The system uses the Start Date field (payment start date), on the JU4DC Payment Details screen to calculate tax. There are 6 scenarios where the payment start date has an influence in determining the tax period, therefore affecting the way in which tax is calculated:
- A new annuitant payment record is loaded for the first time (on an existing scheme):
- The tax YTD will start on the payment start date even if the effective date of the annuity is later.
- A spouse / dependant is loaded for the first time (on an existing scheme), as a result of the main annuitant dying:
- The payment start date must be when the spouse / dependant starts getting paid. It cannot be when the original member started.
- If the member’s start date is used, the tax YTD will start on 01 March of that tax year (or later if the member started later), and the person will receive less than a year’s pension in a tax year, which reduces the member’s marginal annualized taxable income.
- Migration of a scheme from one system to another during a tax year (i.e. where the Administrator of the scheme remains the same before and after the migration):
- The original payment start date must be used, because YTD records and bulk journal loads will be processed to record the YTD figures, so that calculations and tax certificates can be done as if the cases were on the system from the start of the tax year (or from when the person started, if the person started later than the beginning of the tax year).
- Take-over of a scheme by an Administrator (from another Administrator) during the tax year:
- The payment start date must be when the person starts getting paid on the system, not when the person originally retired.
- The previous Administrator will issue tax certificates for their part of the tax year and the system will do tax calculations and certificates for its part of the tax year only.
- Reinstating a suspended annuitant who was last paid in a previous tax year:
- Tax calculations and certificates will be for the full year and will include annual amounts in respect of the previous year’s income.
- Reinstating a suspended annuitant who was last paid during the current tax year:
- Tax calculations and certificates will be for the full year or for from the date when the annuity started, if the start date is later than 01 March of that year.
For more details on Annuity Tax Calculations refer to Payment Details under
Processes
Regular Payments
Annuity Payments
Pensioner Update