The Chartered Institute of Payroll Professionals (CIPP) has responded to today’s Budget, backing a new opt-in route for paying self assessment tax through PAYE and a more measured increase to the minimum wage for younger workers.
Mathew Akrigg, Policy and Research Leader at the CIPP, shared the institute’s view on both announcements.
National Minimum Wage
“While a raise in national minimum wage is normal for every tax year, over the last few years the government has been preparing for the abolition of the 18-20 age band.
“Previous year’s increases have seen large jumps for the lower band to close the gap to the National Living Wage before the rate is removed. However, this year, the rate has seen the same percentage increase as the higher band (3.9%), likely a response to employer feedback about the employability and economic impacts of employing younger, less experienced workers.
“While the CIPP and many employers agree that younger workers should be paid the same for comparable work, careful consideration of the rate of change is welcome to ease pressures on youth employment opportunities, as forms part of the Low Pay Commission’s remit.”
Self assessment payments through PAYE
“The CIPP welcomes the decision to give taxpayers the choice of using PAYE to make more regular payments towards their self-assessment liabilities. We are pleased that the Government has recognised concerns raised by the CIPP in our consultation response and adopted an opt-in approach. PAYE can be an effective mechanism for some taxpayers to spread their tax liabilities, but it should not be assumed that it is the right solution for everyone. Giving taxpayers control over whether they use PAYE for Self Assessment payments is a sensible and pragmatic outcome.
“We support measures that will help taxpayers manage their liabilities more effectively and reduce the risk of falling into tax debt. However, we have consistently highlighted the operational challenges that can arise when PAYE is used to collect liabilities that do not directly relate to employment income. An opt-in model helps address some of these concerns by ensuring taxpayers make an informed choice about whether the arrangement is suitable for them, while reducing confusion, unexpected deductions and additional pressure on employers and payroll teams.
“As these reforms are developed, it will be important that HMRC provides clear guidance, maintains robust safeguards with the PAYE system and ensures any new processes are straightforward to administer in practice.
“Our ongoing commitment is to ensure that policy developments remain practical, proportionate and workable for pay professionals, employers and taxpayers. We look forward to continuing to work with HMRC as they develop the full policy details ahead of implementation.”
About the CIPP
The Chartered Institute of Payroll Professionals is the professional body for payroll, pensions and reward professionals in the UK.
