Claire Court comments on the use of technology in relation to the FCA’s latest call for increased due diligence;
Delta Financial Systems (‘Delta’), the leading pensions and retirement administration technology provider, have summarised the main points from the Autumn Statement. We have summarised below where we feel that it will impact our solutions, clients and the pensions industry as a whole.
The main Autumn Statement document is available here should you wish to read it.
The highlights are as follows:
- Money Purchase Annual Allowance. The plan is to reduce this to £4,000 with effect from 6 April 2017. This is subject to a consultation period and the document is here. The closing date of the consultation period is 15 February 2017. Whilst this change is subject to consultation, it is unlikely that it will not be introduced. This should not require any system changes as it a value in System Parameters.
- This is the last Autumn Statement. Going forward there will be an Autumn Budget which will be the main event in terms of setting major changes that would apply for the forthcoming tax year. This means that the first Autumn Budget will happen in November 2017. In addition there will be a Spring Statement, the first of which will happen in Spring 2018. As there is a requirement for a fiscal statement to be published twice a year there will still be some form of Statement or Budget in March 2017. However this does mean that the more important event in terms of announcements of changes for us going forward will be at this time each year rather than in March.
- Personal Allowances
The thresholds for April 2017 will be:
Personal Allowance £11,500
Higher Rate Allowance £45,000
These are already known and are controlled in System Parameters.
The ISA limit is increasing from £15,240 to £20,000 in April 2017.
There are a few things that don’t directly impact on Delta but are related to what we do. These are:
- Pension scams – The government will shortly publish a consultation on options to tackle pension scams, including banning cold calling in relation to pensions, giving firms greater powers to block suspicious transfers and making it harder for scammers to abuse ‘small self-administered schemes’. We don’t believe there to be any immediate changes to this, however this will be reviewed when the consultation paper becomes available, the consultation paper isn’t yet available and there is no anticipated date so we will keep an eye on this.
- Salary sacrifice – the tax advantages of salary sacrifice arrangements have been removed with the exception of a few areas. One of these areas is in relation to pensions so these arrangements will continue unchanged. Our technology allows users to record where contributions are paid as part of a salary sacrifice arrangement – this will continue unchanged.
- Foreign pensions – The tax treatment of foreign pensions will be more closely aligned with the UK’s domestic pension tax regime by bringing foreign pensions and lump sums fully into tax for UK residents, to the same extent as domestic ones. The government will also close specialist pension schemes for those employed abroad (“section 615” schemes) to new saving, extend from 5 to 10 years the taxing rights over recently emigrated non-UK residents’ foreign lump sum payments from funds that have had UK tax relief, align the tax treatment of funds transferred between registered pension schemes, and update the eligibility criteria for foreign schemes to qualify as overseas pensions schemes for tax purposes.
- Authorised investment funds: dividend distributions to corporate investors – The government will modernise the rules on the taxation of dividend distributions to corporate investors in a way which allows exempt investors, such as pension funds, to obtain credit for tax paid by authorised investment funds and will publish proposals in draft secondary legislation in early 2017. Again, currently there are no more details than this. In most cases pension funds cannot reclaim tax on dividends but there are a few exceptions. We currently allow users to record where tax is reclaimable and it is anticipate this will remain unchanged.
So, subject to the action point above, I believe there are no system changes required which is great news for us. The next 12 months is an exciting time for Delta as we develop Platinum~Pro further, watch out for more updates to see what will be delivered over the coming months.