Author: Glenn

The Department for Work and Pensions has published an outline of the new Pensions Scheme Bill. There are three main objectives that the government want to achieve, and they are set out below. However, the process of consultation and redrafting that will no doubt be required will probably delay the parliamentary process for some time.

The three objectives outlined by the Minister for Pensions are:

“First, the Bill will enable the consolidation of multiple small pots, helping bring individuals eligible pots together in one place. This will support people to keep track of their savings so they can live better and more comfortably in retirement, but it will also mean that consolidators will generate scale at a greater rate, improving opportunity for investment.

“Second, the Bill will introduce a Value for Money Framework for defined contribution schemes, which you’ve already mentioned, to drive consolidation of the sector. We want to see fewer, larger providers who have the scale and expertise to invest in a more diverse portfolio. The Value for Money Framework will also contribute to economic growth, as there will be an increased focus on assets that can deliver long term value.

“Third, the Bill will introduce a requirement for pension schemes to offer retirement products, including a default retirement solution. It is crucial that we improve the options for people when they reach retirement age, and many have said to me that people feel as if they’re left on their own at that crucial time that they retire. But we need to go further, and in July, the Chancellor asked me to lead the first phase of the Pensions Review. I would like to thank all of you in this room who contributed to our Call for Evidence, especially given the short timeframe of our consultation.”

While there have been no specific announcements regarding changes to Business Asset Disposal Relief (BADR), the Chancellor may consider modifying this relief in the upcoming Budget. If you are contemplating selling your business soon, we can assist you in evaluating your options.

BADR currently applies to the sale of a business, shares in a trading company, or an individual's interest in a trading partnership. When this relief is available, a Capital Gains Tax (CGT) rate of 10% applies instead of the standard rate, potentially resulting in significant CGT savings for those looking to exit their business.

To qualify for this relief, several conditions must be met. Currently, individuals can claim a total of £1 million in BADR over their lifetime. This £1 million lifetime limit allows for multiple claims for the relief. Additionally, the lifetime limit may be increased if assets were sold before 11 March 2020.

There are special VAT reverse charge rules in place for certain building contractors and sub-contractors. These regulations, which came into effect on 1 March 2021, make the supply of most construction services between construction or building businesses subject to the domestic reverse charge. The reverse charge only applies to supplies of specified construction services provided to other businesses within the construction sector.

If you are VAT registered in the UK and supply services to the building and construction industry, you must use the VAT reverse charge if the following conditions are met:

• Your customer is registered for VAT in the UK.
• Payment for the supply is reported under the Construction Industry Scheme (CIS).
• The services you provide are standard or reduced-rated for VAT.
• You are not an employment business supplying staff or workers, or both.
• Your customer has not provided written confirmation that they are an end user or intermediary supplier.

When these rules apply, sub-contractors do not add VAT to their supplies for most building customers. Instead, contractors are responsible for paying the deemed output VAT on behalf of their registered sub-subcontractor suppliers. And note, contractors can then reclaim the same amount of VAT as input tax on their VAT return, subject to the usual rules. In effect, contractors are paying their subcontractors' VAT to HMRC and then claiming it back on the same VAT return.

It is important for businesses to understand and comply with these rules in order to avoid potential penalties from HMRC.

The GOV.UK ID Check app is used to allow applicants to verify their identify when they sign in to a government service with GOV.UK One Login. Once this had been completed satisfactorily, your identity information is automatically saved to your GOV.UK One Login. This means you will not need to prove your identity next time a service needs to check who you are.

The app is available on both iPhone and Android platforms and will check that:

• your photo ID is real
• you are a real person
• you are the same person as in your photo ID

You also need one of the following types of photo ID:

• UK photocard driving licence
• UK passport
• non-UK passport with a biometric chip
• UK biometric residence permit (BRP)
• UK biometric residence card (also called a BRC)
• UK Frontier Worker permit (FWP)

If you are unable to prove your identity using the app there are also options to answer security questions online about things like your mobile phone contract, and any bank accounts, credit cards, loans or mortgages you may have. There is also a further option of using a Post Office that offers ‘in branch verification’.

New regulations that prohibit employers from withholding tips for employees in the hospitality, leisure, and services sectors took effect on 1 October 2024. This change follows the enactment of The Employment (Allocation of Tips) Act 2023, commonly referred to as the Tipping Act, along with the statutory Code of Practice on the fair and transparent distribution of tips, which also took effect on 1 October 2024.

This means that more than 2 million workers will have their tips protected. HMRC has estimated that this new law will mean an estimated £200 million a year will go back into the pockets of hard-working staff by retaining tips that would have otherwise been deducted. These new measures apply in England, Scotland and Wales. Employment policy is devolved to Northern Ireland.

Employers who violate these rules could face fines or be required to compensate their staff. Workers will have the ability to hold their employers fully accountable through employment tribunals.

The statutory Code of Practice provides businesses with advice on how tips should be distributed among staff. The Code of Practice is statutory and has legal effect, meaning it can be introduced as evidence in an employment tribunal.