HMRC & UFPLS

mybestattempt

sgx2000 said:

af1963 said:

While those who have commented are correct that "that's how PAYE works", there's no iron law that says it has to be done that way. PAYE was created in a pre-computer age and works very effectively in allowing regular deductions from  weekly or monthly pay by each employer or pension payer, without needing to share any significant amount of personal financial information - just a tax code for each employer, and a lookup in a PAYE table that could be ( and used to always be) done manually.

It also pre-dates the ability to take irregular lump sum income from pensions, which is the way that increasing numbers of retirees will be getting their income. So it will increasingly get more and more of these calculations "wrong" in the first instance if it assumes them to be a monthly income.

If it's possible to do a reclaim process via a quick online claim, it should also be possible to integrate that process into the initial calculation and payment, if the recipient ticks a box that says "this is a one-off payment and not a new monthly income".  At some point, it'll become more cost effective to fix the system to do it right first time rather than paying to process several million regular refunds.

This was what I was trying to highlight (very, very poorly)

The cost saving to HMRC would be enormous (reduced need for refunds).....

The pensions freedoms act was 10 years ago.....
How long will it take HMRC to catch up in this digital age?

Then, perhaps either, of both of you, should advise HMRC on: 

• the precise changes required to both the relevant primary and        secondary legislation

• the changes that would be required to the RTI system

• the costs involved to implement those changes 

• the savings which would be achieved

sgx2000

mybestattempt said:

sgx2000 said:

af1963 said:

While those who have commented are correct that "that's how PAYE works", there's no iron law that says it has to be done that way. PAYE was created in a pre-computer age and works very effectively in allowing regular deductions from  weekly or monthly pay by each employer or pension payer, without needing to share any significant amount of personal financial information - just a tax code for each employer, and a lookup in a PAYE table that could be ( and used to always be) done manually.

It also pre-dates the ability to take irregular lump sum income from pensions, which is the way that increasing numbers of retirees will be getting their income. So it will increasingly get more and more of these calculations "wrong" in the first instance if it assumes them to be a monthly income.

If it's possible to do a reclaim process via a quick online claim, it should also be possible to integrate that process into the initial calculation and payment, if the recipient ticks a box that says "this is a one-off payment and not a new monthly income".  At some point, it'll become more cost effective to fix the system to do it right first time rather than paying to process several million regular refunds.

This was what I was trying to highlight (very, very poorly)

The cost saving to HMRC would be enormous (reduced need for refunds).....

The pensions freedoms act was 10 years ago.....
How long will it take HMRC to catch up in this digital age?

Then, perhaps either, of both of you, should advise HMRC on: 

• the precise changes required to both the relevant primary and        secondary legislation

• the changes that would be required to the RTI system

• the costs involved to implement those changes 

• the savings which would be achieved

Or, perhaps,  HMRC should just look at serving the British people in the most economical manner.....

dunstonh

The pensions freedoms act was 10 years ago.....
How long will it take HMRC to catch up in this digital age?

Drawdown has been available since 1995 and has been taxed the same way under PAYE since then.

sgx2000

dunstonh said:

The pensions freedoms act was 10 years ago.....
How long will it take HMRC to catch up in this digital age?

Drawdown has been available since 1995 and has been taxed the same way under PAYE since then.

Do you not agree.
There has to be a better way than taxing pensioners incorrectly, then having to refund it?

QrizB

sgx2000 said:

dunstonh said:

The pensions freedoms act was 10 years ago.....
How long will it take HMRC to catch up in this digital age?

Drawdown has been available since 1995 and has been taxed the same way under PAYE since then.

Do you not agree.
There has to be a better way than taxing pensioners incorrectly, then having to refund it?

Better for whom, exactly?

Changing the system will have costs. If previous government IT system changes are anything to go by, those costs will run into billions. Funded by taxpayers whom mostly aren't going to see any benefit.

Is that proportionate for the relatively small number of taxpayers affected?

Hoenir

sgx2000 said:

dunstonh said:

The pensions freedoms act was 10 years ago.....
How long will it take HMRC to catch up in this digital age?

Drawdown has been available since 1995 and has been taxed the same way under PAYE since then.

Do you not agree.
There has to be a better way than taxing pensioners incorrectly, then having to refund it?

They are not being taxed incorrectly though. Various scenario's result in tax being refunded at a later date. What happens these days is that every micro issue is distilled into being a problem on social media. While there's little comprehension of the much larger macro picture as to why things are done the way they are. 

Albermarle

sgx2000 said:

dunstonh said:

The pensions freedoms act was 10 years ago.....
How long will it take HMRC to catch up in this digital age?

Drawdown has been available since 1995 and has been taxed the same way under PAYE since then.

Do you not agree.
There has to be a better way than taxing pensioners incorrectly, then having to refund it?

It not specifically related to pensioners. It is anyone receiving irregular income.
I am a pensioner and receive a regular monthly payment from my DB pension, and from my state pension. My tax is spot on.

dashnine

Notepad_Phil said:

MetaPhysical said:

Sharktail said:

snarffie said:

Is it practical to take UFPLS withdrawals every month (I'm with interactive investor)?  I know there is the drawdown option too, but just wondered if monthly withdrawals are a possibility with UFPLS/ii?

Hi
Yes  UFPLS is possible to do monthly with ii that’s what I do ,withdrawal's have to be done manually every month 5-10 mins in total a few basic box ticking questions 3-5 days later the proceeds are in the bank 

Is there no way on II to make this a "recurring" payment?  I am also with II and wondered this.

I don't think so - I believe AJ Bell does allow monthly UFPLS payments, but I use ii because for me they're far cheaper and so I put up with the slight hassle of manually setting them up (though I'm happy to just do 4 UFPLS payments spread over the year rather than one every month).

I believe with AJ Bell you still have to manually sell funds so that cash is available in your cash account to be used monthly for the UFPLS payment.  Forget or become incompetent enough to do it and have enough in there - no payment.

I’ve been looking for a UFPLS provider for a while, and with will do one or some of the following, I’ve not found one that will do all of them:

1. Provide monthly UFPLS payments.
2. Setup UFPLS online without a need to resort to post or phone communication.
2. Sell funds automatically either from one fund or all funds to make the cash available.

Doesn’t seem like rocket science but I’ve checked Aviva, Vanguard, Aegon, HL, Pensionbee and none can do all of them!

Unless someone knows differently…

Albermarle

dashnine said:

Notepad_Phil said:

MetaPhysical said:

Sharktail said:

snarffie said:

Is it practical to take UFPLS withdrawals every month (I'm with interactive investor)?  I know there is the drawdown option too, but just wondered if monthly withdrawals are a possibility with UFPLS/ii?

Hi
Yes  UFPLS is possible to do monthly with ii that’s what I do ,withdrawal's have to be done manually every month 5-10 mins in total a few basic box ticking questions 3-5 days later the proceeds are in the bank 

Is there no way on II to make this a "recurring" payment?  I am also with II and wondered this.

I don't think so - I believe AJ Bell does allow monthly UFPLS payments, but I use ii because for me they're far cheaper and so I put up with the slight hassle of manually setting them up (though I'm happy to just do 4 UFPLS payments spread over the year rather than one every month).

I believe with AJ Bell you still have to manually sell funds so that cash is available in your cash account to be used monthly for the UFPLS payment.  Forget or become incompetent enough to do it and have enough in there - no payment.

I’ve been looking for a UFPLS provider for a while, and with will do one or some of the following, I’ve not found one that will do all of them:

1. Provide monthly UFPLS payments.
2. Setup UFPLS online without a need to resort to post or phone communication.
2. Sell funds automatically either from one fund or all funds to make the cash available.

Doesn’t seem like rocket science but I’ve checked Aviva, Vanguard, Aegon, HL, Pensionbee and none can do all of them!

Unless someone knows differently…

If you had a financial advisor, some (all?) of the platforms they work with offer these facilities AFAIK.
The platforms are more relaxed when dealing with advisors because the responsibility for any client complaints ( I did not really understand what I was doing etc ) is on the advisor.
When dealing with the public, platforms have to be careful and follow certain procedures, warnings etc.

grumpsthegit

I seem to recall advice from others on the forum being that if you can take your UFPLS payment in the last month of the tax year - so early march you do not have this “problem”