We’re currently seeing an abundance of consultations and calls for evidence (CfEs) impacting payroll in the U.K. There’s been a recent flurry of publications released by the government over the past few months. These have either followed from Tax and Administration Maintenance Day (TAMD) or Legislation Day (L-day).
TAMD was held on 27 April 2023, which is now a regular fiscal event. The day sees a flood of announcements regarding government policy proposals. Similarly, the government uses L-day to publish draft clauses and tax legislation from the next Finance Bill for stakeholders to comment on, potentially shaping the direction of future legislation.
L-day 2023 took place on 18 July 2023, and the draft legislation published largely followed from policies announced at the spring budget 2023 and TAMD. The government is also making announcements in a small number of technical tax policy areas and publishing several consultation responses.
Explaining Consultations, CfEs
So, what are consultations and calls for evidence?
Consultations seek valuable information and views which the government uses to design effective solutions to recognised problems. This helps the government to make more informed decisions on matters of policy, while improving the delivery and the accountability of public bodies and services. Consultations take place where there’s scope to influence the policy outcome and are usually run once a policy has been drafted. Consultation responses are analysed carefully, and clear feedback is provided to participants following the closure of that consultation.
CfEs gather information, testimonies, and expertise from individuals and organisations with firsthand experience or knowledge of a particular issue. This is often then used to inform a consultation with a more specific, tailored idea of what a new policy or policy change would look like.
Aside from terminology and technicality, both are usually used to gain insight or information on a particular area or topic in an industry, while also providing the opportunity for interested parties to provide feedback.
Consultations and CfEs can be published by the government and professional bodies, including, but not limited to the following:
- The Department for Business and Trade (DBT)—As the department for economic growth, DBT supports businesses to invest, grow, and export, creating jobs and opportunities across the country
- The Department for Work and Pensions (DWP)—Is responsible for welfare, pensions, and child maintenance policy, and as the U.K.’s biggest public service department, it administers the state pension and a range of working age, disability, and ill health benefits to around 20 million claimants and customers
- The Department of Health and Social Care (DHSC)—Supports ministers in leading the nation’s health and social care to help people live more independent, healthier lives, for longer
- HM Revenue and Customs (HMRC)—The UK’s tax, payments, and customs authority, with a vital purpose to collect the money which pays for the U.K.’s public services
- HM Treasury (HMT)—The government’s economic and finance ministry, maintaining control over public spending, setting the direction of the U.K.’s economic policy, and working to achieve strong and sustainable economic growth
- The Low Pay Commission (LPC)—Is an independent body which advises the government about the national living wage and the national minimum wage (NMW)
Quick Digest
Let’s take a closer look at some of the recently released consultations which could impact the payroll community:
- CfE: Non-statutory flexible working: This seeks views from individuals and businesses on their experiences of non-statutory flexible working, including how it operates in practice. Responses received will help to develop the government’s evidence base on non-statutory flexible working and inform the flexible working strategy moving forward.
- CfE: Labour market enforcement strategy 2024 to 2025: This seeks evidence and views covering emerging trends and risks to the labour market. This call for evidence happens periodically and informs the focus of future enforcement strategy and ways to prevent or discourage noncompliance.
- Helping savers understand their pension choices: Supporting individuals at the point of access—this is a consultation on a policy framework for supporting individuals on how to use their private pension savings at the point of access.
- Ending the proliferation of deferred small pension pots: This consultation sets out proposals to resolve the small pots issue. A small pot is a pension plan worth £10,000 or less. Although automatic enrolment has been a breakthrough success, giving employees easy access to workplace pensions, an issue can arise if someone changes jobs frequently. These pots can remain lost or inactive and their value can be eroded by various administrative charges or fees imposed by the pension providers. This can become a continuous cycle if someone changes jobs repeatedly and eventually, several small pots will form and become dormant if the worker loses track. The proliferation of small pots means there’s undue cost and inefficiency in the pension system that disincentivises member engagement. The consultation explores the government’s preferred options for a system of consolidating and tracking these pots.
- CfE: Pension trustee skills, capability, and culture aims to deepen the evidence base around trustee capability and explore other barriers to trustees doing their job in the most effective way, to deliver the best outcomes for savers.
- CfE: Options for defined benefit schemes aims to support the development of innovative policy options to increase protection for defined benefit members while supporting wider economic initiatives.
- Occupational health-working better is a consultation seeking views on proposals aimed at increasing employer use of occupational health (OH) services. Tackling economic inactivity due to long-term sickness is a top priority for the government. The government intends to seek views on establishing an agreement and partnership between government, employers, and OH providers to help drive an ambitious increase in OH coverage.
- Joint HMT-HMRC consultation on tax incentives for occupational health: This consultation is aimed at employers and explores the role of tax incentives in boosting OH provision by employers.
So, what impact do these publications have on payroll professionals and businesses? Employers and payroll professionals can respond to them directly and voice their opinions to the government to potentially help shape future policies.
Responses Submitted by the CIPP
The Chartered Institute of Payroll Professionals (CIPP) has been responding to many of these consultations. We ensure our members, and the wider community, are informed of this, and that they have a platform to provide input.
So far this year, the following consultations have been submitted by the CIPP’s policy team, and many more will be added to the list:
- The tax administration framework review
- Retained EU employment law reforms
- Off payroll working
- Tougher consequences for promoters of tax avoidance
- LPC NMW 2024 consultation
- Simplifying and modernising HMRC's income tax services through the tax administration framework
CIPP members can access all formal submitted responses via the CIPP website, under the "Policy Hub."
*Author’s Note: Please note that all information provided was correct at the time of writing but is subject to change.