29 June, 2010
June eNewsletter
eNEWS - June 2010
In this month’s enews we cover the key changes in the new government’s first Budget.
We also look at some initiatives from HMRC to help agents and their clients to reduce risk when preparing returns and to assist individuals in understanding the tax credits system.
Please browse through the articles using the links below and contact us if any issues or questions arise.
eNEWS quicklinks
Emergency Budget
Capital gains tax changes
Standard rate of VAT to increase
HMRC amend PAYE penalties guidance
Keep proper records!
HMRC launch tax credit video
Business link guidance for farmers
Maternity rights for the self employed
Emergency Budget
George Osborne presented his first Budget on Tuesday 22 June 2010.
For the first time, forecasts were published in advance of the Budget. The Office for Budget Responsibility was formed in May 2010 to make an independent assessment of the public finances and the economy in advance of each Budget and Pre-Budget Report. Within the framework of these forecasts George Osborne stated that a tough but fair Budget was needed.
Many fundamental announcements have been made which affect the taxation of most individuals and these include:
* An increase in the personal allowance of £1,000 from 6 April 2011 for those aged under 65 but higher rate taxpayers will not benefit due to a reduction in the basic rate band upper limit.
* An increase in the rate of VAT to 20% from 4 January 2011.
* A new 28% rate of capital gains tax for higher and additional rate taxpayers.
* An increase in the maximum Entrepreneurs’ Relief to £5 million from £2 million.
* A scheme to reduce NI contributions for new businesses in particular areas.
* Corporation tax rates to be reduced and the system to be reformed.
The Annual Investment Allowance for capital allowances is to be reduced from £100,000 to £25,000 and the annual writing down allowances are to be reduced from April 2012.
Link: Treasury Website
Capital gains tax changes
A new rate of Capital Gains Tax (CGT) of 28% will be introduced. For individuals, the rate of CGT remains at 18% where total taxable gains and income, after taking into account all allowable deductions including losses, personal allowances and the CGT annual exemption, are less than the basic rate limit. The new 28% rate will apply to gains or any parts of gains above this limit.
The new rate of CGT will apply to gains arising on or after 23 June 2010.
Subject to a number of conditions, gains on qualifying business disposals by individuals and certain trustees are eligible for Entrepreneurs’ Relief. This provides an effective CGT rate of 10% and works by applying a 4/9 reduction to the chargeable gain and then charging the balance at 18%. The change to the CGT rate would mean that the normal 4/9 reduction would no longer achieve 10%. The rules will be changed so that the rate of tax for gains on qualifying disposals on or after 23 June 2010 will be 10% and the previous 4/9 reduction will cease to apply from this date.
The amount of gains that can qualify for Entrepreneurs’ Relief will also be raised from £2 million to £5 million for gains arising on or after 23 June 2010.
Link: HMRC Budget note
Standard rate of VAT to increase
It is proposed to increase the standard rate of VAT from 17.5% to 20% with effect for any supply made on or after 4 January 2011. The rate change does not affect either zero-rated supplies nor those supplies subject to VAT at the 5% reduced rate.
Detailed guidance has been issued by HMRC for businesses on implementing the change.
Links: HMRC Budget note HMRC guidance
HMRC amend PAYE penalties guidance
At the start of the tax year new late payment penalties were introduced for PAYE and other payments due from employers. The new rules apply to almost all employers and contractors, whether they employ one or a hundred employees. The rules apply to monthly, quarterly and annual periods of PAYE starting on or after 6 April 2010.
HMRC can impose late payment penalties on PAYE amounts due that are not paid in full on time, including:
* monthly, quarterly or annual PAYE;
* student loan deductions;
* Construction Industry Scheme deductions;
* Class 1 NIC; and
* annual payments of employers' Class 1A and Class 1B NIC.
HMRC have now amended their guidance to include comments on so-called ‘warning letters’. HMRC state:
‘The letter is only to let you know that HMRC think you have made a PAYE payment late and that a penalty could be charged. It is not a penalty notice and you can’t appeal against it.
Importantly, it does not mean a penalty will definitely be charged, and you may get a penalty even if you do not get a letter.
If you agree that you have made a late payment, you should make sure you pay on time and in full in future. The next time you pay late you may become liable to a penalty. HMRC will contact you before a penalty is charged. If they charge a penalty they will send you a penalty notice.
If you believe you have received a letter in error, perhaps because you have already paid, have a time to pay agreement or have a ‘reasonable excuse’ you don’t need to contact HMRC yet. But you may find it helpful make a note of why you don’t think a penalty is chargeable in case HMRC contact you about penalty action in future.’
If you receive a letter but have paid on time, it may worth telling HMRC that their records are currently wrong to avoid problems later on. If you are experiencing problems with paying PAYE or any other tax on time, HMRC may be prepared to defer payment and this, in turn, may avoid penalties.
Please get in touch if you would like to discuss this further.
Link: HMRC guidance
Keep proper records!
HMRC have recently issued a reminder about the various 'toolkits' that they have developed to assist agents when preparing returns. Although the toolkits are aimed at tax professionals, they highlight common errors and the steps that can be taken to reduce those errors. The first series of toolkits cover:
* marginal small companies' relief;
* capital allowances for plant and machinery;
* personal and private expenditure;
* capital gains tax for land and buildings; and
* capital gains tax for trusts and estates.
The intriguing thing about all of the toolkits is that the main area of risk for all the above areas is record keeping or the lack of it!
In addition, for capital allowances for plant and machinery the main areas of risk include:
* record keeping e.g. different proportions of non-business use during the period of ownership and detailed records of all acquisitions and disposals;
* acquisitions and disposals e.g. whether the asset qualifies for capital allowances; and
* non-business use of assets, particularly cars.
For private and personal expenditure, the main areas of risk are:
* record keeping e.g. non-business expenses being incorrectly recorded or misposted in the business records and claimed in error as allowable expenses;
* personal bills being paid by the business;
* travel and subsistence;
* entertaining, gifts, subscriptions and sponsorship; and
* drawings and capital account.
So the moral is clear – good records today keep the taxman at bay. If you would like to discuss this area in more detail, please do get in touch.
Link: HMRC website
HMRC launch tax credit video
Every year, tax credit claimants must renew their tax credit awards by 31 July or their payments may stop. Claimants on ‘nil awards’, and those receiving only the full family element of Child Tax Credit, will receive a statement of their 2009/10 award. If these details are correct no further action is needed and the claims are automatically renewed. However, if the details on the award statement are wrong, claimants must tell HMRC.
HMRC have launched a series of online videos to help claimants through the annual renewal process. The interactive videos take claimants through the renewal process step-by-step, offering the chance to tailor the help to their own circumstances. The videos cover key areas such as:
* providing details of the previous year’s income;
* notifying HMRC of any changes in circumstances that haven’t already been reported during the year; and
* checking the accuracy of the information in the renewals pack.
HMRC’s Director of Benefits and Credits, Steve Lamey, said:
‘These new videos are a great way of getting help and advice on renewing your tax credits, and should be able to answer any questions you may have about the renewals process.
Once you’ve received your pack, please don’t put it off – renew straight away. The sooner you renew, the sooner we can make sure you’re receiving the right money.’
Links: News release Video
Business link guidance for farmers
Business Link has set up a dedicated new online service for farmers and growers. Whether they are starting up or looking to expand and diversify, the service will help:
‘…focus your planning, apply best practice and meet government requirements - whatever your agricultural sector.
You can access guidance and tools, and sign up for email alerts to let you know when the rules change. The content is developed by government experts and in consultation with farmers' groups. At the moment this content only applies to English legislation.’
Link: Business Link
Maternity rights for the self employed
It appears as though the self employed will become entitled to maternity leave for the first time under new laws introduced by the European Union (EU).
The new rules provide equivalent access to maternity leave as for employees but on a voluntary basis. The EU is expected to adopt the legislation at the end of June and then EU countries will have two years to introduce it into national law. So…watch this space.
Link: EU release
31 May, 2010
May eNewsletter
eNEWS - May 2010
In this month’s enews we include advice for those employers whose employees may suffer from World Cup fever! With an emergency Budget looming we will of course update you on any forthcoming changes.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
eNEWS quicklinks
Flexible working – the World Cup
State Pension age and national insurance contributions
Budget date announced
Changes to the advisory fuel rates from 1 June 2010
Child Trust Fund to be cut
Are there VAT increases ahead?
Holiday entitlement
P11D deadline looming
HMRC warn of email rebate scam
Flexible working – the World Cup
Acas (the Advisory, Conciliation and Arbitration Service) is advising employers to be ready for the World Cup. Some employees will be expecting their employers to be flexible about working hours so that they can watch matches. Employers may also be worrying about their employees being less productive, hung over or sick following over enthusiastic celebrations.
The World Cup kicks off in South Africa on 11 June 2010 and employers need to plan ahead to try and keep everyone happy. As matches are due to kick off at 12.30, 15.00 and 19.30 (UK time) employers will need to plan ahead to ensure they have a clear and consistent policy for those wanting to watch matches.
Acas advice as detailed on their website is that employers should try to be:
* “Flexible, where possible - for example, by altering start and finish times during the working day or allowing longer lunch breaks
* Clear about what you expect from employees - in terms of attendance and performance during the World Cup. Managing employees’ expectations of what might be possible is key to keeping them onside
* Communicative - start talking to each other now about the World Cup and how you hope to manage leave and working hours
* Honest - if you cannot accommodate any changes to your work practices then say so. Also, you may need to remind employees that any special arrangements for watching matches are only temporary
* Fair - you need to be seen to be fair about the way you respond to requests for time off and avoid favouritism”.
For more advice visit the Acas website. For details of when the matches are being played visit the FIFA website link below.
Internet links: Acas article FIFA website
State Pension age and national insurance contributions
HMRC are reminding employers to take care when deciding whether or not their employees need to pay national insurance contributions (NICs). Employees do not need to pay NICs on reaching State Pension age (SPa). Some payroll software warns employers as women approach age 60 to check their national insurance status as previously women would have been exempt from the employee contribution from age 60. This warning may now be being issued too early.
As a result of changes brought in by the 1995 Pensions Act, from 6 April 2010 the age at which women reach SPa will gradually rise to become the same as it is for men of 65. The change is being phased in between 6 April 2010 and 6 April 2020 on a sliding scale, and will affect women born between 6 April 1950 and 5 April 1955. All women born on or after 6 April 1955 will reach SPa at age 65.
For more information see the latest Employer Bulletin and for a look up table of dates see appendix C following the link below.
Internet links: Employer Bulletin DWP report
Budget date announced
The new coalition government is settling into office and a date has been announced for the emergency Budget. Chancellor of the Exchequer George Osborne will present the emergency Budget on Tuesday 22 June 2010.
Some details of government proposals can be found in the Coalition Agreement which can be accessed using the link below.
We will keep you informed of announcements.
Internet links: Treasury press release Coalition agreement
Changes to the advisory fuel rates from 1 June 2010
To reflect the increase in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from 1 June 2010, so employers using the advisory rates should advise affected employees and update any expense forms as soon as possible.
The advisory fuel rates may be used for journeys undertaken on or after 1 June 2010.
Engine size
Petrol
Diesel
LPG
1400cc or less
12p (11p)
11p (11p)
8p (7p)
1401cc – 2000cc
15p (14p)
11p (11p)
10p (8p)
Over 2000cc
21p (20p)
16p (14p)
14p (12p)
HMRC have in the past given employers a month’s notice of changes to these rates. However, according to the HMRC guidance:
“These rates apply to all journeys on or after 1 June 2010 until further notice, allowing them to reflect fuel prices more quickly. 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.”
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
Child Trust Fund to be cut
The government has outlined plans to make changes to the Child Trust Fund as part of plans to cut £6 billion in expenditure.
The government intends to introduce secondary legislation to scale back government payments due to Child Trust Funds from 1 August 2010. From that date, payments at birth will be reduced from £250 to £50 for better off families, and £500 to £100 for lower income families; and payments at age 7 stopped. The government intends to introduce primary legislation to stop all payments from 1 January 2011. Additional contributions for disabled children will be paid this year. From 2011/12 the money used for these additional contributions will be redirected to respite care for disabled children.
Internet links: Times online Press notice
Are there VAT increases ahead?
The British Chamber of Commerce are predicting that we should expect an increase in VAT to help deal with the country’s budget deficit.
David Frost Director General of the British Chambers of Commerce (BCC) said:
“…… the employer National Insurance rise, planned for 2011, should be abolished in full. Most businesses expect VAT to increase after an election to help plug the hole in our public finances. Considering companies have already said that VAT would be less damaging to their operation than a hike in NICs, it seems obvious that the tax on jobs should be scrapped and replaced by a less harmful tax on consumption.”
Internet link: BCC press release
Holiday entitlement
With signs that spring is finally here many employees will be planning or longing for their summer holidays. Holiday entitlement is one of the complex areas which can cause employee dissatisfaction if not handled correctly, especially for those with part time or irregular hours. Since 1 April 2009 the minimum statutory holiday entitlement has been 5.6 weeks inclusive of Bank Holidays, the equivalent of 28 days for those employees working a five day week. Employers may of course offer more holiday if they wish.
To check either your own, or your employees minimum holiday entitlement visit the link below.
Internet link: Business link website
P11D deadline looming
The forms P11D, and where appropriate P9D, which report employees’ and directors’ benefits and expenses for the year ended 5 April 2010, are due for submission to HMRC by 6 July 2010. 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 12.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.
If you would like any help with the completion of forms P11D or the calculation of the Class 1A liability please get in touch.
Employers may wish to complete the forms electronically and submit them online. For information on this use the online submission link below.
Internet links: HMRC P11D guidance Online submission
HMRC warn of email rebate scam
HMRC are warning that taxpayers are being emailed stating that they are entitled to a tax rebate. These emails are being sent from a number of bogus email addresses. They inform recipients that they are entitled to a tax rebate and invite them to complete an online form to receive a rebate of tax.
HMRC are advising that taxpayers should not visit the website contained within the email or disclose any personal or payment information.
Email addresses used to distribute the tax rebate emails include:
* refunds@hmrc.gov.uk
* info@hmrc.gov.uk
* attached.form@hmrc.attached.gov.uk
* service@hmrc.gov.uk
* hmrcrefunds@hmrc.gov.uk
* refundsdept@ir-efile.gov.uk
* noreply@notifications.gov.uk
* customers@hmrc.gov.uk
* taxcredits@hmrc.co.uk
* notice-hm@hmrc.gov.uk
* securemail@hmrc.gov.uk
* hmrc@tax-revenue.uk
* tndrftnpcb@aol.com
HMRC have confirmed that they do not send out emails using these email addresses.
Internet link: HMRC scam email examples
30 April, 2010
April eNewsletter
eNEWS - April 2010
This month’s enews contains several employer related articles following the end of the tax year. With a General Election looming we will of course update you on any forthcoming changes. Who knows what the following month will bring with the various parties and their election promises.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
eNEWS quicklinks
Penalty guidance on late payment of PAYE
National Minimum Wage rates
Furnished holiday letting reprieve
HMRC offer advice on fraud emails
P11D deadline looming
VAT and Royal Mail postage
Online submission of employers forms
Penalty guidance on late payment of PAYE
HMRC have been warning employers for some time that they may have to pay a penalty if they do not pay their PAYE deductions on time. They have now issued more detailed guidance on the way in which the penalties will work. The penalties will apply to PAYE deductions due for a period starting on or after 6 April 2010 include PAYE, Student Loan deductions, Construction Industry Scheme payments, Class 1 NICs, annual payments of employers' Class 1A NICs and annual PAYE Settlement Agreements payments.
Deductions of PAYE, NICs, Student Loan deductions and Construction Industry Scheme payments are generally due by 19 of each month (or 22 if paid by electronic means and cleared into HMRC’s bank account). Small employers are able to pay quarterly.
HMRC are advising employers to let HMRC know if they are likely to have difficulty making a payment on time, so that arrangements can be made and penalties can be avoided. Their guidance states that where employers enter into ‘time to pay’ arrangements, before the liability becomes due, no penalty will be charged.
Penalties for late payment start at 1% increasing to 4% depending on the number of late payments in the year. Extra penalties will be added where liabilities are outstanding for a further six and then 12 months.
Internet link: HMRC guidance on late payment
National Minimum Wage rates
From October 2010, National Minimum Wage rates will increase from
* £5.80 to £5.93 an hour for workers aged 21 and over
* £4.83 to £4.92 an hour for workers aged 18 to 20
* £3.57 to £3.64 an hour for workers aged 16 to 17.
The government has extended the adult minimum wage rate to 21 (previously 22) year-olds from October 2010 and, for the first time, an apprentice minimum wage rate has been set at £2.50 an hour.
The Low Pay Commission Chairman David Norgrove said:
"We are pleased that the government has again accepted the Commission’s recommendations. The introduction of an apprentice rate marks an important extension to minimum wage protection across the UK."
Penalties for non compliance
From April 2009 HMRC are able to charge penalties to those employers found to be in breach of the NMW rules.
Automatic penalties are levied on employers where HMRC officers find NMW arrears. The penalties range from £100 to £5,000 with 50% prompt payment discounts for employers who settle within 14 days of notification.
The penalty is payable in addition to arrears owed to the workers.
In serious cases of non compliance the employer may be tried in a Crown Court and in those cases the fines are unlimited.
If you have any queries on the NMW please do get in touch.
Internet links: NMW rates NMW penalties
Furnished holiday letting reprieve
Getting the Finance Bill 2010 passed between when it was published on 1 April 2010 and the dissolution of Parliament on 12 April was always set to be a heavy load in spite of the fact that there were only 73 clauses and supporting schedules.
That load was lightened as certain of the more unpopular proposals were dropped. The abandoned additional increase on cider duty compared to other alcoholic drinks may have grabbed the headlines but another tax related proposal may be of wider interest.
The favourable tax regime for Furnished Holiday Lettings accommodation was due to be repealed from 6 April 2010. This proposal was dropped from the Finance Bill but what happens next depends on the outcome of the General Election. The Financial Secretary to the Treasury has pledged that this and the other withdrawn clauses will be re-introduced in a second Finance Bill should his party be returned to government.
It does mean for the present there is uncertainty as to the tax treatment of this type of property business as 2010/11 gets under way. We will keep you informed of any further developments.
Internet link: Accountingweb article
HMRC offer advice on fraud emails
HMRC are reminding taxpayers to be vigilant as there have been several reports of scam emails.
Where taxpayers believe they may have been the victim of an email scam they should report the matter to their bank/card issuer as soon as possible. HMRC have previously advised that that those providing their details have had their accounts emptied and credit cards used to their limit. Victims are also at risk of having their personal details sold on to organised criminal gangs.
This is not the only area where HMRC are aware of a problem. Companies are being targeted by email for a National Insurance service. The email offers the service of applying for a rebate of National Insurance on the customer’s behalf, usually for a fee. These companies are not affiliated with HMRC in any way.
HMRC’s further advice is to:
* Check the http://www.hmrc.gov.uk/security/fraud-attempts.htm to see if the email you have received is listed.
* Forward suspicious emails to HMRC at phishing@hmrc.gsi.gov.uk and then delete it from your computer/mail account.
* Do not click on websites, links contained in suspicious emails or open attachments.
Follow advice from www.getsafeonline.co.uk
Internet link: HMRC current security messages
P11D deadline looming
The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2010, are due for submission to HMRC by 6 July 2010. 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 12.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.
If you would like any help with the completion of forms P11D or the calculation of the Class 1A liability please get in touch.
Internet link: HMRC P11D guidance
VAT and Royal Mail postage
Some types of postal services offered by the Royal Mail will be subject to VAT from 31 January 2011.
According to the latest information issued by HMRC
“In broad terms, the proposed changes will mean that any service which is individually negotiated or not subject to any price and regulatory control will become liable to VAT at the standard rate. This includes, but is not limited to:
* all individually negotiated services
* Parcelforce services
* door-to-door (unaddressed mail)
* mailroom services”.
The change follows European Court of Justice Decision known as TNT Post UK Ltd which ruled that the UK has applied the exemption for postal services more widely than was permitted under the special rules which applied to Post Office Mail. HMRC will introduce new legislation to amend the rules from 31 January 2011.
HMRC are currently considering claims submitted by businesses following the TNT case. As claims are subject to strict time limits it is important to act quickly. It should be noted that first, second and metered mail and standard parcel delivery are and will continue to be exempt. A claim cannot be made in respect of these services.
For more information please do get in touch.
Internet links: VAT Brief VAT on postage
Online submission of employers forms
The employer’s annual returns P35 and P14 (P60) are due for submission to HMRC by 19 May 2010. Broadly all employers must submit their forms online this year. Previously those employers with less than 50 employees could file paper forms.
The final date for payment of PAYE, National Insurance Contributions, Construction Industry Scheme deductions and Student Loan deductions was 19 April 2010 (22 April 2010 for cleared receipt of electronic payments into HMRC’s bank account).
The deadline for providing employees with their forms P60 is 31 May 2010 (Bank Holiday Monday). Employees must be provided with a paper form P60 this year. HMRC have confirmed that for 2010/11 electronic forms will be acceptable.
Internet links: HMRC employer guidance IPP press release
26 March, 2010
March eNewsletter
eNEWS - March 2010
This month’s enews is dominated by the Budget. With the General Election looming, Alistair Darling had some significant announcements to make which are set out below. We also report on other news including changes to the rules on VAT payments and the introduction of ‘Fit notes’.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
eNEWS quicklinks
Budget 2010
Annual investment allowance increased
Close company loan write offs
Entrepreneurs’ Relief
Inheritance tax nil rate band frozen
Stamp duty land tax and first time home buyers
Payment of VAT
Employer supported childcare
National Insurance - new EU rules
HMRC will publish details of ‘deliberate’ offenders
Official rate of interest
Employment rate falls to 72.2%
Fit notes
Budget 2010
Alistair Darling presented his third Budget on Wednesday 24 March 2010.
Having acknowledged that the country is emerging from deep global recession and needing to provide a route to long term prosperity he announced a number of new measures.
Main Budget proposals:
* Entrepreneurs’ Relief limit doubled to £2 million
* Annual Investment Allowance doubled to £100,000
* Changes to certain loan write off rules for close companies
* Inheritance tax nil rate band frozen at £325,000 until 2014/15
* SDLT relief is introduced for first time home buyers.
Please see the articles on these specific topics to find out more details of the changes.
Internet link: Treasury website
Annual investment allowance increased
Most businesses are able to claim an Annual Investment Allowance (AIA) on the first £50,000 spent on plant and machinery. This provides immediate 100% tax relief on qualifying expenditure.
The allowance is to increase to £100,000 from 1 April 2010 for a business within the charge to corporation tax and from 6 April 2010 for a business within the charge to income tax.
As the chargeable accounting periods of many businesses will span the operative date of change, a pro rata calculation of their maximum entitlement will be required.
Please do contact us if you would like advice on how this increased allowance will affect your business.
Internet link: Budget report AIA
Close company loan write offs
Close companies, generally meaning family and owner managed companies, are subject to special rules in relation to loans or advances made to participators and their associates. Participators primarily means shareholders. Where such loans are written off or released an equivalent amount is treated as a deemed net dividend for income tax purposes.
This aspect remains unchanged but the position of the company for corporation tax is to be altered.
Under the corporation tax rules governing corporate debt (the ‘loan relationships’ rules) the company may be entitled to a deduction against its tax liability. A loan released or written off will normally give rise to an expense recognised in the company’s accounts.
The release or write off of loans to participators will not obtain a corporation tax deduction when made on or after Budget day.
HMRC is seeking to clarify the law so that there is no tax advantage to a shareholder/ director receiving a loan from a company which then claims a corporation tax deduction compared to the shareholder/director receiving a dividend (for which there is no corporation tax deduction for the company).
Please do get in touch if you would like further advice in this area.
Internet link: Draft legislation
Entrepreneurs' relief
The amount of an individual’s capital gains that can qualify for Entrepreneurs’ Relief are currently subject to a lifetime limit of £1 million. Gains qualifying for the relief are charged at an effective tax rate of 10% rather than the usual rate of 18%.
The lifetime limit will be doubled to £2 million for disposals on or after 6 April 2010.
Internet link: HMRC Budget note
Inheritance tax nil rate band frozen
As previously announced, the nil rate band for 2010/11 will be frozen at the current level of £325,000. This will now be extended to cover the tax years 2011/12 to 2014/15.
Internet link: HMRC Budget note
Stamp duty land tax and first time home buyers
At present the Stamp Duty Land Tax rate is 1% for residential property purchases where the consideration is more than £125,000 but does not exceed £250,000.
Legislation will be introduced in the Finance Bill to give relief from SDLT where the consideration is more than £125,000 but not more than £250,000. This relief will apply where the purchaser or all the purchasers are first time buyers and intend to occupy the property as their only or main home.
The new relief will be available for residential property purchases where the effective date (normally the date of completion) is on or after 25 March 2010 and before 25 March 2012.
The current highest SDLT rate of 4% applies to residential property purchases where the consideration exceeds £500,000. A new rate of 5% will be introduced for transactions in residential property where the consideration exceeds £1 million.
This new higher rate will apply where the effective date is on or after 6 April 2011.
Internet link: Budget report SDLT
Payment of VAT
HMRC are advising businesses that from 1 April 2010 all cheque payments by post will be treated as being received by HMRC on the date when cleared funds reach HMRC's bank account. This change does not affect any cheque payments made by Bank Giro.
Affected businesses will need to ensure that they allow enough time for the payment to reach HMRC and clear into HMRC’s bank account. This needs to happen no later than the due date shown on their VAT return.
According to HMRC’s guidance:
"A cheque takes three bank working days to clear. Bank working days are Monday to Friday excluding bank holidays.
To allow for possible postal delays (for which HMRC is not responsible) please allow at least three working days for the cheque payment to reach them and a further three days for the payment to clear HMRC’s bank account.
If your cheque payment does not clear by the due date shown on your VAT return you may be liable to a surcharge for late payment."
From 1 April 2010 it will be mandatory for all VAT-registered traders with a turnover of £100,000 or more, plus any newly registered traders (regardless of turnover), to submit their returns online and pay electronically. For guidance about electronic payment methods use the second link below or please do contact us.
Internet links: HMRC guidance HMRC how to pay VAT
Employer supported childcare
In 2009 the government announced changes to employer supported childcare and HMRC have now issued further guidance on the changes.
The amount of tax free childcare vouchers and directly contracted childcare for employees joining an employer’s scheme will be restricted in cases where an employee’s earnings and taxable benefits are liable to tax at the higher or additional rate.
Anyone already in a scheme by 5 April 2011 will not be affected by these changes as long as they remain within the scheme.
From 6 April 2011, employers who provide employer-supported childcare will be required, at the beginning of the relevant tax year, to estimate the level of employment earnings that their employee is likely to receive during that year, ignoring potential bonus and overtime payments, but including other known taxable benefits.
If the level of estimated earnings and taxable benefits is equal to or below the equivalent of the sum of personal allowances and the basic rate limit for the year, the employee will be entitled to relief on £55 exempt income for each qualifying week. This is the same as the current amount.
If the level of estimated earnings and taxable benefits exceed the equivalent of the sum of personal allowances and the basic rate limit for the year, but falls below the limit at which tax becomes payable at the additional (50%) rate limit for the year, the employee will be entitled to relief on £28 exempt income for each qualifying week.
If the level of estimated earnings and taxable benefits exceed the equivalent of the additional (50%) rate limit for the year, the employee will be entitled to relief on £22 exempt income for each qualifying week.
If you would like to review your childcare provision options in light of the above please do get in touch.
Internet link: HMRC childcare
National insurance - new EU rules
HMRC have released new guidance for employers about forthcoming changes to EU rules regarding national insurance for people moving around Europe for work. The rules apply from 1 May 2010. To read the guidance in full, please use the link below.
Internet link: HMRC NIC guidance
HMRC will publish details of ‘deliberate’ offenders
HMRC have the necessary power under existing tax law to publish the details of taxpayers where it is established that they have committed ‘deliberate’ tax offences. HMRC have confirmed that they will apply this provision for tax periods starting on or after 1 April 2010 and for offences which are committed on or after this date.
Internet link: HMRC press release
Official rate of interest
From 6 April 2010 the official rate of interest applying to interest-free or low interest loans made to employees will be 4%. The current rate is 4.75%. Employees are generally liable to tax on a benefit equal to the amount of interest, calculated at the official rate, where the balance of the loan exceeds £5,000 at any point in the tax year.
Internet link: HMRC beneficial loan interest rate
Employment rate falls to 72.2%
The government has announced the latest employment statistics which show the number of people in employment has dropped by 54,000.
Ian McCafferty, CBI Chief Economic Adviser, reacting to the latest statistics said:
"Although the fall in unemployment is welcome, the figures also show that the number of people actually in work continued to fall, which is a concern.
The number or people in full-time employment dropped by 54,000 in the three months to January, while the number of part-time jobs was unchanged. Unlike previous months, an increase in part-time work did not help to offset falls in full-time employment.
Clearly, the labour market is still very fragile. Growth is not yet sufficient to generate net new job creation."
Internet links: Government Statistics CBI press release
Fit notes
Fit notes will be brought into effect from April 2010 and are a replacement for sick notes. The information that doctors will be asked to provide means that instead of giving patients a sick note saying they are too ill to work, they will be able to advise whether a person may be fit for work with some help and support, and what employers can do to assist in this process. Assistance could include a phased return to work, altered hours, amended duties or workplace adaptations.
According to the advice given on the Business link website:
"If a doctor uses this option, they will give advice about the effects of the patient's health condition and, if appropriate, some suggestions about the types of adjustment or adaptations you could consider making to help your employee back to work.
While you won't have to act on the doctor's advice in a 'may be fit for work' statement, it may help you make simple and practical adjustments to help your employee return to work and reduce unnecessary sickness absence.
If for any reason you can't make the changes necessary to support your employee's return to work, you should - for sick pay purposes - consider the statement as if the doctor had advised that your employee is 'not fit for work'."
The initiative is designed to encourage employers to be more responsible regarding employee rehabilitation and aims to help reduce the impact of long-term sick leave.
Internet links: Department for Work and Pensions Business link guidance for employers
26 February, 2010
February eNewsletter
FEBRUARY 2010 -
INTRODUCTION
In this month’s enews, as the profession recovers
from the 31 January 2010 self assessment deadline, we advise you of the latest
news including the record number of returns filed online and the latest
inflation figures.
Please browse through the articles using the links
below and contact us if any issues or questions arise.
New record for filing online tax returns
HMRC offer advice on fraud emails
New record for filing online tax returns
According to HMRC statistics a record number of taxpayers filed their Self Assessment tax returns online this year.
Apparently 6,429,899 people filed online by 31 January 2010 deadline. This number was three quarters of all returns submitted and was an increase of nearly 12% on the 2009 total of 5.8 million.
Financial Secretary to the Treasury, Stephen Timms said:
"More people than ever before are now filing their tax returns online. It’s easier, quicker and HMRC processes your return faster, so any money you’re owed is repaid more quickly. If you haven’t yet made the switch from paper to online, do so, and join the millions who are benefiting already."
Internet link: Press release
HMRC offer advice on fraud emails
HMRC are warning taxpayers to be vigilant as there have been several reports of scam emails offering a tax repayment. Taxpayers should not respond to any email promising a tax repayment.
The email advises the recipient they are due a tax refund and directs them to an online form to provide bank or credit card details for the payment of the “rebate”.
Where taxpayers believe they may have been the victim of an email scam they should report the matter to their bank/card issuer as soon as possible. HMRC are advising that those providing their details have had their accounts emptied and credit cards used to their limit. Victims are also at risk of having their personal details sold on to organised criminal gangs.
HMRC are expecting an increase in this type of email as following the Self Assessment filing deadline, many taxpayers will be waiting to receive confirmation of their repayment.
HMRC said:
“We only ever contact customers who are due a refund by post. We never use emails, telephone calls or external companies in these circumstances. We strongly urge anyone receiving such an email to send it to us for investigation before deleting it.”
HMRC’s further advice is to:
- Check the advice published at www.hmrc.gov.uk/security/index.htm to see if the email you have received is listed.
- Forward suspicious emails to HMRC at phishing@hmrc.gsi.gov.uk and then delete it from your computer/mail account.
- Do not click on websites, links contained in suspicious emails or open attachments
- Follow advice from www.getsafeonline.co.uk
- Check with HMRC at http://www.hmrc.gov.uk/security/fraud-attempts.htm
Internet link: Press release
Managed Payment Plans
HMRC has announced that they will launch a new method of paying tax liabilities, known as Managed Payment Plans, in April 2011.
The plan could be entered into by any individual taxpayer making payments under Self Assessment (whether final payments or payments on account) and by companies, under corporation tax self assessment. Group companies and those already subject to quarterly instalment arrangements will be unable to apply.
In order to be able to take advantage of the scheme, which allows the tax to be paid in monthly instalments, taxpayers will have to meet certain conditions:
- The taxpayer has made their self assessment for the year.
- All previous tax must have been paid or time to pay arrangements must already be in place.
- Payments must be made by direct debit.
Payments need to be made in equal monthly instalments on 15th of each month spread symmetrically either side of the payment date. In order to take advantage of a full twelve months to pay, taxpayers will need to make their self assessment and propose their plans by the following dates:
- 31 October for SA taxpayers who are required to make payments on account on 31 January and 31 July;
- 31 July for SA taxpayers who only have a final 31 January payment to make;
- six months before the normal due date for payment for CTSA.
The deadlines for the submission of returns are tight. If you are interested in taking advantage of the payment option please do get in touch so we can look into the matter for you.
Internet link: HMRC news
Student loan repayments
HMRC have announced a new initiative to reduce student loan over repayments for those ex students who repay their loan through PAYE deductions.
Ex students have been in the position whereby it has been difficult for them to avoid over repaying their student loan as the loan term came to an end. This is due to the time delay between their employer making deductions from their salary each month and submitting an annual return showing the individual repayment amounts for each employee.
Ex students will now be able to opt out of PAYE repayments in the last 23 months of repayment and transfer to a Direct Debit arrangement. This should mean that the ex student will not over repay their loan.
This new initiative has been introduced by the Student Loans Company (SLC). The SLC will try to contact borrowers shortly before the last 23 months to offer and arrange this option. However if a borrower is aware that they are reaching this point they can contact the SLC direct and arrange to repay the balance of their loan in this way.
Employers will not have to change their procedures as their authority to stop making deductions comes from HMRC on a form SL2 Stop Notice and this authority will be issued in the normal way.
Internet links: HMRC student loan advice SLC repayment website
Tax codes being issued
HMRC have updated their guidance on the issue of multiple or incorrect PAYE tax codes to some employees following the introduction of their new National Insurance and PAYE computer system.
HMRC have admitted that the changeover to the new system has brought to light some discrepancies in their records which have resulted in some incorrect coding notices being issued.
HMRC advise that three main situations may result in incorrect coding notices. Their updated guidance states that:
- a previous employment stopped some time ago but HMRC’s system has not picked this up and a Coding Notice has been sent for that employment
- two notices have been sent for the same employment
- the code BR (basic tax) or DO (higher rate tax) has been given for an employment or pension for the first time.
HMRC advise that they will try to correct as many of these discrepancies as possible well in advance of the new tax year.
Please do get in touch if you would like us to check your tax code.
Internet link: HMRC guidance
Vehicle Scrappage
The Vehicle Scrappage Scheme is a voluntary scheme for motor dealers under which participating dealers give buyers a £2,000 discount off the purchase price of a new car (or certain types of small van) in exchange for scrapping their old qualifying vehicle.
The government has announced that the deadline for the end of the Vehicle Scrappage Scheme has been extended from the proposed February 2010 to March 2010. The extension is to allow manufacturers and dealers more time to prepare for and operate the final phase of the scheme.
The scheme, which is jointly run by the government and car manufacturers, will now run until the end of March 2010 or until the funding is exhausted, whichever is the sooner.
Business Secretary Lord Mandelson said:
“Against the background of the economic
downturn the Scrappage Scheme has proved a great success, driving
“If you’re considering buying a new car, you should place your order as soon as possible to avoid disappointment, because the budget is strictly limited.”
Internet links: Press release Scrappage website
Inflation
Government figures released show that the inflation rate increased to 3.5% in January 2010 from the previous month’s figure of 2.9%.
The Consumer Prices Index (CPI) inflation percentage was affected by both the VAT rate returning to 17.5% and higher fuel prices.
The Retail Prices Index (RPI) inflation which includes housing costs rose to 3.7% in January 2010 (from 2.4%).
Internet link: BBC news
31 January, 2010
January eNewsletter
JANUARY 2010 - INTRODUCTION
In this month’s enews we report on the latest HMRC disclosure opportunity and advise you to check any PAYE tax code you receive with care.
Please browse through the articles using the links below and contact us if any issues or questions arise.
The Tax Health Plan (THP)
HMRC new scam emails
Employment Rights - Statutory limits
Dispensations - new online application form
Tax codes being issued
Scrappage Scheme
Statutory payments
Using your own car for work
Tax payments
THE TAX HEALTH PLAN (THP)
HMRC have obtained information from various sources, including NHS trusts, private hospitals and medical insurers and are introducing the THP as an opportunity for medical professionals with tax to pay to get their affairs up to date with the benefit of a fixed penalty.
Taxpayers must notify HMRC of the intention to make a disclosure by 31 March 2010 and must make a full disclosure of all undeclared liabilities and full payment of all outstanding taxes and duties, interest and penalties by 30 June 2010.
The penalty is fixed at 10% of the taxes/duties underpaid unless the total amount of unpaid liability being disclosed is less than £1,000, in which case there is no penalty.
.
HMRC will pursue those with undeclared tax liabilities who decide not to make a disclosure.
The THP is initially open to members of the General Medical Council but is expected to be extended to other health professionals including dentists.
If you have any concerns in this area please do get in touch.
Internet link: HMRC guidance on THP
HMRC NEW SCAM EMAILS
HMRC have issued a warning about a new scam email which is being sent from ‘HMRC Online Services – test@test.com’ stating that the recipient has one new ALERT message and should log onto their Online Account to read the message.
The email includes a link to a fraudulent website which asks the taxpayer for their personal account information and password. HMRC are advising that the email is not from them and that anyone receiving a copy should forward it to them at phising@hmrc.gsi.gov.uk
Internet link: HMRC scam email example
EMPLOYMENT RIGHTS - STATUTORY LIMITS
The limit on the amount of the compensatory award for unfair dismissal is set to decrease from 1 February 2010. The current maximum of £66,200 is to reduce to £65,300, due to the decrease in the retail prices index measure of inflation. This new limit applies where the event giving rise to the entitlement to the payment arose on or after 1 February 2010.
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 payment has not been amended from the current amount of £380. This rate has been in force since 1 October 2009.
The Business Link website includes a useful calculator of statutory redundancy entitlement.
Internet links: Business link calculator Statutory instrument
DISPENSATIONS - NEW ONLINE APPLICATION FORM
HMRC have introduced the facility to apply for dispensations online.
Where an employer has a dispensation they do not have to report expenses and certain benefits to HMRC on forms P9D or P11D at the end of the tax year. Where employers have a dispensation in place this can be time saving.
If you would like to discuss applying for a dispensation please do get in touch.
Internet link: HMRC guidance on dispensations
TAX CODES BEING ISSUED
HMRC are advising employees that between January and March 2010 they will be issuing new PAYE coding for 2010/11. The tax codes should reflect the individual’s personal circumstances and include the tax allowances and reliefs that individuals are entitled to.
HMRC are advising that this is the first time the annual coding process will take place using HMRC's new computer system for processing PAYE, known as the National Insurance and PAYE Service (NPS). HMRC are expecting more employees than usual, approximately 25 million, to receive coding notices because of the new system.
However, it appears that there may be a problem with the new coding notices, according to the Chartered Institute of Tax President Andrew Hubbard
“Most people on PAYE are used to assuming that what the taxman sends them is correct. Many file away coding notices without even bothering to check them.”
“But this year, many of them are being given wrong information, and unless they spot it and tell HMRC, their employer will receive the wrong information too, and they could get a nasty shock when they open their April pay packet and see it is as much as a hundred pounds lighter than they are expecting.”
According to the CIOT website
‘Those affected are thought to include taxpayers who have left a job in the last few years. The HMRC database appears to have ‘lost’ the information it holds about people leaving jobs and as a result is combining taxpayers’ current employment records with old data and concluding that they have two (or more) jobs and much higher earnings than they do.
Anyone with two jobs normally has their personal allowance (the portion of your income you do not have to pay tax on) counted against the job with the highest wage. As a result of the error many people will, in effect, have their personal allowance split between two jobs or allocated to a job they no longer have, meaning their current employer will be obliged to deduct too much income tax. The personal allowance will be £6,475 for most people under 65 in 2010/11. If the whole of that personal allowance is wrongly applied that would cut a basic rate taxpayer’s pay packet by about £108 a month or £1,295 a year.’
If you receive a new tax code and are unsure whether or not it is correct please let us know so we can check it for you.
Internet links: HMRC guidance on tax codes Chartered Institute of Tax statement
SCRAPPAGE SCHEME
The Vehicle Scrappage Scheme is a voluntary scheme for motor dealers under which participating dealers give buyers a £2,000 discount off the purchase price of a new car (or certain types of small van) in exchange for scrapping their old qualifying vehicle.
Funded jointly by the government and manufacturers, the scheme has proved very popular. Although the scheme is set to run until February 2010, recent figures show that approximately 80% of the available budget for the scheme has already been utilised. As the scheme enters its final stages the Department for Business will allocate order quotas to manufacturers based on brand popularity and it is hoped it will help to ensure a smooth closing of the scheme.
Lord Mandelson, Business Secretary, said:
“I’m pleased to see that the scheme has been taken up by so many people, supporting our automotive manufacturers through a very difficult time. With limited orders as we near the close of scrappage there is a risk of disappointment for car buyers. I would urge people who are still keen on taking part to put their orders in as soon as possible as time is running out.”
For general information on the £2,000 scrappage discounts and other conditions visit the scrappage website link below. For HMRC’s views on the business tax and VAT implications of the car and van scrappage scheme use the HMRC link below.
If you have any queries on the tax implications of the scheme please do get in touch.
Internet links: BIS press release Scrappage website HMRC Brief
STATUTORY PAYMENTS
The new Statutory Payment Rates for 2010/11 have been announced. The new rates are as follows:
The current Statutory Sick Pay (SSP) weekly rate of £79.15 is being retained for 2010/11.
The Statutory Maternity Pay (SMP) standard rate will be £124.88 for payment weeks beginning on or after 4 April 2010. The current rate is £123.06.
The same weekly rate applies to Statutory Paternity and Statutory Adoption Pay.
If you would like any help with any of these statutory payments please do get in touch.
Internet link: Business link statutory payment rates
USING YOUR OWN CAR FOR WORK
HMRC have updated their guidance on using your own vehicle for work. The guidance needs to be read in conjunction with the mileage rates which for those using their own car for work purposes are unchanged at 40 pence a mile for the first 10,000 miles dropping to 25 pence a mile thereafter.
Internet links: HMRC factsheet mileage HMRC mileage rates
TAX PAYMENTS
For those making tax and national insurance payments on 31 January 2010 HMRC are reminding that their bank details changed last year. To confirm that you are making payment to the correct bank account please visit the link below.
Internet link: HMRC bank details
31 December, 2009
December eNewsletter
DECEMBER 2009 - INTRODUCTION
In this
month’s enews we report on key announcements made in the Pre-Budget Report.
Please
browse through the articles using the links below and contact us if any issues
or questions arise.
With best
wishes for 2010.
Extra national insurance burden ahead
Special Annual Allowance charge – new limits for 2009/10
Changes to the advisory fuel rates from 1 December 2009
Tax relief on nursery vouchers
Extra national insurance burden ahead
One
of the significant announcements in the Pre-Budget Report earlier this month is
a further increase in national insurance contributions (NIC) which is to take
effect from 6 April 2011.
The
NIC rates and limits are broadly frozen for 2010/11 at the 2009/10 figures,
with a couple of minor exceptions.
An
increase in the rates of NIC is proposed from April 2011 with an extra 1% being
added to the rates applicable to employers, employees and the self-employed.
The main rate of Class 1 (employee) NIC will be 12% and the Class 4 rate will
be 9%. The employer rate will increase to 13.8%.
The
additional rate of Class 1 and 4 contributions, payable on pay and profits
currently in excess of £43,875, will also increase from the current 1% to 2%.
The
government has announced that it will protect those at the lower end of the
earnings scale by an increase in the point at which contributions become
payable. It is therefore expected that employees paying the standard employee
rate and earning below £20,000 will pay less NIC overall as a result of the
change.
The government had previously announced that NIC rates would increase by 0.5% from April 2011. This further increase of 0.5% will represent a significant increase in costs particularly for employers.
Internet link: HMRC
pbrn1
Special Annual Allowance charge – new limits for 2009/10
In the Pre-Budget Report earlier this month changes were announced to the complex rules for the Special Annual Allowance (SAA) charge which affects those with substantial income who make significant pension contributions. The current rate of the SAA charge is 20% on excess pension contributions. The aim of the charge is to discourage individuals from making significantly higher pension contributions in anticipation of the removal of higher rate tax relief which will occur in 2011.
The main features of the charge are:
· It applies for 2009/10 and 2010/11 to individuals with relevant income in excess of £150,000 in either of those years or the two preceding years and where increased pension contributions have been paid after 22 April 2009.
· The total pension contributions paid exceed £20,000 (the ‘SAA threshold’). A higher threshold of up to £30,000 may be possible depending on the level of contributions in previous years.
· The SAA threshold is reduced by the amount of so-called ‘protected’ contributions which are sums being paid at least quarterly under arrangements put in place before 22 April 2009.
It
is now proposed to lower the threshold for triggering the SAA charge by
reducing the relevant income limit to £130,000 with effect from 9 December
2009. Individuals will be affected by this if their relevant income in 2009/10
or either of the two preceding years exceeds £130,000. For 2009/10 only,
protected contributions will include any contributions paid up to and
including 8 December 2009.
The rules will
catch one-off contributions made by employers as well as lump sum payments made
by the scheme member. In either case the charge is on the individual.
If
you think you may be affected by this change in the rules please do get in
touch.
Internet link: HMRC
pbrn18
Bank payroll tax
In
a move designed to tackle certain remuneration practices that are considered to
have contributed to ‘excessive risk taking’ in the banking industry, a
temporary bank payroll tax of 50% is to apply to certain bonuses regardless of
how they are paid. The tax will apply to the amount of the bonus which exceeds
£25,000 for any individual employee and is applicable to banks, building societies
and other related financial businesses.
The bank payroll tax will apply to all discretionary and
contractual bonus awards made after the announcement of the measure on 9
December 2009, except for contractual bonus entitlements which existed at the time
of the announcement, where the payer has no discretion as to the amount of the
bonus. The initial charging period will run until 5 April 2010. However the
government has indicated that this period of charge could be extended until
other relevant provisions of the Financial Services Bill come into force.
This
one-off tax is payable on 31 August 2010. It will not be deductible in
calculating the institution’s profit or loss for corporation tax or income tax
purposes.
Internet link: HMRC bank payroll
Offshore disclosure extension
HMRC is giving taxpayers with offshore investments more time
to come forward under the New Disclosure Opportunity (NDO). The registration
deadline, which was due to expire on 30 November 2009 has been moved to 4
January 2010 as some banks need more time to contact their offshore customers.
HMRC are
reminding individuals that the NDO is the last opportunity for taxpayers to
obtain ‘favourable terms’ when advising HMRC of offshore investments that they
have never reported previously. HMRC are currently in the process of obtaining
information from 308
Dave
Hartnett, HMRC’s Permanent Secretary for Tax said:
“We know
that some bank customers will not be contacted by their banks in good time for
the original deadline of 30 November so in the interests of fairness we have
decided to extend our deadline by a month to 4 January.
“I
strongly urge anyone who has been hiding taxable assets offshore to go on line
and register. The NDO is voluntary but from the start of the New Year we will
begin to investigate those who were eligible to use the NDO but instead buried
their heads in the sand. Don’t let that happen to you.”
“This is
a great way to start the New Year – with the knowledge that your tax affairs
are in order and the certainty that the penalty will be capped at 10%.”
If you have any questions or concerns in this area please do
get in touch.
Internet link: HMRC press release
Changes to the advisory fuel rates from 1 December 2009
To
reflect the increase in fuel prices, HMRC have issued new advisory fuel rates
for employees driving employer provided cars. These take effect for all
journeys undertaken from 1 December, so employers using the advisory rates
should advise affected employees and update any expense forms as soon as
possible.
The advisory fuel rates may be used
for journeys undertaken on or after 1 December 2009.
|
Engine size |
Petrol |
Diesel |
LPG |
|
1400cc or less |
11p (10p) |
11p (10p) |
7p (7p) |
|
1401cc – 2000cc |
14p (12p) |
11p (10p) |
8p (8p) |
|
Over 2000cc |
20p (18p) |
14p (13p) |
12p (12p) |
HMRC
have in the past given employers a month’s notice of changes to these rates.
However, according to the HMRC guidance:
“After
discussions with the relevant trade bodies, the month's notice previously given
has been withdrawn for this change. Employers are not obliged to reimburse
their employees for business fuel at these rates as long as they do not exceed
them overall. Employers making or collecting payments at the superseded rate
because they have not been able to change their systems in time may use their
judgement on whether to make or require a second payment in respect of the same
period in order to apply the new rate from its effective date. However,
employers should note that under the normal rules, employees are only able to
avoid the car fuel benefit charge if the amount they repay in respect of
private fuel at least equals the amounts based on the rates as published.”
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
HMRC warn of more scam emails
As
the end of the year fast approaches HMRC are reminding taxpayers to be vigilant
as scam emails have been reported. For details of their latest guidance on scam
emails, more information on this and other scams together with a copy of the
latest example visit the links below.
Internet links: HMRC guidance Latest example
Tax relief on nursery vouchers
Gordon
Brown had revised his proposal to withdraw the income tax and NI exemption on employer
provided childcare vouchers.
Currently
employees are exempt from tax and NIC on childcare vouchers provided by
employers. The exemption is available on the first £55 a week of vouchers per
employee, as long as a range of conditions are met. Any excess over the £55 is
liable to tax and to NIC (both employees’ and employers’ contributions).
In
a change to the original announcement Gordon Brown has now said:
‘I have already made clear that no family currently in
receipt of tax relief for their childcare vouchers will see any change in the
support they receive. But following our discussions I can now also say that we
will retain tax relief for new childcare vouchers issued in the future.
However, there still remains a concern that a disproportionate benefit is accruing
to higher rate taxpayers. So in order to ensure that this tax relief is given
on a fairer basis to all families, we will ensure that all taxpayers get the
same income tax relief as basic rate taxpayers do currently. This will take
place from April 2011 and will not affect those receiving vouchers issued
before that date.’
Under
the revised proposals it appears that from April 2011, vouchers will not attract
the full current tax and NIC exemptions as their tax relief will be restricted
to the basic rate. Higher rate taxpayers
will be liable to tax on the vouchers at their marginal rate of tax of 20%,
being the difference between basic rate of 20% and the higher rate of 40%.
Vouchers
issued prior to April 2011 will be unaffected by the change.
<
30 October, 2009
October eNewsletter
OCTOBER 2009 – ENEWS
In this month’s enews we report on various issues including the announcement that tips no longer count towards employees pay for National Minimum Wage purposes.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
Tips don’t count towards the NMW
Tax relief on nursery vouchers to be withdrawn
Scrappage Scheme
Paying PAYE on time
31 October self assessment deadline
Online payroll starter and leaver forms
Royal Mail postal strike
TIPS DON’T COUNT TOWARDS THE NMW
As you may be aware the National Minimum Wage (NMW) rates increased from 1 October 2009 to:
• an adult rate of £5.80 an hour. This is payable to those age 22 and over.
• a development rate of £4.83 for those aged 18 – 21
• and for 17 year olds a rate of £3.57 an hour.
A change was made from the same date, to the elements of pay which can count towards the payment of the NMW rate. Tips, gratuities, cover charges and service charges do not count from 1 October 2009 towards NMW in any circumstances. This is a change to the previous rules which allowed such payments to count towards the NMW rate in certain circumstances.
As detailed on the Business Link website:
“…before 1 October 2009, tips, gratuities, service charges and cover charges did count towards the NMW as long as you paid them to your workers through your payroll. They no longer count towards the NMW, regardless of whether they are paid through your payroll or are given direct to workers by customers or a tronc master.”
If you have any queries on the NMW, or how this change impacts on your employees, please do get in touch.
Internet links: Business Link Website Employer Bulletin
TAX RELIEF ON NURSERY VOUCHERS TO BE WITHDRAWN
In his speech to the Labour Party Conference, the Prime Minister, Gordon Brown announced an extension of free nursery places, to be financed by the withdrawal of the tax and National Insurance (NIC) exemptions for childcare vouchers.
The proposal is that the provision of free nursery places will be extended to two year-olds (this would be on top of the existing free childcare available to three and four year olds). It is expected that 250,000 children will benefit from this by 2015/16.
However, the quid pro quo would be the eventual withdrawal of tax and NIC exemptions for employer provided childcare vouchers. Currently employees are exempt from tax and NIC on childcare vouchers provided by employers. The exemption is available on the first £55 a week of vouchers per employee, as long as a range of conditions are met. Any excess over the £55 is liable to tax and to NIC (both employees’ and employers’ contributions).
Under the proposals, it appears that from April 2011, employees who join an employer-supported voucher scheme will not be entitled to the current tax and NIC exemptions. Those already receiving vouchers will be unaffected until April 2015, when the exemptions for vouchers will be withdrawn completely.
More details are expected in the 2009 Pre-Budget Report.
Internet link: Childcare vouchers
SCRAPPAGE SCHEME
The Vehicle Scrappage Scheme is a voluntary scheme for motor dealers under which participating dealers give buyers a £2,000 discount off the purchase price of a new car (or certain types of small van) in exchange for scrapping their old qualifying vehicle. Funded by the government and manufacturers the scheme has proved very popular and according to the Department for Business Innovation and Skills (BIS) website 260,226 cars have now been scrapped under the scheme, which is set to run until February 2010.
An extra 100,000 (£100 million) has been added to the number of scrappage deals that the government will fund, taking it to 400,000 in total. In a change to the qualifying conditions, the age of the vehicle has also been adjusted to first registered on or before 29 February 2000 for cars or 28 February 2002 for vans.
For general information on the £2,000 scrappage discounts and other conditions visit the BIS website link below. For HMRC’s views on the business tax and VAT implications of the car and van scrappage scheme use the HMRC link below.
If you have any queries on the tax implications of the scheme please do get in touch.
Internet links: Scrappage website BIS website HMRC Brief
PAYING PAYE ON TIME
HMRC are warning employers that from May 2010 they may have to pay a penalty if they do not pay their PAYE on time. These are generally due each month, on time and in full.
HMRC will implement late payment penalties for payments due from May 2010. From then on, employers may have to pay penalties if they make more than one PAYE payment late in a tax year. The new penalties will apply to all employers, including large employers (those with more than 250 employees) who currently are subject to a Mandatory Electronic Payment surcharge.
HMRC are advising employers to let them know if they are likely to have difficulty making a payment on time, so that arrangements can be made and penalties can be avoided. Their guidance states that where employers enter into ‘time to pay’ arrangements, before the liability becomes due, no penalty will be charged. Penalties for late payment start at 1% increasing to 4% depending on the number of late payments in the year. Extra penalties will be added where liabilities our outstanding for a further six and then 12 months.
Internet link: Employer Bulletin
31 OCTOBER SELF ASSESSMENT DEADLINE
HMRC are warning taxpayers who wish to file a paper (non electronic) tax return for the 2008/09 tax year, should generally reach them by midnight on Saturday 31 October 2009 (or be hand delivered by Monday 2 November).
However, due to proposed postal strike action, HMRC are further advising that returns:
• posted before the 31 October but not delivered by that date (proof of posting will be required) or
• hand delivered to a local tax office, if more convenient
will also not attract a late filing penalty.
The deadline for filing returns may be later in some circumstances for example:
• you received your tax return or a letter (called a 'Notice to File') telling you to file online after the 31 July
• there's no software available to file your tax return online for example Non-Resident Companies.
If you fail to make the paper filing deadline, please do get in touch if you would like us to help you file your return online.
Taxpayers generally have until 31 January 2010 to submit their self assessment return online.
Internet links: HMRC guidance on tax return deadlines and penalties
Online filing guidance HMRC guidance due to proposed postal strike
ONLINE PAYROLL STARTER AND LEAVER FORMS
HMRC are reminding employers with 50 or more employees that they should now be filing online their starter and leaver information online. The forms which need to be filed electronically, and should have been online since 6 April 2009, include:
• P45 (Part 1) – details of employee leaving
• P45 (Part 3) – new employee details
• P46 – details of employees starting work who do not have a P45
• P46 (Pen) – new pension details
• P46 (Expat) – details of those seconded to work either wholly or partly in the UK whilst remaining employed by an overseas employer
Penalties
HMRC advise that they will shortly begin issuing warning letters to those employers with 50 or more employees who are still not filing their starter and leaver forms online. These warning letters will refer to paper submissions made up until 5 January 2010 and will only refer to one paper submission.
From the start of the fourth quarter of 2009/10 (6 January 2010) HMRC will begin charging penalties to those employers with 50 or more employees who send HMRC starter and leaver notifications on paper. Penalties will range from £100 to a maximum of £3,000 depending on the number of paper forms sent in paper format.
The first penalty notices will be sent in April 2010. Although this is some time away it is important to check that employers are sending starter and leaver notifications online.
Internet link: Employer Bulletin
ROYAL MAIL POSTAL STRIKE
For the latest information on postal strike action please visit the link below.
Internet link: Royal Mail website
29 September, 2009
September eNewsletter
eNEWS - September 2009
In this month’s enews we report on various issues including the announcement of the introduction of additional paternity pay and leave for fathers, but not until 2011.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
eNEWS quicklinks
Additional Paternity Leave and Pay
National Minimum Wage increases
Pay for apprentices
Online filing of Corporation tax returns
Online filing of VAT returns
Liechtenstein Disclosure Facility
New UK Border Agency controls
HMRC warn of more scam emails
Additional Paternity Leave and Pay
The government has announced its intention to introduce Additional Paternity Leave and Pay for fathers of children due on or after 3 April 2011.
The government will consult shortly on new regulations that will give families greater flexibility in how they choose to look after their children.
As detailed in the press release:
* Families will have the choice to transfer up to six months leave to the father should they want to, which can be taken by the father once the mother has returned to work.
* This new provision will be available during the second six months of the child’s life, giving parents the option of dividing a period of paid leave entitlement between them.
* Some of the leave may be paid if taken during the mother’s 39 week maternity pay period. This would be paid at the same rate as Statutory Maternity Pay (generally £123.06 per week).
* Parents will be required to ‘self certify’ by providing details of their eligibility to their employer. Employers and HMRC will both be able to carry out further checks of entitlement if necessary.
Harriet Harman, Minister for Women and Equality, said:
“Mothers will be able to choose to transfer the last six months of their maternity leave to the father, with three months paid. This gives families radically more choice and flexibility in how they balance work and care of children, and enables fathers to play a bigger part in bringing up their children.”
Internet links: HMRC guidance Press release
National Minimum Wage increases
The adult rate of the National Minimum Wage (NMW) increases to £5.80 (£5.73) an hour from 1 October 2009. This is payable to those age 22 and over.
The hourly development rate increases to £4.83 (£4.77) and for 16 and 17 year olds to £3.57 (£3.53) an hour.
HMRC are able to charge penalties to those employers found to be in breach of the NMW rules.
If you have any queries on the NMW please do get in touch.
Internet links: NMW rates HMRC guidance on penalties
Pay for apprentices
From 1 August 2009 the minimum wage for apprentices increased from £80 to £95 per week.
The Low Pay Commission is to consider whether or not apprentice pay should come under the umbrella of the National Minimum Wage regulations. The Confederation of British Industry (CBI) has raised concerns about increasing the minimum wage level significantly. According to their press release, and in reaction to youth unemployment reaching its highest level since records began, Katja Hall, CBI Director of Employment Policy, said:
“The rising level of youth unemployment is alarming and we cannot afford to lose a generation of young people. Apprenticeships are an excellent path to employment but their availability would be constrained if a minimum wage was set too high.”
“Young people must not be priced out of apprenticeships in a difficult jobs market. If apprentices join the national minimum wage system they must do so at the right level and in a way that employers can understand.”
Internet link: Press release
Online filing of Corporation tax returns
HMRC have written to half a million companies and their tax agents, to advise them of important changes to Corporation Tax (CT) return filing. The mail-shot contained a new HMRC leaflet on the changes, which will require all company tax returns delivered after 31 March 2011 to be filed online, for accounting periods ending after 31 March 2010. The leaflet explains how, after 31 March 2011, CT returns must be filed online in a specified data format (known as Inline XBRL or iXBRL).
Companies House has also announced that it will accept company accounts in XBRL, the same format as the CT returns. Companies House will introduce their XBRL service for unaudited full accounts by the summer of 2010, and then continue to develop their XBRL capability for all the main types of accounts they receive.
HMRC’s new XBRL service will be available from November 2009.
Internet link: HMRC and Companies House statement
Online filing of VAT returns
HMRC are advising businesses that new rules on how VAT returns are submitted and payments are made will come into force next year. Paper VAT returns will be phased out from 1 April 2010.
As a start of this phasing out process, businesses with:
* VAT (exclusive) annual turnover of £100,000 or more, and
* all newly registered VAT businesses
will need to submit their VAT returns online and make payments electronically from April 2010. Those businesses that are already VAT registered, with a turnover below the threshold, will have the choice to use paper returns but this will be reviewed by 2012.
Please do get in touch if you would like any further advice in this area.
Internet link: HMRC VAT
Liechtenstein Disclosure Facility
HMRC have announced details of the Liechtenstein Disclosure Facility (LDF) which has been introduced to support the reviews to be carried out by the Financial Intermediaries in Liechtenstein to identify those who may have liability to UK tax. The LDF allows people with unpaid tax linked to investments or assets in Liechtenstein to settle their tax liability under this special arrangement.
The LDF will run from 1 September 2009 until 31 March 2015. Please do get in touch if you have any queries about this.
Internet link: HMRC guidance
New UK Border Agency controls
The government has announced new measures which should enable resident workers to have every opportunity to fill vacancies before they are offered to workers abroad.
The government has accepted the recommendations made last month by the Migration Advisory Committee to tighten the rules controlling when skilled workers are allowed to apply for jobs in the United Kingdom under the government's points-based system.
The changes to the rules will mean that, from next year, all jobs must be advertised to British workers in Jobcentre Plus for four weeks (extended from two weeks) before employers can employ individuals from outside Europe.
Other changes include increasing the length of service requirements for overseas workers who want to transfer to the UK and increasing the minimum salary level for a post to qualify as skilled to £20,000 (currently £17,000).
For more details of the changes visit the link below.
Internet link: UKBA news article
HMRC warn of more scam emails
HMRC have updated their guidance on scam emails as they are aware that a large number of individuals are receiving emails offering tax rebates. HMRC have also confirmed that they would not inform taxpayers of a tax rebate via email, or request that they complete an online form to receive a rebate of tax.
HMRC are stressing that individuals should not visit the website contained within the email or disclose any personal or payment information.
For more information on this and other scams together with a copy of the latest example visit the links below.
Internet links: HMRC guidance Latest example
28 August, 2009
August eNewsletter
AUGUST 2009 - ENEWS
In this month’s enews we report on various issues, including further HMRC announcements on the New Disclosure Opportunity.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
New Disclosure Opportunity
Increase in pay for apprentices
‘False self-employment’ in the construction industry
HMRC warn of more scam emails
‘Paper’ tax return deadline looming
VAT increase to 17.5%
Pension changes ahead
Redundancy pay
Cross-border VAT changes 2010
NEW DISCLOSURE OPPORTUNITY
HMRC have provided more details of the New Disclosure Opportunity (NDO) which is due to take place from 1 September 2009 to 12 March 2010. The NDO is for people with unpaid tax connected to offshore accounts and assets and will give the taxpayers one final opportunity to disclose.
To encourage taxpayers to disclose undeclared offshore income and gains, the penalty level has been set at 10%. HMRC hope that the low penalty will encourage taxpayers to come forward.
Although the NDO period runs until 12 March 2010 initial contact must be made to HMRC by 30 November 2009.
Dave Hartnett, HMRC Permanent Secretary for Tax, said:
“I know there are people who regret not taking advantage of our Offshore Disclosure Facility (ODF) in 2007 which focused primarily on the customers of five large banks. Now everybody who has not paid the tax they should in relation to offshore accounts or assets has this New Disclosure Opportunity to pay what they owe with penalties on more favourable terms than normal.”
“The procedure is simple and straightforward. Customers will be able to contact us on paper or through a dedicated area of our website. This will be the last opportunity of its kind.”
Please do get in touch, without delay, if you have any concerns in this area.
Internet links: HMRC news release Basic information and dates
INCREASE IN PAY FOR APPRENTICES
From 1 August 2009 the national minimum wage (NMW) for apprentices increased from £80 to £95 per week.
This announcement was originally made in September 2008, when TUC General Secretary, Brendan Barber, said:
“The announcement will be a welcome boost for the thousands of low-paid apprentices, particularly women, who are struggling to make ends meet.”
“Pay increases will help more people to complete their training and boost the reputation of apprenticeships. Employers will also benefit from a greater number of skilled employees and as a result more organisations will be attracted to the ever improving apprenticeship brand.”
“This is a victory for the TUC's campaign for better apprentice pay. But, as strong supporters of apprenticeships, the TUC will continue to campaign for higher standards and further increases in apprentice pay will help achieve this.”
Women working in childcare and hairdressing, typically low paid apprenticeships, are expected to be the main beneficiaries of the increase.
Internet link: TUC learning initiative
‘FALSE SELF-EMPLOYMENT’ IN THE CONSTRUCTION INDUSTRY
The government has been looking at the best way to address the issue of what they believe is ‘false self-employment’ in the construction industry. They have concluded, for income tax and national insurance purposes, that they will introduce legislation which deems workers within the construction industry to be in receipt of employment income unless one of three simple, clear and easy to apply criteria is met. These criteria take the form of three questions which ask whether the worker provides:
• their own equipment (other than customary to the trade)
• their own materials
• additional workers to complete the job.
The worker will have to satisfy at least one of these criteria to be regarded as self-employed.
The government are consulting on this issue at the moment and we will keep you informed of developments.
Internet links: Consultation on construction self employment tests Treasury statement
HMRC WARN OF MORE SCAM EMAILS
HMRC have updated their guidance on scam emails as they are aware that a large number of individuals are receiving emails offering tax rebates. HMRC have also confirmed that they would not inform taxpayers of a tax rebate via email, or request that they complete an online form to receive a rebate of tax. There is a long list of web addresses being used in the scams including:
online.paper@hmrcpaper.co.uk
office.tax@hmrc.taxreturn.co.uk
customers@hmrc.gov.uk
help.desk@hmrc.notify-online.co.uk
online.notify@hmrc-customs.co.uk
hmrchelpdesk@hrmchelpdesk.co.uk
refunds@hmrc.gov.uk
securemail@hmrc.gov.uk
tax-refund@hmrcforms.co.uk
hmrc@tax-revenue.uk
refundsdept@hmrc.gov.uk
hmrc@tax-revenue.uk
refunds@hmrc.gov.uk
taxcredits@hmrc.co.uk
tax-service@hmrc.customs.gov.uk
service@hmrc.gsi.gov.uk
HMRC are stressing that individuals should not visit the website contained within the email or disclose any personal or payment information.
For more information on this and other scams visit the links below.
Internet links: HMRC guidance Latest example
‘PAPER’ TAX RETURN DEADLINE LOOMING
For those wishing to complete paper self assessment tax returns, the filing deadline of 31 October 2009 is fast approaching.
The 31 January 2010 deadline remains for online submission of 2008/09 self assessment tax returns.
Those wishing to make a paper return need to start compiling the information they need now. This includes a copy of forms P60 and P11D, self-employment accounts, records of savings and investments, and details of any untaxed income.
If you have any queries regarding your personal tax affairs please do get in touch.
Internet link: Business link guidance
VAT INCREASE TO 17.5%
HMRC have issued guidance for businesses dealing with the increase in the standard rate of VAT from 15% to 17.5%. The change takes effect from 1 January 2010. They hope that by issuing the guidance well in advance of the change that businesses will have sufficient time to prepare.
If you would like guidance in this area please do get in touch.
Internet link: HMRC guidance on 17.5%
.
PENSION CHANGES AHEAD
Under provisions contained in the Pensions Act 2008 employee pension enrolment and employer contributions are to be made compulsory.
These provisions, which are due to come into force in 2012, cover the automatic enrolment of qualifying workers into a qualifying workplace pension scheme and a duty on employers to make contributions to such a scheme. To ensure that employers are able to comply with these duties a universal personal account scheme is being created.
The main details of the scheme are:
• automatic enrolment of eligible employees aged between 22 and state pension age earning over £5,035 per annum (unless employee opts out)
• employer contributions of 3% on a band earnings, initially set as £5,035 -£33,540
• employee contributions of 4%, with an additional 1% funded by the government in the form of tax relief
• both employer and employee contribution levels will be phased in over three years
• an enforcement regime led by the Pensions Regulator, with powers to penalise employers who do not comply with the regime.
Consultations and regulations will be issued in the lead up to the introduction of the legislation. These should make it clearer what is expected of employers and pension schemes in anticipation of the new regime starting in April 2012.
The Personal Accounts Delivery Authority (PADA) has recently launched a “myth busting” campaign in advance of the rules taking effect in 2012.
Internet links: Pensions Reform PADA myth buster
REDUNDANCY PAY
The weekly maximum pay which can be taken into account when calculating statutory redundancy pay is set to increase from 1 October 2009.
Employees who have at least two years’ continuous service qualify for a redundancy payment.
The entitlement is as follows:
• for each complete year of service until the age of 21 - half a week’s pay
• for each complete year of service between the ages of 22 and 40 inclusive - one week’s pay
• for each complete year of service over the age of 41 - one and a half weeks’ pay.
A week’s pay is that to which the employee is entitled under his or her terms of contract as at the date the employer gives minimum notice to the employee. The maximum statutory limit for a week’s pay is £350 with effect from 1 February 2009 and will increase to £380 with effect from 1 October 2009. The maximum service to be taken into account in calculating redundancy is 20 years. This means that the maximum statutory payment cannot exceed 30 weeks’ pay or £10,500 (£11,400 Oct 2009).
The maximum week’s pay figure is generally reviewed annually however the £380 limit will continue until 1 February 2011. Employers may, of course, pay in excess of the statutory minimum.
Internet link: Direct gov website redundancy
CROSS-BORDER VAT CHANGES 2010
HMRC have issued important updates in advance of the changes in the place of supply of services rules which take effect from 1 January 2010.
This guidance is part of a package of measures being introduced to simplify and modernise the VAT system for cross-border trading and to counter fraud across the EU. The measures include:
• changes to the basic place of supply of services rules
• changes to the time of supply rules
• European Sales List (ESL) reporting for supplies of cross-border services
• a new electronic refund procedure for VAT incurred in other EU Member States.
If you have any queries on these changes please do get in touch.
Internet link: HMRC cross border changes
31 July, 2009
July eNewsletter
JULY 2009 - ENEWS
In this month’s enews we report on various issues, including an update on employer fines for illegal workers and the success of the car scrappage scheme.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
Rise in prosecutions for employing illegal workers
Are you complying with the National Minimum Wage rules?
Business Payment Support Services
Redundancy alternative
Starting a new business
HSE warning not to be misled over new law poster
Swine flu advice for businesses
Scrappage incentive scheme successful
Pension payments
RISE IN PROSECUTIONS FOR EMPLOYING ILLEGAL WORKERS
Businesses are being warned to undertake more rigorous checks into applicants’ backgrounds as the number of prosecutions for employing illegal workers increased over 500%, according to Giant Precision a business process outsourcer.
According to information they obtained from the Home Office, the introduction in February 2008 of the new penalty system has led to 233 prosecutions of employers for employing illegal workers. This compares with no more than 40 cases per year previously.
Matthew Brown, Managing Director of Giant Precision said:
“The new civil penalty for employers who hire illegal immigrants has made a big difference to the UK Border Agency’s activity in bringing cases against employers. More employers than ever before are finding themselves hit with big fines.
The new regulations are tough on employers and recruiters who may have checked into candidate’s backgrounds and been duped by fraudulent documents. Even if checks are carried out, the UK Border Agency can still levy fines if it deems recruiters and employers have not been sufficiently rigorous.”
For many years, there have been requirements for employers to verify the identity of their workers in order to prevent illegal working. Penalties under the Immigration, Asylum and Nationality Act 2006 were increased from 29 February 2008. The Home Office UK Border Agency website is regularly updated to show a list of employers fined since the introduction of the revised penalties.
Employers can avoid both a civil penalty and committing a criminal offence by checking, on recruitment, that workers have a right to work in the UK. To obtain this protection, employers must make the checks before the worker starts work.
There are two lists of acceptable documents for checking identity. List A contains items such as a British passport, which have no time limits on working in the UK. List B contains a list of documents which carry restrictions on the amount of time individuals will be able to spend in the UK. Employers now have to carry out annual checks for those workers whose documents appear on List B, such as work permit holders.
Please do get in touch if you would like any advice in this area.
Internet links: Giant Precision press release Home Office Guidance and Home office list of employers fined
ARE YOU COMPLYING WITH THE NATIONAL MINIMUM WAGE RULES?
HMRC are reminding employers that since the beginning of the current tax year automatic penalties have been introduced for those who do not comply with the National Minimum Wage (NMW) Regulations.
The penalties range from £100 to £5,000 with 50% prompt payment discounts for employers who settle within 14 days of notification.
The penalty is payable in addition to arrears owed to the workers.
The penalty notice will detail the amounts due to workers (calculated according to the formula shown below) and any penalty due on those arrears. The penalty is calculated as half the total underpayment. The underpayments are uprated to take into account the length of time the arrears have been outstanding.
For each payment period the formula is:
Original underpayment x Current NMW rate = Arrears
Original NMW rate
In serious cases of non compliance the employer may be tried in a Crown Court and in those cases the fines are unlimited.
The current NMW rates are:
• £5.73 (£5.80 from October 2009) an hour for adults aged 22 and over
• £4.77 (£4.83 from October 2009) an hour for 18-21 year olds
• £3.53 (£3.57 from October 2009) an hour for 16-17 year olds.
Internet link: Employer Bulletin article
BUSINESS PAYMENT SUPPORT SERVICES
According to government figures, as at the end of April 2009, over 116,000 businesses have agreed time to pay tax arrangements with HMRC to the value of two billion pounds.
The Business Payment Support Service, which was introduced last autumn, provides a ‘fast track’ service that offers support to those needing more time to pay their tax bills. Terms can be quickly agreed over the phone.
If you would like to discuss the Support Service in relation to your own or your business tax affairs, please do get in touch.
Internet link: Employer Bulletin article
REDUNDANCY ALTERNATIVE
The Confederation of British Industry (CBI) has made a proposal for an 'Alternative to Redundancy' (ATR) scheme which could be introduced as part of a package of measures to reduce job losses.
Under the proposal employers would be able to use current redundancy procedures or place employees on the ATR scheme for a period of up to six months. The employees would not work during the ATR period but could seek employment elsewhere. They would receive an allowance of twice the rate of Job Seekers Allowance, which is currently approximately £50 and £65 a week dependent on age.
The proposal is that half of the allowance would be paid by the government and the other half by the employer. The employees could then go back to work once the ATR period expires or the business improves.
John Cridland, CBI Deputy Director-General, said:
"The worst of the recession may be over, but businesses still face a long convalescence and the dole queues will continue to grow. The alternative to redundancy scheme could save jobs by giving businesses more leeway as the economy recovers.
We considered various forms of wage subsidy and support for short-time working, but this approach is better. Businesses will be more able to cope with sharp drops in demand and prepare for recovery, while workers benefit from improved financial support and a door that is kept open for six months.
This is not about businesses ducking their redundancy responsibility - in fact if a scheme runs for six months and a redundancy is still made then the business will end up paying more.”
For information on the calculation of statutory redundancy pay use the Department for Business Innovation and Skills link below.
Internet links: CBI press release BIS website
STARTING A NEW BUSINESS
HMRC have amended the form CWF1 which is completed by those individuals who have set up a new business either as a sole trader or as a partner in a partnership. The form is used to notify liability to Class 2 National Insurance Contributions (currently £2.40 a week) amongst other things.
Under the revised behaviour based penalties, which apply from April 2009 anyone becoming or ceasing to be liable to pay Class 2 NICs must notify HMRC as soon as possible. Penalties may be charged where the liability is not notified by 31 January following the end of the tax year when they became liable.
Please do get in touch if you would like any clarification of your position.
Internet link: Form CWF1
HSE WARNING NOT TO BE MISLED OVER NEW LAW POSTER
The Health and Safety Executive (HSE) is warning businesses not to be misled into buying unnecessary and expensive copies of the health and safety law poster. Employers have a duty to display the poster prominently in the workplace or provide employees with a copy of the pocket card version. Both poster and card set out the employer’s and employees’ responsibilities.
Apparently there is some evidence of misleading promotions wrongly claiming that the old posters must be replaced immediately and that the new law poster should be displayed on every notice board within business premises. This is incorrect and employers could be led to believe that they are not meeting their legal requirements. Employers can check they have a genuine HSE law poster by checking the unique, serially numbered hologram on each poster.
Vinny Kenny, from HSE said:
"The information that is being sent out by some companies may be misleading under consumer protection legislation and we want to put a stop to it. If businesses receive any promotions relating to the Law poster or pocket card and are in any doubt about their authenticity they should contact HSE on 0845 945 0055 before parting with their money."
The HSE launched updated versions of the health and safety law poster and pocket card in April 2009. The updated versions provide clearer information for workers about their right to have their health and safety properly protected.
Under HSE Information for Employees Regulations businesses have five years to switch to the new poster and pocket cards, so they must be replaced by 5 April 2014. Employers displaying the old poster after 6 April 2009 must ensure it is legible and that the addresses of the enforcing authority and the employment medical advisory service are up to date.
The new law poster, pocket cards and Easy Read and Large Print formats can be ordered from HSE Books on: 01787 881165. The pocket card and Easy Read and Large Print formats can also be downloaded free of charge from the HSE web site.
Internet link: HSE guidance
SWINE FLU ADVICE FOR BUSINESSES
The UK has moved from the 'containment' to the 'treatment' phase of swine flu (H1N1) as the number of people catching swine flu continues to rise.
Health Secretary Andy Burnham said that cases are doubling every week and if it continues at this rate there could be over 100,000 cases per day by the end of August.
Internet links: Direct gov latest Business Link guidance for employers
SCRAPPAGE INCENTIVE SCHEME SUCCESSFUL
According to the Society of Motor Manufacturers and Traders (SMMT) 29,796 vehicles have been registered under the scrappage scheme since it started on 18 May 2009. This accounted for 9.7% of June’s new car registrations a total of 17,014 units. In addition to cars 323 vans were also registered in June under the scheme (1.9% of van registrations).
Paul Everitt, SMMT chief executive said:
“The scrappage incentive scheme is working well and has encouraged a lot more people back into showrooms. In the coming months, we will see an increase in the rate of deliveries and this will confirm further progress on the industry’s long road to recovery.”
The vehicle scrappage scheme is a voluntary scheme for motor dealers. Participating dealers will give buyers a £2,000 discount off the purchase price of a new car (or small van) in exchange for scrapping their old qualifying vehicle which must, amongst other criteria, have been registered on or before 31 August 1999.
The scheme is expected to run until March 2010, unless funds are exhausted before then. For general information on the £2,000 scrappage discounts and the qualifying conditions for vehicles visit the Directgov link below. For HMRC’s views on the business tax and VAT implications of the car and van scrappage scheme use the HMRC link below.
If you have any queries on the tax implications of the scheme please do get in touch.
Internet links: SMMT article Directgov website HMRC Brief
PENSION PAYMENTS
Pension contributions made by an individual are usually paid net of basic rate tax. Where the individual is a higher rate taxpayer further relief is due which significantly reduces the net cost of the contribution.
In the Budget this year the government announced its intention to restrict tax relief on pension savings with effect from 6 April 2011 for people with taxable income of £150,000 or more. The relief will be tapered down until it is 20%.
Legislation has been introduced to prevent those potentially affected by the new rules from seeking to forestall this change by increasing their pension savings in excess of their normal regular pattern. The legislation has been amended on its way through the parliamentary process.
The forestalling measures as originally proposed potentially apply to individuals with incomes of £150,000 or more who, from 22 April 2009, change:
• their normal pattern of regular pension contributions, or
• the normal way in which their pension benefits are accrued, and
their total pension contributions or benefits accrued exceed £20,000.
The amendments will permit taxpayers who currently pay premiums of over £30,000 on an annual or irregular basis to benefit from higher rate tax relief on contributions of up to £30,000.
Andrew Hubbard, Chartered Institute of Tax (CIOT) president, said:
“The CIOT highlighted the unfairness in the original proposals, which favoured those who paid, or whose employer paid, regular monthly or quarterly pension contributions, while disadvantaging those who made less regular contributions.
The self-employed typically make annual contributions only once their income for the year has been determined.
We welcome the fact that the government has listened to our concerns. We had hoped that the changes would have gone further, but we can appreciate that the current adverse financial conditions have necessitated some tough decisions.”
If you would like advice on pension contributions please do get in touch.
Internet links: CIOT article HMRC Budget pensions changes
30 June, 2009
June eNewsletter
JUNE 2009 - ENEWS
In this month’s enews we report on various issues, including employment related matters, such as holiday accrual for those on sick leave and the new advisory fuel rates for those driving employer provided cars.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
Advisory fuel rates
HMRC new disclosure opportunity
HMRC PAYE services interruption
Tax credits renewal deadline
Employees accrue holiday pay while on sick leave
Extra paternity leave put on hold
HMRC warn of fraudulent email
Digital Britain
Corporation tax return guide
ADVISORY FUEL RATES
To reflect the changes in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from 1 July 2009 so employers wishing to use the new rates should advise affected employees and update any expense forms as soon as possible.
Engine size Petrol Diesel LPG
1400cc or less 10p (10p) 10p (11p) 7p (7p)
1401cc to 2000cc 12p (12p) 10p (11p) 8p (9p)
Over 2000cc 18p (17p) 13p (14p) 12p (12p)
Employers may use the new rates prior to 1 July if their systems allow. The rates in brackets are those previously applicable.
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 them to claim a deduction if employers reimburse them at lower rates. Such claims should be based on 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
HMRC NEW DISCLOSURE OPPORTUNITY
HMRC have announced some details of the New Disclosure Opportunity (NDO) which is due to take place this autumn. In order to encourage taxpayers to disclose an undeclared offshore account the penalty level has been set at 10%. HMRC hope that the low penalty will encourage taxpayers to come forward. HMRC are currently liaising with various banks to obtain details for offshore account holders.
The key points of the NDO, as set out on the Chartered Institute of Taxation website, are as follows:
“The key messages provided by HMRC are as follows:
• The New Disclosure Opportunity (NDO) is for people with unpaid tax connected to an offshore account and will run from the autumn 2009 until March 2010. It will give the offshore account holders one final opportunity to disclose, and put their affairs in order.
• Penalty of 10% for full disclosure if no previous opportunity. Higher for full disclosure if you had the chance under previous opportunity.
• HMRC is seeking to obtain details of offshore accounts and assets from hundreds of financial institutions. This ensures HMRC will be able to pursue those who choose not to disclose tax owed as quickly as possible.
• During the disclosure period, all account holders will know that HMRC has, or will soon have, their details. We have already successfully applied to get details from a number of banks.”
We will keep you informed of developments in this area, meanwhile if you have any concerns please do get in touch.
Internet link: CIOT article
HMRC PAYE SERVICES INTERRUPTION
HMRC are advising taxpayers and employers that, as part of its ongoing plans “to improve customer service and efficiency”, they are in the process of changing the way they process PAYE records. In order to make all PAYE records available on one computer system they are undertaking a major IT upgrade.
They are advising that there will be temporary service interruptions from 12 June 2009 and that this may take some time as it will continue until “the new service is available to all trained staff and while we bring outstanding records up to date”. Apparently some parts of the PAYE service will be temporarily unavailable, as will the National Insurance Computer System.
HMRC have advised that although they will be able to provide general advice during this time they will not be able to answer specific queries relating to individual National Insurance records or recent PAYE changes. This may result in delays issuing refunds or new PAYE coding notices to individuals.
HMRC have advised that the Department for Work and Pensions will be similarly disrupted which may affect benefit claimants.
Internet link: HMRC computer upgrade
TAX CREDITS RENEWAL DEADLINE
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 2008/09 have to finalise their provisional award, which would have originally been based on their 2007/08 income, and advise HMRC of any changes in their circumstances for 2008/09. This procedure is known as the renewals process. The deadline for the submission of tax credit renewals is 31 July 2009.
HMRC have been busily advertising the renewals process in the national press and on their website. 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 help with the completion of your form or any advice on tax credits generally please do get in touch.
Internet link: HMRC tax credit renewals
EMPLOYEES ACCRUE HOLIDAY PAY WHILE ON SICK LEAVE
The House of Lords has ruled in the case of Stringer v HMRC that workers who are refused holiday pay while on sick leave can make a claim to an employment tribunal for an unauthorised deduction from wages (under the Employment Rights Act 1996).
This decision follows the ruling in January, by the European Court of Justice (ECJ), that employees do accrue paid holiday for their entire sick leave, and must be allowed to take it on their return to work or be paid in lieu of their entitlement if their employment ends. The ECJ ruling did not comply with the UK’s existing Working Time Regulations, which require employees to use their four weeks statutory leave in the holiday year or lose it. The House of Lords has now ruled that the ECJ decision does indeed apply in the UK.
This is a complex area so please do get in touch if you need any clarification.
Internet links: BERR guidance and Personnel Today article
EXTRA PATERNITY LEAVE PUT ON HOLD
Proposals to introduce six months’ paid paternity leave for new fathers have been put on hold by the government in the light of the current economic climate.
The plans would have seen parents being able to share the 12 months maternity leave between them. Plans to extend the current statutory paid maternity pay from nine months to 12 have also been put on hold.
A spokesperson for the Department for Business, Enterprise and Regulatory Reform issued the following statement:
“We have not yet announced a date for extending maternity and paternity rights. We are continuing to review the appropriateness of all new regulations due to come into force in the current economic climate. It is only right that in tough economic times we look afresh at the costs and benefits of new regulations.”
This announcement means that new father’s will not be able to take six months' paid leave to look after their baby, allowing the mother to return to work early. Many businesses will be relieved that this change is not being introduced in the current economic climate.
Internet link: Telegraph article
HMRC WARN OF FRAUDULENT EMAIL
HMRC are warning that an email is currently being sent to some taxpayers advising them that HMRC have “approved them to receive monies”. Apparently the email states that this is as a result of an HMRC program on 15 June 2009.
HMRC are advising that this is not a genuine email and taxpayers should not act on it.
Internet link: HMRC security fraud attempts
DIGITAL BRITAIN
The government has published its report Digital Britain which sets out the government’s plans for the UK to be at the forefront of the global digital economy.
The core details, as taken from the press release, are as follows:
• Universal access to today’s broadband services by 2012
• Next Generation fund for investment in tomorrow’s broadband services
• Upgraded mobile networks
• National Plan to improve Digital Participation
• Robust legal and regulatory framework to combat Digital Piracy
• Support for public service content partnerships and revised digital remit for Channel 4
• Funding options for national, regional and local news
• Programme of Digital Switchover in Public Services
To read details of the report use the link below.
Internet links: Digital Britain report and Press release
CORPORATION TAX RETURN GUIDE
HMRC have published revised guidance on the completion of the corporation tax return form CT600.
Please do get in touch if you would like any help in this area.
Internet link: CT600 guide
30 May, 2009
May 09 eNewsletter
MAY 2009 - ENEWS
In this month’s enews we report on the announcement of the forthcoming increases to the National Minimum Wage rates.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
National Minimum Wage increases
Tips and the National Minimum Wage
UK opt out on 48 hour working week
Financial Services Compensation Scheme
P11D deadline looming
Landlords and gas safety
Furnished holiday lettings
HMRC warn of email scam
Vehicle scrappage scheme
NATIONAL MINIMUM WAGE INCREASES
The adult rate of the National Minimum Wage (NMW) will rise to £5.80 (£5.73) an hour in October 2009. This is payable to those age 22 and over.
The hourly youth development rate will increase to £4.83 (£4.77) and for 16 and 17 year olds to £3.57 (£3.53) an hour.
Penalties for non compliance
HMRC are able to charge penalties to those employers found to be in breach of the NMW rules.
From 6 April 2009, automatic penalties are levied on employers where HMRC officers find NMW arrears. The penalties range from £100 to £5,000 with 50% prompt payment discounts for employers who settle within 14 days of notification.
The penalty is payable in addition to arrears owed to the workers.
The penalty notice will detail the amounts due to workers (calculated according to the formula shown below) and any penalty due on those arrears. The penalty is calculated as half the total underpayment. The underpayments are uprated to take into account the length of time the arrears have been outstanding.
For each payment period the formula is:
Original underpayment x Current NMW rate = Arrears
Original NMW rate
In serious cases of non compliance the employer may be tried in a Crown Court and in those cases the fines are unlimited.
If you have any queries on the NMW please do get in touch.
Internet links: HMRC guidance on penalties NMW news release
TIPS AND THE NATIONAL MINIMUM WAGE
HMRC have won their case in the Court of Appeal as to the treatment of tips and service charges for bar and restaurant workers.
The court ruled in favour of HMRC in the National Minimum Wage (NMW) legislation case relating to tips, gratuities and discretionary service charges. The case concerned Annabel's restaurant and night club and others.
The ruling confirms that employers must pay their employees at least the NMW without taking into account tips, gratuities, service charges or cover charges, unless they are paid to employees through the employer's payroll.
The case means that Annabel's and others must now pay over £125,000 in arrears to their employees.
Annabel’s had operated a ‘tronc’ scheme which HMRC had argued did not count towards the necessary payment of the NMW. A ‘tronc’ scheme is sometimes used where restaurant or bar service charges are paid by the customer to the employer, but are then paid into a 'troncmaster's' bank account for distribution in accordance with a 'tronc' scheme agreed between the ‘troncmaster’ and employees.
The court decided that where a ‘tronc’ scheme is used the amounts distributed to workers are not paid by the employer and therefore could not be included in pay for NMW purposes.
Rt Hon Stephen Timms, Financial Secretary to the Treasury, said:
"The government's priority is to ensure that all workers are paid at least the national minimum wage. I am extremely pleased that the court has recognised HMRC's commitment to ensuring that tips are correctly and fairly distributed to the people who earn them. This is good news for bar and restaurant workers across the UK."
Internet link: Press release
UK OPT OUT ON 48 HOUR WORKING WEEK
The ability of UK employers to allow employees to opt out from the European Working Time Directive is set to continue. This means that, where employees wish, they will still be able to work more than 48 hours a week.
The European Parliament had wanted to scrap the opt out.
Employment Relations Minister Pat McFadden said:
"We refused to be pushed into a bad deal for Britain. We have said consistently that we will not give up the opt out and we have delivered on that pledge.
Everyone has the right to basic protections surrounding the hours that they work, but it is also important that they have the right to choose those hours.
In the UK and many other Member States, choice over working hours has operated successfully for many years. The current economic climate makes it more important than ever that people continue to have the right to put more money in their pockets by working longer hours if they choose to do so."
For more information on the operation of the working time regulations please visit the Business Link guidance below.
Internet links: Press release Business Link guidance
FINANCIAL SERVICES COMPENSATION SCHEME
The Financial Services Authority (FSA) have provided a table listing the largest UK deposit takers. The list shows how the Financial Services Compensation Scheme (FSCS) limits would apply for most customers but is not a complete list of deposit takers covered by the FSCS.
If a bank or building society authorised by the FSA is unable to pay back deposits held with it, the FSCS can pay 100% of the first £50,000 of an eligible depositor's claim, per authorised institution. Where a person holds accounts with two or more UK deposit takers covered by a single authorisation, then the FSCS will only pay up to the maximum limit of £50,000 in total, regardless of how many different institutions a person holds accounts with and/or the number of accounts that they hold.
In the case of customers with joint accounts, FSCS will assume that the money in that account is split equally unless there is evidence to suggest otherwise. This means that each account holder in a joint account would be eligible for compensation up to the maximum limit of £50,000.
Internet link: fsa list of linked deposit takers
P11D DEADLINE LOOMING
The forms P11D and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2009, are due for submission to HMRC by 6 July 2009. 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 (NIC) at 12.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.
HMRC have advised that they will shortly start sending out paper forms P11D(b) - Return of Class 1A NICs. The forms should be issued by 15 June 2009. Those employers who filed electronically last year will receive an electronic reminder as opposed to a paper form. Payslips will be issued to employers regardless of how the form is to be submitted.
This year HMRC have introduced a new quality standard for P11Ds that are submitted on paper, setting out how employers must complete the form and what information must be included. Failure to complete forms in accordance with the standard may result in the forms being rejected by HMRC and may result in a penalty. For more information on these issues please use the links below.
If you would like any help with the completion of forms P11D or the calculation of the Class 1A liability please get in touch.
Internet links: HMRC P11D guidance HMRC P11Db guidance HMRC notice
LANDLORDS AND GAS SAFETY
Landlords letting property equipped with gas appliances need to ensure that they comply with the law relating to gas safety. As a landlord it is their responsibility to ensure that any pipe work, appliances and flues provided for tenants are maintained in a safe condition.
The landlord must now ensure that a gas safety check is carried out every year by a Gas Safe registered engineer. The new system of registration for engineers was introduced earlier this year. A registered engineer has to check gas appliances and confirm they are safe and issue the relevant certificates. The certificate must be given to the tenant within 28 days.
For more information visit the link below.
Internet link: Gas Safe Register advice
FURNISHED HOLIDAY LETTINGS
The Budget 2009 contained announcements about significant changes to the rules for furnished holiday lettings (FHL) but those who are affected may have to act fast. The main announcements are set out below:
• Extension of the furnished holiday lettings scheme to properties in the European Economic Area (EEA) (previously it was thought that the property had to be in the United Kingdom). This change is being made due to the possible incompatibility of the rules with European law.
• The removal of the scheme, and its advantageous tax treatments, completely from April 2010. Unlike general property rental businesses, FHL are treated as a trade for certain taxation purposes, which is generally more preferential in terms of loss and capital gains tax reliefs.
It may be worthwhile making claims for FHL treatment for properties in the EEA including those for which tax returns have already been submitted and where the property has actually been disposed of in the last few years.
HMRC have indicated that, in the correct circumstances, late claims and amendments will be accepted in relation to this matter. The first deadline is 31 July 2009, although later deadlines may apply in certain circumstances.
If you believe you may have or have had a property which qualifies for FHL treatment, please do get in touch.
Internet link: HMRC Budget guidance
HMRC WARN OF EMAIL SCAM
HMRC are warning that they have become aware that a large number of individuals are receiving emails offering tax rebates. These emails, which are being sent from HMRC Tax Refunds Online and HMRC Tax Refunds On-line, are not genuine.
HMRC are stressing that individuals should not visit the website contained within the email or disclose any personal or payment information.
For more information on this and other scams visit the link below.
Internet link: HMRC fraud attempts
VEHICLE SCRAPPAGE SCHEME
The vehicle scrappage or discount scheme is a voluntary scheme for motor dealers. Participating dealers will give buyers a £2,000 discount off the purchase price of a new car or small van in exchange for scrapping their old qualifying vehicle which must, amongst other criteria, be registered on or before 31 August 1999.
The scheme is expected to run from mid May 2009 to March 2010, unless funds are exhausted before then. For general information on the £2,000 scrappage discounts and the qualifying conditions for vehicles visit the Directgov link below.
HMRC have published their view on the tax implications of the car and van scrappage scheme. The guidance covers the business tax and VAT implications of the scheme.
If you have any queries on the tax implications of the scheme please do get in touch.
Internet links: Directgov website HMRC Brief
30 April, 2009
April 09 eNewsletter
eNEWS - April 2009
This month’s enews is unsurprisingly dominated by Budget announcements. Having waited a month beyond the usual March timing for the Budget, Alistair Darling had some significant announcements to make which are set out below.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
eNEWS quicklinks
Personal tax changes Restricted tax relief on pension contributions
Enhanced relief for trading losses Capital allowances on plant and machinery
Standard rate VAT VAT system for cross-border trading
Bradford & Bingley position of former shareholders Change of HMRC bank account details
Businesses given more time to pay business rates
Personal tax changes
The Chancellor has not only brought forward proposals which were to take place in 2011, he has also made changes to his original announcements.
From 6 April 2010 the personal allowance, currently £6,475, will be subject to an income limit of £100,000. An individual’s personal allowance will be reduced by £1 for every £2 of adjusted net income above the income limit. The personal allowance will be potentially reduced to nil from this income limit instead of the proposed two stage reduction announced last year.
Adjusted net income for these purposes is broadly all income after adjustment for pension payments, charitable giving and relief for losses.
Instead of the proposed 45% top rate of tax in 2011, a new rate of income tax will be introduced of 50% from 6 April 2010. This will apply to taxable income above £150,000.
Dividend income is currently taxed at 10% where it falls within the basic rate band and 32.5% where liable at the higher rate of tax. A new rate of 42.5% will be introduced for dividends which fall into the income band above £150,000.
Internet Link: HMRC budget note 1
Restricted tax relief on pension contributions
Pension contributions made by an individual are usually paid net of basic rate tax. Where the individual is a higher rate taxpayer further relief is due which significantly reduces the net cost of the contribution.
The government has announced its intention to restrict tax relief on pension savings with effect from 6 April 2011 for people with taxable income of £150,000 or more. The relief will be tapered down until it is 20%.
Legislation will be introduced to prevent those potentially affected by the new rules from seeking to forestall this change by increasing their pension savings in excess of their normal regular pattern, prior to that restriction taking effect.
The forestalling measures will apply to individuals with incomes of £150,000 or more who, from Budget Day, change:
their normal pattern of regular pension contributions, or
the normal way in which their pension benefits are accrued, and
their total pension contributions or benefits accrued exceed £20,000 a year.
Reacting to the Chancellor’s Budget speech, Richard Lambert, CBI Director-General, said:
"Changing the higher-rate tax relief on pensions weakens incentives to save for retirement and is yet another change to a system which really needs stability."
Internet Link: HMRC pensions changes
Enhanced relief for trading losses
Under current rules businesses already have a number of mechanisms to relieve trading losses against other income including past trading profits.
Unincorporated businesses can offset unlimited trading losses against income in the preceding year and in the early years of business trading losses may be carried back for three years.
The main relief for companies is a carry back of unlimited trading losses against profits made in the previous year.
A proposed revision will apply for two years and will extend the period that current trading losses from businesses can be carried back against previous profits to a period of three years, with losses being carried back against later years first.
The amount of losses that can be carried back to the preceding year remains unlimited. After carry back to the preceding year, a maximum of £50,000 of the balance of unused losses is then available for carry back to the earlier two years.
This change will have effect for company accounting periods ending in the period 24 November 2008 to 23 November 2010. For unincorporated businesses, the measure will have effect in relation to trading losses for tax years 2008/09 and 2009/10.
Internet Link: HMRC budget note 13
Capital allowances on plant and machinery
Additional capital allowances are to be available for expenditure incurred by a business in the 12 month period (starting 1 April 2009 for companies and 6 April 2009 for individuals and partnerships).
Most businesses have since April 2008 been able to claim the new Annual Investment Allowance (AIA) on the first £50,000 spent on most plant and machinery. Expenditure on qualifying plant and machinery not covered by the AIA will be eligible for a temporary first year allowance (FYA) of 40% instead of a 20% writing down allowance.
The temporary FYA will not apply for certain expenditure including integral features, cars, long life assets and assets for leasing. This additional allowance will be attractive to larger or plant intensive businesses where the AIA is insufficient, particularly groups of companies where one AIA has to be shared between all companies.
Internet Link: HMRC budget note 4
Standard rate VAT
The standard rate of VAT was reduced from 17.5% to 15% for the 13 month period 1 December 2008 to 31 December 2009. HMRC have confirmed that the standard rate of VAT will revert to 17.5% from 1 January 2010.
The government have confirmed that legislation will be introduced to counter schemes which purport to apply the 15% VAT rate to goods or services to be supplied on or after the date that the rate returns to 17.5%. The measures will apply where the customer cannot recover all the VAT on the supply and:
the supplier and customer are connected parties or
the supplier funds the purchase of the goods or services or
a VAT invoice is issued by the supplier where payment is not due for at least six months.
A supplementary charge will also apply where a pre-payment in excess of £100,000 is made before the rate rise in respect of goods or services to be provided on or after the date of the rate rise.
The effect of the measures will be to charge supplementary VAT of 2.5%, where VAT of 15% has been declared.
Internet Links: HMRC budget note 71 HMRC budget note 72
VAT system for cross-border trading
A package of measures is being introduced to simplify and modernise the VAT system for cross-border trading and to counter fraud across the EU. The measures include:
changes to the basic place of supply of services rules
changes to the time of supply rules
European Sales List (ESL) reporting for supplies of cross-border services
a new electronic refund procedure for VAT incurred in other EU Member States.
To read more about these proposed changes visit the link below.
Internet Link: HMRC VAT changes link
Bradford & Bingley position of former shareholders
As you are no doubt aware, shares in Bradford & Bingley plc were taken into public ownership last year. HMRC have issued guidance relevant to former shareholders and employees who were members of employee share schemes.
The guidance sets out the capital gains tax and income tax implications for former shareholders and employees who were members of employee share schemes.
For the majority of shareholders the guidance sets out the procedures for claiming any capital gains tax loss relief.
Please get in touch if you have any concerns in this area.
Internet Link: HMRC brief
Change of HMRC bank account details
HMRC bank account details for paying self employed Class 2 and voluntary Class 3 National Insurance Contributions have changed. HMRC have advised that individuals will need to use the new account details when making a payment.
Their advice is that where an individual pays by Internet, telephone banking or CHAPS:
"HMRC is now using the bank Citi for these types of electronic payments. You can find the new bank account numbers and sort codes by referring to the papers sent to you by HMRC."
According to HMRC:
"Individual banks and building societies will start accepting the new account details on or shortly after the 20 April 2009. If there is a delay your bank/building society will be able to advise you. You can continue to make payments using the old details until your bank is ready to accept the new ones."
New payment details can also be found at the link below and are as follows:
Sort code Account number Account name
08 32 20 12001004 HMRC NICO
For those paying using a payslip by bank giro HMRC will be changing the system later this year so the above details do not apply to these types of payment.
We will keep you informed of developments in this area.
Internet Links: HMRC news Payment information
Businesses given more time to pay business rates
Alistair Darling made a late change to the impact of business rate rises which were due to take effect in England from 1 April 2009.
Business rates were due to go up by 5% from 1 April 2009. However under the new scheme the rise will be restricted to 2%, with businesses being able to spread the cost of the remaining 3% over the following two years. Many had feared that the proposed increase could have caused major cash flow issues for many businesses.
For more information see the fact sheet.
Internet Links: Fact sheet BBC news
31 March, 2009
Mar 09 eNewsletter
eNEWS - March 2009
In this month's enews we report on a significant number of changes in respect of employment related issues.
Please browse through this month's articles using the links below and contact us if any issues or questions arise.
eNEWS quicklinks
National Insurance Contributions from April 2009 New Statutory Payment Rates for 2009/10
Changes to SSP for agency workers Statutory Maternity Leave, salary sacrifice and non-cash benefits
'How to Pay' changes Avoiding and resolving workplace problems
PAYE changes HMRC warn of latest fraud attempt
Rise in late payments to SMEs
National Insurance Contributions from April 2009
From 6 April 2009, changes have been made to how employers will have to record National Insurance Contributions (NICs) due to changes to the State Second Pension. Employers will have to record NICs in the following four earnings bands, with the introduction of the Upper Accrual Point:
* earnings up to and including the Lower Earnings Level (LEL), where earnings are equal to or exceed the LEL
* earnings above the LEL up to and including the Earnings Threshold (ET)
* earnings above the ET up to and including the Upper Accrual Point (UAP)
* earnings above the UAP up to and including the Upper Earnings Limit (UEL).
HMRC's P11 Calculator on their CD-ROM has been updated to include all four earnings bands shown above.
It may be worth checking that, if you use payroll software, your provider has made these NICs changes available as part of the annual upgrade.
HMRC's paper form P11 Deductions Working Sheets have been updated. The 2009/10 version can be obtained from the Employer Orderline. Old stocks of P11 sheets should be destroyed. Further help on completing the 2009/10 P11 can be found in the Employer Helpbook E11 Starting the Tax Year.
Internet Link: HMRC employer bulletin
New Statutory Payment Rates for 2009/10
The new Statutory Payment Rates for 2009/10 have been announced (subject to Parliamentary approval). The new rates are as follows:
* Statutory Sick Pay (SSP) weekly rate - £79.15 for payment weeks beginning on or after 6 April 2009
* Statutory Maternity Pay (SMP) - standard rate £123.06 for payment weeks beginning on or after 5 April 2009
* Statutory, Adoption and Paternity Pay (SAP, SPP) - £123.06 for payment weeks starting on or after 5 April 2009.
Employers who do not qualify for Small Employers' Relief will be able to continue to recover 92% of the SMP/SAP/SPP. Employers who do qualify for the relief will be able to recover 104.5% of the SMP/SAP/SPP.
A small employer is one who paid (or was liable to pay) total gross Class 1 NICs of £45,000 or less in the individual's qualifying tax year.
In addition, a new Employer Helpbook E19 is now available. This brings together all the information on Paternity Pay. The other Helpbooks now cover Sick Pay (E14), Maternity Pay (E15) and Adoption Pay (E16).
Internet Link: HMRC employer bulletin
Changes to SSP for agency workers
Following the Court decision in the case of Thorn Baker Limited, the Department for Work and Pensions (DWP) have amended the legislation. This was done to restore the Government's original policy intention that agency workers who have contracts of less than three months should be eligible for Statutory Sick Pay (SSP) within the first three months of their contract.
This is designed to ensure that all employees and agency workers are eligible for SSP on the same basis, regardless of the length of their contract.
The change which came into effect on 27 October 2008 has recently been confirmed in the latest HMRC Employer Bulletin. The effect of the change is that workers supplied through an agency are eligible for SSP from the start of their contract. This is, of course, subject to all the other entitlement conditions being met.
Internet Link: HMRC employer bulletin
Statutory Maternity Leave, salary sacrifice and non-cash benefits
Salary sacrifice is a change to an employee's contractual pay entitlement. It often involves the giving up of some entitlement to pay in return for some other form of benefit, such as employer pension contributions or childcare vouchers. Depending on the sort of benefit involved, tax and/or National Insurance savings can often result for both the employer and employee.
Following changes in the law in 2008 on what benefits employers must provide to employees during Additional Maternity Leave, HMRC published guidance on Statutory Maternity Leave and salary sacrifice. Similar changes took place in respect of employees on adoption leave. In the recent HMRC Employer Bulletin they provided a link to the guidance.
The guidance also covers what non-cash benefits should be provided to employees during Statutory Maternity Leave.
HMRC have confirmed, following requests from employers, that they plan to publish further guidance on their website, including the tax and NICs implications of providing non-cash benefits, in-year recording and end of year reporting of these complex areas.
If you would like to discuss these issues in more detail or the opportunities afforded by salary sacrifice more generally, please do get in touch.
Internet Link: HMRC guidance on salary sacrifice
'How to Pay' changes
During 2009, HMRC will be changing the bank accounts into which businesses and individuals make payments. These changes will be phased in throughout the year but HMRC will keep businesses and taxpayers informed of any changes.
The first account change will be on the Pay As You Earn (PAYE) payment booklets issued from February 2009, which should be used from April payments onwards for the 2009/10 tax year.
Other changes will appear within HMRC's 'How to Pay' instructions. An updated version of these instructions, including the revised bank account and sort code details, will be published on HMRC's website as changes are made.
If you make payments to HMRC via BACS and banks online systems, the new details will be provided in the 'How to Pay' instructions when the changes are made.
HMRC state:
'You do not need to take any specific action or make any changes at the moment; your payments will continue to be received by HMRC and applied to your tax liability.'
Internet Link: HMRC employer bulletin
Avoiding and resolving workplace problems
The legislation governing how businesses deal with disputes with their employees is changing from April 2009. The new simpler and more flexible system is intended to save businesses time and money.
Acas, the employment relations service, have now issued a new Code of Practice following parliamentary approval and accompanying guidance which will lays out the principles and provides practical guidance on procedures for handling disciplinary and grievance matters in the workplace.
The Employment Act 2008:
* repeals the mandatory three-step process for discipline/grievance issues; and
* allows employment tribunals to adjust awards by up to 25% if an employee or employer has acted unreasonably in not following the principles in the new Acas Code.
The Government is providing additional help for all employers to get the maximum benefit out of this new system by working with Acas.
From April 2009, help on the new rules will be available from the Acas helpline on 08457 47 47 47. Trained Acas conciliators will also be available throughout the country to help resolve workplace problems.
Acas are also running a variety of courses aimed at helping businesses during a recession, such as redundancy and restructuring, managing people in difficult times, understanding and managing redundancy, varying a contract of employment, and employment law update.
Internet Links: HMRC employer bulletin Acas article
PAYE changes
HMRC have issued a reminder to employers with 50 or more employees that they must send their employee starter and leaver information - P45s, P46s and P46(Pen) for pensions - online from 6 April 2009. As always, failure to comply with these new rules could result in a penalty.
HMRC's Simon Lidster said:
"If you're an employer with 50 or more employees, and you're not filing your P45s and P46s online, time is running out. Register now, so you don't end up facing a penalty.
These employers also need to remember that their 2008/09 Employer Annual Returns must be submitted online to HMRC by 19 May. Returns are being accepted now, so we are urging employers to send them in as soon as they are ready."
If you would like any help in this area, please do get in touch.
Internet Link: HMRC press release
HMRC warn of latest fraud attempt
HMRC are warning taxpayers of the latest fraud attempt to be reported to them.
Taxpayers are being sent an email asking them to 'update your account to the new EV SSL certification'. HMRC are warning that this is a scam email which is attempting to steal User IDs and Passwords. The email is being sent from hmrc@hmrc.gov.uk.
HMRC advise that you should never disclose personal information such as User IDs or Passwords and that anyone receiving a suspicious email should forward it to phishing@hmrc.gsi.gov.uk.
Internet Links: HMRC guidance on security fraud attempts Example email
Rise in late payments to SMEs
According to Bacs Payments Schemes Limited (Bacs) small and medium size enterprises (SMEs) are now owed £25.9 billion. This is apparently due to a 40% increase in overdue payments over the last year.
According to their research
* the national average of outstanding payments was in £38,000 (£30,000 in 2007)
* overdue invoices in the Midlands were the highest at £69,000
* 57% of businesses are owed money (up from 51%)
* manufacturing had the highest rate of late payments being 65% and
* the most common cause of late payments was cash flow issues.
For more details on the report visit the link below.
Internet Link: BACS press release
28 February, 2009
Feb 09 eNewsletter
eNEWS - February 2009
This month, as we recover from the self assessment rush, we report that HMRC regard the increase in online filing as a great success. We also report that Chancellor Alistair Darling will be keeping us all guessing a bit longer, by making his Budget speech on 22 April this year.
Please browse through this month's articles using the links below and contact us if any issues or questions arise.
eNEWS quicklinks
Budget day confirmed HMRC announce self assessment filing record
CBI predict deeper UK recession Marks & Spencer VAT win
Beneficial Loan rate Employment Rights - Statutory limits
Business Payment Support Services Employment Law Guidance Programme
Changes to the National Minimum Wage from 6 April 2009
Budget day confirmed
Chancellor Alistair Darling will present his Budget speech at 12.30pm on Wednesday 22 April 2009.
We will keep you informed of any further developments.
Internet Link: HMRC announcement
HMRC announce self assessment filing record
According to HMRC, a record number of taxpayers filed their 2007/08 self assessment tax returns online. 5.75 million returns were filed online by the 31 January 2009 deadline, beating last year's by over 50%.
On the busiest day, Friday 30 January, a record 390,000 returns were filed.
Mark Holden, Director of HMRC's Carter Programme, said:
"HMRC's Self Assessment online service enables people to do business with Government in the way we know they want to."
Internet Link: HMRC self assessment record
CBI predict deeper UK recession
The latest CBI forecast predicts things are going to get worse for the economy before they get better.
According to the CBI press release:
"...it will take until the second half of next year until the impact of interest rate cuts, falling inflation, the relative weakness of sterling, plus the fiscal boost, start to have a stabilising effect.
The rapidly deteriorating global economy and the continued difficulties UK businesses are facing in accessing credit will push the economy deeper into recession in 2009."
CBI predictions include:
* the recession will last throughout 2009;
* the economy is expected to contract by 3.3%;
* unemployment will reach close to 2.9 million by the end of the year; and
* the economy is expected to stabilise early next year with the recovery building throughout 2010.
To read more about the CBI's predictions visit the links below.
Internet Links: CBI press release CBI forecast
Marks & Spencer VAT win
Marks and Spencer (M&S) won a landmark victory last year in the European Court of Justice (ECJ). The case concerned whether or not HMRC were correct to limit the amount of VAT they repaid to the company after their chocolate teacakes were reclassified as a cake rather than a chocolate biscuit. The issue of cakes and chocolate biscuits is an important one as cakes are zero rated rather than standard rated. The case dates back many years.
HMRC only repaid M&S 10% of the output tax it had overpaid on sales of chocolate teacakes on the grounds that the other 90% had been suffered by the customer and so M&S would be 'unduly enriched' if it was all repaid. The ECJ ruled in favour of M&S and the case was referred back to the House of Lords.
The House of Lords has now confirmed that HMRC will not contest this issue further and that M&S are due their refund. This opens the way for other claims of this nature. If you think that this case may have implications for your business, please do get in touch with us.
Internet Links: Parliamentary judgment Times online article
Beneficial Loan rate
HMRC have announced a reduction in the beneficial loan rate of interest from 6.25% to 4.75% from 1 March 2009. This is the rate of interest which is used to calculate the value of the benefit provided to employees where they receive a cheap or interest free loan from their employer.
This loan interest, along with other benefits and expenses provided to employees, should be reported to HMRC on a form P11D.
Please do get in touch if you require help with the completion of these forms which are completed on a tax year basis.
Internet Link: HMRC guidance
Employment Rights - Statutory limits
The limits on payments and awards made to workers in certain situations increased from 1 February 2009, where the event giving rise to the entitlement to the payment arose on or after this date. The increased limits affect statutory redundancy payments and compensatory awards for unfair dismissal.
The main increases include the:
* minimum compensation for unfair dismissal - £4,700 (£4,400)
* limit on the amount of the compensatory award for unfair dismissal £66,200 (£63,000)
* maximum amount of a week's pay for the purpose of calculating the basic or additional award of compensation for unfair dismissal or redundancy payment - £350 (£330).
The Business Link website includes a useful calculator.
Internet Links: Statutory instrument Business link calculator
Business Payment Support Services
According to Government figures, over 60,000 businesses have agreed time to pay tax arrangements with HMRC which total more than one billion pounds.
The Business Payment Support Service, which was introduced last autumn, provides a 'fast track' service that offers support to those needing more time to pay their tax bills. Terms can be quickly agreed over the phone.
The Right Honourable Stephen Timms, Financial Secretary to the Treasury, said:
"I'm delighted that HMRC's Business Payment Support Service is proving such a huge success, already providing a cashflow boost worth over a billion pounds to UK businesses.
This service is delivering the kind of tangible support that business needs at this time. I would urge any business anticipating or experiencing difficulties paying their tax to call the helpline and get a quick response tailored to their specific needs."
If you would like to discuss the Support Service in relation to your own tax affairs, please feel free to contact us.
Internet Link: News Direct press release
Employment Law Guidance Programme
The Department for Business, Enterprise and Regulatory Reform Employment Law Guidance Programme is designed to help employers save time and money when complying with their employment law obligations.
The Businesslink website provides free advice and online tools on a range of employment issues, including:
* the Employee Organiser - an interactive tool aimed at businesses planning to take on new employees;
* maternity, paternity and adoption guidance and interactive tools;
* flexible working schemes and associated ready-made forms to help produce written notices of decisions, etc;
* a downloadable written statement of employment;
* updated National Minimum Wage guidance, including an online calculator;
* working time guidance; and
* a redundancy calculator and guidance.
Internet Links: HMRC employers bulletin Business Link
Changes to the National Minimum Wage from 6 April 2009
The National Minimum Wage (NMW) rules have been with us for some years and require minimum rates of pay for certain workers. The government is now getting tough with those who do not pay the NMW.
From 6 April 2009, a new automatic penalty will be raised on employers where HMRC find NMW arrears. Penalties will range from £100 to £5,000 in addition to any arrears of pay owed to the workers. The most serious cases could lead to a criminal sentence or an unlimited fine.
Several changes are also being made to the powers of investigating officers such as the ability to remove NMW records from an employer's premises.
To read more about the NMW rules please see the links below.
Internet Links: HMRC - National Mimimum Wage www.berr.gov.uk
21 January, 2009
Business Payment Support Service launched
A new dedicated Business Payment Support Service, designed to meet the needs of businesses affected by the current economic conditions has been launched by the Chancellor in today’s Pre-Budget Report.
This targeted support will give businesses a fast and streamlined service for arranging to pay their HM Revenue & Customs (HMRC) tax bill to a timetable they can afford. In addition to this, HMRC will offer further practical help by not imposing additional penalties or surcharges on the tax within a time to pay arrangement.
Financial Secretary to the Treasury Stephen Timms said:
“The Government is determined to support businesses through these challenging economic times. The new dedicated Business Payment Support Service will ensure that businesses needing extra time to pay their tax bill can get a quick decision from HMRC. By speaking directly to an HMRC adviser they should be able to agree an affordable payment timetable without incurring any extra charges, saving hard working businesses both time and money.”
Lesley Strathie, HMRC Chief Executive said:
“We are committed to supporting businesses experiencing temporary difficulties and understand that some businesses want to talk to us about the amount of time they need to pay their HMRC taxes.
Our new Business Payment Support Service will make this easier and faster. Callers will get through to an HMRC officer who will listen and provide a solution tailored to specific circumstances.
Business people who find that they need more time to pay will receive a sympathetic response.”
Notes for editors
1. Further information is available on the HMRC website at www.hmrc.gov.uk/pbr2008/business-payment.htm, which contains general advice about the support line, as well as other frequently asked questions.
2. The support line - tel 0845 302 1435 – will be open 8am to 8pm Monday to Friday and from 8 am to 4pm at weekends.
02 January, 2009
Cash boost for pregnant mums
Mums-to-be, with babies due on or after 6 April 2009, are being urged to apply now for the new £190 Health in Pregnancy Grant.
The one-off payment is intended to help pregnant mums stay fit and healthy in the run up to the birth, and help meet some of the costs as the big day approaches.
The money can be claimed from the 25th week of pregnancy, after receiving health advice from a midwife or other health professional. You’ll be given a claim form to sign and send off, which you must do within 31 days. When your claim is approved, the money is paid directly into your bank or building society account. Women who apply in the first three months of the year will get the cash in April.
Mum-to-be Gemma Hargreaves and midwife Juliet Albert put their questions about the new grant to an HMRC expert in a new podcast, launched today, which you can listen to or download for free by visiting www.hmrc.gov.uk/podcasts .
Stephen Timms, Financial Secretary to the Treasury, said:
“We understand that the run up to a birth is an expensive time for families. The new Health in Pregnancy Grant will help expectant mums meet these extra costs and give their child the best possible start in life.
“It’s very easy to make a claim and pregnant women can spend the cash on whatever they like, including fresh fruit and vegetables, nappies or even a pram or baby bath. It’s their choice.”
Pregnant women can get more information at www.direct.gov.uk/money4mum2be .
Notes for editors
1. The Health in Pregnancy Grant is available to expectant mothers ordinarily resident in the UK and is subject to immigration status.
2. The grant is a universal, one-off payment available to expectant mothers in the UK from the 25th week of pregnancy and will be payable from April 2009. Payment of the grant does not depend on the amount of household income.
3. The grant will not affect payments of other benefits and tax credits and is payable for each pregnancy, not each baby.
31 December, 2008
Dec 08 eNews
January 2009 - INTRODUCTION
In this month’s enews we report on the Business Payment Support Service which is designed to support businesses affected by the current economic conditions.
Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
With very best wishes for 2009.
Business Payment Support Service
Changes to the advisory fuel rates from 1 January 2009
Demand for advice on redundancy and lay-offs
VAT - Extension of 14 day limit
Business Payment Support Service
The Business Payment Support Service, announced in the Pre-Budget Report 2008, is designed to meet the needs of businesses affected by the current economic conditions. Any business that is worried about being able to meet tax, National Insurance or other payments owed to HMRC, or anticipates that payments becoming due will cause them problems, can get in touch with HMRC to discuss payment options to help them deal with temporary cash flow difficulties on 0845 302 1435.
The service is designed to help all businesses (large and small) that are struggling to pay their tax. The service is primarily available to self-employed people and companies but can be used by anyone who is having difficulty in meeting their tax liabilities. The service covers most taxes and duties including Income Tax, Corporation Tax, VAT, PAYE and National Insurance.
To qualify, the business/individual must be:
- in genuine difficulty
- unable to pay their tax on time
- likely to be able to pay if HMRC allow them more time.
HMRC have stated that ‘…we will look to be flexible and agree time to pay arrangements on a case-by-case basis to bring the businesses’/client’s tax back up to date on a timescale that is reasonable and appropriate to the situation.’
Please do get in touch if you would like help in this area.
Internet link: HMRC guidance
Changes to the advisory fuel rates from 1 January 2009
To reflect the reduction in fuel prices, HMRC have issued new advisory fuel rates for employees driving employer provided cars. These take effect for all journeys undertaken from
The advisory fuel rates should be used for journeys undertaken on or after
|
Engine size |
Petrol |
Diesel |
LPG |
|
1400cc or less |
10p (12p) |
11p (13p) |
7p (7p) |
|
1401cc – 2000cc |
12p (15p) |
11p (13p) |
9p (9p) |
|
Over 2000cc |
17p (21p) |
14p (17p) |
12p (13p) |
HMRC are supposed to give employers a month’s notice of changes to these rates. However, according to the HMRC guidance:
‘As was done for the July 2008 changes, HMRC is content for the new rates to be implemented immediately where employers are able and wish to do so.’
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
Demand for advice on redundancy and lay-offs
Acas, the Advisory, Conciliation and Arbitration Service, have reported a sharp increase in the number of businesses and employees seeking advice on redundancy, lay-offs and business transfers.
Apparently:
‘…the employers are most likely to ask about their legal responsibilities, consultation periods and how to decide which employees to make redundant. Common enquiries from employees include asking about their own notice period and redundancy pay levels.’
Ed Sweeney, Acas Chair, commented:
‘Given the challenging economic environment, these figures are not surprising. We are urging businesses to resist any knee-jerk reactions, and ensure that decisions are assessed well ahead of being made.
Thinking about the longer term or looking at alternatives to redundancy, such as redeployment, are just two areas where businesses may be able to save jobs and money in the medium-long term.’
Please do talk to us if you have any concerns in this area.
Internet link: Acas guidance
Cut in interest rates
Commenting on the decision by the Bank of England’s Monetary Policy Committee to reduce interest rates by 1% to 2% earlier this month, Ian McCafferty,
‘The economy needs a significant monetary stimulus and the Bank has clearly decided this will be best achieved by another big cut in interest rates. What is critical for business and consumers alike is that this reduction is passed on.
The economy is stalling, inflation is expected to undershoot the Bank’s own target and the headline
Please do get in touch if you have concerns or issues about you business.
Internet link: CBI press release
VAT - Extension of 14 day limit
HMRC have issued further guidance to businesses on the reduction in the standard rate of VAT from
In normal circumstances, where a business invoices within 14 days after the supply of goods and services, this is generally the effective tax point for VAT, replacing the basic date of supply rule. This does not apply where payment is received in advance, as this triggers the tax point earlier. It does mean that goods and services supplied between 18 and 30 November but invoiced from 1 December 2008 onwards should be charged at 15% where provided within 14 days of the supply date. Concern that businesses would not be able to effect the necessary changes to their accounting systems in time has resulted in a prompt response by HMRC.
HMRC have agreed that the normal 14 day limit can be extended to 30 days for goods or services provided between
Where a business has previously agreed an extension to the 14 day limit with HMRC, it can continue to use that time limit but where it is less than 30 days it can opt to use the 30 day limit instead.
The link at the bottom of this article will take you to the guidance on the change in the standard rate of VAT. However, please do get in touch if you have any queries on the VAT changes.
Internet link: HMRC VAT guidance
Double up on your duty free
Travellers can now bring back more than double the amount of gifts and souvenirs from outside the EU without paying
The tax and duty free allowance increased from £145 to £300 from
Travellers and holiday makers will also be able to bring back more alcohol, with a new allowance for beer of 16 litres and a doubling in the allowance of still wine, from two to four litres.
Financial Secretary to the Treasury, Stephen Timms, said:
‘This new rate for all EU member states will be a welcome boost to holiday makers and all others travelling outside the EU. The changes stem from an initiative by the then Chancellor, Gordon Brown, and demonstrate the benefits of the
Internet link: Press release
Capital allowances on cars
HMRC have issued some draft legislation and guidance on how the tax relief on business cars, known as capital allowances, will be calculated from April 2009.
The new rules apply to expenditure incurred on or after
The rate of annual writing down allowances for expenditure on other cars will be determined by the car’s CO2 emissions. The new rules provide that expenditure on cars with CO2 emissions:
- not exceeding 160gm/km will be pooled in the main 20% pool: and
- over 160gm/km will be pooled in the 10% pool.
The legislation is draft at present and we will keep you informed of developments.
Meanwhile do get in touch if you are planning significant expenditure in this area.
Internet link: Treasury note
01 October, 2007
New Wage and Holiday entitlements
The government has announced the changes in National Minimum Wage (NMW) rates from 1st October 2007. The table below sets out current and future rates.
NMW rate Current From 1/10/07
Adult rate (age 22 and over) £5.35 £5.52
Development rate (age 18-21) £4.45 £4.60
Development rate (age 16-17) £3.30 £3.40
Increase in holiday entitlement
DTI has announced some changes to their original proposals to increase the annual leave entitlement. An increase in the statutory minimum holiday entitlement is announced. The implementation will be in two phases. The first phase takes effect on 1 October 2007 when the statutory annual leave will increase from 20 to 24 days (4 to 4.8 weeks).
The second phase will be on 1 April 2009 when the leave will increase from 24 to 28 days (4.8 to 5.6 weeks).
The following table is a summary of the new regulation.
Worker works 5 days a week and currently has a total of 4 weeks’ holiday
Leave year is January to December
Period Initial annual Additional New total leave
Entitlement entitlement entitlement
Oct to Dec 2007 20 1 21
Jan to Dec 2008 21 3 24
Jan to Dec 2009 24 3* 27
Jan to Dec 2010 25 1 28
Worker works 5 days a week and currently has a total of 4 weeks’ holiday
Leave year is April to March
Period Initial annual Additional New total leave
Entitlement entitlement entitlement
Oct 07 to Mar 08 20 2 22
Apr 08 to Mar 09 22 2 24
Apr 09 to Mar 10 24 4 28
*3 days to be given from 1 April 2009
Highlights
- The statutory leave will still be capped at 28 days
- The additional holiday can be inclusive of bank holidays. Therefore employers who currently offer their workers 20 days’ holiday plus 8 bank holidays will already meet the increased statutory minimum holiday entitlement.
- Part-time workers will be entitled to the additional leave on a pro-rata basis.
01 August, 2007
New website
Raymond's have launched new web site. The followings are the benefits for our clients.
• You can view, print, download your Accounts , Tax returns at any time
• Your own secure account with unlimited space
• Easy access to your accounts data any where in the world
• Secure login via https server
• No more waiting for office hours, you are in contact with us 24x7
• You can send your queries by email to us via your own accounts online
• You can upload your documents security – no need to send them by post!
• Easy trace records of our communications
• Fortnightly newsletters: keeping you updated in today's dynamic financial world
08 March, 2007
Victory of tax payer in Arctic Case
The House of Lords has dismissed HM Revenue and Customs' appeal in the so-called "Arctic Systems" case. HMRC had challenged husband and wife, Geoff and Diana Jones' remuneration structure (commonly used by spouses) in which they formed a family company and paid themselves a low salary and a relatively higher dividend payment in order to maximise tax efficiencies.
The particular element on which the case was dismissed was that, while the court agreed that if a husband made a "gift of income" to his wife, he should be taxed on it in full; if there was a transfer of an actual share in the company (which there was in Mr and Mrs Jones' case), the dividend income associated with that share is taxable only on the wife. David Kilshaw, head of private client advisory at KPMG, said: "Tens of thousands of couples who run businesses together will breathe a sigh of relief". The spectre of horrendous tax bills has disappeared. Thousands of businesses have literally been saved from bankruptcy by the House of Lords. HMRC have lost this case and they have no further recourse to appeal. However, Mr and Mrs Jones won because of the particular way that they had structured their company – ie because Mrs Jones had an actual share in Arctic Systems with real rights. Couples running businesses together need to check that they have appropriate arrangements in place or they may find that they still have high tax bills.
31 December, 1969
November eNewsletter
NOVEMBER 2009 - INTRODUCTION
In this month’s enews we report that the Chancellor has announced the date of the Pre-Budget Report.
We also include our usual round up of news. Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
Pre-Budget Report 2009
Intrastat thresholds
VAT and New Year’s Eve traders
Parties for employees
Swine flu and SSP
Online filing of VAT returns
First aid at work
Business rates bills
PRE-BUDGET REPORT 2009
Alistair Darling will make his Pre-Budget statement to the House of Commons on Wednesday 9 December 2009 at 12:30.
We will let you have details of the important announcements in the next issue.
Internet link: Treasury website
INTRASTAT THRESHOLDS
HMRC have announced significant changes to the Intrastat thresholds. Intrastat is used to report the movement of goods within the EU over certain thresholds. Those traders with an annual intra-EU trade in goods exceeding the exemption thresholds are required to provide monthly statistical returns (Intrastat Supplementary declarations).
From 1 January 2010, subject to parliamentary approval:
• the exemption threshold for arrivals will be increased from £270,000 to £600,000 and
• the exemption threshold for dispatches will be reduced from £270,000 to £250,000.
The significant change in the arrivals threshold is due to a reduction in the EU minimum requirement for Member States to collect data from 97 to 95%.
The threshold for dispatches has been reduced to £250,000 due to the current economic downturn and the consequent reduction in the number of UK businesses trading within the EU.
If you would like any advice as to how this change affects your business please do get in touch.
Internet link: HMRC Brief
VAT AND NEW YEAR’S EVE TRADERS
If you are going to be out celebrating on New Year’s Eve or indeed if your business will be operating over midnight, you will be glad to hear that the government has announced a relaxation of the VAT rules. Pubs, clubs, restaurants and other retail businesses remaining open past midnight on New Year’s Eve will be allowed to continue charging VAT at 15% on their sales until they close or until 6am on 1 January 2010, whichever is the earlier.
Similar arrangements will apply to telecommunications companies in respect of calls and texts made up to 6am on 1 January.
Internet links: HMRC VAT Brief Press release
PARTIES FOR EMPLOYEES
Are you planning a party for your employees? The good news is that, unlike entertaining customers, the costs of entertaining employees are generally allowable against the profits of the business.
But what is the tax treatment 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 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, transport and accommodation that you provide.
If the costs are above the £150 limit then do get in touch so we can advise you how best to deal with them.
Internet link: HMRC guidance
SWINE FLU AND SSP
Under existing rules for Statutory Sick Pay (SSP) employees can self-certify for the first seven days of their illness and employers cannot ask for medical evidence during this period. There has been no change to this requirement.
If employees are ill for more than seven days, employers can ask for reasonable evidence that they are not able to work and decide what, if any, further information they may need.
During the swine flu pandemic, employers are being asked to consider other evidence (instead of a doctor’s certificate) as proof of an employee's illness. This will hopefully help to reduce the burden on GPs.
Internet link: HMRC guidance
ONLINE FILING OF VAT RETURNS
HMRC are reminding businesses that new rules on how VAT returns are submitted and payments are made will come into force next year. Paper VAT returns will be phased out from 1 April 2010.
As a start of this phasing out process, businesses with:
• annual turnover of £100,000 or more, and
• all businesses which register or should have registered for VAT on or after 1 April 2010
will need to submit their VAT returns online and make payments electronically from April 2010. Those businesses that are already VAT registered, with a turnover below the threshold, will have the choice to use paper returns but this will be reviewed by 2012.
Further guidance has been issued together with details of the penalties for failing to make an electronic return. The penalties will be:
• turnover £100,000 (VAT exclusive) and below - £100
• turnover £100,001 to £5,600,000 - £200
• where turnover exceeds £5,600,000 the penalties charged will be higher.
HMRC have announced a period of grace which means that penalties will not be imposed initially, however periods ending on or after 31 March 2011 will be charged. This grace period is to allow businesses to adjust to the change in procedures.
HMRC have also announced simplified procedures for agents to submit their clients VAT returns, so please do get in touch if you would like any further advice in this area.
Internet link: HMRC VAT Statutory instrument
FIRST AID AT WORK
The Health and Safety Executive are reminding businesses that the guidance for first aid at work changed from 1 October 2009.
To insure that you are complying with the revised requirements please visit the link below.
Internet link: HSE website
BUSINESS RATES BILLS
The government has confirmed that 60% of business rates will fall next year as a result of revaluation and that it will not collect a penny more of extra revenue as a result of the 2010 revaluation, which is carried out every five years. However, rates bills for some businesses will rise significantly.
The government recently announced that it will remove the requirement to re-apply for small business rate relief, which can reduce business rates by up to 50%, at revaluation, reducing bureaucracy for small businesses and billing authorities.
John Cridland, CBI Deputy Director-General, said:
“We’re concerned by the government’s announcement on business rates today. Although business rates will fall overall, in some areas of the country they will rise sharply, which is worrying at this critical time for the economy.
We called for the government to cap business rate increases at lower levels than those announced today. For example, we called for a maximum rise of 7.5% for larger properties, but the government has announced a maximum rise of 12.5%. This is worrying.
We’re particularly concerned about the potential for sharp rises in business rates in London, where properties were revalued near the height of the market. Given the economic situation, a significant rise in business rates could make a critical difference to companies trying to survive the recession.”
Internet links: CBI press release Press release
