Author Archives: Henry Cooper

Newsletter – April 2013

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In this month’s enews we report on changes to the tax rules for loans to participators and other issues pertinent to employers with many deadlines approaching.

Please contact us if you would like any further information.

eNEWS quicklinks
Loans from a company to shareholders Increase in NMW rates
HMRC launch Managing Serious Defaulters (MSD) Employer end of year forms
Employment Particulars P11D deadline approaching
Scottish rate of income tax

Loans from a company to shareholders

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

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

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

The new law will prevent the practise of avoiding the payment of the tax charge by repaying the loan before the tax is due (nine months after the end of the accounting period) and then effectively withdrawing the same money shortly after. This change may also prevent refunds of the 25% tax already paid where loans are redrawn shortly after.

This change may affect a number of owner managed companies and we will be happy to discuss this with you.

Internet links: Press release HMRC TIIN

Increase in NMW rates

The Government has announced increases in the NMW rates which will come into effect on 1 October 2013:

  • the adult rate will increase by 12p to £6.31 an hour
  • the rate for 18-20 year olds will increase by 5p to £5.03 an hour
  • the rate for 16-17 year olds will increase by 4p to £3.72 an hour
  • the apprentice rate will increase by 3p to £2.68 an hour and
  • the accommodation offset increases from the current £4.82 to £4.91.

Katja Hall, CBI Chief Policy Director, said:

‘Pay restraint has been crucial in creating jobs in this tough economic climate.’

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

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

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

Internet links: Press release CBI press release

HMRC launch Managing Serious Defaulters (MSD)

Following on from Managing Deliberate Defaulters (MDD) programme, under MSD HMRC will closely monitor the tax affairs of more individuals and businesses who have deliberately evaded tax for up to five years.

From 1 April 2013, HMRC is also extending the close monitoring of the tax affairs of those who deliberately choose not to pay what they owe. MSD replaces and expands the MDD scheme.

David Gauke, Exchequer Secretary to the Treasury, said:

‘Increasingly, evaders are using contrived insolvency to evade tax, either through liquidation of a business or bankruptcy of an individual. It is only fair that someone who has deliberately tried to evade tax should face extra scrutiny from HMRC.’

‘This measure, along with those announced in the Budget, demonstrates that we will crack down on people who don’t pay what they owe.’

Internet link: Government news

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.

Where employers do not file their annual return by 19 May they incur a penalty of £100 per 50 (or fewer) employees for every month (or part month) that their return is late.

With the introduction of RTI for the majority of employers from 6 April 2013 this will be the final P35 submission for many.

If you are unsure whether you need to complete a return this year please do get in touch.

Internet links: HMRC end of year guidance Employer Bulletin

Employment Particulars

The government has updated the template of written employment particulars.

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

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

Internet link: Government Publications

P11d deadline approaching

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

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

HMRC have issued some guidance as to common errors on the forms in the latest Employer Bulletin. These include the following which can delay processing and cause problems with employees’ tax codes:

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

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

Internet links: http://www.hmrc.gov.uk/paye/exb/index.htm Employer Bulletin

Scottish rate of income tax

On 14 February 2013 Scottish and UK ministers agreed the final text of the Memorandum of Understanding between HMRC and the Scottish Government covering the Scottish rate of income tax.

The Scottish rate will commence from a date to be set by the UK Government, expected to be April 2016.

Internet links: HMRC What’s New FAQs

So, is it really THAT bad?

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We seem to be bombarded nowadays, with bad news. Job losses, insolvencies, triple-dip recession, austerity, Euro crisis – it seems to go on and on. It’s no wonder then that the country is grinding to a halt, why would anyone even consider going into business, it’s bound to fail isn’t it?

But, are things REALLY that bad, there must be some encouragement, some good news out there, mustn’t there?

If you look at the Companies House statistics, in the year to 28th March 2013, there was a net increase of companies on the register of 192,000 – ok, admittedly, not all of them will become fully fledged businesses, but if only half do, that’s nearly 100,000 potential new employers and contributors to the economy. This doesn’t include sole-traders, partnerships etc., so the numbers are even better. Studies have shown that over the past three years, the private sector has created over a million new jobs, life is returning to the housing market and parts of industry, such as motor manufacturing and its associated suppliers, are flourishing.

And what else?

We have interest rates at record low-levels.

We have new methods of FREE interaction with our customers (and suppliers), via social media, where we can give and receive honest feedback about our services given and received.

We have a wealth of FREE information on the Internet, where we can carry out research about our competitors, legislation and so much more. ALL of this information is now at our fingertips, with mobile devices, so we can always be “in the know”.

We also have amazing technology nowadays, which allow us to automate tasks, increase our productivity and just generally get things done.

So, why is it that this is not being talked about more? Why is it that according to recent research, it is estimated that UK business is currently sitting on balance sheets with cash of an estimated £700 billion?

I guess this is the negative drawback of some of the good things above. TV news, social media and the Internet, seems to only like to give us bad news, which over time, we end up believing is the ONLY news. So, until this, or our beliefs change, perhaps we won’t allow things to get better.

I think this is a shame, because as we have seen above, it’s not all bad. Maybe, I am seeing some of this through some rose tinted spectacles, but as I can see with my business and the businesses that we help and work with, it’s not all bad. With every loser there will always continue to be winners as well.

I wonder what would happen if the Government made “bad news” illegal for a year and that news channels etc. could only give good news for that time, would it make a difference? Who knows, but me, I’m going to keep wearing my groovy rose-tinted specs, and keep searching for those positives, they ARE there, you just have to look in the right place. Go on – give it a try!

And if you are encouraged by this, maybe you are needing further encouragement to start up a business or want help with an existing business, come and talk to me and you will see my passion for the small and micro-business community, hopefully, i can share some with you.

Newsletter – March 2013

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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.

eNEWS quicklinks
Personal allowance up to £10,000 from 2014/15 National Insurance – £2,000 employment allowance
New scheme for tax free childcare Support for the housing market
RTI ‘relaxation’ for small employers Advisory fuel rates for company cars
Employer end of year forms Reminder to those with child benefit and higher incomes
HMRC publish names of deliberate defaulters Another HMRC disclosure facility

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:

Engine size Petrol LPG
1400cc or less 15p 10p
1401cc – 2000cc 18p 12p
Over 2000cc 26p 18p

 

Engine size Diesel
1600cc or less 13p
1601cc – 2000cc 15p
Over 2000cc 18p

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

The Budget 21 March 2013

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George Osborne presented his Budget on Wednesday 20 March 2013.

In his opening statement he set the scene for some of the new measures announced, stating ‘this is a Budget for people who aspire to work hard and get on’.

Towards the end of last year the Government issued the majority of the clauses, in draft, of Finance Bill 2013 together with updates on consultations. The publication of the draft Finance Bill clauses is now an established way in which tax policy is developed, communicated and legislated.

The Budget updates some of these previous announcements and also proposes further measures. Some of these changes apply from April 2013 and some take effect at a later date, so the timing needs to be carefully considered.

Our summary focuses on the issues likely to affect you, your family and your business. To help you decipher what was said we have included our own comments.   Please click here for our summary http://birchcooper.co.uk/useful-information/the-budget-2013/

Newsletter – February 2013

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In this month’s enews the majority of issues we report on are relevant to employers and individuals. Please contact us if you would like any further information on any of the articles.

 

eNEWS quicklinks
Auto enrolment tool Real Time Information
Paying HMRC by Bill Pay Tax rebate phishing scam
HMRC report self assessment statistics HMRC win furnished holiday lettings test case
Shared Parental Leave Tackling long term sickness absence
Health and Safety reforms Charities online Gift Aid service

Auto enrolment tool

Under Pensions Auto Enrolment employers must:

  • ‘auto enrol’ eligible employees into a pension scheme
  • make employer pension contributions for them, and
  • make deductions of employee pension contributions from the employees pay.

Although the rules came into force from October 2012, they only impact on the largest employers from that date, as few employers have a workforce of more than 120,000. For those employers with a more modest number of employees the start dates vary by number of employees and PAYE reference.

The Pensions Regulator has released a tool which details the start date for auto enrolment. To access the tool and check the start date for a particular PAYE scheme please use the following link.

Internet link: Pensions regulator tool

Real Time Information

HMRC are issuing final reminders to employers to ‘act now’ in order to be ready to report PAYE under Real time Information (RTI).

HMRC have advised that they are writing to employers and pension providers to formally notify them that they must start reporting under RTI from the first payday on or after 6 April 2013.

The letters are being sent throughout February 2013 and are designed to prompt employers who have not yet taken action to get ready to send their PAYE to HMRC in real time.

Employers should have plans in place to update or acquire new RTI ready payroll software and/or have discussed the issue with their software provider, payroll bureau, or agent if they have one.

The letter includes a checklist which explains the key steps employers need to take before April 2013 to make sure they are ready for reporting PAYE in real time from 6 April 2013. More information is available on HMRC’s website.

Internet link: HMRC news

Paying HMRC by Bill Pay

The ICAEW has reported that HMRC are aware that there are problems with the Bank of Santander’s Bill Pay service which is used by many individuals to pay their self assessment tax liabilities by credit or debit card.

HMRC have issued a statement giving advice on other ways to pay and also confirming that payments made late because of this problem will not incur interest or penalties.

HMRC advised the ICAEW that:

‘The Bank of Santander is having problems with their Bill Pay service that customers use to pay their tax by credit card or debit card. We are working with them to sort this out.

There are other ways you can pay us. These are:

By Faster Payments. You can find out more at: http://www.hmrc.gov.uk/payinghmrc/selfassessment.htm#5

At your bank

At the Post Office

By Debit/Credit card

You can find out more about these other methods of payment at: http://www.hmrc.gov.uk/payinghmrc/selfassessment.htm

Please continue to try to pay us, but if your payment is late because of the problems Santander is experiencing you will not have to pay a penalty or interest for late payment.’

Internet link: ICAEW Tax Faculty

Tax rebate phishing scam

HMRC are warning taxpayers not to fall victim of scam emails sent by fraudsters. In 2012 taxpayers reported almost 80,000 tax rebate phishing emails and HMRC took action to close down 522 illegal sites.

The emails follow the same general format and promise a tax refund in exchange for personal, credit card or banking details. Those who respond risk opening their account to fraud and having details sold on to organised criminal gangs. The emails often link to a clone of HMRC’s website to make the email appear genuine.

Gareth Lloyd, Head of Digital Security for HMRC said:

‘HMRC does not email customers about tax refunds – we only ever contact customers who are genuinely due tax back in writing, by post.’

‘If anyone receives an email offering a tax rebate and claiming to be from HMRC, please send it to phishing@hmrc.gsi.gov.uk before deleting it permanently. HMRC does everything it can to ensure customers are safe online and we are working closely with other law enforcement agencies to target the criminals behind this serious crime.’

HMRC also advise taxpayers to:

  • Check the advice published at www.hmrc.gov.uk/security/index.htmwhere they can see if the email received is listed.
  • Do not click on websites or links contained in suspicious emails or open attachments.
  • Follow advice from www.getsafeonline.co.uk
  • Anyone who has answered one of these emails should forward the email and disclosed details to security.custcon@hmrc.gsi.gov.uk
  • If you have reason to believe that you have been the victim of an email scam, report the matter to your bank/card issuer as soon as possible.

Internet link: Press release

HMRC report self assessment statistics

HMRC have reported that a record 9.61 million people submitted their self assessment tax return on time this year.

According to the HMRC statistics of the 10.34 million people in self assessment, 92.9% taxpayers met the return deadlines of 31 October 2012 for paper and 31 January 2013 for online returns.

Of the 9.61 million on time tax returns, 7.93 million (82.5 per cent) were sent online, which is a record number. The remaining 1.68 million (17.5%) were sent on paper.

Anyone who hasn’t yet sent their 2011/12 tax return to HMRC will have already incurred a £100 late filing penalty. To avoid any further penalties, they should send their return as soon as possible, as well as paying any outstanding liabilities for the 2011/12 tax year.

The penalties for late Self Assessment returns are:

  • an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time
  • after three months, additional daily penalties of £10 per day, up to a maximum of £900
  • after six months, a further penalty of 5% of the tax due or £300, whichever is greater; and
  • after 12 months, another 5% or £300 charge, whichever is greater.

There are also additional penalties for paying the liability late of 5% of the tax unpaid at: 30 days; six months; and 12 months respectively.

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

Internet link: HMRC press release

HMRC win furnished holiday lettings test case

HMRC have been successful in a test case which considered the tax reliefs available for Furnished Holiday Lettings (FHL). Provided that certain conditions are met, FHL are treated as a trade for both income and capital gains tax purposes, often allowing access to valuable reliefs.

However, the inheritance rules (IHT) are different. Business Property Relief can allow up to 100% relief on business assets but FHL are not automatically included. For many years, HMRC allowed relief but have changed their policy and taken a test case, which they have won.

This means IHT would be due on the full value of an FHL.

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

Internet links: Mercia Blog Decision

Shared Parental Leave

Proposals to change the way parents can share maternity leave have been outlined as part of the Children and Families Bill.

The government plans to change the current arrangements which have been criticised by some employees as being ‘inflexible’.

The Bill also introduces the extension of the right to request flexible working to all employees not just parents and carers.

Under the new system:

  • Employed mothers will still be entitled to 52 weeks of maternity leave regardless of the length of their employment.
  • Mothers can choose to end their maternity leave after the initial two week recovery period; working parents can then decide how they want to share the remaining leave.
  • Fathers will have a new right to take unpaid leave to attend two antenatal appointments.
  • There will be new statutory payment for parents on shared parental leave with the same qualifying requirements that currently apply to statutory maternity and paternity pay.
  • Those who have adopted a child will be entitled to the same pay and leave as birth parents.

Please be aware that these changes are proposal at present. We will keep you informed of developments.

Internet link: Press release

Tackling long term sickness absence

The government has announced proposals to introduce a new independent assessment and advisory service aimed at getting people back to work. The service will help businesses tackle long term sickness absence in the workplace.

The scheme is expected to save employers up to £160 million a year in statutory sick pay and increase economic output by up to £900 million a year.

The Minister for Welfare Reform, Lord Freud, said:

‘Long-term sickness absence is a burden to business, to the taxpayer and to the thousands of people who get trapped on benefits when they could actually work.’

‘So for the first time, all employers, big or small, will have access to a service that offers the early support they need to keep people in work and fulfil their aspirations.’

The independent occupational health assessment and advice service is expected to be up and running in 2014.

Internet link: Press release

Health and Safety reforms

The government has announced that they have made significant progress in reforming Health and Safety requirements. The government has been working towards implementing some of the recommendations made in the Löfstedt Report in 2011 and the Young Report in 2010.

Steps taken to date include:

  • scrap or simplify more than half of health and safety legislation by 2014
  • the clarification of Portable Appliance Testing (PAT) requirements and
  • a reduction of one third in the number of inspections made by the Health and Safety Executive (HSE).

Professor Löfstedt said the government is ‘supporting a more risk-and evidence-based approach to health and safety‘.

Internet links: Press release HSE website

Charities online Gift Aid service

HMRC have announced that claiming gift aid repayments will be quicker and easier for charities and sports clubs from April 2013.

HMRC are writing to 110,000 charities and Community Amateur Sports Clubs advising them that, from 22 April 2013, they can enrol to make repayment claims online, via the HMRC website using a new service, called Charities Online.

Charities will be able to get information on how to use the system from the HMRC website at www.hmrc.gov.uk/charitiesonline

Internet link: Press Release

SMEs in the dark about changes to the PAYE system

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SMEs in the dark about changes to the PAYE system

One in three SMEs has no knowledge of Real Time Information (RTI) and what it means for their business, according to a recent report from AAT (Association of Accounting Technicians). This is despite the major changes to the PAYE system coming into effect from April.

The survey of 1,000 decision makers, managers and directors of SMEs carried out in January this year, revealed that:

One in three SMEs (35 per cent) don’t know about the changes to the PAYE system (the introduction of RTI) which will be implemented from April 2013

Of those who are aware, one in three don’t know if their payroll is set to cope with the changes

The biggest fears of SMEs around RTI are the time and money required to successfully implement the changes AAT report highlights a lack of understanding about the introduction of RTI

The lack of understanding about these major changes also revealed that 30 per cent of those businesses that were aware of RTI didn’t know if their current software or payroll could cope with the changes.

With HMRC issuing onerous penalties for those businesses that don’t comply, it may come as no surprise that 35 per cent of SMEs are worried and concerned about the cost involved and a further 30 per cent are worried about how time consuming it will be to implement .

As our economy currently flat-lines and David Cameron states that SMEs, startups and entrepreneurs are vital for the future of our country, 25 per cent of businesses think that the implementation of RTI will affect their overall business growth.

Half of SMEs also believe that the complexity of the tax system favours big business.
Forty-three per cent think that HMRC needs to take responsibility and address those organisations suspected of tax avoidance to ensure a more level playing field – putting a stop to “sweetheart” deals.

Almost half (49 per cent) of SMEs were quick to explain that startups and entrepreneurs face major difficulty within the UK to get their business ideas off the ground because of the lack of capital made available to them. There is much work to be done to raise awareness of lending and cash flow initiatives so that entrepreneurs are made aware of the opportunities and feel supported.

“We need the small business community to feel that the UK government is doing more to incentivise and stimulate their growth” AAT Director of Professional Development, Adam Harper commented on the new research findings: “We need the small business community to feel that the UK government is doing more to incentivise and stimulate their growth; especially with many small businesses feeling disheartened with the growing number of high profile tax avoidance stories.

With nearly half of SME enterprises unaware of the finance lending initiatives available to startups and entrepreneurs, so much more needs to be done to educate them about their options.”

“The lack of understanding about RTI clearly indicates not enough has been done to guide small businesses through the massive changes to PAYE which will have a big impact on time, resource and spend for small enterprises. It’s a distressing situation given April is fast approaching.”

328 sleeps to Christmas!

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According to my IPad app (other devices are available!), today (31st January 2013) there are just 328 sleeps until Christmas, which I guess means there should be 365 sleeps until this day in 2014.  So, why should I care about that then, I hear you ask?

Well, yesterday (30th January – 1 day early), we submitted our final tax return to HMRC to continue our 100% record to meet the annual 31st January HMRC tax return deadline.  I want to say a big thank you to our clients for working with us to achieve the deadline.

It always interests me, how our clients, some of who, have been with us for many years, always follow the same patterns.  We get the keen ones, who bring in the information as soon as possible after 6th April, so that they can be in the smug satisfaction of knowing that all is taken care of, for another year, well in advance and then we get the others who like to leave it until the last moment, so that they can enjoy the thrill of the chase, as we rush to complete everything in time, and of course all of the others in between.

Now, I have to say, that I do quite enjoy the final push to the deadline, it’s very satisfying watching the percentage of completed tax returns increasing as we get nearer to the date, coupled with the worry of “can we do it?”, it can become quite a buzz!

So, why have I decided to start chasing our clients much earlier for their information this year, am I looking to have a holiday in January or something (not sure about Wales in January!), or is there some more sinister reason?

Well, lets look at the benefits of getting your tax return done early:

  • the smugness of being able to relax in the satisfaction of knowing that “tax doesn’t have to be taxing” and you are all compliant for another year, so can relax, one less worry
  • by getting your tax return done early, we can calculate any liability and give you much more warning of what you will have to pay the following January, which can lesssen the shock, which sometimes occurs, when you have had a particularly good year
  • similarly, if we calculate that you are due a tax refund (particulalrly might apply to CIS sub-contractors), you will have the refund much earlier
  • it will, avoid you getting lots of e-mails and phone calls from us, chasing you, for your information – it will get us off your back for another year!
  • perhaps I could have that long-awaited holiday in Wales in January!

So – how soon COULD you get your information in to us:

  • if you are self-employed, with no PAYE income as well, as soon as possible after your year end date
  • If you are on PAYE, either 31st May, if you receive no benefits, or end July if you do (these are the deadlines for your employer to give you your P60/P11d)

So, in reality then, bearing in mind the latest date above is 31st July, if we could have all of the information in by then, why dont we say that providing we do, we’ll get all of our clients tax returns done by 31st October and we can all relax once the clocks go back, safe in the knowledge, that we are all compliant, knowing exactly what our liabilities are.

Which means, I can finally have that 2 week holiday in Wales in January, my family will be so pleased!

So, will this happen?  Who knows, we’ll see what happens.  If you are worried, check back next year to see how we did and, in the meantime, can I be the first to wish you a Happy Christmas 2013, safe in the knowledge that you won’t be worrying about that pesky tax return.

 

 

 

Newsletter – January 2013

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eNEWS – January 2013

In this month’s enews we report on several employment related issues together with HMRC’s latest campaign. Please contact us if you would like any further information.

 

eNEWS quicklinks
Employment rights – statutory limits HMRC target those with outstanding VAT returns
‘Tax cheats’ sentenced to over 150 years behind bars PAYE coding notices
RTI is coming Start up loan scheme for young entrepreneurs extended
State Pension reform Child Benefit opt out
Deadline looming for self assessment returns HMRC bank account details for employers

Employment rights – statutory limits

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

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

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

Internet links: Legislation Gov.uk calculator

HMRC target those with outstanding VAT returns

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

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

Marian Wilson, Head of HMRC Campaigns, said:

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

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

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

Internet links: Press release VAT Outstanding Returns Campaign

‘Tax cheats’ sentenced to over 150 years behind bars

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

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

Exchequer Secretary to the Treasury, David Gauke, said:

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

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

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

Internet link: Press release

PAYE coding notices

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

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

Good news for many

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

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

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

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

Internet links: Press release HMRC income tax rates and allowances

RTI is coming

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

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

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

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

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

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

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

Internet link: Press release

Start up loan scheme for young entrepreneurs extended

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

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

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

Internet link: News release

State Pension reform

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

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

The single tier pension will:

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

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

Internet link: DWP website

Child Benefit opt out

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

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

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

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

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

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

Internet links: BBC news HMRC Child Benefit guidance

Deadline looming for self assessment returns

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

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

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

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

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

Internet links: HMRC SA deadlines and penalties Press release

HMRC bank account details for employers

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

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

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

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

Internet link: HMRC payments

Newsletter – December 2012

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eNEWS – December 2012

In this month’s enews we report on some key issues from the Autumn Statement and subsequent publication of draft Finance Bill legislation. The Autumn Statement has sparked much debate with the biggest surprise being the tenfold increase in the AIA only months after it was reduced.

We also report that HMRC are urging those who have not yet filed their self assessment tax return to do so now and experience ‘inner peace’.

Please contact us if you would like any further details on any of the issues covered.

With all best wishes for the festive season and the New Year.

 

eNEWS quicklinks
Tenfold increase in Annual Investment Allowance Personal allowance for 2013/14
Pensions Saving A simpler tax system for smaller businesses
Statutory residence test Government must tackle red tape
Reminder to those with high income and child benefit Advisory fuel rates for company cars
2013/14 statutory payments Charities and Gift Aid
File your self assessment return

Tenfold increase in Annual Investment Allowance

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

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

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

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

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

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

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

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

Internet link: HMRC TIIN

Personal allowance for 2013/14

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

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

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

Tax band and rates 2013/14

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

Additional rate tax payers

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

Tax bands for 2014/15 and 2015/16

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

Internet link: HMRC autumn statement personal

Pensions Saving

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

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

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

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

Please contact us if you would like any pensions advice.

Internet link: HMRC pensions tax relief

A simpler tax system for smaller businesses

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

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

Cars, vans and motorcycles

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

Business use of a home

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

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

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

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

Internet link: HMRC update

Statutory residence test

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

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

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

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

Internet link: HMRC finance bill draft

Government must tackle red tape

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

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

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

Katja Hall, CBI Chief Policy Director, said:

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

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

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

Internet link: Press release

Reminder to those with high income and child benefit

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

Lin Homer, HMRC’s Chief Executive, said:

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

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

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

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

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

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

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

Internet links: Press release HMRC Child Benefit guidance

Advisory fuel rates for company cars

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

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

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

Engine size Petrol LPG
1400cc or less 15p 11p
51 hours or more 18p 13p
101 hours or more 26p 18p

 

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

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

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

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

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

Internet link: HMRC advisory fuel rates

2013/14 statutory payments

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

Statutory Maternity Pay (SMP) £136.78 per week
Ordinary Statutory Paternity Pay (OSPP) £136.78 per week
Additional Statutory Paternity Pay (ASPP) £136.78 per week
Statutory Adoption Pay (SAP) £136.78 per week
Statutory Sick Pay (SSP) £86.70 per week

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

Internet link: Proposed benefit rates

Charities and Gift Aid

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

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

Internet link: HMRC charities online

File your self assessment return

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

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

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

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

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

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

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

Internet links: Press release HMRC SA deadlines and penalties

Autumn Statement 2012 – Follow Up

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We recently gave you a summary of the key tax issues announced in the Autumn Statement on 5 December. We promised to provide you with an update if there were any significant changes announced on 11 December when much of the draft legislation for the Finance Bill 2013 was issued for consultation.

Once again, HM Treasury did not disappoint! Well over 1,000 pages of draft legislation and explanatory notes hit the Treasury website. Much of this is very heavy technical material but from within it we have distilled some key issues which update the items covered in the earlier summary.

Please click here for our summary http://birchcooper.co.uk/wp-content/uploads/4/files/2012/12/update/index.htm

As always, if you have any queries, re the above, please do not hesitate to get in touch.