Developments in Employee Benefits law and practice

01 April 2019

Tax Rates and Allowances 2019/20

Personal allowance and higher rate threshold

The personal allowance for England and Wales increases on 6 April 2019 to £12,500 from £11,850. The threshold for paying the higher rate of income tax (which is 40%) will increase to £50,000 from £46,350.

Income tax rates

UK and Northern Ireland

Rate

%

Range

Basic

20%

£1 - £37,500

Higher

40%

£37,501 - £150,000

Additional

45%

Over £150,000

Scotland – Scottish rate of income tax

Rate

%

Range

Starter

19%

£1 - £2,049

Basic

20%

£2,050 - £12,444

Intermediate

21%

£12,445 - £30,930

Higher

41%

£30,931 - £150,000

Top

46%

Over £150,000

GMP equalisation working group

According to HMRC’s latest Pensions Newsletter, he government is forming a working group to consider the pensions tax issues arising from last year’s Lloyds Bank ruling on addressing inequalities arising from Guaranteed Minimum Pensions (GMPs).

The Newsletter says –
A working group is being formed to consider the pension tax issues arising as result of GMP equalisation. The group, which will be chaired by HMRC and include selected industry representatives, will work alongside other industry groups who are looking to address the wider issues arising from the equalisation of GMP. The first meeting of the group will take place in April 2019. We’ll continue to provide further updates and information in future pension schemes newslettters.

Illiquids could new frontier says PPI

The Pensions Policy Institute (PPI) has published a report entitled DC scheme investment in illiquid and alternative assets, which looks at the potential challenges of investing in these assets and discusses how they may be overcome.

The report, sponsored by Blackrock, sets out the potential challenges and discusses how they may be overcome.

MPs call for action on executive pay

In a new report, the Business, Energy and Industrial Strategy (BEIS) committee says that “A tougher, more proactive regulator is needed because we do not have confidence in remuneration committees, or institutional investors in exercising their stewardship functions, in a way that consistently bears down on executive pay”.

EIOPA: IORP II report

EIOPA has published a second report on IORP II, covering guidance on information to be provided to prospective and current members. It analyses national practices existing prior to the implementation of the IORP II Directive on the activities and supervision of institutions for IORPs, particularly documents for obligatory disclosure to prospective members and members in the pre-retirement and pay-out phase.

Pensions and long-term savings trials for self-employed people

This new report outlines plans for research and trials to help build evidence to find ways to help self-employed people save for retirement.

Pensioners’ incomes series: financial year 2017 to 2018

The latest pensioners’ income series research provides estimates and interpretation of trends in the level and sources of pensioners’ incomes for financial years 1994/95 to 2017/18.

Family Resources Survey confirms impact of auto-enrolment

The introduction of automatic enrolment in October 2012 means that employees aged 22 to State Pension age, earning above the earnings threshold, are automatically enrolled into qualifying pension schemes on a staged basis up to February 2018.

Pension participation for employees has continued to increase substantially following this introduction, from 49 per cent in 2012/13 to 71 per cent in 2017/18.

The participation rate for self-employed people, who are not eligible for automatic enrolment, fell from 19 per cent in 2012/13 to 16 per cent in 2014/15, but has remained fairly steady since.

Overall, pension scheme participation rates were very similar for men and women in 2017/18.

Fifty-one per cent of all working-age men were contributing to a pension compared to 47 per cent of working-age women.

Participation rates in employer-sponsored schemes were slighter higher for working-age men (47 per cent) than for women (45 per cent).

Participation in individual pension schemes (personal pensions, including stakeholder pensions) was lower for working-age women (four per cent) compared with working-age men (seven per cent).

Brexit update

  • Part of the Government’s Brexit plan – the Withdrawal Agreement – was defeated in Parliament, 344 to 286.

  • Separately, earlier in the week, MPs held a series of non-binding ‘indicative votes’ on their preferred Brexit option going forward. No single option gained majority, with a second referendum and customs union gaining most support.

The Prime Minister had pledged to step down ahead of the next phase of the negotiations if Parliament accepted her deal.

Legislative developments

Taxes (Amendments) (EU Exit) Regulations 2019
These regulations, SI 2019/689, are made in exercise of legislative powers under the Finance Act 2019 in preparation for Brexit. They amend UK primary and subordinate legislation relating to taxes to make changes to keep tax law working in the same way as it does now if the UK leaves the EU. These Regulations are intended to apply in the event that no deal is reached on the UK’s withdrawal from the EU. These Regulations amend references to the EU, the European Economic Area (EEA) and related concepts, such as Member State.

European Union (Withdrawal) Act 2018 (Exit Day) (Amendment) Regulations 2019
These regulations, SI 2019/718, are made in exercise of legislative powers under the European Union (Withdrawal) Act 2018 in preparation for Brexit. They amend the definition of ‘exit day’ in section 20(1) of the 2018 Act from 29 March 2019 at 11pm to 22 May 2019 at 11pm, if the negotiated Withdrawal Agreement has been approved by the House of Commons by 11pm on 29 March 2019, or to 12 April 2019 at 11pm if the negotiated withdrawal agreement has not been approved by the House of Commons by 11pm on 29 March 2019 and consequently amends section 20(2) of the 2018 Act. Amending the definition of exit day will ensure the correct functioning of the domestic statute book and avoid a discrepancy between UK law and EU law on 29 March 2019 at 11pm.

Contact:

John W. Wilson LLB(Hons) FPMI ACII, Head of Research| Email: john_wilson@jltgroup.com