Wed, 31 Oct 2007

MP's concern on pensions PAYE

At the 10 October Public Accounts Committee meeting, Richard Bacon MP picked up on the ending of the effective no-tax regime for small pensions, which are to be brought into the PAYE scheme from 2007/08. In total, around 420,000 pensions are affected.

He said to the HMRC officials: ‘What the Low Income Tax Reform Group is concerned about is ... people who do not yet know that they have a liability and who will not find out that they have a liability until 2008/09 or even 2009/10.’

He suggested writing to pensioners, via the pension providers, to give individuals advance warning of the liability.
HMRC chairman Paul Gray said that the department had considered the matter, but felt that complete coverage was not realistic.

His colleague Michael Shipp told the committee: ‘There is little we could do to force the pension providers to give us that data.’

But PAYE campaigner Matt Boyle said that HMRC receives this data from payroll professionals but loses it: ‘HMRC would have received details of the pensions paid via Forms P14 but these would have been put in the Residual File – the file where Forms P14 are placed when they cannot be traced to an individual.’