OTS taxation of savings income review
The Office of Tax Simplification (OTS) has published a report looking at the taxation of savings income. The report identifies areas that might be simplified.
“Savings income: routes to simplification” cover the taxation of:
- interest and dividend income;
- Individual Savings Accounts (ISAs);
- pension withdrawals;
- life insurance bonds;
- collective investment vehicles such as unit and investment trusts.
The report highlights areas where further work would be beneficial. These include:
- a review of the various savings rates and allowances, and the interactions between them, to identify options to streamline the income tax calculation;
- improving guidance on the taxation of savings income and pension withdrawals;
- considering whether trusts and personal representatives should be entitled to the Personal Savings Allowance;
- simplification of ISAs, including a review of the rules on withdrawals from the Lifetime ISA;
- review rules on partial redemption of life insurance bonds.
HMRC updated guidance on pension scheme member’s residency
HMRC have updated existing and published new guidance for pension scheme administrators on how to use the look up residency status for relief at source service
The “look up residency status for relief at source service” can be used by pension scheme administrators to check the residency status of members to ensure that they give them the right tax relief using relief at source.
HMRC have updated existing guidance to provide further information on how to use the look up service. They have also published new guidance on how to create a comma-separated values (CSV) file to search for the residency statuses of multiple pension scheme members.
Countdown Bulletin 34
Contracting-Out Countdown bulletin 34 has updates on:
- automation of scheme cessation files
- new automated solution change of responsible paying authority/buy out
- not in scheme Contributions Equivalent Premium
- automation file submissions
- State Scheme Premium payments
HMRC newsletter 99
HMRC have published pension schemes newsletter 99 containing updates and guidance on:
- Pension Schemes Online service - new Manage and Register Pension Schemes service available from 4 June 2018
- APSS262 form – validation error now fixed
- Event report – reportable events 22 and 23 - incorrect legislative reference on the online event report for ‘Annual Allowance Pension Savings Statement Information - Member and Aggregate Pension Input Amount Details’ – when reporting event 23, it is necessary to report the individual’s details under event 22 to get to event 23
- Genuine errors – clarification about genuine errors guidance in the Pensions Tax Manual (PTM) at PTM146000
- Relief at source for Scottish Income Tax
- Look up residency status for relief at source
The updated Genuine Errors guidance states that –
“For taxation purposes, you can apply the genuine errors guidance to the actions of an independent financial advisor (IFA) or other agent where all of the following apply:
- there’s a clear authority for the IFA or agent to act on behalf of the member
- there’s a clear instruction from the member as to what form the transaction should take
- as a result of a clerical error the form of the transaction is not what the member intended
- the error is spotted and reported to the scheme immediately
- had the error been made by the member the scheme administrator would have applied the genuine error guidance
If in these situations you’ve restored the position of the scheme member to the state it was before the error took place and then the transaction undertaken as originally intended, this would fall within the genuine errors guidance in the PTM.
You cannot apply the genuine errors guidance where:
- the member has changed their mind
- the error is more than clerical
- the IFA or agent has given advice they now regret and wish to undo the transaction”
Single Financial Guidance Body
DWP has announced that Sir Hector Sants has been appointed as chair of the Single Financial Guidance Body. He will take up the post from 3 October 2018 for a five year term.
John W. Wilson LLB(Hons) FPMI ACII, Head of Research| Email: email@example.com
Stephen Williams, Senior Research Consultant | Email: firstname.lastname@example.org