Q. I am a physiotherapist and I am self-employed. A colleague has told me that HMRC is scrutinising the tax affairs of all those who work in this sector, with a view to increasing its revenue. Is this correct?
A. To an extent, yes, this is true.
HMRC has conducted a number of disclosure campaigns in recent years, intended to encourage people with undisclosed tax liabilities to come forward and pay the relevant amount of unpaid taxes (together with a much reduced fine, in consideration of have self-disclosed). For example, such a campaign in respect of property sales concluded last month.
HMRC has instigated a “Health and Wellbeing Tax Plan”, providing a voluntary disclosure opportunity to those people working in the health sector (including physiotherapists, chiropractors, chiropodists and alternative therapists) and incentivising people employed in the sector to bring their tax affairs up to date. The campaign runs from 7 October to 6 April 2014, although if you intend to use the plan you must notify HMRC before the end of 2013.
Where voluntary disclosures are made, lower penalties will apply. The amount payable varies according to the circumstances of the non-disclosure, with higher penalties applied in circumstances where information has been kept from HMRC deliberately.
Once the notification period ends, HMRC will investigate the tax affairs of anyone it believes ought to have come forward and, where additional taxes are found to be due, HMRC will charge significantly higher penalties than it would have done under the Plan.
The Health and Wellbeing Tax Plan is not aimed at doctors or dentists, who were covered by a previous amnesty in 2010 (under which HMRC recovered £10.5m from more than 1,500 medics).
Q. I am a higher rate taxpayer and currently benefit from tax relief, at my marginal rate, on my pension contributions. I have heard that there are plans to scrap higher rate tax relief after the next election. Is this correct?
A. Not exactly. The subject of pension tax relief has been in the news recently, with many industry bodies suggesting that it is ripe for reform and all of the political parties opining on the subject during the conference season.
The Pensions Policy Institute published a paper in the summer, setting out a number of options for the reform of pension tax relief, including the possible introduction of a 30% flat-rate of tax relief. This prompted both the Treasury and the Association of British Insurers to call for a debate on the subject.
The only definitive policy announced to date has been that of the Labour Party, which has promised to restrict tax relief to 20% for additional rate tax payers (i.e. those who pay 45% income tax on earnings over £150,000). However, Labour’s Shadow Pensions Minister, Gregg McClymont, has insinuated that Labour may go even further, suggesting that too great a proportion of the benefit of pensions tax relief is garnered by a highly-paid minority of the working population.
I suspect that this is a topic therefore that will attract a reasonable amount of scrutiny from all political parties ahead of the next election and that will result in definitive policy announcements from them all.
Q. I am the Finance Director of my company and I am preparing the business to comply with its obligations under the auto-enrolment pension regime. A peer has told me however that the rules have changed recently and that the obligations placed upon employers have been relaxed. Is this correct?
A. Yes. The Pensions Minister, Steve Webb, has made several changes to the auto-enrolment regime, as a consequence of a public consultation (concluded earlier this year) regarding the early experiences of auto-enrolment and the impact the government’s initiative has had upon employers.
The most noteworthy amendments relate to the amount of time afforded to employers in which to comply with their obligations, including communicating with their staff regarding their opt-in and joining rights, the deadline for enrolling automatically all relevant employees into a “qualifying workplace pension”, the timescale for paying over to a pension provider contributions deducted from an employee’s salary and the time by which an employer must register with the Pensions Regulator (the government body charged with overseeing the auto-enrolment regime) to confirm compliance with their obligations.
Employers now have six weeks in which to enrol automatically all relevant employees into a qualifying workplace pension (extended from one month). This increased time limit has been applied equally to employers’ other obligations.
The extension to time limits reflects both the increasing number of employers who are set to be caught by the obligations under the auto-enrolment regime in the coming 12 months and the fact that there is a finite amount of consultancy/support available to those employers.
The new rules are set to come into effect on 1st November.
If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.
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