Income Tax Ready Reckoner Ay 2022-23 Pdf Free Download
Yvone Wernett
The ready reckoner is designed to help staff understand the benefits they are building up in the scheme and their annual allowance liability. We have produced a checklist for employers and a checklist for staff to use alongside the tool.
The ready reckoner will provide members of the NHS Pension Scheme with a broad insight into their AA position, including whether or not the tapered AA may apply to their circumstances. It will also provide an estimated breakdown of the total annual cost of scheme membership and estimate how much their NHS pension is projected to increase by. The ready reckoner looks at the 2023/24 tax year only.
After completing the ready reckoner, staff can download and save a summary of their results, which can be used to discuss potential annual allowance problems with their employer or financial advisor, if required.
Members of staff - before accessing the ready reckoner please read the staff checklist on this page below. This informs you of the important pieces of information you will need to have to hand when using the ready reckoner.
For 1995 pensionable pay, this is your whole-time equivalent pensionable pay as stated in your 31 March 2023 TRS (do not enter your actual 'part-time' pensionable pay).
For 2008 reckonable pay, we recommend entering your reckonable pay as stated in your 31 March 2023 TRS as the ready reckoner does not allow for any three-year averaging. Reckonable pay is determined using whole-time equivalent pensionable pay figures (do not enter your actual 'part-time' pensionable pay.)
This is needed to estimate your pension at 31/03/2023 and your pension growth over the 2023/24 tax year.
We will assume that this figure determines any 1995/2008 pension that you have built up to 31 March 2023. As highlighted above, if you have 2008 Section membership we recommend that you enter your 2021/22 reckonable pay as the Ready Reckoner does not allow for any three-year averaging.
Estimated figures from the ready reckoner do not replace and are not expected to match the actual figures from NHS Pensions. Also, the ready reckoner cannot replace what a tax accountant or an independent financial advisor can do. If you are at all uncertain about what to do next, then you should consider seeking professional guidance.
A green or amber rating does not necessarily mean that your pension growth will be under the annual allowance in practice as the outcome depends on your data inputs and there are several limitations as stated throughout the ready reckoner.
The ready reckoner presents staff with a traffic light system to assess the potential risk of breaching their annual allowance. The purpose of the traffic light system is to highlight when an employee can have relative comfort in their position or when they really ought to be seeking independent financial advice. If the employee is projected to be running a risk, then the ready reckoner will trigger either an amber or red signal. However, it will often be the case that the scheme still provides good value for the cost of membership.
You should engage with staff who are likely to be affected by pension tax issues, provide information on the local options for affected staff that are available and encourage them to use the ready reckoner.
It is vital that staff are aware of the limitations of the ready reckoner. If not, they could end up taking actions or reaching incorrect conclusions that might adversely affect them.
The information provided on the ready reckoner should only be relied on as a guide to what steps staff could consider taking next and not as a definitive statement about their tax position. It is vital that staff seek advice from a tax accountant or an independent financial advisor if they are uncertain about what to do next. The calculations of pensions, pension growth and annual allowance are not simple and vary hugely from one individual to the next. For the purposes of simplification, the ready reckoner makes some assumptions and approximations. The main assumptions and approximations are listed on a summary page, which is generated for the user once all the required data has been inputted. Employers should encourage staff to read the assumptions and approximations carefully to understand how their personal situation could differ to that presented by the ready reckoner.
The ready reckoner can be accessed by anyone and we encourage employers to become familiar with the ready reckoner so that you can support staff and answer any questions. If a member of staff is concerned that they may breach the annual allowance, we recommend employers direct them to the ready reckoner to estimate their position with regard to the annual allowance. Staff will be able to use the ready reckoner on their desktop, laptop and on their smartphone or tablet.
Staff will not be required to log in to the ready reckoner. We recommend they save the individual summary report for future reference. It is possible to go back to the data input sections to amend data/inputs.
The ready reckoner is user-friendly and presents for staff what they need to know in simple terms, providing guidance and support throughout. Staff will see a series of prompts for entering data into the input sections and will be presented with a series of outputs, including the estimated net cost of scheme membership, annual pension projected to build up in the financial year and their estimated pension input amount.
A green or amber rating does not necessarily mean that pension growth will be under the annual allowance in practice as the outcome depends on individuals data inputs and there are several limitations as stated throughout the ready reckoner.
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You can mitigate the risk, as well, because the block grant adjustment approach allows for those kinds of risks to be mitigated. We mitigate currently through the fiscal agreement already in place in terms of the budgetary risks that arise from the different distribution of taxpayers that we have in Wales, and that block grant adjustment mitigation policy could be adjusted further to provide mitigation in the way that the Northern Ireland Fiscal Commission has suggested if income tax bands are also devolved there.
We can look to the example of Euskadi, the Basque Country, too, whose devolved Government has extensive powers over personal income taxation, corporate taxation and its own wealth and inheritance and gift tax. This has engendered economic growth in the Basque Country, which has been described as highly inclusive by the Foreign Policy Centre. The region features among the top in Europe, not only in terms of GDP per capita, but crucially, given the current economic context, also in having a low percentage of population at risk of poverty or social exclusion. So, what we're proposing here isn't particularly radical, therefore; rather, it seeks to normalise what is already happening, and happening well elsewhere.
And, of course, we've got that long, porous border with England, and that creates the risk of outward migration for those more mobile taxpayers. And we had some questions yesterday in terms of how we consider that. So, just to reassure colleagues, that is already built into our ready reckoner, which estimates that a 1p increase in the additional rate actually generates a mechanical rate of 7 million, but an actual estimate of only 3 million, due to what we would expect the behavioural impact to be. And I mentioned yesterday that that was relating to the Swiss study, which is seen as the closest proxy that we have.
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