Pensions get the e-treatment

Eighteen months after Pensions A-Day HM Revenue & Customs (HMRC) feel it is timely to make online communication of key pension scheme forms mandatory.

From 16 October the following forms must be sent online:

  • an application to register a pension scheme;
  • the Registered Pension Scheme (RPS) return;
  • the accounting for tax return;
  • the scheme administrator's declaration;
  • the Event Report;
  • notification of winding-up of a registered pension scheme; and
  • notification of the termination of a scheme administrator appointment.
     

As with PAYE at present there is no requirement to receive forms online, although when you register for the Pension Schemes Online Service you will have a Pension Noticeboard set up where notices and reminders will be sent unless you choose to revert to paper.

Before being able to file, it must be decided who will be the Scheme Administrator and Practitioners. Confusingly the Administrator is the key role, carrying with it the responsibility for making returns and for the payment of any tax charges incurred by the scheme, whereas day-to-day administration can be delegated to the Practitioners.

Departments where the payroll team already have access to HMRC's online service for PAYE or Construction Industry Scheme purposes can use their gateway ID to access Pension Schemes Online and request the activation token needed to initiate the service.

Do remember to allow seven days to complete the registration process, bearing in mind that even if you received a notice to file dated before 16 October, that any return sent from 16th onwards must be sent online or a penalty will be levied.

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CIS - the honeymoon period is ending

When the new Construction Industry Scheme (CIS) came into force on 6 April this year so did the requirement to submit a monthly return - the CIS300 - within 14 days of the end of each tax month, or 17 days if submitted online.

To allow contractors to familiarise themselves with the new scheme HM Revenue & Customs (HMRC) waived any penalties for late or missing returns for the first six months. That amnesty is now coming to an end and from 20 October any monthly returns, which are still outstanding, will attract an automated penalty that will be backdated to when the return should have been filed.

HMRC will undertake a publicity campaign shortly to alert contractors to the introduction of penalties to allow them to get their house in order. This will include the issuing of warning letters to late filers that will be sent out in both September and October.

Contractors should remember that the CIS regulations require that a CIS300 return be sent each month so a Nil return is vital where no details fall to be submitted. Nil returns can of course be made simply by telephoning the CIS Helpline, and if the scheme feels that it is unlikely to pay any subcontractors for some time the scheme can be set to 'inactive' and no returns will be required for up to six months.

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No summer break from HMRC announcements 

MPs may be enjoying a break from parliamentary duties but HM Revenue & Customs (HMRC) have been busy issuing a wide range of information key to payroll professionals, so in case you've missed anything whilst on your own post P11D break... 

  • New interest rates on late tax and NICs came into force on 6 August and were increased to 8.5%. In contrast the interest due to the taxpayer from HMRC for overpaid tax only rose to 4%.
  • Due to the large number of cheque requests for the £150 online incentive payment for the filing of 2006/07 returns by schemes with less than 50 employees HMRC have warned that requests will not be fulfilled completely until December of this year. When cheques are issued any PAYE arrears are deducted first, whereas if the incentive is deducted from any PAYE remittances due the full £150 may be claimed.
  • The new limit for payment by employers to employees while attending full time courses of education, including sandwich courses, that can be given free of tax and NICs has been raised to £15,480 for academic years beginning on 1 September 2007.
  • Following concern that employers may be exploiting the tax/NICs exemption for the payment of late night journeys from home to work, draft guidance has been prepared by HMRC that is out for consultation until 11 September.

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Pensions Act paves way for major changes

The 2007 Pensions Act received Royal Assent on 26 July. It contains a number of major changes that will affect us both personally and professionally.

State pension age will rise to 68 for both men and women by 2046, with a reduction to 30 of the number of qualifying years needed to receive a full state pension from 6 April 2010. You'll recall it was the failure to alert individuals to this change that led the Government to permit refunds of overpaid voluntary NICs that we covered in a recent e-news.

The link between earnings and the state pension will be restored from 2012 (or the end of the next parliament), while the contracting-out for money purchase schemes will end by the same date.

The state second pension flat rate scheme will be simplified and there will be a long overdue reform of Home Responsibilities Protection (HRP). This is the scheme where those taking time out of the workplace to care for children are awarded NI credits to maintain their contribution record. HRP will be replaced with a much fairer Carers Credit that will not require those with caring responsibilities to be out of work for a full qualifying year in order to receive a credit.

Finally the Act allows for the establishment of the Personal Accounts Delivery Authority, which will be charged with setting up the new auto-enrolled pension personal account.

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