Britons Invited To Top Up State Pension

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More than seven million British people are being offered the opportunity to top up their state pensions. Men who are over the age of 65 and women over the age of 63 can get around £25 a week extra on their state pension, in return for a one off payment.

The exact amount they will have to pay depends on factors such as their age- the older they get, the lower the cost. The offer is currently open to existing pensioners and those who will reach the state pension age by April 2016. After that date, a single tier pension will begin.

Currently, basic state pension is worth up to £115.95. The new flat rate pension will be worth up to £155 a week for people that qualify. The top up scheme will be known as Class 3A contributions and will provide pensioners with an income that will rise with inflation. Any spouses or civil partners will be able to inherit at least half of the income once their partner dies.  shutterstock_326906771

Currently, around seven million people are of pensionable age and are therefore eligible to take part. However, the DWP has said that the scheme won’t be suitable for everyone and expects around 265,000 people to take up the offer. A spokesperson said:

“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.”

The maximum amount of extra income possible will be £1,300 a year or £25 a week. Those wishing to apply have 18 months to do so.

 

A New Tax Year: Are You Prepared?

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A new tax year commenced on the 6th April and a whole new set of reforms came with it. They can often be rather difficult to understand, particularly if you are one of the lucky few who have to complete a self assessment. The changes range from income tax right through to pensions, so let’s take a brief look at them and how they may affect you:

Income Tax

Tax free personal allowance will increase this year from £10,000 to £10,600. It will also be the first year people born between the 6th April 1938 and 5th April 1948 will have the same allowance as working age people, as their allowance has only increased by £100. The higher rate tax threshold is rising to £42,385 and the starting rate of income tax on savings will be cut from 10% to 0% on savings up to £5,000. Couples allowance means that people who are married or in a civil partnership are able to transfer up to £1,060 of their tax free allowance to their partner but only if neither of them pay more than the basic rate of income tax. Lastly, married couple’s allowance, which is only available if one partner was born before the 6th April 1935 has been increased to a maximum of £8,355 and a minimum of £3,220.

If you have overpaid tax, you will be able to choose between a refund or saving it for future tax bills.

National Insurance

National Insurance has one change this tax year. The Class 2 rate of contributions is increasing from £2.75 to £2.80. Class 3 contributions are increasing from £13.90 to £14.10.

State Pension

The basic state pension is increasing by 2.5 per cent or to £2.85 per week to a maximum of £115.95 per week. The maximum amount that pensioners who are on low incomes can receive with the addition of pension credit is £151.20 for a single person or £230.85 for a couple.

Pension Lump Sums

Under new rules, you can now withdraw your pension in one lump sum, however it will be subject to be taxed at your marginal rate of income tax (e.g. 20%, 40%) rather than 55% as was previously claimed.

benefit-fraud-stafford

Inherited Pensions

Tax on inherited pensions is scrapped if the pension holder dies before they reach age 75.

Isa Allowances

The tax free annual Isa allowance will increase from £15,000 to £15,240. The junior Isa annual allowance will increase from £4000 to £4,080. The child trust fund allowance will also increase to the same amount.

Tax Credits and Child Benefit

Working Tax Credits are increasing by small amounts.

Basic element: £1,960.

Couple and lone parent element: £2,010.

30 hour element: £810.

Disabled worker element: £2,970.

Severe disability element: £1,275.

The Childcare element will be frozen at £175 for one child/ £300 per week for two or more children. For Child Tax Credits, the family element is frozen at £545 a year, but there are small changes to other elements.

If you have a high income and you claim Child Benefit, you may need to complete a self assessment.

Child element: £2,780.

Disabled child element: £3,140.

Severely disabled child element: £1,275.

Child Benefit is increasing by 20p a week to £20.70 for the first child and to £13.70 for the second and subsequent children. Guardian’s allowance is increasing by 20p a week to £16.55.

Maternity and Paternity Pay

The statutory rate of maternity and paternity pay is increasing from £138.18 to £139.58 per week.

Air Passenger Duty

Children who are under the age of 12 won’t have to pay Air Passenger Duty on economy class tickets from 1st May.

 

 

This is only a basic guide to the changes. If you are unsure of anything, make sure to dial the HMRC Helpline who will be able to assist you further.

 

 

 

 

 

 

Pension Reform Blocks HMRC Helpline

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Recent changes to the pension rules blocked the HMRC helpline in April. One million people are believed to have called the tax office on a particular day at the beginning of April, meaning the lines were engaged throughout the day. Many people were forced to spend up to 10 minutes navigating the automated menus before being cut off because the waiting time was seen to be ‘too long’.

To save people who were inquiring about pensions from waiting in a line, a recording played to them instead directed them to the new Government helpline, Pension Wise. The reforms mean that people can now take out a lump sum for their pension rather than having several smaller payments. However, those who call Pension Wise have been left annoyed as if you wish to take out a lump sum, Pension Wise can not advise you on the amount of tax that you will pay- only HMRC can do this.

A spokesperson for HMRC said that the lines were very busy due to it being the start of a new tax year. He added that it was regrettable that customers could not be served due to the waiting times.

With the HMRC helpline, calls are automatically terminated if the machine anticipates that it will keep the taxpayer on hold for too long. In the end of the last tax year, some callers reported that they were waiting more than 45 minutes just to be connected, which would indicate that the waiting times this year are longer.

The HMRC spokesperson said that only a small number of the calls it took were about pension reforms.

Workplace Pension Complete Guide: Is Your Business Ready?

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Under new law, all employers are now responsible for providing their employees with a workplace pension.pensions-auto-enrolment

Read our complete guide for tips on how to implement a Defined Contribution pension scheme in your workplace.

What is the Workplace Pension?

The workplace pension is a government-enforced, automated pension scheme, whereby both an employer and their employee make regular monthly payments into the employee’s pension fund.

Over the next five years, all employers will be required to implement a workplace pension in their business via ‘automatic enrolment‘. Employees will have a chance to opt out if they want to.

When you are expected to roll out an automated workplace pension scheme will depend on your company’s staging date. If you do not set up the scheme before the staging date, you may face a fine from the Pensions Regulator.

Who Will Be Eligible for a Workplace Pension?

The workplace pension will involve employees who:

  • Are aged between 22 and State Pension age
  • Earn at least £10,000 a year
  • Work in the UK.

When Must I Implement My Workplace Pension Scheme?

You must have your penuk-income-taxsions scheme up and running by your staging date, no later. Your staging date is based on the number of people in your PAYE (Pay As You Earn) scheme, and can be calculated using the Staging Date Calculator tool on the Pensions Regulator website.

You will need to enter your company’s PAYE reference into the calculator to discover your staging date. Your PAYE reference can be found on a P6/P9 coding notice from the tax office or on your P30BC white payslip booklet.

The staging dates stored by the calculator tool were initially determined on April 1 2012. If at this time you had fewer than 50 staff and/or were part of a PAYE scheme will more than 50 people, you may be eligible to move your staging date (see below). There are also other exceptions that may determine your staging date (see below).

If you have staff in more than one PAYE scheme, you will need to enter the details of each scheme into the calculator.

Exceptions to Staging Dates

In some cases, your staging date may be different to that generated by the Staging Date Calculator. These include the following:

  • You have already agreed a modified staging date with the Pensions Regulator.
  • You set up your business after April 1 2012
  • You have acquired a different PAYE reference since April 1 2012 (in this case you would enter your old PAYE reference into the calculator tool)
  • You have certain types of staff but don’t have a PAYE scheme (in this case, your staging date will be April 1 2017)
  • You had fewer than 30 staff on April 1 2012, no staging date associated with your PAYE reference, and are not affected by any other exceptions listed here (in this case your staging date will be April 1 2017).

Modifying your Staging DateYou will need details of any income or employment to hand when completing your Tax Return.

If, at the time of April 1 2012, you had fewer than 50 staff or were part of a PAYE scheme with more than 50 people, you may be eligible to push back your staging date.

You can view a list of prescribed staging dates to which you can choose to move below.

[twocol_one]Original Staging Date

1 October 2012 and 1 November 2012

1 January 2013 and 1 February 2013

1 March 2013 and 1 April 2013

1 May 2013 and 1 June 2013

1 July 2013 and 1 August 2013

1 September 2013 and 1 October 2013

1 November 2013 and 1 January 2014

1 May 2014 and 1 April 2014

1 May 2014 and 1 July 2014

1 August 2014 and 1 October 2014

1 November 2014 and 1 January 2015

1 March 2015 and 1 April

[/twocol_one] [twocol_one_last]Optional New Staging Date

1 August 2015

1 October 2015

1 January 2016

1 February 2016

1 March 2016

1 April 2016

1 May 2016

1 July 2016

1 September 2016

1 November 2016

1 February 2017

1 April 2017

[/twocol_one_last]

What if I Se380_image_money_houset Up My Business After April 1 2012?

If you set up your business after April 1 2012, you too will be eligible to push back your original staging date to the new one prescribed, as shown below.

[twocol_one]Date of first payable PAYE income

1 April 2012 – 31 March 2013

1 April 2013 – 31 March 2014

1 April 2014 – 31 March 2015

1 April 1 2015 – 31 December 2015

1 January 2016 – 30 September 2016

1 October 2016 – 30 June 2017

1 July 2017 – 30 September 2017

[/twocol_one] [twocol_one_last]Staging Date

1 May 2017

1 July 2017

1 August 2017

1 October 2017

1 November 2017

1 January 2018

1 February 2018

[/twocol_one_last]

Can I Bring My Staging Date Forward If I Wish?

You may wish to bring your staging date forward to align better with your business practices, such as the start of your financial year. If this is the case, you will need to notify The Pensions Regulator (TPR) either online, by post or by email.

To bring your staging date forward online, you must have the following information:

  • Your unique 10 digit letter code (this can be found on all correspondence from the Pensions Regulator; if you do not have one you can ask for one)
  • Your PAYE reference
  • Your Government Gateway User ID (you will have the option to create one the first time you log in).

Available early staging dates are as shown below. You may choose from any that best suits your business.

[threecol_one]2015

1 January

1 March

1 April

1 June

1 July

1 August

1 September

1 October

1 November

[/threecol_one] [threecol_one]2016

1 January

1 February

1 March

1 April

1 May

1 June

1 July

1 August

1 September

1 October

1 November

[/threecol_one] [threecol_one_last]2017

1 January

1 February

1 March

1 April

1 May

1 July

1 August

1 October

1 November

1 January 2018

[/threecol_one_last]

 

[box]When notifying the TPR of your new staging date, you must supply the following:

  • Name of employer/business
  • PAYE scheme reference(s) that you operate
  • Original staging date and the new earlier staging date
  • Business postal address
  • Email address
  • Name of most senior accountable person at the employer (optional)
  • Companies House (or equivalent) registration number
  • Employer declaration that you have a pension scheme in place and have agreement from trustees or managers that this scheme will comply with employer duties from the staging date
  • Your name
  • Your job title
  • You contact phone number, address and email address
  • Your own written declaration of your eligibility to apply for a new staging date.[/box]

You will receive written confirmation from TPR when it has received your notification and your new staging date will take effect automatically. Your declaration should be submitted within five months of the new staging date.

How Do I Enroll My Employees Into the Workplace Pension?retirement

Once you know your staging date, you will need to know how to enroll eligible employees into the workplace pension.

It is important to work with your pension provider closely during the months leading up to your staging date, to ensure they have everything need from you in advance. Carry out a data check with all of your employees to make sure you hold all the latest information, and check with your provider how long it will take to create membership for each employee.

You will need to supply your pension provider with the following details for each employee:

  • Name
  • Address
  • Date of birth
  • National Insurance number

There may be other info you need to provide, depending on an individual’s circumstances.

Paying Into Your Scbenefit-fraud-staffordheme

If you are using your scheme for automatic enrollment, you will be required to pay in a minimum amount each month by law. Otherwise, your pension provider will inform you of its own minimum payment amount.

The minimum for automatic enrollment schemes is determined by your staging date (though you can choose to pay more if your wish). These are shown below.

[threecol_one]Staging Date

30 September 2017

1 October 2017 – 30 September 2018

1 October 2018 onwards

[/threecol_one] [threecol_one]Minimum Contribution for Employer

1%

2%

3%

[/threecol_one] [threecol_one_last]Minimum Total Contribution

2%

5%

8%

[/threecol_one_last]

To find out your minimum contribution, you can use the TPR’s Minimum Contribution Calculator tool.

[box]

Other things to consider

  • Employee contributions are deducted automatically from their salary each month. You will need to decide which part of their salary you wish to deduct the percentage of contribution from – their basic pay; bonuses; overtime? You will also need to let both your provider and payroll know of this decision, as well as the contribution rate per employee.
  • Some employees will be eligible to get a tax-free rate on their pension contributions up to a certain amount each year. Ask your provider who may be eligible for tax relief and how much.
  • Employer contributions must be paid on time each month, or you risk a fine from TPR. This date will be decided by your provider.
  • Employee contributions deducted from staff salaries must be paid no later than 22nd of each month, as determined by law. This becomes the 19th when paid by cheque.
[/box]

Keeping Records

You must keep records of all contributions made for six years. This includes:money-management-budgeting

  • Staff gross earnings
  • Contributions due and contributions paid (for both staff and employer)

You must tell your provider when there are changes to a scheme member’s earnings or entitlement, or when someone joins or opts out of the scheme (see below).

How Can My Employees Opt Out?

Your staff will have one month to opt out after being automatically enrolled. You will need to talk to your provider to find out:

  • How employees may opt out if they wish
  • Who is responsible for handling opt-outs
  • How and when you will be notified of an opt-out
  • How quickly opt-outs are processed and for contributions to be refunded.

Can New Empension-planployees Join the Scheme?

Both newly hired employees and employees who weren’t eligible for automatic enrollment will have the option to join your scheme if they wish.

Simply find out from your provider what information they will need from you.

I Already Have My Own Pension Scheme; Can I Use it for Automatic Enrollment?

Your pension or Defined Contribution scheme will need to meet two sets of criteria to used for automatic enrollment. One criteria is for continuing to use the scheme for already-enrolled members; the other is for enrolling new members.

For more details, you can use TPR’s Defined Contribution Qualifying Scheme Tool.

BudgetingPension Credit phone number

Contributing to your employees’ pension funds will inevitably be an extra cost for your business that must be budgeted for accordingly. Fortunately it will not produce any additional tax liabilities as your contributions can be offset against corporation tax and are not subject to employer National Insurance contributions.

Nevertheless, it is essential to plan early to avoid having to make unexpected cuts in crucial areas of your business. From 2015 onwards, employers will be spending an extra 3% on each of their employees on top of their salary. Other costs to consider include:

  • Opt-out rates. You should prepare as if 100% of eligible employees will be opting out of the scheme.
  • Infrastructure. Are your payroll/HR technology and software systems able to handle the increased demand? Consider an update if you are unsure.
  • Salary sacrifice. By employees agreeing to reduce their salary, both employers and staff can pay less in National Insurance contributions, thus reducing your firm’s costs.

What Information Do I Need to Give My Staff?

workplace-pensionBefore auto-enrollment, you should inform staff exactly of what is going to happen, and the choice they have ahead of them.

 

Ensure that they know:

  • The date the scheme will come into place
  • Whether or not they will be automatically enrolled, and if not, whether they would like to join the scheme
  • The minimum amount they will be expected to contribute
  • Which parts of their salary will be deducted from and which parts (if relevant) are exempt
  • Whether they are eligible for tax relief on their contributions
  • How they can opt out, and how long this can be expected to take.

The Pensions Regulator has a collection of poster and letter templates on its website that you can use in the workplace to inform your employees of the changes. It will also supply you with answers to any questions your staff might have about the scheme.

News Roundup: Community

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Bringing you the latest headlines from the community and beyond…

PM Recommends Criminal Checks for Cab Drivers following Taxi Driver Rapist Case

Prime minister David Cameron has recommended that cab firms ought to carry out criminal records bureau checks (CRB checks) before hiring potential taxi drivers, to ensure passenger safety.taxi-drivers-CRB-check

His warnings come shortly after the decision was made by Milton Keynes council  to allow a convicted rapist to become a taxi driver. Mr. Cameron commented that it was a “bad decision” on part of Milton Keynes mayor, Subhan Shafiq.

Nadeem Ahmed Kiani, 44, was convicted of rap and serious sexual offence in 1994, for which he was imprisoned for eight years.

He was then granted a taxi license in 2011 and has since been allowed to be in confined environments with potentially vulnerable people.

Despite the council looking into Mr Kiani’s criminal past, Mayor Shafiq had vouched for his “good current character and family circumstances” and describing him as “a friend”. However, it is reported that the council had looked over a document detailing how Kiani had picked up prostitutes in a vehicle and threatened them with weapons, before raping and sexually abusing them.

David Cameron condemned the council’s actions.

[quote]”Its obvious in this case that the council followed the correct procedures but then made a bad decision,”[/quote]

he said.

[quote]”When that happens, the person making that decision should bear the consequences.”[/quote]

Indeed, Mr. Shafiq stepped down from his post last week. Milton Keynes Council leader Peter Marland said that the former mayor should “examine his conscience” over whether he could even continue as a councillor.

Scottish Pensioners Promised Better Pension from Yes Campaign

pension-credit-ssScottish pensioners are being promised a more generous pension for their later years, if Scotland should become independent from the UK following the upcoming referendum.

The Yes campaign is giving Scotland’s 1.2 million pensioners a personal commitment to voting in favour of independence, as the nation struggles with the second lowest state pension in the OECD.

SNP Depute leader and Yes Board member Nicola Sturgeon said:

[quote]Scotland is one of the wealthiest countries in the world, but for too many people – including far too many of our older people – it just doesn’t feel that way.

Our pensioners have contributed largely to society and are entitled to get a fair deal in return for that. But under Westminster rule, the state pension is the second lowest in the developed world.”[/quote]

The Yes campaign is setting out an ‘independence guarantee’ which lays out the 10 reasons why pensions will be better in an independent Scotland. Among these are a proposal for a single tier pension of £160 minimum a week; the retention of savings credit which provides additional income for pensioners, and the assurance that pensions and benefits will keep pace with the cost of living.

Ms Sturgeon also added that an independent Scotland will review Westminster’s decision to raise the state pension age to 67.

Over One-Third of People Claim to Feel ‘Worse Off’ Post-Recession

A survey for the website VoucherCodes.co.uk has suggested that more than a third of people feel worse off as the UK is slowly emerging from the recession.money-management-budgeting

Of the 2000 people surveyed, around 37% said that their financial situation was not as stable or secure as before the 2008 recession kicked in, with basic costs such as utility bills, food and transport becoming common worries for families.

35% said they had changed their regular shopping habits to compensate, including moving to a cheaper store to save money. One in eight said that they had needed to take out a credit card in the last year to help them balance essential monthly costs and one in 16 (6%) even said they had turned to a bank budgeting loan.

VoucherCodes managing director Claire Davenport said:

[quote]It’s clear that the debt problem isn’t going away anytime soon, but there are lots of resources available, with advice on everything from budgeting to switching utility providers to help householders get back in the black.”[/quote]

DWP Defends its Message to Staff to Support UK Government

The Department for Work and Pensions (DWP) has been criticised for its message to staff to “support the UK government” in the run-up to the Scottish independence referendum.

Back CameraThe message was said to be overly patriotic and possibly interpreted as the DWP telling its staff in Scotland which way to vote in the vain of preserving the UK union.

According to the BBC, the memo issued to DWP staff read:

[quote]The UK government has a clear position to maintain the union and so it is legitimate and necessary for UK civil servants to support the Government in this objective.”[/quote]

Scottish First Minister Alex Salmond reacted strongly to the memo, saying it was an attempt by the DWP to tell Scottish civil servants how to vote.

The DWP defended its wording in the memo however, insisting that was only intended to inform staff of restrictions of the purdah period in the days leading up to the ballot.

[quote]Of course the department has not told its staff, or anyone else, how to vote.”[/quote]

it said.

Dave Penman, general secretary of senior servants’ union the FDA, said the memo was “factually accurate” but also “ill judged”.

[quote]It probably could have been written a lot more sensitively,”[/quote]

he said.

Redcar MP Criticises Teesside Council of Poor Management of Social Fund

MP Ian Swales has thrown criticism at Redcar and Cleveland council in Teesside, UK, for its “poor management” of the social fund designed to help residents most in need.

Control of the Discretionary Social Fund was passed from Government to local councils in 2013, meaning that help would be granted on local case basis.

However, this has led to problems in monitoring and auditing. MP Ian Swales claims that in the first year, Redcar and Teesside council managed to spend £256,000 out of a total budget of £764,700, with only 195 applications for help
being successful.

He claims there was 2100 requests for help overall.benefit-fraud-stafford

Speaking after a Westminster Hall debate, Swales said:

[quote]Last year, the allowance of £764,000 was in the hands of the Labour council which allowed a £500,000 underspend – turning down more than 90% of applications from people in need, often sending them to food banks instead.

The council is using its own set of perverse criteria to sit in judgement of people who often, through no fault of their own, find themselves in financial hardship.”[/quote]

He went on to argue that Labour councils were “playing politics with people’s lives”, pointing out that 66% of applications were approved in 2012-13 when it was in control of the DWP. Spend for this period stoof at £717,000.

In comparison, he said, only 9.3% of applications were approved by councils in 2013-14 and half of money spent went on council administration and staffing costs.