membershipfocus policy & research
Exam schemes and electoral payments
Some of our members have been keen to understand what the implications are of the new reporting requirements under real time information (RTI) from April 2014 in respect of exam and electoral schemes. HMRC has confirmed to the CIPP that the new requirements do not affect any agreements in respect of no national insurance being deducted etc but more so that pay as you earn, starters and leavers must now be reported in real time. Whilst guidance has not been updated to reflect this the industry concerned has received communications and guidance to enable them to comply. The Policy team spoke with one member affected by the new legislation who confirmed HMRC had consulted with them and they understood fully what was required and have already put processes in place ready.
Payroll giving research paper We would like to highlight a research paper compiled and written by one of the members of the policy team, Helen Hargreaves. The paper is on payroll giving and seeks to: l understand what drives individuals to give charitably l examine whether the recent recession has had any effect on donations l identify the characteristics of, and the company conditions needed to launch, a successful payroll giving scheme, and l make recommendations as to how organisations can implement a low cost, low administration scheme.
According to research by the Charities
Aid Foundation and National Council for Voluntary Organisations, 55% of adults in the UK give to charity in a typical month. Though payroll giving offers the highest
tax incentives and is a safe and easy method of donating it accounts for only 3% of all donations despite these advantages. Recent research undertaken by the CIPP in conjunction with Workplace Giving UK, suggests that two of the main reasons why employers do not offer payroll giving to their staff are because of the administration process and the perceived cost of running the scheme. However, the reality uncovered by the survey results shows that the majority of employers who responded think payroll giving schemes are easy to implement and administer. If you are thinking about payroll giving or
...THE MAJORITY OF EMPLOYERS WHO RESPONDED THINK PAYROLL GIVING SCHEMES ARE EASY TO IMPLEMENT AND ADMINISTER
need some extra information to encourage your employer to consider one, we would recommend you read this research paper. It can be downloaded from the CIPP website News pages (published on 4 December).
Scottish rate of income tax One of the consultation forums that our head of Policy, Karen Thomson, attends (and co-chairs) on behalf of members is the Employment Consultation Forum (ECF). One of the topics discussed at the last meeting was the Scottish rate of income tax (SRIT). This has not been on the radar for some months now but as it is only next year that HMRC will be contacting Scottish taxpayers, it is time to revisit and raise awareness of the implications of the changes to come. In brief, from April 2016 all rates (basic, higher and additional) are to be reduced by 10p in every pound for Scottish taxpayers. The Scottish Parliament will then levy a new Scottish rate of income tax which will apply equally to all of the main UK rates and all income tax from this rate will be paid over to the Scottish government. The UK government will still control the wider income tax structure and HMRC will still be responsible for administering and collecting tax.
A Scottish taxpayer will be determined by one of the following: l If someone is resident in the UK for tax purposes and their sole or main place of residence is in Scotland. l If someone has more than one main place of residence in a year, it must be determined which has been their main place of residence for the longest. If this is in Scotland they are a Scottish taxpayer. l If someone is a Scottish Parliamentarian. In 2015:
l PAYE customers will be identified via address information held within the HMRC system l there will be direct customer contact by HMRC with potential Scottish taxpayers to help individuals to understand their obligations in relation to the change l tax codes will be issued as part of the annual coding routines to employers and
pension providers so the correct rate of income tax can be deducted. Scottish tax codes will have a specific indicator to differentiate it from current tax codes. Note that it is anticipated that this will be a ‘S’ prefix but this has not yet been confirmed. Members of the ECF raised queries
which HMRC has taken away to look at. These included: l What will happen if someone changes Scottish taxpayer status in year? Will their new code be operated on a week 1/ month 1 basis? Will there be a fix for this throughout the year? l Address changes – HMRC need to be able to capture the date of change, rather than the date of notification. Retrospective changes could be six months behind. Software developers will need to know the rules. l Payroll giving – how will this work if someone changes status in year? l If separate amounts of UK/Scottish rate tax are shown on payslips there needs to be clear rules in respect of rounding. l It was suggested that a group needs to be set up to look at avoidance issues and it was confirmed that this issue was being discussed with HMRC’s compliance staff. l Concerns were raised about digitalisation – going forward individuals will be able to input changes of address and change codes. l The responsibilities of agents needs to be considered i.e. who is accountable if addresses are not changed. l It was confirmed that it is the tax year not the calendar year that is used for determining Scottish taxpayer status. l The changes could mean that two sets of tax tables would be needed if the Scottish rate was set at a figure other than ten per cent. It is important that HMRC continue to provide manual tax tables. As discussions and consultation continues, we will provide further updates with answers to these queries in future issues of On Your Behalf. All minutes from the ECF meetings are available to view on HMRC’s website at
www.hmrc.gov.uk/consultations/cf- meetings.htm.
PP PayrollProfessional 7
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