July News 2013

Non statutory expenses

HMRC have introduced an optional system of ‘simpler income tax for smaller businesses’ which takes effect from April 2013 for smaller unincorporated businesses. As a consequence of this change, HMRC are withdrawing some non-statutory ‘business mileage’ deductions and existing agreements for ‘board and lodging’ private use adjustments as these have been superseded by the ‘simplified expenses’ rules.

HMRC have issued guidance in the form of a Tax Brief which sets out:

• transitional arrangements for the withdrawal of ‘board and lodging’ agreements.
• how businesses can use the ‘simplified expenses’ rules for business mileage, ‘board and lodging’ private use adjustments and flat rate adjustment for use of home.

Please do get in touch if this is something which would be of interest to you and your business so we can bear it in mind when completing your business accounts.

Internet link: Tax Brief

 

Gift Aid Small Donations Scheme

HMRC have published detailed guidance for charities and community amateur sports clubs (CASCs) on the new Gift Aid Small Donations Scheme (GASDS). Eligible charities and CASCs can claim payments from HMRC on small cash donations of £20 or less that they receive from 6 April 2013.

If you would like any advice in this area please do get in touch.

Internet link: Guidance

Government publishes ‘Supporting automatic enrolment’

Under Pensions Auto Enrolment employers will have to automatically enrol eligible workers in a qualifying pension scheme and make pension contributions for those employees. The Auto Enrolment process is being rolled out in stages and the contributions will be increased over time to broadly 8%.

The government backed pensions option is the National Employment Savings Trust (NEST) which has received some criticism. To establish the level of concern, the Department of Work and Pensions sought views and evidence on whether the annual contribution limit and transfers restriction would impact many employers and employees. The government has now published the response to consultation.

Steve Webb Minister for Pensions said:

‘With over 250,000 members already, it is clear that NEST is a success. Targeting low to moderate earners that the market has traditionally forgotten, NEST has innovated with its use of language and investment strategy and has ensured that everyone has access to quality pension provision. That is why I am not making any changes until 2017, when automatic enrolment is fully rolled-out. At this point I will lift the contribution limit so that NEST remains a force for good in the marketplace, driving up standards and best practice.’

‘The position on bulk transfers is much the same. As huge numbers of employers gear-up to start to enrol their workers, we need NEST to focus on getting these people in to pension saving. Once this is achieved and the market is established, the restrictions on bulk transfers will be lifted.’

If you would like further advice on Pensions Auto Enrolment please do get in touch.

Internet link: Press release

Single Compliance Process

HMRC have been trialling a new approach to enquiries, known as the Single Compliance Process (SCP).

Following feedback from the trial HMRC have now agreed that the opening letter, which advises the taxpayer that they are to be subject to the SCP, will give the taxpayer seven days to tell HMRC if they wish to deal directly with the matter themselves. If the taxpayer does not reply, HMRC will contact the taxpayer’s agent within 14 days to progress the case. If contact or progress cannot be made, then HMRC will go back to the taxpayer.

If you receive a letter advising that you are to be subject to a SCP then do please get in touch so we can deal with this matter on your behalf.

Internet link: HMRC news

 

Tax return amnesty

HMRC have launched a tax return ‘amnesty’ for those individuals who have been issued with a self assessment tax return or notice to complete a tax return for any year up to 2011/12 and have not completed the return(s).

HMRC are offering ‘the best terms available’ to those who come forward now and take part in the ‘My Tax Return Catch Up’.

For those wishing to take part in ‘My Tax Return Catch Up’ there are three stages to the process:

• advise HMRC that they want to join the campaign by completing the online notification
• complete and submit all outstanding returns and
• pay outstanding liabilities or claim any repayment that might be due.

Once a taxpayer has notified HMRC that they wish to take part in this campaign, they will need to complete and submit their outstanding tax returns and generally pay any amounts due by 15 October 2013.

HMRC have advised that

• they will look at spreading the payments where the taxpayer is unable to pay the liability in full and
• by taking part in the campaign a taxpayer will increase their chances of paying reduced behavioural based penalties.

If you have any concern in this area please do get in touch.

Internet link: HMRC campaign

Employee share ownership

The Department for Business, Innovation and Skills (BIS) has published some useful guidance on employee share ownership following the Nuttall review.
The documentation includes some company model documentation together with guidance for employees on taxation matters.

Internet link: HMRC website

Real Time Information and annual schemes

HMRC have received a number of requests since April 2013 from employers, asking for the status of their PAYE schemes to be changed to ‘annual’ which is only an option where employees are only paid once a year.

Unfortunately HMRC are currently unable to process requests from employers to:
• move to paying annually and register as an annual scheme
• change their payment frequency.

HMRC expect to have resolved this issue by the end of July and will confirm this on their website in the ‘What’s New’ section. Until that time, if an employer does not pay any employees, they should send in a ‘nil’ Employer Payment Summary by the 19th of each month.

When the fix is in place, HMRC will accept all the requests that have been made and change those schemes to annual. They will then provide information on what action should be taken once the fix is in place.

Internet link: HMRC What’s New

Tax credits claimants have until 31 July to renew claims

HMRC are reminding tax credits claimants that they need to renew their claims by the 31 July deadline or their payments might stop.

Nick Lodge, Director General of Benefits and Credits, said:

‘We are asking claimants to renew immediately. The sooner they do, the sooner we can check their payments and avoid paying too little, or too much money, which they then have to pay back.’

Tax credits renewal packs have been sent to about 5.8 million people since April. Last year more than 80% of claimants renewed by the 31 July deadline.

HMRC are asking claimants to check the accuracy of the information in their packs and to let them know about any changes to circumstances such as working hours, childcare costs, pay and whether they are single or living with a partner.

Claimants can renew by calling the Tax Credits helpline – 0345 300 3900, or post their renewal to the address in the pack that was sent to them.

Internet links: Press release Renewal guidance

 

HMRC announce latest taskforces

The latest targets in HMRC’s sights are tax dodger’s involved in:

• the holiday industry in Blackpool, Lake District, North Wales, Devon and Cornwall
• restaurants in Yorkshire and Humber
• road hauliers in the Midlands and
• the fishing industry in Scotland.

David Gauke, the Exchequer Secretary to the Treasury, said:

‘We are determined to support hardworking people who want to get on in this industry and every other. However, the people being targeted by this taskforce have no intention of playing by the rules. The Government has made it clear that we will not tolerate tax evasion and we have provided HMRC with the resources to crack down on those who break the rules.’

HMRC have collected more than £80 million as a result of taskforces launched since 2011/12 and expect to recover over £90 million per year from taskforces launched over the next three years.

Internet link: Press release

June News 2013

Real Time Information and paying HMRC

HMRC are reminding employers that they need to pay their PAYE liabilities ‘on time and in full’ although they are mindful that employers are still getting used to reporting under RTI.

The due dates for payment remain unchanged. Cheque payments therefore need to be received by the 19th of the month following the end of the tax month of deduction and cleared electronic payments by the 22nd.

Under RTI HMRC are aware of the amount of PAYE payment due as this is the:

• total amount shown on the Full Payment Submission(s) (FPS) for a tax month, including any corrections or adjustments submitted on or before the 19th of the following month. 
   
• less the amount shown on any Employer Payment Summary (EPS), also submitted on or before the 19th of the following month. 

Where amended or additional EPS or FPS returns are made after the 19th of the month these will be reflected in the payment due for the following period.

HMRC also advise that employers should also use an EPS to tell them that there is no FPS to send (where no employees have been paid in the month) as, without it, HMRC will estimate what they believe is due and expect the employer to pay it in full. This estimate is known as the ‘specified charge’.

A specified charge will be issued for each month that the employer fails to report. A specified charge does not replace the need for an employer to send a FPS, as this still needs to be sent to report the actual deductions the employer has made.

Where an employer submits an FPS or EPS within seven days of the specified charge, these submissions will overwrite the specified charge. This means that an employer can pay the reported amount rather than the specified charge.

Employers can check their 2013/14 PAYE payment position by using the online PAYE Liabilities & Payments Viewer to confirm the real time submissions that HMRC have received and to check what is owed and been paid. This viewer will also include any specified charges.

Please do get in touch if you have any queries on payroll issues.

Internet link: HMRC news

HMRC guidance for charity shops

HMRC have published new detailed guidance on claiming Gift Aid when goods are sold by, and the proceeds gifted to, charity shops.

The guidance is useful for charities and also those making donations as it details the circumstances when Gift Aid may be claimed by the charity and the position for the donor wishing to claim higher rate tax relief.

Internet link: Charity guidance

HMRC announce extension to relaxation on RTI

HMRC have announced that they will extend the temporary relaxation of the new reporting rules for businesses with fewer than 50 employees from October 2013 until April 2014 and that this relaxation will come to an end at this point.

The relaxation means that these businesses are still required to report using RTI, but are able to do so once a month, rather than each time they pay their employees. This gives small businesses that pay weekly (or more frequently), but who only run their payroll at the end of the month, some extra time to adjust to the new requirements.

HMRC’s Director General for Personal Tax, Ruth Owen, said:

‘The roll-out continues to exceed our expectations. I am delighted that 83% of SMEs and 77% of the smallest businesses are already on board. We will now write to the minority of employers who are not, to establish how we can help them meet the requirements of reporting in real time’

Please do contact us if you would like any assistance with payroll matters.

Internet link: Press release

Latest employment and pay statistics

The Office for National Statistics has announced the latest official labour market statistics. These are as follows:

• The employment rate for those aged from 16 to 64 for February to April 2013 was 71.5%, down 0.1% from November 2012 to January 2013. There were 29.76 million people in employment aged 16 and over, up 24,000 from November 2012 to January 2013.
   
• The unemployment rate for February to April 2013 was 7.8% of the economically active population, unchanged from November 2012 to January 2013. There were 2.51 million unemployed people, down 5,000 from November 2012 to January 2013.
   
• The inactivity rate for those aged from 16 to 64 for February to April 2013 was 22.4%, up 0.1% from November 2012 to January 2013. There were 8.99 million economically inactive people aged from 16 to 64, up 40,000 from November 2012 to January 2013.
   
• Between February to April 2012 and February to April 2013 total pay rose by 1.3% and regular pay rose by 0.9%. 

Neil Carberry, CBI Director for Employment and Skills, said:

‘It’s encouraging to see businesses feel able to pay people a little more through one-off bonuses, as economic conditions appear to have brightened. The use of bonuses rather than base pay awards suggests firms are still being cautious.’

‘The labour market always lags a few months behind the economy, so it’s not surprising that overall, the picture on unemployment remains fairly flat.’

‘However, we expect to see improving economic conditions making a more positive impact on job creation later this year and it’s encouraging that once again the private sector more than offset the number of positions lost in the public sector during the first quarter.’

Internet links: ONS statistics Press release

New 0300 helpline numbers

HMRC have introduced new phone numbers for VAT, National Insurance, income tax and self assessment.

For most people the new numbers will reduce the cost of calling these helplines. The numbers are set out below for your information:

 

VAT
Line	Old Number	New Number
VAT Enquiries	0845 010 9000	0300 200 3700
VAT Online Services Helpdesk	0845 010 8500	0300 200 3701
VAT, Customs & Excise Welsh Language Line	0845 010 0300	0300 200 3705

For those with hearing or speech impairments, the new textphone number for both VAT Enquiries and VAT Online Services Helpdesk changes from 0845 010 8500 to 0300 200 3719.

National Insurance
Line	Old Number	New Number
National Insurance enquiries for employees and individuals	0845 302 1479	0300 200 3500
National Insurance registrations	0845 915 7006	0300 200 3502
National Insurance deficiency enquiries	0845 915 5996	0300 200 3503
Newly Self-Employed Helpline	0845 915 4515	0300 200 3504
National Insurance enquiries for the self-employed	0845 915 4655	0300 200 3505
National insurance enquiries for non-UK residents	0845 915 4811	0300 200 3506
Contracted Out Pensions enquiries	0845 915 0150	0300 200 3507

Income Tax and Self Assessment
Line	Old Number	New Number
Income Tax enquiries for individuals, pensioners and employees	0845 300 0627	0300 200 3300
Agent Dedicated Line	0845 366 7855	0300 200 3311
Tax back on bank and building society interest: Savings Helpline The National Claims Office	0845 980 0645	0300 200 3312
	0845 366 7850	0300 200 3313
Self Assessment textphone service	0845 302 1408	0300 200 3319

HMRC have confirmed that taxpayers may still use the 0845 numbers for about the next 18 months.

Other 0845 numbers will change in the coming months as part of a rolling program to give taxpayers cheaper access to HMRC helplines.

Internet link: HMRC news

Download Basic PAYE Tools

HMRC have updated their Basic PAYE Tools which is a software package designed to help those employers operating their own payroll.

The Basic PAYE Tools can be used by employers with nine or fewer employees. The tools calculate the tax and National Insurance Contributions for employees and enable the employer to report the necessary payroll information to HMRC under RTI.

HMRC are advising users to ensure they download the latest version of the tools and any updates. For more information visit the link below.

Internet link: HMRC Basic PAYE Tools

May News 2013

RTI annual schemes and guidance on payment date

HMRC have issued guidance on RTI and annual schemes, including clarification of the requirements and operating annual PAYE schemes in real time.

They have also published guidance for employers on what to do if they have been reporting payments to employees in RTI which do not match with the actual date of payment or with tax periods.

If you would like further help and advice on RTI please do get in touch.

Statutory Residence Indicator

From 6 April 2013 the rules that determine whether an individual is resident in the UK for tax purposes have changed. These rules are known as the Statutory Residence Test (SRT).

For the majority of individuals determining whether or not they are resident in the UK for tax purposes is quite straight forward and under the test their position will not change. However for those with complex circumstances the SRT will provide more certainty about their residence status.

Residence is a complex area and we would be happy to discuss your position with you in more detail.

HMRC are planning to issue a pilot online residence indicator in the next few weeks. The residence indicator is designed to give users an indication of their residence status after answering a few straight forward questions regarding days spent in the UK, where your home is and whether you have family ties here.

HMRC gather extra £220m from high net worth individuals

HMRC have announced that their High Net Worth Unit, which deals with the tax affairs of 5,800 people with assets in excess of £20m, increased its yield from tax enquiries by 10% in 2012/13 to £220m.

Exchequer Secretary to the Treasury, David Gauke, said:

‘HMRC’s High Net Worth Unit provides the specialist attention they require in ensuring the wealthy pay the tax they owe. This Government has reinvested almost £1 billion in HMRC and expects them to deliver almost £22 billion in 2014/15.’

‘Since 2010, the unit has raised £582 million, increasing its revenue year on year which, at a time when the Government is focused on reducing the deficit, is delivering real results for the country’.

New Employee Shareholder Status finally law

After much debate the Growth and Infrastructure Act is now law.

One of the clauses contained within the Act introduces a new employee shareholder employment status, under which an employee or new recruit can agree to trade certain employment rights for shares in the company.

The House of Lords finally accepted the clause after the government made a number of concessions. One new requirement is that an offer being made under the new contract contains details of the rights being sacrificed and that the individual receives independent legal advice which will be paid for by the employer.

The Queen has announced the legislative programme

The Queen’s Speech set out the government’s legislative programme for the 2013/14 Parliamentary session including confirmation that the government plans to introduce an annual £2,000 National Insurance rebate for employers from April 2014.

John Cridland, the CBI Director-General, said:

‘Business does not need a raft of new bills at this stage of a Parliament. You cannot legislate your way to economic growth – laws are only ever one piece of the jigsaw.’

‘The surprise £2,000 National Insurance rebate in the Budget will give smaller firms the confidence to take on extra staff.’

‘Extending the General Anti Avoidance Rule is sensible. No one can condone abusive avoidance schemes which serve no commercial purpose other than the minimisation of tax – even if they are legal.’

Tax credits renewals and scam emails

Tax credit customers are being reminded by HMRC that they must renew claims by the 31 July deadline or their payments may stop.

Tax credit claimants are also being warned to be vigilant as last year the renewals process triggered more than 22,000 scam or ‘phishing’ emails being sent out by fraudsters in the run up to the renewal deadline.

These emails often advise that an amount of money is due to the claimant and, if they click on a link, they are taken to a fake replica of the HMRC website. They are then asked to provide credit or debit card details or other sensitive information such as passwords. The fraudsters then try to take money from their account.

Nick Lodge, Director General of Benefits and Credits, said:

‘HMRC will never ask you to disclose personal or payment information by email. We are committed to your online safety but the methods fraudsters use to obtain information are constantly changing, so you need to be alert. Anyone who receives this type of email should sent it to phishing@hmrc.gsi.gov.uk.

Tax credits are state benefits which are generally available to lower income families. However, entitlement to the credits is significantly increased where individuals pay for childcare or suffer a drop in normal levels of income perhaps due to incurring trading losses or redundancy.

Individuals who have already claimed tax credits for 2012/13 have to finalise their provisional award, which would have originally been based on their 2011/12 income, and let HMRC know of any changes in their circumstances for 2013/14. This procedure is known as the renewals process and renewals packs should be issued to claimants between 19 April and 28 June 2013. The deadline for the submission of tax credit renewals is generally 31 July 2013.

Claimants need to be aware that the payment of tax credits will stop at the end of July if they have not renewed their applications by that date.

If you need any advice on tax or universal credits will stop at the end of July if they have not renewed their applications by that date.

If you need any advice on tax or universal credits please do get in touch.

Expenses and Benefits online forms

The forms P11D, and where appropriate P9D, which report benefits and expenses for both employees and directors for the year ended 5 April 2013, are due for submission to HMRC by 6 July 2013.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A national insurance contributions at 13.8% on teh provision of most benefits.

If you would like any help with the forms P11D or the calculation of the Class 1A liability please get in touch.

From April 2013 HMRC have introduced an additional method for employers and agents to report end of year expenses and benefits called ‘Online end of year Expenses and Benefits forms’. These are HMRC produced web based forms. However at present only two of the new online forms are available which deal with the situation where no P11Ds are due or benefits have been fully ‘payrolled’.

HMRC have advised that the rest of the planned online forms are in the final stages of development and should be available in June, prior to the 6 July firling deadline.

Employers who previously used HMRC’s Basic PAYE Tools to create forms P11D, P9D adn P11D(b) will need to consider alternative methods for completing these end of year forms as the tools will not provide this facility for the year ended 5 April 2013.

April News 2013

Loans from a company to shareholders

Draft legislation has been published which confirms an announcement made in Budget 2013 and which has effect from 20 March 2013.

A close company (which generally includes an owner managed company) may be charged to tax in certain circumstances where it has made a loan or advance to individuals who have an interest or shares in the company (known as participators). Loans and advances are also caught where they are made to an associate of the individual such as a family member.

The corporation tax charge is 25% where the loan is outstanding nine months after the end of the accounting period.

The new law will prevent the practise of avoiding the payment of the tax charge by repaying the loan before the tax is due (nine months after the end of the accounting period) and then effectively withdrawing the same money shortly after. This change may also prevent refunds of the 25% tax already paid where loans are redrawn shortly after.
This change may affect a number of owner managed companies and we will be happy to discuss this with you.

Increase in NMW rates

The Government has announced increases in the NMW rates which will come into effect on 1 October 2013:
• the adult rate will increase by 12p to £6.31 an hour
• the rate for 18-20 year olds will increase by 5p to £5.03 an hour
• the rate for 16-17 year olds will increase by 4p to £3.72 an hour
• the apprentice rate will increase by 3p to £2.68 an hour and
• the accommodation offset increases from the current £4.82 to £4.91.

Katja Hall, CBI Chief Policy Director, said:
‘Pay restraint has been crucial in creating jobs in this tough economic climate.’

‘The LPC has struck a careful balance in setting the rates given sluggish growth, particularly in recommending a cautious approach to youth pay.’

‘The LPC will need to monitor the impact of raising the adult rate very carefully. Given average earnings this year are already lower than expected, we must make sure the minimum wage doesn’t limit jobs in key sectors, by outstripping pay across the rest of the workforce.’

‘The law is clear that employers must pay apprentices the legal minimum wage. It is right that ministers tighten up compliance and enforcement.’

Employment Particulars

The government has updated the template of written employment particulars.

The template is an example of a written statement of employment particulars which meets the requirements of employment law.

Where an employee is employed for more than a month the employer must give them a written statement of employment particulars.

P11D deadline approaching

The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2013, are due for submission to HMRC by 6 July 2013. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.

HMRC have issued some guidance as to common errors on the forms in the latest Employer Bulletin. These include the following which can delay processing and cause problems with employees’ tax codes:
• Not ticking the ‘director’ box if the employee is a director.
• Not including a description or abbreviation, where amounts are included in sections A, B, L, M or N of the form.
• Leaving the ‘cash equivalent’ box empty where you’ve entered a figure in the corresponding ‘cost to you’ box of a section.
• Not correctly completing the box in Part 5 of form P35 (Employers Annual Return) or the declaration on the final FPS/EPS submission (for those employers operating PAYE in ‘real time’) to indicate whether or not P11Ds are due.
• Where a benefit has been provided for mixed business and private use, entering only the value of the private-use portion – you must report the full gross value of the benefit.
• Not completing the fuel benefit box/field where this applies. This means an amended P11D has to be sent in.
• Incorrectly completing the ‘from’ and ‘to’ dates in the ‘Dates car was available’ boxes. For example entering 06/04/2012 to 05/04/2013 to indicate the car was available throughout that year. If the car was available in the previous tax year, the ‘from’ box should not be completed and if the car is to be available in the next tax year, the ‘to’ box should not be completed.

Correct P11D completion is complex. If you would like any help with the forms P11D or the calculation of the associated Class 1A National Insurance liability please get in touch.

March News 2013

Budget 2013

Employer NIC Budget measures a welcome boost to SMEs

The headline announcement in the Budget was a £2,000 Employment Allowance to be deducted from NIC bills for all employers. This will result in an estimated 450,000 SME’s no longer paying any Employer NIC from April 2014.

In what was labelled as a Budget for an “Aspiration Nation”, other measures to help businesses included a cut of 1% in the top rate of Corporation Tax to 20% by April 2015, while Stamp Duty is also to be scrapped on shares traded on growth markets like AIM.

Mr Osborne also committed to extending the Capital Gains Tax holiday for the Seed Enterprise Investment Scheme meaning any investors making capital gains in 2013-14 will receive a 50% CGT relief when they reinvest those gains into seed companies in either 2013-14 or 2014-15.

For the individual, the biggest announcement in the Budget was the income tax rate threshold being raised to £10,000 in 2014 – a year earlier than planned.

In an effort to stimulate the housing market, Mr Osborne introduced a “Help-to-Buy” scheme, including interest-free loans of up to 20% of the value of new-build properties, and bank guarantees underpinning £130 billion of new mortgage lending for three years from 2014.

The headline announcements came against a backdrop of a downgrade in the economy – with the growth forecast cut to 0.6% in 2013, from a predicted 1.2% in December.

Nick Rawson from Knill James said: “While this Budget is short on a great host of tax cuts for SMEs, we are pleased that the Chancellor has announced measures to take 450,000 small businesses out of paying employer NICs and that he will reduce the top rate of Corporation Tax to 20% by April 2015. 

“This will reduce a significant burden on small businesses, and allow them to take on new staff and invest in their companies. 

“However as with any Budget we advise that people take a closer look at all the announcements to see how it affects them and their businesses.”

 

Personal allowance up to £10,000 from 2014/15

It has been confirmed in the Budget that the basic personal allowance will be increased from the current £8,105 to £9,440 for 2013/14. This increase is part of the plan of the Coalition Government to ultimately raise the allowance to £10,000 which will be achieved from 2014/15.

The reduction in the personal allowance for those with ‘adjusted net income’ over £100,000 will continue. The reduction is £1 for every £2 of income above £100,000. For 2013/14 the allowance ceases when adjusted net income exceeds £118,880.

From 2013/14 the higher age related personal allowances will not be increased and their availability will be restricted to people who were born before 6 April 1948.

2013/14 income tax bands

The basic rate of tax is currently 20%. The band of income taxable at this rate is £32,010 for 2013/14 so that the threshold at which the 40% band applies is £41,450 for those who are entitled to the full basic personal allowance.

For 2013/14 the additional rate of tax is reduced to 45%, rather than the 2012/13 rate of 50%. This rate will be payable on taxable income above £150,000.

January News 2013

Welcome to the latest News Update from Knill James.

With only less than 48 hours to go before the end of January you still have time to complete your Tax Return – or better still, let us do it for you.

We hope the New Year has started well for you, despite media gloom and fears of a ‘Tripple Dip’ recession. What better time to talk to us about how to plan for ‘adverse economic weather’ and ensure your personal and business affairs are in good shape, whatever the months ahead will bring..

Featured this month are brief articles on :-

• Deadline looming for self assessment returns

• Employment rights – statutory limits

• HMRC target those with outstanding VAT returns

• ‘Tax cheats’ sentenced to over 150 years behind bars

• PAYE coding notices

• Good news for many – increase in personal allowances

• RTI is coming – with major implications for your PAYE & Payroll

• Start up loan scheme for young entrepreneurs extended

• State Pension reform

• Child Benefit opt out

• HMRC bank account details for employers

These articles are published by way of general guidance and information. For detailed advice on specific issues and how they may affect your business or personal affairs please contact us in person.

 

Deadline looming for self assessment returns

HMRC are reminding taxpayers that the countdown has begun to the 31 January 2013 self assessment deadline, with just days left for anyone with an outstanding 2011/12 tax return to send it online.

The deadline of midnight on 31 January 2013 is relevant to individuals who need to complete a self assessment tax return and make direct payments to HMRC in respect of their income tax, Class 4 National Insurance (NI) and any capital gains tax liabilities.  There is an automatic penalty of £100 if the return is not submitted on time, even if there is no tax due or the return shows that a refund is due.

The balance of any outstanding income tax, Class 4 NI and capital gains tax for 2011/12 is also due for payment by 31 January 2013.  Where the payment is made late interest will be charged.

The first payment on account for 2012/13 is also due for payment by 31 January 2013.

If we have already dealt with your self assessment return on your behalf and advised you what you need to pay you need take no additional action.

Internet links: HMRC SA deadlines and penalties Press release

Employment rights – statutory limits

The limit on the amount of the compensatory award for unfair dismissal is set to increase from 1 February 2013. The current maximum of £72,300 is to increase to £74,200 due to inflation.

The maximum amount of a week’s pay for the purpose of calculating the basic or additional award of compensation for unfair dismissal or redundancy payments will be increased to £450. This increase on the previous limit of £430 applies from 1 February 2013.

The Gov.uk website includes a calculator of statutory redundancy entitlement.

Internet links: Legislation Gov.uk calculator

HMRC target those with outstanding VAT returns

HMRC have introduced the VAT Outstanding Returns Campaign, which is an opportunity for taxpayers to bring their VAT returns and payments up to date. To take advantage of the best terms, taxpayers must complete and submit their returns by 28 February 2013.

According to HMRC, as many as 50,000 businesses, that have failed to submit VAT returns, will be targeted with warnings that their tax affairs will be closely scrutinised.

Marian Wilson, Head of HMRC Campaigns, said:

‘If HMRC has sent you a VAT return and you have not yet taken any action, this campaign is a reminder to bring your tax affairs up to date. But time is running out.’

‘After 28 February, if they have not submitted their outstanding VAT returns and paid what they owe, HMRC will use its legal powers to pursue outstanding returns and any VAT that is unpaid. Penalties, or even criminal investigation, could follow. ‘

If you would like any help with VAT returns please do get in touch.

Internet links: Press release: VAT Outstanding Returns Campaign

 

‘Tax cheats’ sentenced to over 150 years behind bars

HMRC have announced that the top ‘tax criminals’ of 2012 have been sentenced to a combined total of 155 years and 10 months behind bars.

Details of over 30 of the UK’s top tax cheats have been publicised on Flickr as part of HMRC’s current Tax Evasion Campaign.

Exchequer Secretary to the Treasury, David Gauke, said:

‘The government is committed to closing in on tax evaders. Collectively the 32 criminals have been sentenced to more than 150 years. Most people play by the rules and pay what they owe, but HMRC is cracking down on those who don’t.’

‘We hope that publishing these pictures will help get across that it always makes sense to declare all your income, and tax dodgers are simply storing up trouble for the future.’

HMRC’s top tax criminals of 2012 can be seen at flickr pages

Internet link: Press release

 

PAYE coding notices

HMRC are issuing PAYE tax codes for 2013/14. These new coding notices, which are due to be issued between January and March 2013, will be used against employees’ pay from April 2013 onwards. It is important that these coding notices are checked carefully, as an incorrect code will result in too little or too much tax being deducted from pay or pension payments.

If you are unsure whether your coding notice is correct and would like some further guidance please do get in touch.

 

Good news for many – increases in personal allowances

The majority of taxpayers will see an increase in their tax code as the personal allowance (for those born after 5 April 1948) increases from £8,105 to £9,440.

Those individuals with simple tax affairs (just one employer with no reliefs or benefits or tax underpayments brought forward) will generally not receive a coding notice. Their current coding of 810L will be automatically uplifted to 944L following general instructions to employers. Basic rate taxpayers will be better off with a tax saving of £267 for 2013/14.

Although the personal allowance is increasing, the point at which taxpayers start to pay the higher rate of 40% tax on their taxable income is decreasing (from £34,370 to £32,010). This means that higher rate taxpayer will generally benefit from a tax saving of £62.

The withdrawal of the personal allowance for those with income over £100,000 income limit applies for 2013/14. The reduction in the personal allowance is by £1 for every £2 of adjusted net income above the income limit. Adjusted net income for these purposes is broadly all income after adjustment for pension payments, charitable giving and relief for losses. Individuals with adjusted net income of at least £118,880 will not be entitled to a personal allowance for 2013/14.

Internet links: Press release  HMRC income tax rates and allowances

 

RTI is coming – are you ready? Is your payroll compliant?

HMRC are urging employers to get ready for major PAYE changes that come into effect from April 2013.

From April 2013 employers will have to submit PAYE returns electronically, using RTI enabled payroll software, each time they pay their employees. The new returns form part of routine payroll procedures and will include details of individual employees’ pay, tax and other deductions.

Ruth Owen, HMRC’s Director General Personal Tax, said:

‘To avoid a last minute rush it’s vital employers act now, if they have not already done so.’

‘Employers will need to send their first return – called a ‘Full Payment Submission’ or ‘FPS’ for salary or wage payments made to employees on or after 6 April – and if they have 250 or more employees they will have to send an Employer Alignment Submission before the first FPS.’

‘Although reporting PAYE in real time will be straightforward for most, some preparation is needed. There is more to it than simply buying or updating software – although this is key. Employers may need to add employees such as casuals or those below the Lower Earnings Limit to their payroll system and must think about their payroll practices to make sure that they work for real-time reporting.’

If you would like help with payroll and RTI please do contact us.

Internet link: Press release

 

Start up loan scheme for young entrepreneurs extended

David Cameron has announced a boost to the government’s Start-Up Loans Scheme, with funding being increased by £30 million to £110 million over three years. The upper age limit for applying will also be extended from the current 24 to 30 years old.

Start-Up Loans provide entrepreneurs with a range of support to get their business idea off the ground which includes access to a business mentor as well as funding of approximately £2,500.

To apply for a loan visit http://www.startuploans.co.uk/

Internet link: News release

State Pension reform

The government have announced proposals for a new single tier pension.

The single tier reforms will restructure the State Pension into a simple flat rate amount from 2017 at the earliest. Those over State Pension age when the reforms are implemented will continue to receive it in line with existing rules.

The single tier pension will:

• be set above the basic level of means tested support. The amount will be set nearer implementation;
• replace the State Second Pension, contracting out and out-dated additions, such as the Category D pension and the Age Addition. The Savings Credit element of Pension Credit will also close to pensioners reaching State Pension age after the implementation of the single tier pension;
• require 35 qualifying years of NIC or credits for the full amount, with pro-rating where 35 years is not achieved. There will also be a minimum qualifying period of between seven and ten qualifying years;
• be based on individual qualification, without the facility to inherit or derive rights to the State Pension from a spouse or civil partner; and
• continue to allow people to defer claiming their state pension and receive a higher weekly State Pension in return. The deferral rate will be finalised closer to the planned implementation date. It will no longer be possible to receive deferred State Pension as a lump-sum payment.

The government will also carry out a review of the State Pension age every five years, based around the principle that people should maintain a specific proportion of adult life receiving the State Pension. The first review will take place in the next Parliament.

Internet link: DWP website

 

Child Benefit opt out

The High Income Child Benefit Charge (HICBC) was introduced from 7 January 2013. It mainly applies to a taxpayer who has ‘adjusted net income’ in excess of £50,000, where either they or their partner is in receipt of Child Benefit. The effect of the charge is to claw back some or all of the Child Benefit paid. Where both partners have income in excess of £50,000 the charge applies to the partner with the higher income.

Adjusted net income is broadly gross income less pension payments and gift aid payments. Where a taxpayer has adjusted net income of £60,000 or more then the charge has the effect of cancelling out the Child Benefit paid.  A sliding scale charge operates where income is between £50,000 and £60,000.

The charge applies to the Child Benefit paid from 7 January to the end of the tax year. However, the income taken into account will be the full income for 2012/13.

Child Benefit claimants had the option to elect not to receive Child Benefit if they or their partner do not wish to pay the new charge.

According to details revealed to the BBC some 270,000 people have opted out of receiving Child Benefit. Apparently there was a late surge of around 80,000 during the weekend before the deadline of 7 January 2013.

Please visit the HMRC Child Benefit guidance link below for more details of the options available.

Internet links: BBC news HMRC Child Benefit guidance

HMRC bank account details for employers

HMRC have updated their guidance to employers on paying PAYE liabilities. From April 2013 employers who make a payment to HMRC by:

• Bacs Direct Credit
• Faster Payments by online/telephone banking
• CHAPS

should make payments to a single bank account. From month 1 of 2013/14 payments should be made to the Accounts Office Cumbernauld account using sort code 08 32 10 and account number 12001039.

HMRC has started to send employers information about this change ready for 2013/14.

Internet link: HMRC payments

December News 2012 – Part the Second

Welcome to the latest News Update from Knill James.

This being the last calendar month of 2012 it wouldnt be right to let it pass without a reminder to submit your Tax Returns. Or better still let us help you with it.

Have a great Christmas & our best wishes for a successful and prosperous New Year

Featured this month are brief articles on:-

• Tenfold increase in Annual Investment Allowance
  
• Personal allowance for 2013/14
  

• Pensions Saving & allowances

• A simpler tax system for smaller businesses

• Statutory residence test

• Government must tackle red tape

• Reminder to those with high income and child benefit

• Advisory fuel rates for company cars

• 2013/14 statutory payments

• Charities and Gift Aid

• File your self assessment return

These articles are published by way of general guidance and information. For detailed advice on specific issues and how these may affect your business or personal affairs please contact us in person.

 

Tenfold increase in Annual Investment Allowance

The shock announcement of the Autumn Statement was the tenfold increase in the amount of the Annual Investment Allowance (AIA).

The AIA provides a 100% deduction for the cost of plant and machinery purchased by a business up to an annual limit which is currently £25,000 for expenditure incurred from April 2012. The Chancellor announced that this limit will rise to £250,000 for a period of two years for expenditure incurred from 1 January 2013.

Where a business has an accounting period that straddles the date of change the allowances have to be apportioned on a time basis.

 Where a company has a 12 month accounting period ending on 30 June 2013 the AIA will be £137,500 (£25,000 x 6/12 + £250,000 x 6/12).

However for expenditure incurred before the 1 January 2013, rules will limit the maximum figure available. The maximum allowance will be the AIA that would have been due for the whole of the accounting period to 30 June 2013 if the increase in AIA had not taken place. This would have meant that the company would have been entitled to £25,000 for the 12 months and so this is the limit for the six months to 31 December.

The rules for accounting periods straddling 1 January are complicated and this is without the additional complications that arise if part of the accounting period commences prior to April 2012 (as yet another AIA limit needs to be factored in).

The main point to appreciate is that expenditure incurred after 31 December 2012 may give a full tax write off but expenditure incurred before the 1 January 2013 may not give this result.

Please contact us before capital expenditure is incurred for your business in a current accounting period, so that we can help you to maximise the AIA available.

Internet link: HMRC TIIN

Personal allowance for 2013/14

For those aged under 65 the personal allowance will be increased from the current £8,105 to £9,440. This increase in the personal allowance is greater than the amount previously announced and is part of the plan of the Coalition Government to ultimately raise the allowance to £10,000.

For basic rate taxpayers this increase in the personal allowance should result in a tax saving next year of £267.

The reduction in the personal allowance for those with ‘adjusted net income’ over £100,000 will continue. The reduction is £1 for every £2 of income above £100,000. Next year the allowance ceases when net adjusted income exceeds £118,880. 

Tax band and rates 2013/14

The basic rate of tax is currently 20%. The band of income taxable at this rate is being reduced from £34,370 to £32,010 so that the threshold at which the 40% band applies will fall from £42,475 to £41,450.

Additional rate tax payers

The 50% band currently applies where taxable income exceeds £150,000 but the rate will fall to 45% next year.

Tax bands for 2014/15 and 2015/16

For 2014/15 and 2015/16 the increase in the higher rate threshold will be capped at 1%. Over the last few years the value of the higher rate threshold has fallen so a small increase should be welcome.

Internet link:  HMRC autumn statement personal

 

Pensions Saving & allowances

It was announced in the Autumn Statement that for tax year 2014/15 onwards:

• the annual allowance for pensions tax relieved savings will be reduced from £50,000 to £40,000 
• the standard lifetime allowance for pensions tax relieved savings will be reduced from £1.5 million to £1.25 million 
• a transitional ‘fixed protection’ regime will be introduced for those who believe they may be affected by the reduction in the lifetime allowance.

Legislation will be introduced in Finance Bill 2013 to make these changes.

The Government considers that these measures are expected to affect only the wealthiest pension savers as 98% of individuals currently approaching retirement have a pension pot worth less than £1.25 million which is the revised level of the lifetime limit. Annual contributions made by 99% of pension savers are below £40,000, the average annual contribution being around £6,000 per annum.

Please contact us if you would like any pensions advice.

Internet link:  HMRC pensions tax relief

                          

A simpler tax system for smaller businesses

The Chancellor is to proceed with proposals to make the tax system simpler for small unincorporated businesses from April 2013. Where a business has a turnover up to £77,000 it will be able to calculate its profits on a simplified cash basis. In addition it will not have to distinguish between revenue expenditure and capital expenditure. A business will be able to continue to use this basis until its turnover reaches £154,000.

Flat rate expenses will be available for some types of expense including:

Cars, vans and motorcycles

For cars or vans the rate for the first 10,000 business miles is 45p, after which the rate reduces to 25p. For motorcycles the rate is 24p

Business use of a home

Provided certain conditions are satisfied, the following monthly rates will be allowed:

 

Business use in a month	Deduction
25 hours or more	£10
51 hours or more	£18
101 hours or more	£26

           

The new rules are not quite as simple as the Government would have us believe. Whilst the actual accounting treatment may be simpler it will still be necessary to have regard to tax rules for the deductibility of some expenses. There will also be transitional rules for existing businesses wishing to opt into the new system.

Please do get in touch if you think this may be of interest to you.

Internet link: HMRC update

Statutory residence test

HMRC have announced that legislation will be introduced in Finance Bill 2013 to put the rules which determine an individual’s tax residence on a statutory basis.  The new statutory residence test will come into force from the start of the 2013/14 tax year.

The new legislation includes circumstances such as the situation where a tax year is split into a UK part and an overseas part. The rules also cover the taxation of certain income and gains arising during a period of temporary non-residence.

HMRC has published draft guidance to assist individuals on the application of the statutory residence test and on eligibility for overseas workday relief.

Please do contact us if you would like any assistance in this complex area.

Internet link:  HMRC finance bill draft

 

Government must tackle red tape

The CBI is calling on the Government to tackle ‘red tape’. The CBI is warning that economic growth faces being held back because of tens of millions of pounds in extra business red tape coming from the UK Government and Europe.

It has published a report ‘Changing the rules – eight steps to a better regulatory regime’, which calls on ministers to tackle the red tape and bureaucracy created in Whitehall.

According to the report the net added cost of regulation on UK businesses will increase by £177.7m as a result of policies created in 2011 alone, when for every £3 of costs removed, another £5 was added.

Katja Hall, CBI Chief Policy Director, said:

‘Regulation has an essential role to play in a thriving market economy, promoting competition and protecting consumers, but we know it can be a major barrier to growth.’

‘The Autumn Statement contained some really welcome proposals to improve the accessibility and accountability of the regulators that enforce many of the rules, but the facts speak for themselves. Small and medium-sized businesses are the engines of growth, but they’re telling us they are drowning under the weight of extra regulation coming out of Whitehall, layered on top of outdated red tape which has not been repealed.’

‘We’re calling on the Government to back up its words with action. We want to toughen up the law so there is a presumption that every piece of regulation has a sunset clause, so it expires after a set date unless it is actively renewed.’

Internet link: Press release

 

Reminder to those with high income and child benefit

HMRC are reminding Child Benefit recipients with higher incomes that they have a month to decide whether to stop receiving the benefit or to pay a charge on it through self assessment.

Lin Homer, HMRC’s Chief Executive, said:

‘Over 680,000 people have already looked at information on HMRC’s website that explains the changes and what steps those affected can take. It is really easy to use and will help families come to a decision.’

The High Income Child Benefit Charge (HICBC) is being introduced from 7 January 2013. It will mainly apply to a taxpayer who has ‘adjusted net income’ in excess of £50,000, where either they or their partner is in receipt of Child Benefit. The effect of the charge is to claw back some or all of the Child Benefit paid. Where both partners have income in excess of £50,000 the charge will apply to the partner with the higher income.

Adjusted net income, which is broadly gross income less pension payments and gift aid payments, has the same meaning as for the withdrawal of the personal allowance for taxpayers with income above £100,000.

Where a taxpayer has adjusted net income of £60,000 or more then the charge has the effect of cancelling out the Child Benefit paid. A sliding scale charge operates where income is between £50,000 and £60,000.

The charge will apply to the Child Benefit paid from 7 January to the end of the tax year. However, the income taken into account will be the full income for 2012/13.

Child Benefit claimants will be able to elect not to receive Child Benefit if they or their partner do not wish to pay the new charge.

If Child Benefit recipients want to stop receiving the benefit, they should contact HMRC before 7 January 2013. Please visit the HMRC Child Benefit guidance link below for more details.

Internet links: Press releaseHMRC Child Benefit guidance

 

Advisory fuel rates for company cars

New company car advisory fuel rates took effect from 1 December 2012. HMRC’s website states:

‘These rates apply to all journeys on or after 1 December 2012 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’

The advisory fuel rates for journeys undertaken on or after 1 December 2012 are:

 

Engine size	Petrol	LPG
1400cc or less	15p	11p
1401cc – 2000cc	18p	13p
Over 2000cc	26p	18p

 

Engine size	Diesel
1600cc or less	12p
1601cc – 2000cc	15p
Over 2000cc	18p

 

Please note that not all of the rates have been increased, so care must be taken to apply the correct rate.  

Other points to be aware of about the advisory fuel rates:

• Employers do not need a dispensation to use these rates.
• Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
• The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.

If you would like to discuss your car policy, please contact us.

Internet link: HMRC advisory fuel rates

 

2013/14 statutory payments

HMRC have announced the following statutory payment rates for 2013/14. These rates are still subject to Parliamentary approval and will be confirmed by HMRC before the start of the new tax year.

Statutory Maternity Pay (SMP)                                £136.78 per week

Ordinary Statutory Paternity Pay (OSPP)  £136.78 per week

Additional Statutory Paternity Pay (ASPP)            £136.78 per week

Statutory Adoption Pay (SAP)                                 £136.78 per week

Statutory Sick Pay (SSP)                                         £86.70 per week

Please contact us if you would like any help with payroll issues.

Internet link: Proposed benefit rates

 

Charities and Gift Aid

HMRC will introduce a new online service which will enable Charities and Community Amateur Sports Clubs (CASCs) to submit repayment claims electronically, Charities Online, in April 2013.

It will replace the current R68(i) Gift Aid and tax repayments claims form and will be a way for charities and CASCs to claim Gift Aid, tax repayments on other income and Gift Aid Small Donations Scheme top-up payments by using an online form.

Internet link: HMRC charities online

 

File your self assessment return

A HMRC advertising campaign is urging anyone who hasn’t sent in their 2011/12 self assessment tax return to do it now and find ‘inner peace’.

The new advertising campaign highlights the imminent 31 January 2013 deadline for online returns, and the automatic £100 penalty for missing the deadline. The adverts will encourage people who still haven’t sent their return to ‘do it today, pay what you owe and take a load off your mind’, so they can experience ‘inner peace’.

According to HMRC, the campaign has been developed to touch on the emotions that HMRC found people typically experience after they have filled in their tax return, often described ‘as a real sense of relief or peace of mind, like a weight being lifted from their shoulders’. The new adverts will feature individuals from different professions experiencing this feeling of post return wellbeing.

The 31 January 2013 deadline is relevant to individuals who need to complete a self assessment tax return and make direct payments to HMRC in respect of their income tax, Class 4 National Insurance and any capital gains tax liabilities.  There is an automatic penalty of £100 if the return is not submitted on time, even if there is not tax due or the return shows that a refund is due.

The balance of any outstanding income tax, Class 4 NI and capital gains tax for 2011/12 is also due for payment by 31 January 2013.  Where the payment is made late interest will be charged.

The first payment on account for 2012/13 is also due for payment by 31 January 2013.

If we have already dealt with your self assessment return on your behalf and advised you what you need to pay you need take no additional action.

Internet links: Press releaseHMRC SA deadlines and penalties

 

 

December News 2012

Welcome to the latest News Update from Knill James.

A slight delay in posting November’s update, as we wanted to reflect on the impact of the Chancellor’s Autumn Statement and take a look at the 1,000 odd pages of draft legislation and explanatory notes posted on the HM Treasury Website. If you would like to have a copy of our key highlights summary & commentary please visit our website www.knilljames.co.uk or give us a call.

Featured this month are stories on:

• Changes to VAT Online Services

• HMRC Close in on ‘Tax Cheats’

• HMRC Announce Latest Targets

• Updated Approach to Business Records Checks

• VAT Registration threshold no longer due to those not established in the UK

• Parties for Employees

• Simpler Health and Safety Guidance

• More Flexibility in the Leave Available to Parents

• Payroll RTI System ‘Unrealistic’

• Improving Gender Diversity in Boardrooms

• Proposal to Remove Red Tape on Building Extensions

These articles are published by way of general guidance and information. For detailed advice on specific issues and how these may affect your business or personal affairs please contact us in person.

 

Changes to VAT Online Services

HMRC have announced various changes to their online services including the introduction of the VAT online registration service which was promised earlier this year.

They have also taken the opportunity to introduce a new online variations service which should allow businesses to:

·        make changes to the principal place of business and contact details

·        deregister for VAT

·        apply for Annual Accounting or Flat Rate Scheme

·        view and print the VAT certificate and     

·        enrol for VAT Online.

Please do get in touch if you would like any assistance with any of these issues.

Internet link: HMRC news

HMRC Close in on ‘Tax Cheats’

HMRC have launched an advertising campaign warning ‘tax cheats’ to declare all their income before it is too late.

The campaign is part of HMRC’s targeted approach to help taxpayers pay the right amount of tax, at the right time. Guidance is available at www.gov.uk/sortmytax.

David Gauke, Exchequer Secretary to the Treasury, said:

‘Most people play by the rules and pay what they owe, but HMRC is cracking down on those who don’t. Using the £917 million the government has made available to tackle avoidance, evasion and fraud, HMRC is closing in on tax cheats.’

‘It always makes sense to declare all your income and tax dodgers are simply storing up trouble for the future; getting caught means higher fines, and in the most serious cases criminal prosecution. There is an alternative. Simply visit the new website and make a fresh start.’

Internet link: HMRC press release

HMRC Announce Latest Targets

HMRC have launched new taskforces to tackle ‘tax cheats’ in the following sectors:

·        the rag trade (manufacturing, wholesale, retail and textile recycling in the Midlands, North Wales and the North West)

·        the Scottish alcohol industry and

·        the rental property sector in the South East.

David Gauke, the Exchequer Secretary, said:

‘The vast majority of people play by the rules. We will not tolerate tax evasion and will crack down on the minority who choose to break the rules.’

‘It cannot be fair that, while most people are paying the right tax, a tiny minority are not paying what they should.’

‘HMRC is on target to collect more than £50 million as a result of taskforces launched in 2011/12.’

Internet links: Press release on the rag trade

 Press release on alcohol industryPress release on rental property

Updated Approach to Business Records Checks

HMRC have announced an updated approach to business records checks.

Following a pilot programme of Business Records Checks (BRC), which looked at the records of in excess of three thousand SMEs, HMRC have amended their approach to these checks.

Businesses which HMRC believe are more likely to be at risk of having inadequate records will initially be contacted by letter. HMRC will then phone the business to go through a short questionnaire.

Depending on the outcome of this phone call, HMRC will subsequently confirm to some businesses that no further action is required. Where some issues are identified, businesses will be offered targeted self-help education options.

HMRC have confirmed that where businesses are assessed as being at risk of keeping inadequate records they will be referred for a BRC visit.

Please let us know if HMRC contact you about a BRC.

Internet link: HMRC BRC

 

 

VAT Registration threshold no longer due to those not established in the UK

A decision in the European Court of Justice has confirmed that only businesses established in a Member State can benefit from its domestic VAT registration threshold.

As a consequence, from 1 December 2012, ‘non-established taxable persons’ (NETPs) will no longer be able to benefit from the UK VAT registration threshold. This means that they will be required to register for UK VAT when they make their first supply of goods or services in the UK regardless of the value.

NETPs already making supplies here will be required to register for UK VAT with effect from 1 December 2012.

As detailed in the HMRC guidance:

‘From 1 December 2012, any non-established business which makes or intends to make taxable supplies in the next 30 days has 30 days from the date it formed that intention to notify HM Revenue & Customs (HMRC) that it is required to register for VAT. Businesses which become required to register in the UK on 1 December 2012 will have to notify HMRC of that fact by 30 December 2012.’

Please contact us if you have any concerns in this area.

Internet link: VAT Brief

Parties for Employees

With the season for office parties fast approaching we thought it would be a good idea to remind you of the tax implications. The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.

But what about the tax consequences for the employees themselves? Is it a perk of their jobs and will they have to pay tax on a benefit?

Generally, as long as the total costs of all employee annual functions in a tax year are less than £150 per attendee (VAT inclusive) there will be no tax implications for the employees themselves. In considering this limit make sure you have included all the costs, which may include not only the meal itself but also any drinks, entertainment, transport and accommodation that you provide.

If the costs are above the £150 limit then the full cost will be taxable on the employee. In that case do get in touch so we can advise you how best to deal with them.

Internet link: HMRC guidance

 

Simpler Health and Safety Guidance

The Health and Safety Executive (HSE) has launched an online ‘Health and Safety Toolbox’ aimed at smaller, low-risk businesses. It is hoped that the Toolbox, which can be accessed from the right hand side of the HSE’s home page, will make it quicker and easier for small businesses to find the information that applies to their industry. This should enable them to manage health and safety issues themselves, without the need to use health and safety consultants.

Employment Minister Mark Hoban said:

‘Small and low risk businesses should be focusing their time on growing and becoming a success not having to waste precious time and money on unnecessary bureaucracy. This Toolbox will make it quick and simple for businesses to discover everything they need to know about health and safety.’

Internet links: Press releaseHSE website

 

More Flexibility in the Leave Available to Parents

Deputy Prime Minister Nick Clegg has announced that parents will be able to share up to 12 months leave after the birth of a child from 2015.

The plans will allow working parents to take up to 52 weeks off in total either together or in separate blocks and will be more flexible than the current system.

Nick Clegg said:

‘Reform is long overdue and the changes we are making will shatter the perception that women have to be the primary care-givers.’

‘In the future, both mothers and fathers will be able to take control of how they balance those precious first months with their child and their careers.’

Internet link: BIS top stories

Payroll RTI System ‘Unrealistic’

The Institute of Chartered Accountants in England and Wales (ICAEW) has warned that the RTI reporting system will be ‘at best unrealistic and at worst impossible’ for small employers. This is despite HMRC publishing proposals explaining when employers will be allowed up to an extra seven days to send some information to HMRC.

Frank Haskew, head of ICAEW Tax Faculty, said:

‘We are particularly concerned about the impact this will have on smaller businesses, which are the lifeblood of the UK economy and essential if the UK is to continue to grow.’

Under the RTI, employers will have to submit payroll information to HMRC electronically on or before every payday, with potential penalties applying to employers submitting returns late.

The ICAEW suggestion is that HMRC move the RTI return date to the 19th of the month following the tax month of payment, which is the same as the current PAYE due date, being familiar to employers.

RTI is compulsory for most employers from April 2013.

We will keep you informed of developments.

Internet links: ICAEW press release

Improving Gender Diversity in Boardrooms

The CBI commented on proposals from the European Commission, aimed at achieving a better gender balance in the boardrooms of some European companies. The proposals apply to companies listed on stock exchanges in EU’s Member States.

Katja Hall, CBI Chief Policy Director, said:

‘Businesses will be relieved that the Commission has listened to their concerns. These new proposals rightly focus on the need to improve boardroom diversity, while allowing firms to recruit the best candidates from the widest possible talent pool. MEPs should get behind this approach.’

‘Increasing the number of women in boardrooms is important for businesses, who know that gender diversity brings greater creativity, higher performance and better customer insight. That is why firms are already taking action to increase the flow of women to the top, such as targeting mentoring schemes at women and offering flexible working.’

Internet links: CBI press releaseEuropa press release

Proposal to Remove Red Tape on Building Extensions

The government has announced proposals to make it quicker and cheaper to make improvements to homes and business premises.

The proposals would mean that, for a limited period, much of the red tape required to complete a planning application for a small-scale, single-story extension would be removed. It has been confirmed that the current safeguards that ensure neighbours and communities are not adversely affected will remain in force. The proposals will also not apply to protected areas or listed buildings.

Internet link: News

 

 

October News 2012

Welcome to the October News Update from Knill James. 

In this edition we feature stories on the following:

High Income Child Benefit Charge Letters

Too Late for ‘paper’ Self Assessment Tax Returns
Plans for a New Type of Employment Contract

RTI – Closing Payroll Schemes

Guidance on Reclaiming National Insurance Contributions Paid in Error
Health and Safety Executive Fee for Intervention
Retirement Funds Set to Fall
HMRC Checklist for EC VAT Registration Numbers

These articles are by way of general guidance. For detailed advice on specific issues and how these may affect your business or personal affairs please contact us in person. We stand ready to assist.

 

High Income Child Benefit Charge Letters

HMRC are about to write to taxpayers who they believe will be affected by the High Income Child Benefit Charge.

In Budget 2012, as part of the reforms to the welfare system, it was confirmed that Child Benefit will be withdrawn from households that include certain higher earners.

Although the change applies from January 2013 the calculation to decide whether or not a household is affected by the reform includes the full income for 2012/13.       

The legislation imposes a new charge (the High Income Child Benefit Charge) on a taxpayer who has adjusted net income over £50,000 in a tax year where either they or their partner, if they have one, are in receipt of Child Benefit for the year. Where there is a partner and both partners have adjusted net income in excess of £50,000 the charge will apply to the partner with the higher income.

An income tax charge will apply at a rate of 1% of the full Child Benefit award for each £100 of income between £50,000 and £60,000, rounded down to the nearest pound. The charge on taxpayers with income above £60,000 will be equal to the amount of Child Benefit paid.

Further information on the changes and what steps those affected should take can be found at http://www.hmrc.gov.uk/childbenefitcharge.

Please contact us if you would like any advice in this area.

Internet link: Press release

Too Late for ‘paper’ Self Assessment Tax Returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2011/12 return was 31 October 2012. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

If you would like any help with the completion of your return please do get in touch.

Internet link: HMRC press release

Plans for a New Type of Employment Contract

Chancellor George Osborne has announced a new type of employment contract to be known as an employee-owner. Under the new contract employees will be able exchange some of their UK employment rights for shares in the business they work for. Gains on the disposal of the shares will be exempt from capital gains tax.

Companies of any size will be able to use this new kind of contract and employees will be given between £2,000 and £50,000 of shares.  In exchange, they will give up their UK rights on unfair dismissal, redundancy, the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave.

Employee-owner status will be optional and legislation to bring in the new contract is expected to be introduced later this year so that companies can use the new type of contract from April 2013.

Internet link: Press release

RTI – Closing Payroll Schemes

HMRC are about to write to employers who they believe have a payroll scheme which is not being used.  The letters are being sent in preparation for the introduction of RTI as HMRC are planning to close any payroll schemes which they believe are no longer needed.

If you receive a letter regarding a payroll scheme which you believe will be used in the future please do get in touch so that we can advise HMRC accordingly.

Internet link: Employer Bulletin

Guidance on Reclaiming National Insurance Contributions Paid in Error

HMRC have issued guidance to cover the situation where vocational or recreational trainers may be entitled to claim a refund of National Insurance contributions. The refunds are due following a change in guidance on charging national insurance contributions.

HMRC’s briefing states:

‘Refunds may be made by trainers or instructors, or those who engaged them, and where amounts of NICs were paid in error following HMRC’s guidance. This is primarily going to affect those engaged in the provision of vocational or recreational training as set out in HMRC’s guidance prior to repeal of the relevant provisions of the Regulations.’

‘Refunds are not due where educational training providers applied the Regulations. This is because there is no dispute or doubt that the Regulations prior to 6 April 2012 applied to the providers of educational training. In this context educational training provider means a school, college, university or any such similar educational establishment.’

‘Refunds are also not due where any trainer or instructor was engaged under an employment contract and Income Tax (PAYE) and Class 1 NICs were correctly accounted for.’

Please get in touch if you would like any help in this area.

Internet link: HMRC brief

Health and Safety Executive Fee for Intervention

The Health and Safety Executive has announced that it has implemented a Fee for Intervention (FFI) cost recovery scheme, which came into effect on 1 October 2012.

Under The Health and Safety (Fees) Regulations 2012, those who break health and safety laws are liable for recovery of HSE’s related costs, including inspection, investigation and taking enforcement action.

The HSE website advises:

‘The Fee for Intervention hourly rate for 2012/13 is £124. The many businesses that comply with their legal obligations will continue to pay nothing.’

For more information on how the new scheme works visit the link below.

Internet link: HSE website

Retirement Funds Set to Fall

According to a report issued by the Saga Foundation, millions of Britons due to retire over the next few years risk seeing £11.5 billion wiped off their retirement funds.

The report factors in tax and benefit changes, which include the freezing of age related personal allowances from April 2013 and reduction in winter fuel payments, together with low interest rates.

Compiled by experts from the Centre for Economics and Business Research, the report comes to the conclusion that the changes will cost pensioners an average of £1,318 each by 5 April 2014.

Dr Ros Altmann, Director General of Saga, said:

‘Pensioners are being hammered. They didn’t cause our economic meltdown yet they have been paying a heavy price as we try to fix it and they face an even tighter financial squeeze in future.’

Internet link: Saga press release

HMRC Checklist for EC VAT Registration Numbers

HMRC have issued a revised Notice 725, The Single Market, which includes a useful checklist (see section 16.19) to enable businesses to help spot incorrect VAT registration numbers at a glance.

Customer’s VAT registration numbers can be verified using the Europa website VIES http://ec.europa.eu/taxation_customs/vies/ or by contacting the VAT Helpline on 0845 010 9000.

Internet link: VAT Notice 725

September News 2012

Welcome to the September News Update from Knill James. 

In this edition we feature stories on the following:

Autumn Statement 2012

Check your National Insurance Number

What is a Car, Commercial Vehicle or Motor Home for VAT?
VAT Guidance
Seed Enterprise Investment Scheme Guide
National Minimum Wage Rates

Get paid: A Guide for Owners and Managers of Small Businesses

HMRC Launch Tracker – Where’s my Reply?

Does your Business Still Need an Audit?
New Proposals to Streamline Employment Law

As ever, these are just be way of general guidance. If you feel you may be affected by any of these issues then get in touch to discuss how we can help.

Autumn Statement 2012

The government has announced that the Autumn Statement will be made by the Chancellor of the Exchequer, George Osborne, on Wednesday 5 December at 12.30pm.  

The Statement provides an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility. 

We will let you have details of pertinent announcements following the Chancellor’s statement to Parliament.

Internet link: Treasury website

Check your National Insurance Number

HMRC have announced a new procedure whereby individuals can email them for written confirmation of their National Insurance number using form CA5403.

 HMRC advise:

‘If you’ve lost or can’t remember your National Insurance number or can’t find it on official paperwork you can email HM Revenue & Customs (HMRC) for written confirmation of your number. You can also use this service to let HMRC know that you’ve changed your name or address.’

‘National Insurance cards are no longer issued and your National Insurance number is not proof of your identity.’

Internet links: Press release Form CA5403

What is a Car, Commercial Vehicle or Motor Home for VAT?

HMRC have updated their guidance on the classification of vehicles.

For VAT purposes it is vital to know the difference between cars and other vehicles. This is because in most cases, VAT registered businesses cannot reclaim the input VAT incurred when they purchase a car. Generally businesses are able to reclaim the input VAT when they buy a commercial vehicle.

The HMRC guide explains the difference between a car, motorcycle, a motor home and a commercial vehicle for VAT purposes.

The link also gives access to the current list of ‘Car derived vans and combi vans’. This updated useful list considers the treatment of some borderline vehicles.

Internet link: HMRC VAT motor vehicle guidance

VAT Guidance

HMRC have announced the publication of guidance covering the changes to address VAT borderline anomalies announced at Budget 2012. 

The majority of the changes take effect from 1 October 2012. The changes which relate to caravans will however take effect from 6 April 2013.

Seven information sheets are available which cover the following areas:

• Hot food and premises
• Caravans
• Sports nutrition drinks
• Listed buildings
• Hairdressers’ chairs
• Self storage and
• Anti-forestalling (in relation to the listed building and self storage changes)

HMRC have confirmed in their press release:

‘Information sheets are being published to explain how each of the changes will work.  These will be incorporated into HMRC’s books of guidance as soon as possible.’

If you would like any guidance in any of these areas please do get in touch.

Internet link HMRC VAT briefs

Seed Enterprise Investment Scheme Guide

The Enterprise Investment Scheme (EIS) has been in place for a number of years and provides tax relief for individuals prepared to invest in new and growing companies. Investors can obtain generous income tax and capital gains tax reliefs for their investment and companies can use the relief to attract additional investment to develop their business. 

A junior version of EIS known as Seed Enterprise Investment Scheme (SEIS) was introduced from 6 April 2012.

HMRC have issued guidance for both companies and investors on the operation of SEIS.

Please do contact us if you would like advice on SEIS or EIS.

Internet link: HMRC SEIS guidance

National Minimum Wage Rates

The National Minimum Wage (NMW) rates from 1 October 2012 are as follows:

• the adult minimum wage rate will increase from £6.08 to £6.19 an hour
• the rate for 18 – 20 year olds will remain at £4.98 an hour
• the rate for 16 -17 year olds will remain at £3.68 an hour and
• the apprentice rate will increase from £2.60 to £2.65 an hour.

HMRC are able to charge penalties to those employers found to be in breach of the NMW rules. Details of the calculation of arrears and potential penalties can be found on the BIS website.

If you have any queries on the NMW please do get in touch.

Internet links: Directgov website BIS website

Get paid: A Guide for Owners and Managers of Small Businesses

The CBI is backing a new guide which encourages good practice among suppliers and customers. The guide offers advice to businesses to ensure that they get paid by their customers and also pay their suppliers on time.

To read the guidance please visit the link below.

Internet links: Press release  Get paid guide

HMRC Launch Tracker – Where’s my Reply?

HMRC have announced the introduction of a new tracker service.

Agents, employees and those paying tax on company pensions through PAYE can use a new tracker to find out when to expect to receive a reply to their enquiry from HMRC.

HMRC advise:

‘If you’re an employee or you pay tax on a company pension through PAYE (Pay As You Earn – the system used by employers and pension providers to deduct tax from your wages or pension), you can use the tracker to check how long it will take HMRC to:

• pay your income tax refund
• reply to your general income tax enquiry
• provide a copy of individual information, such as your tax code or pay and tax details
• send you HMRC forms or stationery.’

‘If you’re an agent, you can also check how long it will take HMRC to:

• register you as an agent to use HMRC Online Services
• process an application for authority to act on behalf of a client
• amend your agent details.’

Internet link: HMRC Where’s my reply?

Does your Business Still Need an Audit?

The government has announced key changes to company and LLP audit and reporting requirements. The changes remove the need for many more companies and LLPs to have an audit and apply to financial years ending on or after 1 October 2012.

The government has announced that:

• for small companies the audit thresholds will be aligned with small company accounting thresholds
• for qualifying parent companies and their subsidiaries that an option will be available to not have subsidiaries audited and instead for the parent to provide a statutory guarantee over their subsidiaries’ liabilities, and
• dormant subsidiaries will be exempt from the requirement to prepare and file accounts.

Whilst the changes have been marketed by the government as saving businesses millions in reporting and accountancy fees, there are, of course, a number of factors to consider in making a decision as to how to proceed.

Please contact us for guidance in this area.

Internet link: BIS response

New Proposals to Streamline Employment Law

Vince Cable has announced measures to give employers more flexibility in managing their workforce by reducing employment law red tape.

According to the press release:

‘The government has given details of:

• Its support for settlement agreements to help end employment relationships in a fair and consensual way.
• A consultation on how best to make this work in practice starts today and Acas has agreed to provide a new code of practice.
• How it might reduce the cap on compensation for unfair dismissal claims.
• Proposals to streamline employment tribunals by making it easier for judges to dismiss weak cases
• Responses to its call for evidence on the TUPE rules, when staff transfer to a new employer. Government has heard that businesses want this to be more efficient, and will consult on specific proposals before the end of the year.
• Recommendations on how to improve guidance for small businesses on the Acas code of practice on discipline and grievance.’

Internet link: BIS news