Budget 2014 – An Overview

Posted on March 20, 2014 by Henry Cooper

Budget 2014

George Osborne presented his Budget on Wednesday 19 March 2014.

In his speech the Chancellor set the scene for the announcements stating that ‘If you’re a maker, a doer or a saver: this Budget is for you.’

Towards the end of last year the Government issued the majority of the clauses, in draft, of Finance Bill 2014 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 2014 and some take effect at a later date.

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. If you have any questions please do not hesitate to contact us for advice.

Main Budget tax proposals

The starting rate band for savings will be increased from April 2015 and the current 10% tax rate reduced to nil.
Individual Savings Accounts are to be simplified by merging the cash and stocks ISAs together with a significant increase in the investment limit from 1 July 2014.
Radical changes are to be made to the pensions regime including removing the restrictions on access to pension pots so there will no longer be a requirement to buy an annuity.
The Annual Investment Allowance is to be doubled to £500,000 until 31 December 2015.
An increase will be made in the R&D tax credit available to loss making SMEs to 14.5%.
Those using tax avoidance schemes may be required to pay tax upfront.

The Budget proposals may be subject to amendment in a Finance Act. You should contact us before taking any action as a result of the contents of this summary.

Personal Tax

The personal allowance for 2014/15

For those born after 5 April 1948 the personal allowance will be increased from £9,440 to £10,000.

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. So for this year there is no allowance when adjusted net income exceeds £118,880. For 2014/15 the allowance ceases when adjusted net income exceeds £120,000.

Comment

The increase in the personal allowance gives more importance to planning before 6 April 2014 where adjusted net income is expected to exceed £100,000. Broadly, adjusted net income is taxable income from all sources, reduced by specific reliefs such as Gift Aid donations and pension contributions.

Tax bands and rates for 2014/15

The basic rate of tax is currently 20%. The band of income taxable at this rate is being reduced from £32,010 to £31,865 so that the threshold at which the 40% band applies will rise from £41,450 to £41,865 for those who are entitled to the full basic personal allowance.

The additional rate of tax of 45% is payable on taxable income above £150,000.

Dividend income is taxed at 10% where it falls within the basic rate band and 32.5% where liable at the higher rate of tax. Where income exceeds £150,000, dividends are taxed at 37.5%.

The personal allowance and tax bands for 2015/16

For 2015/16, the personal allowance for those born after 5 April 1948 will be increased to £10,500, and the basic rate limit will be reduced to £31,785. The threshold at which the 40% band applies will rise from £41,865 to £42,285.

From 6 April 2015, the maximum amount of an eligible individual’s savings income that can qualify for the starting rate of tax for savings will be increased to £5,000 from £2,880, and this starting rate will be reduced from 10% to nil. The 10% rate is not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income) exceeds the starting rate limit.

Comment

This will increase the number of savers who are not required to pay tax on savings income, such as bank or building society interest. If a saver’s total taxable income will be below the total of their personal allowance plus the £5,000 starting rate limit then they can register to receive their interest gross using a form R85.

Transferable tax allowance for some

From April 2015 married couples and civil partners may be eligible for a new transferable tax allowance.

The transferable tax allowance will enable spouses and civil partners to transfer a fixed amount of their personal allowance to their spouse. The transferable allowance is £1,050 for 2015/16 being 10% of the personal allowance.

The option to transfer will be available to couples where neither pays tax at the higher or additional rate. If eligible, one spouse will be able to transfer £1,050 of their personal allowance to the other spouse. The transferor’s personal allowance will be reduced by £1,050. It will mean that the transferee will be able to earn £1,050 more before they start paying income tax.

The claim will be made online and entitlement will be from the 2015/16 tax year. Couples will be entitled to the full benefit in their first year of marriage.

Comment

For those couples where one person does not use all of their personal allowance the benefit will be worth up to £210.

New Tax-Free Childcare scheme

In Budget 2013, the Government announced new tax incentives for childcare. Following consultation on the design and operation of the scheme, the Government has announced improvements.

The relief will be 20% of the costs of childcare up to a total of childcare costs of £10,000 per child per year. The scheme will therefore be worth a maximum of £2,000 per child. The original proposal had a cap of 20% of £6,000 per child.

The scheme will be launched in autumn 2015. All children under 12 within the first year of the scheme will be eligible. Under the original proposal only children under five would have been eligible in the first year of the scheme.

To qualify for Tax-Free Childcare all parents in the household must:

meet a minimum income level based on working eight hours per week at the National Minimum Wage (around £50 a week at current rates)
each earn less than £150,000 a year, and
not already be receiving support through Tax Credits or Universal Credit.

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.

It is proposed that parents register with the Government and open an online account. The scheme will be delivered by HMRC in partnership with National Savings and Investments, the scheme’s account provider. The Government will then ‘top up’ payments into this account at a rate of 20p for every 80p that families pay in.

Comment

Self-employed parents will be able to get support with childcare costs in the Tax-Free Childcare scheme, unlike the current employer supported childcare scheme. To support newly self-employed parents, the Government is introducing a ‘start-up’ period. During this period a newly self-employed parent will not have to earn the minimum income level.

Venture Capital Trusts (VCTs)

Where an individual subscribes for shares in a VCT, income tax relief at 30% of the subscription price is available. The Government has been concerned that particular forms of share buy-backs and reinvestment arrangements offered by VCTs were not in keeping with the intention of the legislation.

The Government will introduce legislation to:

prevent VCTs from returning share capital to investors within three years of the end of the accounting period in which the VCT issued the shares
restrict an individuals’ entitlement to VCT income tax relief where investments are conditionally linked in any way to a VCT share buy-back, or have been made within six months of a disposal of shares in the same VCT
ensure that HMRC can withdraw tax relief in all cases if VCT shares are disposed of within five years of acquisition.

These changes will take effect from 6 April 2014.

In addition, from the date of Royal Assent, investors will be able to subscribe for shares in a VCT via a nominee.

Seed Enterprise Investment Scheme (SEIS)

SEIS was introduced in 2012 as a way of encouraging equity investment in small companies. This relief was originally introduced for a period of five years and has now been made permanent in respect of both the income and capital gains tax reliefs applicable.

Individual Savings Accounts (ISAs)

From 6 April 2014 the overall ISA savings limit will be increased from £11,520 to £11,880 of which £5,940 can be invested in cash. From 1 July 2014 ISAs will be reformed into a simpler product, the ‘New ISA’ (NISA) and all existing ISAs will become NISAs.

NISAs

From 1 July 2014 the overall annual subscription limit for these accounts will be increased to £15,000 for 2014/15. Special rules apply if investments are made before 1 July 2014. Investments for 2014/15 cannot exceed £15,000 in total.

Savers will also be able to subscribe this full amount to a cash account (currently only 50% of the overall ISA limit can be saved in cash). Under the NISA, investors will also have new rights to transfer their investments from a stocks and shares to a cash account.

There are also changes to the rules on the investments that can be held in a NISA, so that a wider range of securities to include certain retail bonds with less than five years before maturity can be invested. In addition, Core Capital Deferred Shares issued by building societies will become eligible to be held in a NISA, Junior ISA or Child Trust Fund (CTF).

Comment

These measures are part of a broader package of changes to support savers. In particular they will increase the choice and flexibility available to savers in tax advantaged products.

Junior ISA and CTF

The annual subscription limit for Junior ISA and CTF accounts will increase from £3,720 to £3,840 from 6 April 2014. From 1 July 2014 the amount that can be subscribed to a child’s Junior ISA or CTF for 2014/15 will also be increased to £4,000.

The Government has decided that a transfer of savings from a CTF to a Junior ISA should be permitted at the request of the registered contact for the CTF. It is expected that the first transfers will be possible by April 2015.

Social investment tax relief

The Government will introduce a new tax relief of 30% for individuals investing in equity or certain debt investments in social enterprises with effect from 6 April 2014. Organisations which are charities, community interest companies (CICs) or community benefit societies will be eligible.

The tax relief available to an individual has a similar design to investments by individuals in an Enterprise Investment Scheme company. Draft guidance on the reliefs is expected to be published later this month.

Comment

CICs are limited companies that provide benefits to the community and the legal form has only been available since 2005. The reason behind the development of CICs was the lack of legal structures for non-charitable social enterprises. Community benefit societies are incorporated industrial and provident societies where profits are returned to the community for its benefit.

The Government wants to make the UK one of the easiest places in the world to invest in social enterprises.

Pension changes

The Chancellor has announced a range of significant measures to bring greater flexibility to individuals who want to access funds in defined contribution pension schemes. Some changes to the current restrictive rules will come into effect from 27 March 2014 whilst further measures will follow in April 2015 after a period of consultation.

Pensions – immediate measures

The immediate measures come into effect from 27 March and cover four broad areas.

Capped drawdown. An individual aged 55 or over can opt for a drawdown pension which allows them to extract amounts from the pension fund which is treated as income for the relevant year. The maximum amount of drawdown is fixed to ensure that the fund is not cleared too quickly. The cap is based on 120% of a notional annuity rate set by the Government Actuary. The cap will be increased to 150%.

Flexible drawdown. Where an individual aged 55 or over can demonstrate that they have pension income (including the state pension) of £20,000 per annum or more they can ignore the drawdown cap and can take whatever amount they wish. Tax will be payable at their marginal rate. The income limit is to be reduced to £12,000 per annum.

Trivial commutation. At present an individual aged 60 or over who has total pensions savings of £18,000 or below can withdraw this as a lump sum. The limit will be increased to £30,000.

Small pots. The Government will increase the amount for small individual pension pots that can be taken as a lump sum regardless of total pension wealth from £2,000 to £10,000. They will also increase the number of small pension pots that can be taken as lump sums from two to three.

Pensions – changes to come

The Government plans to bring even greater flexibility into the pension system from April 2015. In effect an individual will be able to choose what they want to do with their defined contribution pension fund.

If they want to draw out all of the fund on retirement they will be able to do so. The tax free element will be 25% of the sum and the balance will be taxed as income in that year.
If they wish to buy an annuity they will be able to do so.
If they wish to opt for a drawdown arrangement they will be able to do this without any restriction either in the form of a cap or a minimum income limit.

These changes will be subject to a consultation.

Two other important changes will also be made:

pension providers and pension trustees will be required to provide free and impartial advice to all individuals approaching retirement so that they can make an informed choice of the options available to them
the minimum retirement age for pension schemes will rise to 57 years in 2028 when the state pension age rises to 67 years.

Comment

The Government has indicated that individuals approaching retirement should be trusted to make their own decisions as to what to do with their pension funds and not be restricted by legal requirements. The greater range of options will mean that getting the right advice at the point of retirement will be even more important.

Pension liberation

The Government is concerned about schemes which are intended to encourage people to access their pension funds before they reach retirement and use the funds for other purposes. A range of measures are being introduced to combat these schemes. The measures, generally take effect from 20 March 2014.

With effect from 1 September 2014 a further measure will allow HMRC to refuse to register pension schemes where they believe that the scheme administrator is not fit and proper and the scheme has been established for purposes other than providing pension benefits.

Business Tax

Corporation tax rates

The main rate of corporation tax will be 21% from 1 April 2014. The current rate is 23%. From 1 April 2015 the main rate of corporation tax will be reduced to 20% and unified with the small profits rate.

The small profits rate will therefore remain at 20% until then.

Annual Investment Allowance (AIA)

The AIA provides a 100% deduction for the cost of most plant and machinery (not cars) purchased by a business up to an annual limit and is available to most businesses. Where businesses spend more than the annual limit, any additional qualifying expenditure generally attracts an annual writing down allowance of only 18% or 8% depending on the type of asset.

The maximum amount of the AIA was increased to £250,000 from £25,000 for the period from 1 January 2013 to 31 December 2014. The amount of the AIA is further increased to £500,000 from 1 April 2014 for companies or 6 April 2014 for unincorporated businesses until 31 December 2015. The AIA will return to £25,000 after this date.

Comment

The increased AIA will mean that up to 99.8% of businesses could receive 100% upfront relief on their qualifying investment in plant and machinery. For example a single company with a 12 month accounting period to 31 December 2014 could obtain overall relief for the period of £437,500 (£250,000 x 3/12 plus £500,000 x 9/12). There is a restriction of £250,000 for expenditure incurred in that part of the accounting period which falls before 1 April 2014.

Members of Limited Liability Partnerships (LLPs)

Since their introduction in 2000, LLPs have become increasingly popular as a vehicle for carrying on a wide variety of businesses. The LLP is a unique entity as it combines limited liability for its members with the tax treatment of a traditional partnership. Individual members are currently deemed to be self-employed for income tax purposes and are taxed as such on their respective profit shares.

It is proposed to reclassify some members of an LLP from self-employment to employees of the LLP. As a consequence employer’s National Insurance Contributions will be due and PAYE will need to be applied to the ‘remuneration’ of the member from the LLP.

A member is potentially a salaried member if ‘Condition A’ is satisfied. However if caught by Condition A there are two further conditions which, if either apply, will result in the member not being treated as a salaried member.

The main part of Condition A is a test of whether it is reasonable to expect that at least 80% of the total amount payable by the LLP to the member will be ‘disguised salary’.

Amounts which vary by reference to the overall amount of profits of the LLP are not disguised salary. A disguised salary would include for example a salary or a guaranteed profit share. Whether a bonus based on personal performance is disguised salary will depend on the precise circumstance. For example, a bonus based only on the performance of the individual is not a profit share. A performance bonus calculated by reference to the LLP’s profits is not disguised salary.

However, a member is not caught if either of the following apply:

the individual has a significant influence in the running of the business as a whole, or
the individual has invested capital in the LLP that is at least 25% of their expected income from the LLP.

The new regime will come into force on 6 April 2014. The tests will need to be applied at that date for existing members. For the capital invested rule, the measurement of capital will include amounts the member has undertaken to contribute by 5 July 2014.

Comment

Many professional firms are now LLPs. The potential risk is that some junior members with a significant fixed element to their profit share may be treated for tax purposes as employees unless their contractual arrangements with the LLP are modified.

Those LLPs potentially affected may wish to consider increasing member capital contributions to allow the capital invested rule to be satisfied. Undertakings made by members by 6 April 2014 (and actually contributed by 5 July 2014) will be taken into account.

Employment intermediaries and ‘false self-employment’

The Government considers that employment intermediaries are increasingly being used to disguise employment as self-employment. The largest business sector affected will be the construction industry. However, there are other sectors such as the driving, catering and security industries where there is evidence of existing permanent employees being taken out of direct employment and being moved into false self-employment arrangements involving intermediaries.

The central proposal is to make a change to the agency legislation. If the agency legislation applies, payments received by a worker are treated as being in consequence of an employment between the intermediary (agency) and worker. This means that the intermediary must deduct PAYE and NIC.

Currently the agency legislation only applies to workers providing their services under the terms of an agency contract. This is defined as:

‘A contract made between the worker and the agency under the terms of which the worker is obliged to personally provide services to the client.’

This has led intermediaries to set up contracts which allow the worker to send someone else to do their job and thus it is argued that the worker is not obliged to personally provide services.

The Government proposes removing the obligation for the worker to provide their services personally. Instead the proposal is that the agency legislation will apply where the worker is:

subject to (or to the right of) control, supervision or direction as to the manner in which the duties are carried out
providing their services personally
remunerated as a consequence of providing their services
receiving remuneration not already taxed as employment income.

The legislation will be amended with effect from 6 April 2014.

It is proposed that the legislation will be supported by record keeping and statutory returns requirements. The intermediary will need to submit a quarterly electronic return containing details of any workers it has placed for whom it is not deducting PAYE and NIC. The aim of this requirement is to allow HMRC to identify possible cases of non-compliance with the new agency legislation.

The record keeping and returns requirements will come into force from 6 April 2015.

Comment

The use of intermediaries to facilitate false self-employment started in the construction industry as a way to reduce the risk to contractors of incorrectly engaging workers on a self-employed basis. The Government considers that around 200,000 workers in the construction sector are engaged through intermediaries.

Community Amateur Sports Club (CASC)

The Community Amateur Sports Club (CASC) scheme provides a number of tax reliefs, similar to those available to charities, to support amateur sports clubs. For example an individual can make a donation to a CASC as Gift Aid.

The Finance Bill 2014 will include provisions to extend corporate Gift Aid to donations of money made by companies to CASCs. This will allow companies to claim tax relief on qualifying donations they make on or after 1 April 2014.

Comment

The corporate Gift Aid provisions will not only encourage companies to make donations to clubs which are registered as CASCs but will also encourage clubs with high levels of commercial trading to potentially benefit from CASC status. A club with significant trading receipts may well not qualify for CASC status because of the trading receipts. It could however set up a trading subsidiary and donate the profits to the club. The donation received by the club will not be treated as trading receipts and thus the club could apply for CASC status. The new Gift Aid relief will eliminate the corporation tax charge on the profits of the company.

Research and Development (R&D) relief

R&D relief gives additional tax relief to companies for expenditure incurred on R&D projects that seek to achieve an advance in science or technology. For an SME company which incurs losses when conducting R&D activity a tax credit can be claimed by way of a cash sum paid by HMRC. From 1 April 2014 the rate of the R&D payable tax credit will be increased from 11% to 14.5%.

Business Premises Renovation Allowance (BPRA)

BPRA provides for 100% tax relief on expenditure in bringing business premises in disadvantaged areas back into business use. Following a review of BPRA, the Government will make changes to clarify the type of expenditure which qualifies and other modifications to make it more certain in its application. The changes are to take effect from April 2014.

Enterprise Zones and capital allowances

Subject to certain conditions being met, 100% enhanced capital allowances are available for expenditure incurred by companies on qualifying plant or machinery for use primarily in designated sites within Enterprise Zones. The qualifying period was due to expire on 31 March 2017 and is proposed to be extended to 31 March 2020.

Mineral Extraction Allowance

Mineral exploration and access expenditure attracts an annual 25% capital allowance relief (100% for oil and gas) whereas the acquisition of a mineral asset only attracts 10% relief annually. Expenditure on successful planning permission costs is to be treated as mineral exploration and access rather than as expenditure on acquiring a mineral asset. This applies to expenditure incurred from the date of Royal Assent.

Employment Taxes

Employer provided cars

The scale of charges for working out the taxable benefit for an employee who has use of an employer provided car are now announced well in advance. From 6 April 2014, the bands used to work out the taxable benefit remain the same but the percentage applied by each band goes up by 1%. There is an overriding maximum charge of 35% of the list price of the car. From 6 April 2015, the percentage applied by each band goes up by a further 2% and the maximum charge is increased to 37%.

Comment

These increases have the perverse effect of discouraging retention of the same car. New cars will often have lower CO2 emissions than the equivalent model purchased by the employer, say three years ago. Particular attention should be paid to the benefit increase from 6 April 2015

Exemption threshold for employment-related loans

Where an employer provides an employee with a cheap or interest free loan they have to report notional interest on the loan at 4% per annum on the form P11D. Where the balance of the loan is no more than £5,000 throughout the tax year no benefit is reportable.

The exemption applies if the total balance, at any point in the tax year, does not exceed the limit of £5,000 and includes the total of low cost or interest free loans, or notional loans arising from the provision of employment-related securities.

From 6 April 2014 where the total outstanding balances on all such loans do not exceed £10,000 at any time in the tax year, there will not be a tax charge and employers will no longer be required to report the benefit to HMRC.

Comment

This change reflects the increase in the cost of commuting for an employee and allows the employer to provide finance for the purchase of season tickets for rail fares.

National Insurance – £2,000 employment allowance

The Government has introduced an allowance of up to £2,000 per year for many employers to be offset against their employer Class 1 National Insurance Contributions (NIC) liability from 6 April 2014. The legislation is contained in the National Insurance Contributions Act 2014.

There will be some exceptions for employer Class 1 liabilities including liabilities arising from:

a person who is employed (wholly or partly) for purposes connected with the employer’s personal, family or household affairs
the carrying out of functions either wholly or mainly of a public nature (unless charitable status applies), for example NHS services and General Practitioner services
employer contributions deemed to arise under IR35 for personal service companies.

There are also rules to limit the employment allowance to a total of £2,000 where there are ‘connected’ employers. For example, two companies are connected with each other if one company controls the other company.

The allowance is limited to the employer Class 1 NIC liability if that is less than £2,000.

The allowance will be claimed as part of the normal payroll process. The employer’s payment of PAYE and NIC will be reduced each month to the extent it includes an employer Class 1 NIC liability until the £2,000 limit has been reached.

Employer NIC for the under 21s

From April 2015 the Government will abolish employer NIC for those under the age of 21. This exemption will not apply to those earning more than the Upper Earnings Limit, which is £42,285 per annum for 2015/16. Employer NIC will be liable as normal beyond this limit.

Employee ownership

Following a consultation the Government will introduce three new tax reliefs to encourage and promote indirect employee ownership. The reliefs are as follows:

From 6 April 2014 disposals of shares that result in a controlling interest in a company being held by an employee ownership trust will be relieved from CGT.
Transfers of shares and other assets to employee ownership trusts will also be exempt from inheritance tax providing certain conditions are met.
From 1 October 2014 bonus payments made to employees of indirectly employee owned companies which are controlled by an employee ownership trust will be exempt from income tax up to a cap of £3,600 per annum.

Real Time Information (RTI) late filing penalties

RTI requires employers operating PAYE to report information on employees’ pay and deductions in ‘real time’ to HMRC. Under RTI employers are obliged to tell HMRC about payments they make to their employees, on or before the date payments are made. Employers continue to pay over to HMRC the sums deducted from their employees under the PAYE system either monthly, quarterly or annually.

HMRC are introducing automatic in-year penalties for RTI to encourage compliance with the information and payment obligations.

In essence late filing penalties will apply to each PAYE scheme, with the size of the penalty based on the number of employees in the scheme. It is proposed that monthly penalties of between £100 and £400 will apply to micro, small, medium and large employers.

Each scheme will be subject to only one late filing penalty each month regardless of the number of returns submitted late in the month. There will be one unpenalised default each year with all subsequent defaults attracting a penalty.

This regime will start in October 2014.

Another change is more imminent. For tax years 2014/15 onwards, HMRC will charge daily interest on all unpaid amounts from the due and payable date to the date of payment, and will raise the charge when payment in full has been made.

Capital Taxes

CGT rates

The current rates of CGT are 18% to the extent that any income tax basic rate band is available and 28% thereafter. The rate for disposals qualifying for Entrepreneurs’ Relief is 10% with a lifetime limit of £10 million for each individual.

CGT annual exemption

The CGT annual exemption is £10,900 for 2013/14 and will be increased to £11,000 for 2014/15.

CGT – Private Residence Relief

A gain arising on a property which has been an individual’s private residence throughout their period of ownership is exempt from CGT. There are deemed period of occupation rules which may help to provide an exemption from CGT even if the individual was not living in the property at the time. This may mean the individual is accruing private residence relief on another property at the same time.

The final period exemption applies to a property that has been an individual’s private residence at some time even though they may not be living in the property at the time of disposal.

For disposals on or after 6 April 2014 the final period exemption will be reduced from 36 months to 18 months. There may be exceptions for disabled individuals and long term residents in care homes.

CGT – non-residents and UK residential property

From April 2015 a CGT charge will be introduced on future gains made by non-residents disposing of UK residential property. A consultation on how best to introduce this will be published shortly.

Business roll-over relief

Roll-over relief allows CGT to be deferred on gains made on certain qualifying assets where the proceeds are used to purchase other qualifying assets within a specified period of time. With effect from 20 December 2013 a payment entitlement under the new EU Basic Payment Scheme for farmers will become a qualifying asset.

IHT nil rate band

The IHT nil rate band remains frozen at £325,000 until 5 April 2018.

IHT exemption for emergency service personnel

The Government will consult on extending the existing IHT exemption for members of the armed forces whose death is caused or hastened by injury while on active service to members of the emergency services.

Changes to the trust IHT regime

Certain trusts, known as ‘relevant property trusts’, provide a mechanism to allow assets to be held outside of an individual’s estate for the purpose of calculating a 40% IHT liability on the death of an individual. The downside is that there are three potential points of IHT charge on relevant property trusts:

a transfer of assets into the trust is a chargeable transfer in both lifetime and on death
a charge has to be calculated on the value of the assets in the trust on each ten-year anniversary of the creation of the trust
an exit charge arises when assets are effectively transferred out of the trust.

The calculation of the latter two charges is currently a complex process which can take a significant amount of time to compute for very little tax yield. HMRC therefore wants to simplify the process and will consult on proposals to take effect in 2015.

Two changes will however be introduced in Finance Bill 2014:

simplification of filing and payment dates for IHT relevant property trust charges
income arising in such trusts which remains undistributed for more than five years may be treated as part of the trust capital when calculating the ten-year anniversary charge.

Comment

Part of the price of the tax simplification proposals will be that some planning techniques where an individual creates more than one relevant property trust will no longer work. For example, a nil rate band that may be currently available for each trust may, in future, need to be split between the trusts resulting in higher IHT charges

IHT anti-avoidance

In 2013 measures were introduced to restrict the use of liabilities to reduce IHT liability where loans were used to purchase assets which are excluded property for IHT purposes. A common situation which was blocked was the use of loans to purchase assets outside the UK which were held by a non-domiciled individual. A loophole has been spotted where a non-domiciled individual holds a foreign currency account in a UK bank. Such an asset is not chargeable to IHT but is not excluded property. That loophole will now be blocked by treating such an account as if it were excluded property.

Residential property held through a company

A range of measures exist to discourage the holding of residential property in the UK via companies and other non-natural persons. Specifically where the property has a value of at least £2 million:

stamp duty land tax (SDLT) is payable at 15% on acquisition
an annual tax on dwellings (ATED) applies at a fixed amount depending on value, and
CGT at 28% is payable on a proportion of gains.

For SDLT the value limit is being reduced to £500,000 for acquisitions on or after 20 March 2014.

The Government will introduce two new bands for ATED. Residential properties worth over £1 million and up to £2 million will be brought into the charge with effect from 1 April 2015. Properties worth over £500,000 and up to £1 million will be brought into the charge with effect from 1 April 2016.

The related CGT charge on disposals of properties liable to ATED will be extended to residential properties worth over £1 million with effect from 6 April 2015 and for residential properties worth over £500,000 from 6 April 2016.

Comment

The Government is determined to drive out the use of so-called ‘envelopes’ for the ownership of residential property in the UK. The major group affected will be non-domiciled individuals who have historically used overseas companies to hold UK residential property.

Other Matters

VAT prompt payment discounts

Legislation will be introduced in Finance Bill 2014 to amend the UK VAT legislation on prompt payment discounts so that it is aligned with EU legislation.

Under the current rules, suppliers account for VAT on the discounted price offered for prompt payment, even when that discount is not taken up. This amendment will ensure that VAT is accounted for on the full actual consideration paid for goods and services where prompt payment discounts are offered.

The measure will have effect for supplies made from 1 April 2015 although the measure will apply from 1 May 2014 for telecommunication and broadcasting supplies. The earlier date may also apply to other specified supplies.

VAT reverse charge for gas and electricity

A reverse charge for wholesale supplies of gas and electricity will be introduced which means customers will be liable to account for VAT rather than the supplier. The measure does not apply to domestic supplies or to businesses not registered, or liable to be registered for VAT.

The Government will informally consult on the timing with those affected, with a view to laying the necessary secondary legislation at the earliest opportunity thereafter. The measure has been announced to remove the opportunity for fraudsters to charge VAT and then go missing before the VAT has been paid over to HMRC.

Requirement for users of failed avoidance schemes

It is proposed to give HMRC the power to give notice to taxpayers who have used avoidance schemes, which are defeated in another party’s litigation, that taxpayers should amend their returns or settle their disputes with HMRC accordingly. Taxpayers who decide not to settle their case will risk a penalty.

This change will take effect from Royal Assent.

Accelerated payments in tax avoidance cases

Following consultation, further legislation will be introduced in Finance Bill 2014 to extend accelerated payment of tax to users of schemes disclosed under the Disclosure of Tax Avoidance Schemes (DOTAS) rules, and to taxpayers involved in schemes subject to counteraction under the General Anti-Abuse Rule (GAAR), so that the amount in dispute is held by HMRC whilst the dispute is resolved.

These changes will take effect from Royal Assent.

This summary is published for the information of clients. It provides only an overview of the main proposals announced by the Chancellor of the Exchequer in his Budget Statement, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this summary can be accepted by the authors or the firm.

Newsletter – February 2014

Posted on February 28, 2014 by Henry Cooper

In this month’s enews we advise on several issues relevant to employers. We also report on the help available for those affected by floods.

Please contact us if you would like any further information.

eNEWS quicklinks
Employment Allowance	Increases to NMW penalties and latest targets
Help for those affected by floods	No penalties for some late Self Assessment returns
HMRC warning about phishing scams	PAYE end of year approaching
Electronic messages to employers	Employee travel disruption

Employment Allowance

The Government has announced further details of the Employment Allowance which is available from 6 April 2014. Eligible employers can reduce their employer Class 1 NICs by up to £2,000 each tax year.

The Employment Allowance can be claimed by a business or charity (including Community Amateur Sports Clubs) that pays employer Class 1 NICs on their employees’ or directors’ earnings.

However there are some circumstances which may limit the availability of the allowance:

if a company belongs to a group of companies or a charity is part of a charities structure, only one company or charity can claim the allowance
the £2,000 Employment Allowance can only be claimed against one PAYE scheme, even if the business has more than one PAYE scheme.

Not all businesses can claim the Employment Allowance and the government guidance gives the following details of excluded employers.

You cannot claim the Employment Allowance, for example if you:

employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener or care support worker
already claim the allowance through a connected company or charity
are a public authority, this includes; local, district, town and parish councils
carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:

NHS services
General Practitioner services
the managing of housing stock owned by or for a local council
providing a meals on wheels service for a local council
refuse collection for a local council
prison services
collecting debt for a government department

If you would like any guidance on claiming the allowance please do get in touch. If we deal with your payroll we will ensure this matter is dealt with on your behalf.

Internet link: Gov.uk

Increases to NMW penalties and latest targets

The Government has announced that rogue employers who do not pay their workers the National Minimum Wage (NMW) will face an increased penalty of up to £20,000 as part of a Government crackdown.

Currently employers that break NMW law must pay the unpaid wages plus a financial penalty calculated as 50% of the total underpayment for all workers found to be underpaid. The maximum penalty an employer can face is £5,000.

The Government plans to increase the financial penalty percentage from 50% to 100% of the unpaid wages owed to workers. The maximum penalty will increase from £5,000 to £20,000. Regulations introducing these new limits are subject to Parliamentary approval and are expected to be enacted this month.

Latest target

Major record labels involved in this year’s Brit Awards are among the latest targets of HMRC’s continued crackdown on unpaid internships.

HMRC have written to record labels and event companies warning them about the consequences for non-payment of the NMW for any unpaid interns they take on. HMRC intend to follow up these letters with compliance visits later in the year to ensure the rules are being followed.

Michelle Wyer, HMRC’s Assistant Director NMW, said:

‘Non-payment of the National Minimum Wage is not an option, it’s the law, and we’re letting the music industry know that we’ve got them in our sights. If they are not playing by the rules, now is the time to put things in order.

Last year we fined over around 800 employers, so our message is clear: if you are not paying your interns, but should be, come forward now and put things right to avoid a penalty.’

Internet link: Press release

Help for those affected by floods

The Prime Minister has announced a package of measures to help flood affected businesses get back on their feet. The package of measures includes:

A Government Business Support Helpline providing comprehensive advice and support to businesses affected by floods. The helpline number is 0300 456 3565.
A new Business Support Scheme to provide hardship funding for SME businesses in areas affected by the floods. Both businesses that have been flooded, and businesses that are in affected areas and have suffered significant loss of trade, will be able to apply for support. Eligible businesses will be able to claim for funding for things like immediate clean-up costs, materials, and exceptional costs to help them continue trading.
Extra time for businesses to file accounts without any penalties.
All affected businesses will be able to apply to their local authority to get business rate relief for 3 months.
HMRC will also set up a new hotline for those who have been affected by flooding and may have difficulties in meeting their tax liabilities. HMRC will look to offer up to 3 months additional time to pay. This will cover all taxes owed to HMRC, including VAT, PAYE and corporation tax. The helpline number is 0800 904 79000800 904 7900.

Help is also available for communities affected. To read more about the help on offer visit the links below.

Internet links: HMRC website News Communities News business support

No penalties for some late Self Assessment returns

HMRC have announced that more than 10 million tax returns were filed on time meeting the 31 January deadline.

Approximately 8.5 million returns were filed online with the rest being paper filed. Perhaps not surprisingly the busiest day for tax return submission was 31 January when HMRC received over half a million returns.

For those failing to meet the deadline there is an automatic £100 late filing penalty regardless of whether the tax has been paid on time or indeed there is a refund due. Further penalties may also be imposed for continued failure to submit the return.

It has been widely reported that HMRC would not be charging penalties where returns were submitted before midnight on 15 February 2014. However this ‘reprieve’ only applies in limited circumstances as set out in the following HMRC statement:

‘We haven’t extended the Self Assessment deadline. Tax returns and any tax due must be received by HMRC by midnight tonight 31 January.

If someone has registered for our Online Service or existing customers have lost their User ID or password and realise they have left it too late we will allow a bit of extra time for this information to be received. This only applies to taxpayers who did the following between midnight on 21 January and midnight on 31 January 2014:

enrolled for the Self Assessment online service, or
requested a replacement user ID or password’

If you are one of the half a million people who have not yet submitted your self assessment return and you would like some help please do get in touch.

Internet links: Gov news SA leniency

HMRC warning about phishing scams

HMRC are warning taxpayers to be wary of the latest in a long line of email phishing scams that claim to offer tax rebates in return for bank account details.

HMRC have received over 23,000 reports of phishing scam emails in the three months to the 31 January 2014 self assessment deadline which is a 47% increase on the same period in 2013.

HMRC have confirmed that it never contacts taxpayers via e-mail regarding a refund and advised anyone who receives an email claiming to be from HMRC:

not to click on any links or attachments
forward it to phishing@hmrc.gsi.gov.uk and then
delete it permanently.

HMRC have published advice and examples of typical fake emails at www.hmrc.gov.uk/security/index.htm.

Internet link: News

PAYE end of year approaching

HMRC are reminding employers that with the end of the 2013/14 tax year approaching they will soon need to make their final 2013/14 PAYE (RTI) submission.

For most employers, the final submission will be their final Full Payment Submission (FPS) which advises HMRC about the very last employee payments for 2013/14 and this needs to be made on or before 5 April 2014. Details of how to make the final submission can be found on the HMRC website using the link below.

If we deal with the payroll on your behalf we will ensure this matter is dealt with on a timely basis.

Internet link: HMRC news

Electronic messages to employers

HMRC have issued an electronic warning message to employers who have not submitted their Full Payment Submission (FPS) return(s) during the January tax month. The message is intended to be a reminder to employers and is not a penalty notice.

HMRC are advising employers who receive this message that they should check that they have sent all the submissions that are due for their PAYE scheme.

If employers have notified HMRC recently that their business has ceased, then they can ignore the electronic message and do not need to contact HMRC.

HMRC started issuing these messages in December 2013 and this following link sets out instances where an employer may receive a non-filing message, although they have filed on time and where not action is required.

Internet links: HMRC news

Employee travel disruption

From time to time and particularly with the current weather conditions, travel disruption can affect an employee’s ability to get to work on time, or in some cases at all. For situations ranging from public transport cancellations to severe weather, employers and employees should consider how this could impact on the workforce.

Acas provide some useful guidance on these issues.

Internet link: Acas

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Newsletter – January 2014

Posted on January 31, 2014 by Henry Cooper

In this month’s enews we report on announcements regarding Real Time Information (RTI), PAYE tax codes and some details on the new class of national insurance contributions (NIC).

We also report on the consultation on zero hours contracts and if you are reading this on your smart phone does your business have a ‘bring your own device’ policy?

Please contact us if you would like any further information.

eNEWS quicklinks
RTI and micro employers	DWP issue guidance on new Class 3A NIC
Personal device at work policy	PAYE coding notices
Help to Buy mortgage guarantee completions	Zero hours contracts
Excuses excuses

RTI and micro employers

HMRC have announced that, although the vast majority of employers are finding PAYE reporting in real time straightforward, a small proportion of micro employers and their agents still need more time to adapt. They have therefore announced that existing employers with nine or fewer employees who need more time to adapt will be able to report PAYE information on or before the last payday in the tax month until April 2016.

HMRC will be encouraging micro businesses to adapt their processes sooner to ensure that they are ready to report all payments each time they pay their employees by April 2016.

End to the current relaxation

The current relaxation which applies to employers with fewer than 50 employees comes to an end in April 2014. Conditions for the current relaxation can be found by visiting the link at the end of the HMRC article.

All employers starting to operate PAYE after 6 April 2014, as well as existing employers with 10 or more employees, will need to report each time they pay their employees from April 2014.

This relaxation is part of a package of measures to help micro employers as they move towards full reporting of PAYE information in real time. The package also includes:

guidance such as ‘Situations where employers will not have to report PAYE information ‘on or before’ the time they pay their employee’ which can be found at the end of the HMRC article and
ongoing work to develop new ways to report PAYE information on a timely basis, for example using mobile apps.

If you would like any help with payroll issues please do get in touch.

Internet link: HMRC news

DWP issue guidance on new Class 3A NIC

The Government wants to offer help to existing pensioners and people who reach State Pension age before 6 April 2016, when the single-tier pension is introduced, to give:

‘people in the pre single tier population, who may have lost out because of the structure of the legacy second pension system, the opportunity to increase their state pension in retirement
hard pressed pensioners, especially those who rely on their capital to supplement their income, an opportunity to top up their pension in a way that will protect them from inflation and
people with small amounts of pension saving a secure way of achieving an income.’

The Government intends to introduce Class 3A in October 2015 and the scheme will be open for a limited period. There will be two entitlement conditions:

contributors must have entitlement to a UK State Pension (either basic State Pension or additional State Pension) and
must reach State Pension age before 6 April 2016.

‘Prices will reflect the age an individual takes up Class 3A. This is a key component of an actuarially fair price. Prices will be lower for older pensioners simply because on average they will have a shorter life in retirement at the point they take up Class 3A. The Government intends to publish a list showing prices of a unit by age.

Class 3A will not replace the existing Class 3…The Class 3A information products will make clear that individuals should consider making Class 3, contributions where that is possible, before taking up Class 3A. HMRC intend to identify applicants in that position and inform them of the option.

Each Class 3A contribution will result in the acquisition of a unit of extra pension which will increase the contributor’s additional State Pension by £1 a week up to a cap of potentially £25.’

‘We estimate that around 7 million pensioners will have enough savings to pay the new National Insurance contribution.’

‘Class 3A will be set at an actuarially fair rate which means that over time the policy will be broadly cost neutral. This reflects the funding position of the single tier and means that today’s workers will not have to fund the policy.’

We will keep you informed of further announcements.

Internet link: Government publication

Personal device at work policy

The Information Commissioner’s Office (ICO) is advising that organisations should have a clear personal device at work policy.

A recent survey showed that 60% of the UK population now own a smart phone and 20% a tablet and an increasing number want to use their personal devices at work. Known as ‘bring your own device’ the ICO state that the benefits include increased efficiency, flexibility and employee morale but the practice also carries a number of risks which organisations must consider when allowing employees’ devices to be used to process work-related personal information.

Simon Rice, Group Manager (Technology), said:

‘As the line between our personal and working lives becomes increasingly blurred it is critical employers have a clear policy about personal devices being used at work.’

‘The benefits must be balanced against the potential risks to work-related personal data but the organisation should not underestimate the level of effort which may be required to ensure that the processing of personal data with BYOD remains compliant with all 8 Principles of the Data Protection Act. Remember, it is the employer who is held liable for any breaches under the DPA.’

The ICO’s key ‘bring your own device’ recommendations are:

ensure devices are secure
ensure data transfers are secure
retain control
have an ‘end of contract’ policy
have a clear ‘acceptable use policy’.

Internet link: ICO news

PAYE coding notices

Over the next few months HMRC will be sending out new PAYE tax codes for the 2014/15 tax year.

HMRC are advising that some individuals may receive more than one coding especially if they have:

two or more employments at the same time
income from two or more pensions
pension income and employment income.

HMRC may send a PAYE coding notice for each job or pension and the new tax codes will be used from 6 April 2014.

If you would like help checking your tax code please do get in touch so we can ensure you pay the correct amount of tax.

Those individuals with more straightforward affairs may not receive a coding notice and their tax codes will be automatically updated, generally to reflect the increase in the personal allowance from the current £9,440 to £10,000.

Internet link: HMRC news

Help to buy mortgage guarantee completions

The Government has announced that ‘nearly 750’ homes have been bought and 6,000 offers made since the mortgage guarantee scheme started.

In November 2013, ministers published figures showing that in the first month of the scheme more than 2,000 people had put in offers on homes and applied for a Help to Buy mortgage. That number has now trebled to more than 6,000.

For more information on Help to Buy mortgages visit http://www.helptobuy.org.uk/

Internet link: Press release

Zero hours contracts

Business Secretary Vince Cable has announced that, under new proposals, employers could be banned from imposing ‘exclusivity’ on zero hours contracts which offer no guarantee of work and stop employees from working for another employer.

In the consultation, the Government also outline proposals on ways to tackle the lack of transparency in the way zero hours contracts are currently being used and improve guidance for both employers and employees around their use.

Business Secretary Vince Cable said:

‘A growing number of employers and individuals today are using zero hours contracts. While for many people they offer a welcome flexibility to accommodate childcare or top up monthly earnings, for others it is clear that there has been evidence of abuse around this type of employment which can offer limited employment rights and job security. We believe they have a place in today’s labour market and are not proposing to ban them outright, but we also want to make sure that people are getting a fair deal.’

The public consultation will seek views on a range of proposals will run until 13 March 2014.

Internet link: Press release

Excuses excuses

HMRC have released the ‘Top 10 oddest excuses’ for sending in a late self assessment return. These include a dead goldfish and a run in with a cow!

Internet link: HMRC top 10

Newsletter – December 2013

Posted on December 18, 2013 by Henry Cooper

In this month’s enews we report on pertinent announcements from the Autumn Statement and the subsequent publication of draft Finance Bill legislation.

We also report on the proposals for shared parental leave and the latest fuel advisory rates.

Please contact us if you would like any further information.

eNEWS quicklinks
Autumn Statement	Advisory Fuel rates for company cars
Employers will no longer be able to reclaim SSP	Shared Parental Leave
Changes for Limited Liability Partnerships (LLPs)	‘False self-employment’ via intermediaries
CGT – Private Residence Relief	HMRC advise register for Self Assessment now

Autumn Statement

Earlier this month the Office for Budget Responsibility (OBR) published its updated forecast for the UK economy and Chancellor George Osborne responded to that forecast in a statement to the House of Commons later on that day. This statement was followed by the issue of draft legislation together with consultation documents.

Some of the key new announcements made as part of the Autumn Statement are as follows:

the introduction from April 2015 of an exemption from employer NICs for employees under 21 on earnings paid up to the Upper Earnings Limit
allowing companies to claim tax relief on donations to Community Amateur Sports Clubs by extending Gift Aid
the introduction from October 2015 of a new class of voluntary NIC (Class 3A) that gives those who reach state Pension age before 6 April 2016 an opportunity to boost their Additional State Pension entitlement.

The link below gives access to the government information on these and other areas.

Please also refer to the separate articles in this newsletter on some specific announcements where further details are available.

However please do contact us if you would like further details on any announcements.

John Cridland, CBI Director-General has issued the CBI’s response to the statement some of which is reproduced below:

‘We have always advocated the dual approach of tackling the deficit and driving growth – the OBR forecasts confirm it is working. Let’s stick with what works.’

‘The pressure on the high street has been recognised; the 2% cap on business rates and discount for very small businesses are positive, as is the reoccupation relief.’

‘Abolishing a jobs tax on employing young people under 21 will make a real difference and help tackle the scourge of youth unemployment.’

‘But it was a missed opportunity not to support our hard-pressed energy intensive businesses which are also struggling with rising costs, and the package on housing supply could have been more ambitious.’

‘Alongside the positive measures to help the high street, including the 2% cap on rates, empty property incentive and £1,000 boost for smaller retailers, we need to see a review of the outmoded business rates system.’

“Reducing the cost of employing 18-20 year olds will help more young people find jobs when it comes into force in 2015. Job centres will have an important role to play and will need to work more effectively with businesses to ensure young people get the right advice.’

‘Businesses will now be looking for government action in the Budget and this has to include looking at the impact of the Carbon Price Floor. Shale gas will play a role in delivering a balanced energy mix, but we need action on all fronts to keep costs down and secure our future supply.’

Internet links: Autumn Statement CBI press release

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 December 2013. HMRC’s website states:

‘These rates apply to all journeys on or after 1 December 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 December 2013 are:

Engine size	Petrol	LPG
1400cc or less	14p (15p)	9p (10p)
1401cc – 2000cc	16p (18p)	11p
Over 2000cc	24p (26p)	16p

Engine size	Diesel
1600cc or less	12p
1601cc – 2000cc	14p (15p)
Over 2000cc	17p (18p)

Please note that not all of the rates have been amended so care must be taken to apply the correct rate. The amounts for the previous quarter are shown in brackets where the rate has been amended.

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

Employers will no longer be able to reclaim SSP

The Percentage Threshold Scheme (PTS), which allows employers to reclaim Statutory Sick Pay (SSP) in certain circumstances, is abolished from 6 April 2014.

Under PTS employers can reclaim SSP where the SSP paid is more than 13% of the Class 1 NIC due for the month. Employers are not entitled to recover any of the SSP paid to their employees unless they qualify for the reimbursement scheme.

The following example explains how the scheme works for a tax month:

SSP paid	=	630.00
Gross NI £3,704.29 x 13%	=	481.56
SSP recoverable: (£630 – £481.56)	=	£148.44

From 6 April 2014 employers will be unable to recover SSP however they will continue to be able to recover unclaimed SSP for previous years for a limited period. Do contact us if you think this may apply to your business.

The government has announced that the current PTS funding will be moved into a new scheme to help employees who have been incapacitated for four weeks or more get back to work as part of the government’s Health Work and Wellbeing Initiative. This scheme is expected to be available later next year.

Internet links: ICAEW health work and wellbeing initiative

Shared parental leave

The government has announced how the new system of shared parental leave will operate for employees and employers.

Earlier this year the government invited views on how the system for shared parental leave and pay should operate.

The consultation considered how the new system should work and align with current arrangements for maternity and paternity leave.

The proposals for shared parental leave and flexible working are included in the Children and Families Bill 2013 which is currently going through Parliament. The details will be set out in regulations and are expected to be introduced from April 2015.

The new leave system will allow eligible working families to have more choice about how they balance their work and caring commitments. Parents can choose to be at home together or to work at different times and share the care of their child.

The government hopes that businesses will also benefit from being able to have more open discussions about patterns of leave with their employees.

Internet link Parental Leave

Changes for Limited Liability Partnerships (LLPs)

Since their introduction in 2000, LLPs have become increasingly popular as a vehicle for carrying on a wide variety of businesses. The LLP is a unique entity as it combines limited liability for its members with the tax treatment of a traditional partnership. Individual members are deemed to be self-employed and are taxed as such on their respective profit shares.

The government now considers that deemed self-employed status is not appropriate in some cases. For example, individuals who would normally be regarded as employees in high-salaried professional areas such as the legal and financial services sectors are benefitting from self-employed status for tax purposes which leads to a loss of employment taxes payable.

The new rules will apply when an individual is a member of an LLP and three conditions are met. The conditions are:

There are arrangements in place under which the individual is to perform services for the LLP, in their capacity as a member, and it would be reasonable to expect that the amounts payable by the LLP in respect of their performance of those services will be wholly, or substantially wholly, disguised salary. An amount is disguised salary if it is fixed or, if is variable, it is varied without reference to the overall profits of the LLP.
The mutual rights and duties of the members and the LLP and its members do not give the individual significant influence over the affairs of the LLP.
The individual’s contribution to the LLP is less than 25% of the disguised salary. The individual’s contribution is defined (broadly) as the amount of capital which they contributed to the LLP.

The new rules will have effect from 6 April 2014.

Internet link: Partnerships

‘False self-employment’ via intermediaries

Following announcements made as part of the Autumn Statement the government has announced some further information ‘false self-employment’ via intermediaries.

The government believes that employment intermediaries are increasingly being used to disguise employment as self-employment. The largest business sector being the construction industry where the government believes 200,000 workers are engaged via intermediaries. However, there are other sectors such as the driving, catering and security industries where there is evidence of existing permanent employees being taken out of direct employment and being moved into false self-employment arrangements involving intermediaries.

The central proposal is to make a change to the agency legislation so that it will apply to these type of intermediary arrangements where the worker is:

subject to (or to the right of) control, supervision or direction as to the manner in which the duties are carried out
providing their services personally
remunerated as a consequence of providing their services
receiving remuneration not already taxed as employment income.

After the change the intermediary will be responsible for deduction PAYE and NIC from the worker and paying employers NIC.

The legislation will be amended with effect from 6 April 2014.

Internet link: False self employment

CGT – Private Residence Relief

It was announced in the Autumn Statement that there will be changes made to the rules for Private Residence Relief.

A gain arising on a property which has been an individual’s private residence throughout their period of ownership is exempt from CGT. There are deemed period of occupation rules which may help to provide an exemption from CGT even if the individual was not living in the property. This may mean the individual is accruing private residence relief on another property at the same time.

The final period exemption applies to a property that has been an individual’s private residence at some time even though they may not be living in the property at the time of disposal.

The final period exemption will be reduced from 36 months to 18 months with two exceptions. An individual that:

is a disabled person or
is a long term resident in a care home, where they have been there for at least three months, or can reasonably be expected to be resident there for three months, and
has no other property, on which they, or their spouse or civil partner, can claim private residence relief

will continue to be able to claim a 36 month final period exemption.

The rules apply to disposals made on or after 6 April 2014.

Internet link: Draft legislation and TIIN

HMRC advise register for Self Assessment now

HMRC is urging those who have to file a Self Assessment return for the first time to register for its online services now.

The process of registration can take up to seven working days to complete and involves HMRC sending you an activation code in the post. It’s therefore important not to leave this to the last minute, to avoid a rush to beat the 31 January filing deadline. Those needing to complete a Self Assessment return for the first time this year will include parents with income above £50,000 who received Child Benefit payments from 7 January 2013. The High Income Child Benefit Charge is based on their incomes and how much of the benefit they received in the 2012/13 tax year.

The 31 January is also the deadline for paying any tax owed for 2012/13. Taxpayers who owe less than £3,000, and want HMRC to collect the tax they owe through next year’s tax code, need to submit their online return by midnight on 30 December.

If you would like any help with Self Assessment please do get in touch.

Internet link: News

The Chancellor’s Autumn Statement 2013 – Additional Detail

Posted on December 11, 2013 by Henry Cooper

2013 AUTUMN STATEMENT – more detail

We recently gave you our Autumn Statement summary. Draft legislation has now been published and there now follows further information with more detail on specific areas which we thought you might find helpful.

The further details cover the following areas:

members of Limited Liability Partnerships (LLPs)
employment intermediaries and false self-employment
changes to the CGT Private Residence Relief deemed occupation rules.

Business Tax

Members of Limited Liability Partnerships (LLPs)

Since their introduction in 2000, LLPs have become increasingly popular as a vehicle for carrying on a wide variety of businesses. The LLP is a unique entity as it combines limited liability for its members with the tax treatment of a traditional partnership. Individual members are deemed to be self-employed and are taxed as such on their respective profit shares.

The Government now considers that deemed self-employed status is not appropriate in some cases. For example, individuals who would normally be regarded as employees in high-salaried professional areas such as the legal and financial services sectors are benefitting from self-employed status for tax purposes which leads to a loss of employment taxes payable.

The new rules will apply at any time when an individual (M) is a member of an LLP and three conditions are met. The conditions are:

There are arrangements in place under which M is to perform services for the LLP, in M’s capacity as a member, and it would be reasonable to expect that the amounts payable by the LLP in respect of M’s performance of those services will be wholly, or substantially wholly, disguised salary. An amount is disguised salary if it is fixed or, if is variable, it is varied without reference to the overall profits of the LLP.
The mutual rights and duties of the members and the LLP and its members do not give M significant influence over the affairs of the LLP.
M’s contribution to the LLP is less than 25% of the disguised salary. M’s contribution is defined (broadly) as the amount of capital which the individual has contributed to the LLP.

The new regime will have effect from 6 April 2014.

Employment intermediaries and ‘false self-employment’

The Government considers employment intermediaries are increasingly being used to disguise employment as self-employment. The largest business sector affected will be the construction industry. However, there are other sectors such as the driving, catering and security industries where there is evidence of existing permanent employees being taken out of direct employment and being moved into false self-employment arrangements involving intermediaries.

Currently the agency legislation only applies to workers providing their services under the terms of an agency contract. This is defined as:

“A contract made between the worker and the agency under the terms of which the worker is obliged to personally provide services to the client.”

This has led intermediaries to set up contracts which allow the worker to send someone else to do their job and thus it is argued that the worker is not obliged to personally provide services.

The Government proposes removing the obligation for the worker to provide their services personally. Instead the proposal is that the agency legislation will apply where the worker is:

subject to (or to the right of) control, supervision or direction as to the manner in which the duties are carried out
providing their services personally
remunerated as a consequence of providing their services
receiving remuneration not already taxed as employment income.

It is proposed that this change will be supported by a statutory returns requirement. The intermediary will need to submit a quarterly electronic return containing details of any workers it has placed for whom it is not deducting PAYE and NIC. The aim of this requirement is to allow HMRC to identify possible cases of non-compliance with the new agency legislation.

The legislation will be amended with effect from 6 April 2014.

Comment

Capital Taxes

CGT – Private Residence Relief

The final period exemption applies to a property that has been an individual’s private residence at some time even though they may not be living in the property at the time of disposal.

The final period exemption will be reduced from 36 months to 18 months with two exceptions. An individual that is:

a disabled person or
a long term resident in a care home, where they have been there for at least three months, or can reasonably be expected to be resident there for three months, and
has no other property, on which they, or their spouse or civil partner, can claim private residence relief

will continue to be able to claim a 36 month final period exemption.

The amended legislation has effect in relation to disposals:

made on or after 6 April 2014, or
made before that date under a contract, unless the conveyance takes place before 6 April 2015.

The Chancellor’s 2013 Autumn Statement

Posted on December 6, 2013 by Henry Cooper

2013 AUTUMN STATEMENT

On Thursday 5 December the Office for Budget Responsibility (OBR) published its updated forecast for the UK economy. Chancellor George Osborne responded to that forecast in a statement to the House of Commons later on that day.

In the period since the Budget in March a number of consultation papers and discussion documents have been published by HMRC and some of these proposals are summarised here. Draft legislation relating to many of these areas will be published on 10 December and some of the details in this summary may change as a result.

Our summary also provides a reminder of other key developments which are to take place from April 2014.

The Chancellor’s statement

His speech and the subsequent documentation announced tax measures in addition to the normal economic measures.

Our summary concentrates on the tax measures which include:

the introduction of a transferable tax allowance for some married couples and civil partners
the introduction of an exemption from employer National Insurance Contributions for employees under 21
allowing companies to claim tax relief on donations to Community Amateur Sports Clubs
measures to tackle employment intermediaries disguising employment as self-employment
anti-avoidance measures which will affect some partnerships in which the partners include individuals and companies
changes to the CGT Private Residence Relief deemed occupation rules
the introduction of new CGT rules for non-residents and UK residential property.

Personal Tax

The personal allowance for 2014/15

For those born after 5 April 1948 the personal allowance will be increased from £9,440 to £10,000. When the current Government came into power in 2010 the personal allowance was £6,475 so there has been a significant increase.

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. So for this year there is no allowance when adjusted net income exceeds £118,880. Next year the allowance ceases when adjusted net income exceeds £120,000.

Comment

The increase in the personal allowance gives more importance to planning before 6 April 2014 where adjusted net income is expected to exceed £100,000. Broadly, adjusted net income is taxable income from all sources reduced by specific reliefs such as Gift Aid donations and pension contributions.

Tax bands and rates for 2014/15

The additional rate of tax of 45% is payable on taxable income above £150,000.

Dividend income is taxed at 10% where it falls within the basic rate band and 32.5% where liable at the higher rate of tax. Where income exceeds £150,000, dividends are taxed at 37.5%.

Transferable Tax Allowance for some

In October the Government announced that from April 2015 married couples and civil partners may be eligible for a new Transferable Tax Allowance.

The Transferable Tax Allowance will enable spouses and civil partners to transfer a fixed amount of their personal allowance to their spouse.

The option to transfer will be available to couples where neither pays tax at the higher or additional rate. If eligible, one partner will be able to transfer £1,000 of their personal allowance to the other partner. The transferor’s personal allowance will be reduced by £1,000. It will mean that the transferee will be able to earn £1,000 more before they start paying income tax.

The claim will be made online and entitlement will be from the 2015/16 tax year. Couples will be entitled to the full benefit in their first year of marriage.

Comment

For those couples where one person does not use all of their personal allowance the benefit will be up to £200.

Class 3A Voluntary National Insurance

From October 2015 a new class of voluntary National Insurance Contributions (Class 3A) will be introduced that gives those who reach State Pension age before 6 April 2016 an opportunity to boost their Additional State Pension.

Venture Capital Trusts (VCTs)

From April 2014 the Government is to withdraw income tax relief on share buy-backs in VCTs. Investments that are conditionally linked in any way to a VCT share buy-back, or that have been made within six months of a disposal of shares in the same VCT, will not qualify for new tax relief.

Individual Savings Accounts (ISAs)

From April 2014 the overall ISA savings limit will be increased to £11,880 of which £5,940 can be invested in cash, a 2.7% increase from the limit for the current year.

Regulations were issued in 2013 to allow shares listed on the Alternative Investment Market (AIM) to be permitted ISA investments in stocks and shares ISAs.

To further support these companies, the Government will abolish stamp tax on shares for companies listed on growth markets including AIM and the ISDX Growth Market, from April 2014.

The Government is exploring whether to increase the number of retail bonds eligible for stocks and shares ISAs, by reducing the requirement that such securities must have a remaining maturity above five years.

Comment

Shares held in an ISA are exempt from capital gains tax (CGT) and income tax. AIM shares can also have inheritance tax benefits. Many AIM shares benefit from Business Property Relief (BPR) which provides an IHT exemption once the shares have been held for two years.

Junior ISA and Child Trust Fund

The annual subscription limit for Junior ISA and Child Trust Fund accounts will increase from £3,720 to £3,840.

Pensions saving – annual allowance

The annual allowance is an annual limit for giving tax relief on pension contributions. Contributions can be paid in excess of the limit but may give rise to an income tax charge on the member of the pension scheme. For tax year 2014/15 onwards the annual allowance will be reduced from £50,000 to £40,000.

Pensions saving – lifetime allowance

There is also an overall limit, known as the lifetime allowance, on the total amount of tax relieved pension savings that an individual can have over their lifetime. Savings in excess of the allowance can be charged at 55% if taken as a lump sum or 25% if taken as income (in addition the pension is taxable as income in the normal way). For most individuals the charge will occur when they start to take their benefits from their pension scheme.

For tax year 2014/15 onwards:

the standard lifetime allowance will be reduced from £1.5 million to £1.25 million
a transitional ‘fixed protection’ regime has been introduced for those who believe they may be affected by the reduction in the lifetime allowance. Applications for this protection must be received by HMRC on or before 5 April 2014. However any new pension savings made by or on behalf of the individual on or after 6 April 2014 are likely to lead to the loss of fixed protection. This means that, normally, individuals have to opt out of active membership of all registered pension schemes of which they are members.

The Government will also be introducing an individual protection regime (IP14) in addition to fixed protection. IP14 will provide individuals with a personal lifetime allowance equal to the total pension savings they have on 5 April 2014 with a value of between £1.25 million and £1.5 million.

Individuals will have three years from 6 April 2014 to apply for IP14.

Comment

Individuals with IP14 will be able to carry on actively saving in a registered pension scheme, should they so wish. However when benefits are taken any pension savings above the individual’s personal lifetime allowances will be subject to charge. An example of when IP14 would be beneficial may be for an individual whose employer normally contributes towards their pension scheme but, if the individual opted out of the pension scheme, they would not be able to receive the value of those employer contributions in another form such as higher pay.

Business Tax

Corporation tax rates

The small profits rate will therefore remain at 20% until then.

Close company loans to participators

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 Government was considering making changes to the structure and operation of the tax charge but has now announced that it will not make any immediate changes.

Members of Limited Liability Partnerships (LLPs)

Since their introduction in 2000, LLPs have become increasingly popular as a vehicle for carrying on a wide variety of businesses. The LLP is a unique entity as it combines limited liability for its members with the tax treatment of a traditional partnership. Individual members are deemed to be self-employed and are taxed as such on their respective profit shares.

Full details of the changes have not yet been announced. The legislation may be amended by simply removing the provision which deems individual members to be self-employed. This would mean applying the normal (but sometimes difficult) tests that characterise employment and self-employment. A consultation document proposed additional tests which may be easier to apply in certain scenarios.

The new regime is expected to come into force on 6 April 2014.

National insurance and self-employed entertainers

Following consultation, the Government has decided to repeal the current NIC regulations in respect of entertainers. From 6 April 2014, those individuals engaged as an actor, singer, or musician, or in any similar performing capacity will pay Class 2 and Class 4 NIC as self-employed earners.

Community Amateur Sports Club (CASC)

Comment

Partnerships with mixed membership

Anti-avoidance measures will be introduced which will affect partnerships, including LLPs, where the partners or members include both individuals and non-individuals (mixed membership partnerships). Most commonly the non-individuals will be company members of the partnership. There will be two areas potentially affected:

where partnership profits are allocated to a non-individual partner in circumstances where an individual member may benefit from those profits
where partnership losses are allocated to an individual partner, instead of a non-individual partner, to enable the individual to access certain loss reliefs.

The main changes relate to profit allocation and these rules come into force on 5 December 2013.

Excess profits will be reallocated to an individual partner from a non-individual partner where the following conditions are met:

a non-individual partner has a share of the firm’s profit
the non-individual’s share is excessive
an individual partner has the power to enjoy the non-individual’s share or there are deferred profit arrangements in place
it is reasonable to suppose that the whole or part of the non-individual’s share is attributable to that power or arrangements.

The Government is proposing to introduce legislation which will result in certain income tax loss reliefs and capital gains relief for a loss allocated to an individual partner being denied.

The reliefs will not be available where the individual is party to arrangements, the main purpose of which, or one of the main purposes of which, is to secure that some or all of the loss is allocated, or otherwise arises, to the individual, instead of a non-individual, with a view to the individual obtaining relief.

These changes will take effect from 6 April 2014.

Comment

Some changes to the treatment of mixed member partnerships have been expected following the issue of a consultative document. The difficulty with the proposed legislation may be determining the boundary between profit allocations which are caught or not caught by the legislation.

Employment intermediaries and ‘false self-employment’

The Government will amend existing legislation to prevent employment intermediaries being used to avoid employment taxes by disguising employment as self-employment. The Government will consult on strengthening existing legislation to ensure the correct amount of tax and NIC are paid where the worker is, in effect, employed. The legislation will be amended with effect from 6 April 2014.

Comment

The Government expects this measure to raise around £400 million each year.

Other tax avoidance measures

The Government has announced a number of measures to help tackle tax avoidance which have effect from 5 December 2013 including changes to:

the debt cap provisions
the controlled foreign companies legislation to counter some aspects of profit shifting
the double tax relief system to prevent avoidance.

Legislation will be introduced in Finance Bill 2014 to prevent a charity from being entitled to claim charity tax reliefs if one of the main purposes of establishing the charity is tax avoidance. The definition of a charity for tax purposes will be amended to exclude such charities.

Social investment tax relief

The Government will introduce a new tax relief for equity and certain debt investments in social enterprises with effect from April 2014. Organisations which are charities, community interest companies or community benefit societies will be eligible. Following consultation, investment in social impact bonds issued by companies limited by shares will also be eligible. The Government will publish a ‘roadmap’ for social investment in January 2014.

Theatre Relief

A consultation will be launched in spring 2014 on the introduction of a limited corporation tax relief for commercial theatre productions and a targeted relief for theatres investing in new works or touring productions to regional theatres.

Employment Taxes

Employer provided cars

Comment

Car fuel benefit charge

Employees and directors who are provided with an employer provided car and who also receive free private fuel from their employers are subject to the fuel benefit charge. The benefit charge is determined by multiplying a set figure by the appropriate percentage for the car, based on its CO2 emissions.

The car fuel benefit charge multiplier will be increased from £21,100 to £21,700 with effect from 6 April 2014.

Vans

For 2014/15 the private use of a company van will result in a benefit assessable on the employee of £3,090, an increase on the current benefit of £3,000. The charge will not apply to vans which cannot emit CO2 or if a restricted private use condition is met throughout the year. If fuel for private purposes is also provided, a benefit of £581 will be assessable on the employee.

Exemption threshold for employment-related loans

Comment

This change reflects the increase in the cost of commuting for an employee and allows the employer to provide finance for the purchase of season tickets for rail fares.

National Insurance – £2,000 employment allowance

The Government will introduce an allowance of up to £2,000 per year for many employers to be offset against their employer Class 1 National Insurance Contributions (NIC) liability from April 2014. The legislation is contained in the National Insurance Contributions Bill 2013.

There will be some exceptions for employer Class 1 liabilities including liabilities arising from:

a person who is employed (wholly or partly) for purposes connected with the employer’s personal, family or household affairs
employer contributions deemed to arise under IR35 for personal service companies.

The allowance is limited to the employer Class 1 NIC liability if that is less than £2,000.

It is expected that the allowance will be claimed as part of the normal payroll process. Employer’s payment of PAYE and NIC will be reduced each month to the extent it includes an employer Class 1 NIC liability until the £2,000 limit has been reached.

Employer NIC for the under 21s

Tax exemption for employer funded occupational health treatments

As announced at Budget 2013 the Government will introduce a tax exemption for amounts up to £500 paid by employers for medical treatment for employees. Following consultation the Government will extend the exemption to medical treatments recommended by employer arranged occupational health services in addition to those recommended by the new Health and Work Service.

Employee ownership

Following a consultation the Government will introduce three new tax reliefs to encourage and promote indirect employee ownership. The reliefs are as follows:

From April 2014 disposals of shares that result in a controlling interest in a company being held by an employee ownership trust will be relieved from CGT.
Transfers of shares and other assets to employee ownership trusts will also be exempt from inheritance tax providing certain conditions are met.
From October 2014 bonus payments made to employees of indirectly employee owned companies which are controlled by an employee ownership trust will be exempt from income tax up to a cap of £3,600 per annum.

Share Incentive Plans (SIP)

From 2014/15 the individual limits on the ‘free’ shares companies can award to employees will be increased from £3,000 to £3,600 per year. The individual limit on the ‘partnership’ shares employees can purchase will be increased from £1,500 to £1,800 per year.

Save as You Earn (SAYE)

The amount that an employee can save and apply towards the purchase of shares for 2014/15 will be increased from £250 to £500 per month.

Real Time Information (RTI) late filing and late payment penalties

HMRC have introduced a new penalty regime for RTI to encourage compliance with the information and payment obligations. The penalty regime will apply from 6 April 2014.

In essence late filing penalties will apply to each PAYE scheme, with the size of the penalty based on the number of employees in the scheme. Monthly penalties of between £100 and £400 will apply to micro, small, medium and large employers.

Each scheme will be subject to only one late filing penalty each month regardless of the number of returns due in the month. There will be one unpenalised default each year with all subsequent defaults attracting a penalty. Penalties will be charged quarterly and subject to the usual reasonable excuse and appeal provisions.

A new employer will not receive a late filing default provided the first RTI return is filed within 30 days of making the first payment to an employee.

HMRC have the option of charging further tax geared ‘extended failure’ penalties where a return is more than three months late. The penalty will be 5% of the amount due on the late return.

Changes will be made to the late payment penalty regime, which is based on the number of late payments relating to each tax year. Where an employer pays over a sum that is within £100 of the total shown as due to HMRC from the RTI returns filed for the tax period, no late payment penalty will arise.

HMRC will send a late payment penalty notice quarterly in July, October, January and April, if necessary.

Capital Taxes

CGT rates

CGT annual exemption

The CGT annual exemption is £10,900 for 2013/14 and will be increased to £11,000 for 2014/15. The exemption for most trustees will be £5,000 and £5,500 respectively.

CGT – Private Residence Relief

The final period exemption applies to a property that has been an individual’s private residence at some time even though they may not be living in the property at the time of disposal. From 6 April 2014 the final period exemption will be reduced from 36 months to 18 months.

CGT – non-residents and UK residential property

From April 2015 a CGT charge will be introduced on future gains made by non-residents disposing of UK residential property. A consultation on how best to introduce this will be published in early 2014.

IHT nil rate band

The IHT nil rate band remains frozen at £325,000 until 5 April 2018.

Changes to the trust IHT regime

a transfer of assets into the trust is a chargeable transfer in both lifetime and on death
a charge has to be calculated on the value of the assets in the trust on each ten-year anniversary of the creation of the trust
an exit charge arises when assets are effectively transferred out of the trust.

Two changes will however be introduced in Finance Bill 2014:

simplification of filing and payment dates for IHT relevant property trust charges
income arising in such trusts which remains undistributed for more than 5 years will be treated as part of the trust capital when calculating the ten-year anniversary charge.

Comment

Vulnerable Beneficiary Trusts

The Government will extend from 5 December 2013 the CGT ‘uplift’ provisions that apply on the death of a vulnerable beneficiary. It will also extend from 2014/15 the range of trusts that qualify for special income tax, CGT and IHT treatment.

The Government will consult further on ways to reform the tax treatment of trusts established to safeguard property for the benefit of vulnerable people.

Non-tax measures for smes

Business rates

A package to help all businesses in England with the cost of business rates, with particular support for the smallest businesses has been announced. The following measures are introduced from 1 April 2014:

businesses with retail and food and drink premises with a rateable value of up to £50,000 will receive a discount of £1,000 on their business rates for a period of two years (subject to state aid limits)
the RPI rate increase will be capped at 2% for one year
a ‘reoccupation relief’ will be introduced which will provide a 50% business rates discount for 18 months where businesses move into retail premises that have been empty for more than 12 months. Businesses which move into empty premises between 1 April 2014 and 31 March 2016 will be eligible for the relief (subject to state aid limits)
businesses will be allowed to pay their rates in 12 monthly instalments, rather than 10
the doubling of the Small Business Rate Relief (SBRR) will be extended for a further 12 months to April 2015
the SBRR criteria will be amended to allow businesses in receipt of SBRR to keep it for one year when they take on an additional property that would currently cause them to lose SBRR.

Comment

The doubling of the SBBR will mean that around 360,000 of the smallest businesses will continue to receive 100% relief from business rates until April 2015, with around a further 180,000 benefiting from tapering relief.

Retail Export Scheme

HMRC has consulted on options for making the Retail Export Scheme easier to use and will publish a formal Summary of Responses before the end of 2013.

Fuel duty

The planned increase in fuel duty set to take place in September 2014 has been cancelled. The Government will instead freeze fuel duty for the remainder of this parliament. This equates to a saving of £680 for a typical motorist, £1,300 for a small business with a van, and £21,000 for a haulier by 2015/16.

This summary is published for the information of clients. It provides only an overview of the main proposals announced by the Chancellor of the Exchequer in his Autumn Statement, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this summary can be accepted by the authors or the firm.

Newsletter – November 2013

Posted on November 30, 2013 by Henry Cooper

In this month’s enews we report that HMRC have announced a new approach to Business Records Checks and that research shows that many employers fail to pay employment tribunal awards.

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

eNEWS quicklinks
Employers fail to pay tribunal awards	HMRC new approach to Business Records Checks
Autumn Statement	Labour Market Statistics
HMRC reveal deliberate defaulters	Parties for employees
Pension scheme charges consultation

Employers fail to pay tribunal awards

According to government commissioned research into the outcome of employment tribunals more than 50% of those awarded payments do not receive their full award.

The study by IFF Research found 49% of claimants had received payment in full and another 16% had received part of their award and over a third had been paid no compensation at all. The most common reason for non-payment was business insolvency.

The government is considering giving judges the power to require employers to pay deposits in advance of employment tribunals.

Employment Relations Minister Jo Swinson said:

‘We are determined to clamp down on businesses who fail to pay out. Far too many cases are not being resolved leaving people out of pocket. Taking an employer to tribunal is a stressful enough process without having to face the possibility of not getting what you are entitled to if you win your case.’

‘Whilst this is primarily about justice for individuals, it is also important that there is a level playing field for the majority of honest employers who follow the rules. Rogue employers should not be allowed to simply get away with not paying.’

‘We will look closely at how we can tighten things up to make sure that people get what they are owed. This includes potentially making changes to the employment tribunal rules to give judges the power to demand deposits from businesses who they think might not pay up.’

‘We are also considering fixed penalty notices for late payment and naming and shaming employers who fail to pay out. And we need to make sure that people are aware how they can take enforcement action if they are not paid what they are due.’

Internet link: Press release

HMRC new approach to Business Records Checks

HMRC have announced that they are changing their Business Record Check (BRC) activity to ensure ‘it better targets help to those who are likely to have inadequate records’.

According to the HMRC press release:

‘Customers whose records were not adequate on first inspection, and who received follow up visits, all improved their record-keeping standard. HMRC have not had to charge any penalties.’

‘In the latest phase of BRC, many of the customers contacted by HMRC have been keeping records correctly. So HMRC wants to explore how to better target this activity.’

‘From 4 November 2013, HMRC’s BRC activity in the Edinburgh, Glasgow, Leeds, Bradford and Stockport areas will explore new ways of using the checks. As part of this, HMRC will evaluate new risk processes and ensure new approaches are cost effective and fit with its wider compliance activity.

HMRC will also work with tax agents’ representatives to review the benchmarks of what good record-keeping should be. Many tax agents already do much to improve their clients’ record-keeping and HMRC wants to work with them to improve standards.’

‘For customers outside the development areas HMRC will continue with existing BRCs until they are completed.’

If you are contacted by HMRC regarding your records please do get in touch.

Internet link: BRC

Autumn Statement

The government has announced that the Autumn Statement will now take place on 5 December 2013.

We will update you on pertinent announcements.

Internet link: News

Labour Market Statistics

The Office for National Statistics has announced that:

The employment rate for those aged from 16 to 64 for July to September 2013 was 71.8%, up 0.3% from April to June 2013. There were 29.95 million people in employment aged 16 and over, up 177,000 from April to June 2013.
The unemployment rate for July to September 2013 was 7.6% of the economically active population, down 0.2% from April to June 2013. There were 2.47 million unemployed people, down 48,000 from April to June 2013.
Between July to September 2012 and July to September 2013 total pay rose by 0.7% and regular pay rose by 0.8%.

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

‘Further signs of recovery can clearly be seen in these jobs figures. Unemployment is falling faster and businesses have taken on 124,000 more employees in full-time work.’

‘It is really pleasing to see more regions benefiting from job creation.’

‘It’s clear that pay restraint is continuing to underpin employment growth. We expect wages to pick up next year, but sustained growth must come first to protect jobs.’

Internet links: ONS CBI press release

HMRC reveal deliberate defaulters

HMRC publishes details of deliberate tax defaulters, those people who have received penalties either for:

deliberate errors in their tax returns or
deliberately failing to comply with their tax obligations.

To view the latest list please visit the HMRC website link below and look for the latest list.

Internet link: HMRC defaulters

Parties for employees

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

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

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

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

Internet link: HMRC guidance

Pension scheme charges consultation

Government consultation proposes to cap annual charges that are applied to pension schemes at between 0.75% and 1.0% a year.

While the average charge on new pension schemes is around 0.51% the Office of Fair Trading estimates that there are over 186,000 pension pots with £2.65bn assets that are subject to an annual charge of above 1%.

The government is also consulting on measures to increase transparency in the pensions sector and make it easier for employers to compare pension schemes.

Minister for Pensions Steve Webb said:

‘The government believes that enough is enough on charges. People need to know they are getting value for money when they save into a pension and not being ripped off by excessive charges. We are consulting on a cap on pension charges. A range of options will be on the table including an outright ban on all charges above 0.75% per year.’

With Pensions Auto Enrolment being rolled out to all employers please do get in touch if we can help you to get to grips with the obligations.

Internet links: Press release consultation

Newsletter – October 2013

Posted on October 29, 2013 by Henry Cooper

eNEWS – October 2013

In this month’s enews we report on the latest HMRC disclosure opportunities, important information for employers and the date of the Autumn Statement.

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

eNEWS quicklinks
Autumn Statement	National Crime Agency
PAYE Online	Updated charity guidance
Transferable Tax Allowance for some	HMRC announcements for employers
HMRC announce another disclosure facility	Let Property Campaign
NIC Employment Allowance

Autumn Statement

George Osborne, Chancellor of the Exchequer, has announced that he will deliver the Autumn Statement on Wednesday 4 December.

We will update you on pertinent announcements.

Internet link: News

National Crime Agency

The National Crime Agency (NCA), a new single law enforcement agency, is to be responsible for leading the national response to serious and organised crime.

The press release states that the Agency will comprise four commands: Organised Crime, Economic Crime, Border Policing and CEOP (Child Exploitation and Online Protection) and will have a National Cyber Crime Unit to reflect the broad range of threats that are posed by serious and organised criminals.

Keith Bristow, Director General of the NCA said:

‘The NCA is a UK-wide crime-fighting agency, which will have the capability to tackle serious and organised crime in areas that have previously had a fragmented response, such as the border, cyber and economic crime, and those where we need to increase our impact, like child protection and human trafficking.’

Internet link: News

PAYE Online

HMRC intend to introduce a new online service for taxpayers who use PAYE to pay tax via their employer in April 2014. Features of the new system include enabling individuals to update a range of their benefits in kind online so they can keep their tax code up to date.

Internet link: To read more about these issues visit the HMRC website and search for Employer Bulletin 45. Please note this is a large pdf document.

Updated charity guidance

HMRC have updated several areas of charity guidance. The updates cover:

‘Gift Aid Small Donations Helpsheet’ – new helpsheet giving an overview of how the Gift Aid Small Donations Scheme works
Annex II: non-charitable expenditure – detailed guidance notes updated
Annex VIII: Tainted Charity Donations – detailed guidance notes updated

To read the updated guidance use the link below. If you would like any help in this area, please contact us.

Internet link: HMRC charity guidance

Transferable Tax Allowance for some

The government has announced that from April 2015 married couples and civil partners may be eligible for a new Transferable Tax Allowance.

The Transferable Tax Allowance will enable spouses and civil partners to transfer a fixed amount of their personal allowance to their partner.

The option to transfer will be available to couples where one partner is a basic rate taxpayer (earning below £42,285 in 2015/16) and the other partner has unused personal allowances for the year. One individual will be able to transfer £1,000 of their personal allowance to their spouse or civil partner. It will mean that the higher earner will be able to earn £1,000 more before they start paying income tax.

The claim will be made online and entitlement will be from the 2015/16 tax year. Couples will be entitled to the full benefit in their first year of marriage.

For those couples where one partner does not use all of their personal allowance at the moment the tax saving will be up to £200.

Internet link: News

HMRC announcements for employers

The latest Employer Update issued by HMRC contains a number of pertinent articles which may be of interest to employers and employees:

Age Exception Certificates

HMRC will no longer issue age exception certificates to confirm that a person has reached State Pension age and therefore ceases to be liable to pay Class 1 NIC. HMRC advice is that employers will need sight of an employee’s birth certificate or passport as evidence of the person’s date of birth and retain a copy.

Automatic cancellation of PAYE schemes

From October 2013 if there has been no activity for a PAYE scheme, for example no RTI submissions, within 120 days of it being set up it will be automatically reviewed to see if it can be cancelled.

Employee shareholder status

HMRC is to offer employers the opportunity to apply for HMRC agreement (for tax purposes) to their share valuation which will hold for 60 days.

Internet link: To read more about these issues visit the HMRC website and search for Employer Bulletin 45. Please note this is a large pdf document.

HMRC announce another disclosure facility

HMRC have launched yet another disclosure facility, the Health and Wellbeing Tax Plan, which runs from 7 October 2013 to 6 April 2014 and is aimed at physical therapy, alternative medicine or therapy and other therapy.

Notification is required by 31 December 2013 and disclosure and payment by 6 April 2014.

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

Internet link: HMRC publications

Let Property Campaign

HMRC have announced a new campaign designed to target landlords in the residential property market. The campaign offers landlords in this sector a chance to get their tax affairs up to date or put right any errors they have made and then remain compliant.

HMRC have set up a Let Property Campaign Hotline on 03000 514479 but please do get in touch if you have concerns in this area.

Internet link: HMRC campaigns

NIC Employment Allowance

The Chancellor announced the creation of a National Insurance Contributions (NIC) Employment Allowance in the 2013 Budget. This is expected to be introduced from 6 April 2014 and this moved a step closer to becoming law with the First Reading of the Bill on 14 October 2013.

Businesses, Charities and Community Amateur Sports Clubs will be able to reduce their Employer Class 1 NICs bill by up to £2,000 per year.

HMRC plan to release more details on how to claim the Employment Allowance in the New Year and we will keep you informed of developments.

Internet link: HMRC news

Newsletter – September 2013

Posted on September 19, 2013 by Henry Cooper

In this month’s enews we report on a variety of issues including an update for employers on payroll and NMW increases. We also report on the implementation of Universal Credit and the latest crackdown by HMRC utilising card payment transactions.

Please do get in touch if you would like more detail on any of the articles.

eNEWS quicklinks
Advisory fuel rates for company cars	Data payment crackdown
HMRC chase those who have missed RTI deadlines	Universal Credit criticised by NAO
HSE guidance on new first aid training rules	RTI issue affecting student loan borrowers
HMRC issue guidance on the Statutory Residence Test	National Minimum Wage
Deadline for ‘paper’ self assessment tax returns	Latest Job figures

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 September 2013. HMRC’s website states:

‘These rates apply to all journeys on or after 1 September 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 September 2013 are:

Engine size Petrol LPG

1400cc or less 15p 10p

1401cc – 2000cc 18p (17p) 11p (12p)

Over 2000cc 26p (25p) 16p (18p)

Engine size Diesel

1600cc or less 12p

1601cc – 2000cc 15p (14p)

Over 2000cc 18p

Please note that not all of the rates have been amended, so care must be taken to apply the correct rate. The amounts for the previous quarter are shown in brackets where the rate has been amended.

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

Data payment crackdown

HMRC have announced that for the first time they now have access to information on all credit and debit card payments to UK businesses. HMRC intend to use this information to aid them in a new crackdown on tax evasion.

Under new powers introduced from 1 September, HMRC can now access information from ‘merchant acquirers’ which are the companies that process card payment transactions. HMRC will use the information to determine the amount and value of transactions completed by a specific trader.

HMRC do not have access to personal data identifying the card owners or card numbers but this data will be used to ensure that traders have correctly accounted for all taxes due.

HMRC estimate that this information could reduce fraud by over £50 million a year.

Exchequer Secretary to the Treasury David Gauke said:

‘Tax evasion and the hidden economy cost the taxpayer £9 billion a year. While the majority of traders are honest, they may find themselves undercut by the minority who seek to lower prices by cheating the tax system.’

‘The Government has given HMRC nearly £1 billion to tackle fraud and evasion, and these new powers give HMRC an extra tool to ensure a level playing field between businesses, and also reducing opportunities for those who try and cheat the system.’

Internet link: News

HMRC chase those who have missed RTI deadlines

HMRC are writing to the 167,000 employers who have missed one or more of the deadlines for reporting their PAYE information in real time.

The majority of employers should have started to report their PAYE information under RTI from the first payday on or after 6 April 2013. According to HMRC more than 1.6 million employer PAYE schemes, covering over 40 million individual records, are already reporting under RTI.

If you receive a letter and would like help with your payroll procedures, or do not believe you need to report any payments, please do get in touch.

Internet link: Press release

Universal Credit criticised by NAO

The implementation of the Government’s welfare reform programme, Universal Credit, has been criticised in a report by the National Audit Office (NAO).

Universal Credit will merge a number of existing benefits into a single payment in order to reduce the costs and fraud associated with the current multi-benefit system.

Amyas Morse, head of the National Audit Office said

‘The Department’s plans for Universal Credit were driven by an ambitious timescale, and this led to the adoption of a systems development approach new to the Department. The relatively high risk trajectory was not, however, matched by an appropriate management approach. Instead, the programme suffered from weak management, ineffective control and poor governance. Universal Credit could well go on to achieve considerable benefits if the Department learns from these early setbacks and puts realistic plans and strong discipline in place for its future roll-out.’

The DWP will now extend pilot schemes to six more areas of the UK, with these sites taking on simple welfare claims.

Internet links: Response NAO report

HSE guidance on new first aid training rules

The Health and Safety Executive has issued guidance to help employers assess their first aid training needs and comply with amendments to the Health and Safety (First Aid) Regulations.

Under the amended regulations the requirement for workplace first aid training providers to be approved by the HSE is removed from 1 October 2013.The amendments cover carrying out a first aid needs assessment and selecting a first aid training provider.

Internet link: HSE press release

RTI issue affecting student loan borrowers

HMRC would like employers to be aware that they have identified an issue with some employees who have student loans.

A few of the employees in this situation have had their employment status incorrectly ‘ceased’ on HMRC’s PAYE systems and this incorrect information has been passed to the Student Loans Company (SLC).

The SLC have written to these borrowers, querying their employment status. Employees affected by this issue are being asked to reply to the SLC saying they have not ceased or changed employer.

HMRC are hoping to correct their systems in the next few weeks. They have identified that there is an issue getting this corrected information on to the student loans system and are taking steps to resolve this issue.

Internet link: HMRC website

HMRC issue guidance on the Statutory Residence Test

HMRC have issued some updated guidance on the Statutory Residence Test which took effect from 6 April 2013.

Residence is a complex issue, if you would like any advice in this area please do get in touch.

Internet link: SRT guidance

National Minimum Wage

National Minimum Wage rates increases 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 a day.

The accommodation offset rate is used where the employer provides you with accommodation, some of the value of which can count towards NMW pay.

It is important to note that these rates, which are in force from 1 October 2013, apply to pay reference periods beginning on or after that date.

Most workers in the UK over school leaving age are entitled to be paid at least the National Minimum Wage (NMW) for details of exceptions see the Acas website.

Internet links: Gov.uk ACAS

Deadline for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2012/13 return is 31 October 2013. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

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

Internet link: HRMC deadlines

Latest Job figures

According to the latest information published by the ONS, employment rose by 80,000 and unemployment fell by 24,000 in the three months to July.

The employment rate for those aged from 16 to 64 (for May to July 2013) was 71.6%, an increase of 0.2%. There were 29.84 million people in employment aged 16 and over.

The unemployment rate for May to July 2013 was 7.7% of the economically active population a reduction in 0.1%. There were 2.49 million unemployed people.

Between May to July 2012 and May to July 2013 total pay rose by 1.1% and regular pay rose by 1.0%.

Stephen Gifford, CBI Director of Economics, said:

‘These figures show the upturn in economic data we’ve seen through the spring and summer is starting to show up in job creation. Encouragingly, jobs growth in the private sector was more than three times greater than losses in the public sector.’

‘Despite better news on the direction of travel, youth unemployment is persistently high and growth alone will not address this problem.’

‘We’ve called on the Government to reduce employers’ National Insurance to help tackle this, and the launch of the Million Jobs campaign further emphasises the need for action to help young people enter a tough jobs market.’

Internet links: ONS report Press release

Newsletter – August 2013

Posted on August 31, 2013 by Henry Cooper

In this month’s enews we report on a variety of issues including an update on child benefit for higher earners, RTI changes and a warning about pension ‘liberation’.

Please do get in touch if you would like more detail on any of the articles.

eNEWS quicklinks
Parents with higher incomes must register for Self Assessment	PAYE RTI and annual schemes
Pension ‘liberation’	Consultation on Tax-Free Childcare for working families
HMRC’s most wanted tax fugitives	A million zero hour contracts
HMRC introduce new safeguards for debt collection visits

Parents with higher incomes must register for Self Assessment

HMRC are reminding parents with higher incomes who continued to receive Child Benefit after January 2013 that they must register for Self Assessment by 5 October 2013 to avoid any penalties in relation to the High Income Child Benefit Charge.

HMRC have announced that they will be writing to approximately 2 million higher rate taxpayers over the next few weeks, including those affected by recent changes to Child Benefit. The letter reminds them that if their income is over £50,000 and they or their partner received Child Benefit in 2012/13, they will need to complete a Self Assessment tax return for the 2012/13 tax year. They must register with HMRC for Self Assessment if they have not already done so.

According to HMRC, over 390,000 people with higher incomes have already opted out of receiving Child Benefit.

HMRC’s Chief Executive, Lin Homer, said:

‘HMRC is committed to helping people pay the right amount of tax. If you have had certain changes to your income in the last year, including those affected by the changes to Child Benefit, you have until 5 October to register for Self Assessment.’

If the charge does apply, then the taxpayer must register for Self Assessment for the 2012/13 tax year by 5 October 2013, so that they can declare the Child Benefit received, and pay the tax charge on time and avoid any penalties.

If you would like any help or advice on whether or not you need to register, or whether you should opt to stop receiving Child Benefit, please do get in touch.

Internet link: Press release

PAYE RTI and annual schemes

HMRC are advising that they have now fixed the issue with Annual PAYE schemes.

HMRC received a number of requests since April from employers, asking that the status of their PAYE scheme be changed to annual. Due to technical issues they were unable to process the requests at the time. HMRC have now resolved the issue and have accepted all the requests that have been made and changed those schemes to annual. They will not however, be notifying employers that the change has been made.

If you are interested in changing your scheme to annual please do get in touch. However please be aware that under an annual scheme the payroll must meet all of the following requirements:

all the employees are paid annually (generally only applicable to directors only PAYE schemes)
everyone is paid within the same, single tax month and
the employer is only required to pay HMRC annually.

Internet link: HMRC news

Pension ‘liberation’

The ICAEW have issued a warning that individuals are being approached by firms offering to help them ‘unlock’ their pensions or access them early. Some unscrupulous firms are using misleading information and in some cases offering personal loans or cash incentives to entice savers to cash in their pensions early. This is known as pension ‘liberation’. For further information use the link to the Pensions Regulator website below.

The ICAEW are warning that those taxpayers who decide to take the initiative themselves and access their pensions early will find that some or all of their hard earned pension savings may be at stake. This is because the normal rule is that you cannot generally access pension savings before you reach the age of 55 at the earliest.

Those opting for pension ‘liberation’ will generally be liable to pay a tax bill of more than half of their pension savings and may have to pay further tax penalties as well. Additionally, the provider usually imposes significant charges, sometimes up to 20%. The ICAEW website provides details of the potential tax liabilities and charges and also a link to report firms promoting pension ‘liberation’.

Please do get in touch if you would like further guidance in this area.

Internet links: ICAEW website Pensions Regulator action pack

Consultation on Tax-Free Childcare for working families

Earlier this year the government announced that it plans to introduce a new childcare scheme for working families. The proposal is that Tax-Free Childcare will provide 20% of working families’ childcare costs, up to £1,200 for each child. The scheme is expected to be introduced from 2015.

The consultation invites interested parties to comment on the detailed design and operation of Tax-Free Childcare.

Internet link: Consultation

HMRC’s most wanted tax fugitives

HMRC has published an updated list of their most wanted ‘tax fugitives’ and announced that a ‘fraudster’ has been apprehended at Heathrow Airport whilst travelling on a false passport, following almost ten years on the run.

HMRC have published a gallery of its 2013 most wanted and announced the capture of one of the most wanted tax criminal fugitives. To view the gallery see the link to the flickr page below.

The 2013 list includes updated information on the original 20 together with the addition of 10 more tax fugitives. These fugitives are being pursued for a range of crimes including VAT fraud, tax evasion and money laundering. According to HMRC their crimes have cost the taxpayer between £100,000 and £10 million.

Anthony Judge, who was wanted for his role in over £350,000 of tax fraud, was stopped at Heathrow Airport last month as he attempted to enter the UK on a forged passport.

Chancellor of the Exchequer George Osborne said:

‘Our message is clear; tax fraud and evasion is illegal and will not be tolerated. Millions of hard-working people pay their taxes and it is they who are being defrauded. The government has stepped up HMRC’s enforcement activities to enable them to pursue tax cheats relentlessly around the world.’

Internet links: flickr Press Release

A million zero hour contracts

New research suggests that the number of workers on zero hour contracts, with no guarantee of hours or pay, are becoming more widespread.

Research by the Chartered Institute of Personnel and Development (CIPD) shows that there are up to a million workers on zero hour contracts. The survey also showed that only 14% of workers on these contracts were let down by their employers by them failing to provide sufficient hours each week.

However figures from the Office for National Statistics (ONS) show that only 250,000 people on zero hour contracts.

Zero hour contracts have become more widespread over recent years, particularly in the hospitality and retail sectors, where businesses view them as a cost effective way of satisfying short term staffing needs by using ‘on call’ staff.

Peter Cheese the CIPD’s CEO said:

‘Zero hours contracts, used appropriately, can provide flexibility for employers and employees and can play a positive role in creating more flexible working opportunities. This can for example allow parents of young children, carers, students and others to fit work around their home lives.’

‘However, for some this may be a significant disadvantage where they need more certainty in their working hours and earnings, and we need to ensure that proper support for employees and their rights are not being compromised through such arrangements. Zero hours contracts cannot be used simply to avoid an employer’s responsibilities to its employees.’

Internet link: Press release

HMRC introduce new safeguards for debt collection visits

HMRC have introduced a Field Force Verification Helpline, so that taxpayers can easily check whether or not a caller on their doorstep claiming to be from HMRC is genuine.

Every year, HMRC visit a small number of taxpayers who have not paid their tax or arranged to repay overpayments of tax credits, in order to collect the debt. The Debt Management and Banking’s Field Force Collectors may visit a taxpayer’s home or business premises. HMRC always give advance warning that a visit may take place if a debt is not paid.

HMRC advise:

‘To provide a safeguard against bogus callers in these situations, HMRC has introduced a new Field Force Verification Helpline

To access the helpline, customers should follow these simple steps:

Ask to see the Collector’s photo ID
Make a note of the ID number on the photo ID
Call 0300 200 3862
Provide HMRC with the ID number you’ve noted

Our operators will then be able to confirm to you whether or not your caller is genuinely an HMRC Collector.

To help to explain the purpose of the visit and the rights and responsibilities of customers, we have also produced a new leaflet. Every customer visited, from 13 August onwards, will be given a copy of this by the Collector on arrival at the customer’s premises. This also includes the Field Force Verification Helpline number.’

If you have any concerns about paying your liabilities please do get in touch.

Internet link: HMRC news