Coronavirus pauses the government’s review of the net pay anomaly

03 July 2020

At Budget 2020, it was announced that a call for evidence would be published in relation to the issue surrounding pensions tax relief administration, as per the pledge in the Conservative manifesto to review the problem.

Unfortunately, coronavirus has meant that the publication of the government’s call for evidence has been delayed.

As reported by The Financial Adviser, Economic secretary to the Treasury, John Glen, confirmed that COVID-19 had affected the publication date of the call for evidence, and explained that the government will provide further detail “in due course”. He said:

 “At Budget 2020 the government announced a call for evidence will be published on pensions tax relief administration, in line with our manifesto commitment to comprehensively review this issue. 

In the light of Covid-19, the government is considering the publication of this and other government documents on a case by case basis, taking into account the impact of Covid-19 on stakeholders.”

The net pay anomaly unfortunately means that lower earners aren’t receiving the 20% boost on their pension contributions that they would receive if the pension scheme they saved into was operated on a relief-at source basis. It appears that only a small amount of companies use relief-at-source pension schemes, and the majority of businesses actually use net pay arrangement schemes, so the problem is a widespread one.

In the manifesto for the 2019 general election, the Conservative Party promised to fix this problem, and at Budget the government reiterated that it was “committed to reviewing options for addressing these differences.”

We await further details of when the call for evidence is due to be published and will advise members via News Online once this happens.

The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.