This month’s enews is not surprisingly dominated by the Budget. Some of the key announcements are set out in the following articles together with a round up of other news.
Please contact us if you would like any further information on any of the articles.
Personal allowance up to £10,000 from 2014/15
It has been confirmed in the Budget that the basic personal allowance will be increased from the current £8,105 to £9,440 for 2013/14. This increase is part of the plan of the Coalition Government to ultimately raise the allowance to £10,000 which will be achieved from 2014/15.
The reduction in the personal allowance for those with ‘adjusted net income’ over £100,000 will continue. The reduction is £1 for every £2 of income above £100,000. For 2013/14 the allowance ceases when adjusted net income exceeds £118,880.
From 2013/14 the higher age related personal allowances will not be increased and their availability will be restricted to people who were born before 6 April 1948.
2013/14 income tax bands
The basic rate of tax is currently 20%. The band of income taxable at this rate is £32,010 for 2013/14 so that the threshold at which the 40% band applies is £41,450 for those who are entitled to the full basic personal allowance.
For 2013/14 the additional rate of tax is reduced to 45%, rather than the 2012/13 rate of 50%. This rate will be payable on taxable income above £150,000.
Internet link: Budget TIIN
National Insurance – £2,000 employment allowance
The Government will introduce an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 NIC liability from April 2014. The allowance will be claimed as part of the normal payroll process through Real Time Information (RTI).
The Government proposes to introduce legislation on this issue later in the year.
Internet link: HMRC key employer Budget announcements
New scheme for tax free childcare
New tax incentives for childcare have been announced. To be eligible, families will have to have all parents in work, with each earning less than £150,000 a year and not already receiving support through Tax Credits or Universal Credit.
The relief will be 20% of the costs of childcare up to a total of childcare costs of £6,000 per child per year. The scheme will therefore be worth a maximum of £1,200 per child.
The scheme will be phased in from autumn 2015. For the first year of operation, all children under five will be eligible and the scheme will build up over time to include children under 12.
The current system of employer supported childcare will continue to be available for current members if they wish to remain in it or they can switch to the new scheme. Employer supported childcare will continue to be open to new joiners until the new scheme is available.
The Government will consult on the detail of the new scheme but it is expected that parents will be able to open an online voucher account with a voucher provider and have their payments topped up by the Government. Parents will be able to use the vouchers for any Ofsted regulated childcare in England and the equivalent bodies in Scotland, Wales and Northern Ireland.
The existing system of employer supported childcare is offered by less than 5% of employers and used by around 450,000 families. It provides an income tax and national insurance contributions (NIC) relief. The maximum relief is an exemption from income tax and NIC on £55 a week. This relief is per employee so if both parents are in employment the maximum exemption is £110 per week. In the new scheme the limit is per child.
Internet link: Treasury infographic
Support for the housing market
Major reforms have been announced in Budget 2013, including over £5.4 billion of financial help, to tackle long-term problems in the housing market and to support those who want to get on or move up the housing ladder, including the introduction of a new housing scheme, Help to Buy.
From April 2013, the Government will extend First Buy to provide an equity loan worth up to 20% of the value of a new build home, repayable once the home is sold, and widen the eligibility criteria, including increasing the maximum home value to £600,000 and removing the income cap constraint.
The Government will also create a mortgage guarantee for lenders who offer mortgages to people with a deposit of between 5% and 20% on homes with a value of up to £600,000, increasing the availability of mortgages on new or existing properties for those with small deposits.
Further detail is expected on these schemes.
Internet link: Treasury Infographic
RTI ‘relaxation’ for small employers
HMRC have announced that, for some smaller employers, they will relax the reporting requirement for RTI that payments to employees should be reported on or before the amount is paid to the employee.
The relaxation for small employers (those with fewer than 50 employees) who pay employees weekly, or more frequently, but only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. HMRC have therefore agreed a relaxation of reporting arrangements for these small employers.
Until 5 October 2013 employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month.
HMRC have also advised that they:
‘will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI or the success of the Department for Work & Pension’s Universal Credit’.
HMRC have also made available some guidance on exceptions to reporting PAYE information ‘on or before’ paying an employee which can be found at http://www.hmrc.gov.uk/payerti/on-or-before.pdf
Please do contact us if you would like any further help or advice on payroll procedures.
Internet link: HMRC RTI news
Advisory fuel rates for company cars
Updated company car advisory fuel rates have been published which took effect from 1 March 2013. HMRC’s website states:
‘These rates apply to all journeys on or after 1 March 2013 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’
The advisory fuel rates for journeys undertaken on or after 1 March 2013 are:
|1400cc or less
|1401cc – 2000cc
|1600cc or less
|1601cc – 2000cc
Please note that not all of the rates have been amended, so care must be taken to apply the correct rate.
Other points to be aware of about the advisory fuel rates:
- Employers do not need a dispensation to use these rates.
- Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
- The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.
If you would like to discuss your car policy, please contact us.
Internet link: HMRC advisory fuel rates
Employer end of year forms
HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time. The vast majority of employers must file electronically and the deadline for submission of the forms is 19 May 2013 which this year falls on a Sunday.
To avoid unnecessary late filing penalty notices being issued, where no return is necessary, it is important to advise HMRC that no return is due. This can be done using the link below.
If you are unsure whether you need to complete a return this year please do get in touch.
Internet links: HMRC guidance No P35 online form
Reminder to those with child benefit and higher incomes
HMRC are reminding people with income over £60,000 whose family is still receiving Child Benefit to consider ‘opting out’ before 28 March if they wish to avoid filling in a tax return and repaying the benefit for the 2013/14 tax year.
According to HMRC’s latest figures over 370,000 people have opted out of Child Benefit since the High Income Child Benefit Charge was introduced on 7 January 2013.
Those with income over £60,000 that continued to receive Child Benefit from 7 January 2013 onwards that do not already receive a self assessment return need to register for self assessment by 5 October 2013. This action is necessary so they can repay the child benefit received between January and April 2013.
However opting out before 28 March will mean they will not need to fill in a tax return in future years.
Lin Homer, Chief Executive at HMRC, said:
‘Anyone wanting to opt out of Child Benefit payments can do so at any time. It is really easy – just go to our website. Anyone with an income over £60,000 who has received Child Benefit since January needs to register for self assessment by 5 October to repay some or all of this year’s benefit, but if they opt out now this will be a one-off.’
For those with income of more than £60,000, the tax charge is 100% of the amount of Child Benefit. For income between £50,000 and £60,000, the charge is gradually increased to 100% of the Child Benefit.
The decision to stay in or opt out of receiving Child Benefit payments is not final, and families are free to change their minds. Anyone earning over £50,000 who has received Child Benefit since 7 January 2013 will need to register for self assessment if they do not currently receive a tax return and complete a tax return for that period, regardless of whether they are now opting out.
Please do get in touch if you have concerns in this area.
Internet links: Press release HMRC news
HMRC publish names of deliberate defaulters
For the first time, HMRC have published a list of ‘deliberate tax defaulters’. To read the full list, please click on the link below.
Internet link: Defaulters list
Another HMRC disclosure facility
HMRC have launched the Property Sales campaign, which is the latest in a long line of disclosure facilities. Under the campaign those individuals who have sold a residential property and made a profit are able to bring their tax affairs up to date.
To take advantage of the best possible terms, taxpayers must voluntarily disclose any income or gains and payment must be made by 6 September 2013.
According to the HMRC press release:
‘This campaign is for you if you’ve sold, or disposed of, second or additional residential properties either in the UK or abroad. These could include a holiday home or a property that you rented out. You may also be able to use this campaign where you have sold your main home. This would normally qualify for Private Residence Relief but in some circumstances the relief is restricted. Where the entitlement to this relief is restricted capital gains tax may be due if you are liable to UK taxes.’
‘If your circumstances meant that capital gains tax was due on the sale of your main home you may be able to use this campaign.’
‘Even if you didn’t originally purchase the property you may still be liable to pay tax on the gain if you acquired the property another way. For example you may have inherited it or it may have been a gift.’
HMRC are advising that after 6 September they will use the information they hold to target those who should have made a disclosure under this campaign and failed to do so.
Internet link: HMRC campaigns