain open for 18 months and those who think they can benefit will be able to buy additional State Pension, worth up to £1,300 a year. In most cases, surviving spouses and civil partners will be able to inherit at least 50% of the extra pension.
Minister for Pensions, Baroness Altmann said:
‘This government’s commitment is to provide security for working people at every stage of their lives, and that includes giving people the chance to enjoy a financially secure retirement. We have already committed to protecting pensioner incomes with the triple lock – uprating the basic State Pension by at least 2.5% each year of this Parliament. The new State Pension, coming in from April 2016, will ensure a simpler, more sustainable State Pension for the pensioners of tomorrow.
Top up is an opportunity for people already retired, or reaching State Pension age before April 2016, to boost their later life income. It won’t be right for everybody and it’s important to seek guidance or advice to check if it’s the right option for you. But it could be particularly attractive for those who haven’t had the chance to build significant amounts of State Pension, particularly many women and people who have been self-employed.’
Anyone who thinks they might benefit should seek advice and can use the online calculator to help them find out more. More information on State Pension top up and how to apply is available at www.gov.uk/statepensiontopup.
Workplace Pensions – don’t ignore it
The Department of Work and Pensions and the Pensions Regulator have launched a new advertising campaign promoting auto enrolment which aims to change the country’s perception of pensions in the workplace.
Workie, ‘a striking physical embodiment of the workplace pension’, will be seen visiting people in different work environments over the coming months, asking them not to ignore him.
The advertisements come with a message, whilst automatic enrolment into workplace pensions has been rolling out across the UK since 2012, it is only now that 1.8 million small and micro employers need to act. In a phased process over the next three years, every employer will have to enrol their eligible staff into a pension scheme, by reference to their staging date.
Pensions Minister, Baroness Altmann, said:
‘We have made great strides forward by automatically enrolling more than 5 million people into a workplace pension – now the challenge is to make sure hardworking people with every type of employer get to enjoy this major financial benefit.
This is a fun and quirky campaign but behind it lies a very serious message. We need everyone to know they are entitled to a workplace pension – and we need all employers to understand their legal responsibility to their staff, but also to feel more positive about engaging with workplace pensions.
This government is committed to providing security for working people at every stage of their lives, and that includes giving people the chance to plan for a financially secure retirement. Automatic enrolment is a big part of that.
Since 2012, more than 5.4 million workers have been automatically enrolled into a workplace pension by almost 61,000 employers. By the time the process is complete in 2018, it is estimated that around 9 million workers will either be newly saving or saving more into a workplace pension thanks to the policy.
The new campaign will include radio, print, online and outdoor advertising and will run for the remainder of this year and into 2016. It is being coordinated jointly by the Department for Work and Pensions and The Pensions Regulator.’
If you would like help with pensions auto enrolment please get in touch.
NMW offenders named and shamed
Over 100 employers who have failed to pay their workers the National Minimum Wage (NMW) have been named and shamed.
Between them, the 113 employers owed workers over £387,000 in arrears, and span sectors including hairdressing, retail, education, catering and social care. The cases named were thoroughly investigated by HMRC.
Since the scheme was introduced in October 2013, 398 employers have been named and shamed, with total arrears of over £1,179,000 and total penalties of over £511,000.
Business Minister, Nick Boles said:
‘Employers that fail to pay the minimum wage hurt the living standards of the lowest paid and their families.
As a one nation government on the side of working people we are determined that everyone who is entitled to the National Minimum Wage receives it.
Next April we will introduce a new National Living Wage which will mean a £900-a-year pay rise for someone working full time on the minimum wage and we will enforce this equally robustly.’
On 1 October 2015, the main rate of the NMW rose to £6.70 per hour.
Acas online offers advice to both businesses and employees that have any questions about the NMW.
For help with payroll issues contact us.
This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm. Please contact us for further information.