Category Archives: Newsletters

Newsletter – July 2013

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In this month’s enews we update you on the latest HMRC announcements relevant to individuals and businesses. We also report on developments in Pensions Auto Enrolment and Real Time Information.

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

eNEWS quicklinks
Non statutory expenses Gift Aid Small Donations Scheme
Government publishes ‘Supporting automatic enrolment’ Single Compliance Process
Tax return amnesty Employee share ownership
Real Time Information and annual schemes Tax credits claimants have until 31 July to renew claims
HMRC announce latest taskforces

Non statutory expenses

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mileage’ deductions and existing agreements for ‘board and lodging’ private use adjustments as these have been superseded by the ‘simplified expenses’ rules.

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

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

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

Internet link: Tax Brief

Gift Aid Small Donations Scheme

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

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

Internet link: Guidance

Government publishes ‘Supporting automatic enrolment’

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

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

Steve Webb Minister for Pensions said:

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

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

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

Internet link: Press release

Single Compliance Process

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

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

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

Internet link: HMRC news

Tax return amnesty

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

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

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

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

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

HMRC have advised that

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

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

Internet link: HMRC campaign

Employee share ownership

The Department for Business, Innovation and Skills (BIS) has published some useful guidance on employee share ownership following the Nuttall review.

The documentation includes some company model documentation together with guidance for employees on taxation matters.

Internet link: HMRC website

Real Time Information and annual schemes

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

Unfortunately HMRC are currently unable to process requests from employers to:

  • move to paying annually and register as an annual scheme
  • change their payment frequency.

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

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

Internet link: HMRC What’s New

Tax credits claimants have until 31 July to renew claims

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

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

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

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

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

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

Internet links: Press release Renewal guidance

HMRC announce latest taskforces

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

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

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

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

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

Internet link: Press release

Newsletter – June 2013

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In this month’s enews we report on various issues many of which are relevant to employers. Please do get in touch if you would like more detail on any of the articles.

eNEWS quicklinks
Real Time Information and paying HMRC
Advisory fuel rates for company cars
HMRC guidance for charity shops
HMRC announce extension to relaxation on RTI
Latest employment and pay statistics
New 0300 helpline numbers
Download Basic PAYE Tools

Real Time Information and paying HMRC

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

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

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

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

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

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

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

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

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

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

Internet link: HMRC news

Advisory fuel rates for company cars

New company car advisory fuel rates have been published to take effect from 1 June 2013. HMRC’s website states:

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

Engine size Petrol LPG
1400cc or less 15p 10p
1401cc – 2000cc 17p (18p) 12p
Over 2000cc 25p (26p) 18p

 

Engine size Diesel
1600cc or less 12p (13p)
1601cc – 2000cc 14p (15p)
Over 2000cc 18p

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

HMRC guidance for charity shops

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

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

Internet link: Charity guidance

HMRC announce extension to relaxation on RTI

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

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

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

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

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

Internet link: Press release

Latest employment and pay statistics

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

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

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

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

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

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

Internet links: ONS statistics Press release

New 0300 helpline numbers

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

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

VAT

Line

Old Number

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

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

National Insurance

Line

Old Number

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

Income Tax and Self Assessment

Line

Old Number

New Number
Income Tax enquiries for individuals, pensioners and employees 0845 300 0627 0300 200 3300
Agent Dedicated Line 0845 366 7855 0300 200 3311
Tax back on bank and building society interest:Savings Helpline

The National Claims Office

 0845 980 0645 0300 200 3312
0845 366 7850 0300 200 3313
Self Assessment textphone service 0845 302 1408 0300 200 3319

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

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

Internet link: HMRC news

Download Basic PAYE Tools

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

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

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

Internet link: HMRC Basic PAYE Tools

Newsletter – May 2013

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In this month’s enews we report on agreed and proposed law amongst other issues. Please do get in touch if you would like more detail on any of the articles.

eNEWS quicklinks
RTI annual schemes and guidance on payment date
Statutory Residence Indicator
HMRC gather extra £220m from high net worth individuals
New Employee Shareholder Status finally law
The Queen has announced the legislative programme
Tax credits renewals and scam emails
Expenses and Benefits online forms

RTI annual schemes and guidance on payment date

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

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

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

Internet links: HMRC RTI corrections HMRC news

Statutory Residence Indicator

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

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

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

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

Internet link: HMRC SRI

HMRC gather extra £220m from high net worth individuals

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

Exchequer Secretary to the Treasury, David Gauke, said:

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

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

Internet link: HMRC press release

New Employee Shareholder Status finally law

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

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

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

Internet link: Legislation

The Queen has announced the legislative programme

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

John Cridland, the CBI Director-General, said:

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

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

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

Internet links: CBI press release Queen’s Speech

Tax credits renewals and scam emails

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

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

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

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

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

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

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

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

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

Internet links: HMRC tax credit deadlines Press release News scam emails

Expenses and Benefits online forms

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

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

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

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

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

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

Internet link: HMRC online forms

Mailshot Warning

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We would like to warn businesses about a mailshot that could lead to an annual bill of almost £800 each year, for a period of at least three years.

A number of trading standards organisations, throughout the UK, are advising Companies and businesses to ignore a letter from a German firm headed Publication of Companies and VAT Registration Numbers in the UK Corporate Portal 2013.

The letter claims that due to a change to the “EU Economic Package”,  the “UK Corporate Portal” is also required to update companies’ business data as a “basic entry”.

The letter includes a form for businesses to check and sign to say their details are correct, if they wish their entry to be a “non-basic entry”. But if they do this, the small print indicates a cost of £797 will be incurred by the business, for a minimum of three years.

HMRC have provided an excample of the letter here:

http://www.hmrc.gov.uk/security/example-vat-letter.pdf

We are concerned that local businesses may consider the letter to be an official communication.

Businesses should be aware that there is no obligation on them to provide any information to the company and entries do not have to appear on the company’s website or portal.

 

Newsletter – April 2013

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

Please contact us if you would like any further information.

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

Loans from a company to shareholders

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

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

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

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

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

Internet links: Press release HMRC TIIN

Increase in NMW rates

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

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

Katja Hall, CBI Chief Policy Director, said:

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

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

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

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

Internet links: Press release CBI press release

HMRC launch Managing Serious Defaulters (MSD)

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

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

David Gauke, Exchequer Secretary to the Treasury, said:

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

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

Internet link: Government news

Employer end of year forms

HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time. The vast majority of employers must file electronically and the deadline for submission of the forms is 19 May 2013, which this year falls on a Sunday.

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

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

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

Internet links: HMRC end of year guidance Employer Bulletin

Employment Particulars

The government has updated the template of written employment particulars.

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

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

Internet link: Government Publications

P11d deadline approaching

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

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

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

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

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

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

Scottish rate of income tax

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

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

Internet links: HMRC What’s New FAQs

Newsletter – March 2013

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This month’s enews is not surprisingly dominated by the Budget. Some of the key announcements are set out in the following articles together with a round up of other news.

Please contact us if you would like any further information on any of the articles.

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

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

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

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

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

2013/14 income tax bands

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

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

Internet link: Budget TIIN

National Insurance – £2,000 employment allowance

The Government will introduce an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 NIC liability from April 2014. The allowance will be claimed as part of the normal payroll process through Real Time Information (RTI).

The Government proposes to introduce legislation on this issue later in the year.

Internet link: HMRC key employer Budget announcements

New scheme for tax free childcare

New tax incentives for childcare have been announced. To be eligible, families will have to have all parents in work, with each earning less than £150,000 a year and not already receiving support through Tax Credits or Universal Credit.

The relief will be 20% of the costs of childcare up to a total of childcare costs of £6,000 per child per year. The scheme will therefore be worth a maximum of £1,200 per child.

The scheme will be phased in from autumn 2015. For the first year of operation, all children under five will be eligible and the scheme will build up over time to include children under 12.

The current system of employer supported childcare will continue to be available for current members if they wish to remain in it or they can switch to the new scheme. Employer supported childcare will continue to be open to new joiners until the new scheme is available.

The Government will consult on the detail of the new scheme but it is expected that parents will be able to open an online voucher account with a voucher provider and have their payments topped up by the Government. Parents will be able to use the vouchers for any Ofsted regulated childcare in England and the equivalent bodies in Scotland, Wales and Northern Ireland.

The existing system of employer supported childcare is offered by less than 5% of employers and used by around 450,000 families. It provides an income tax and national insurance contributions (NIC) relief. The maximum relief is an exemption from income tax and NIC on £55 a week. This relief is per employee so if both parents are in employment the maximum exemption is £110 per week. In the new scheme the limit is per child.

Internet link: Treasury infographic

Support for the housing market

Major reforms have been announced in Budget 2013, including over £5.4 billion of financial help, to tackle long-term problems in the housing market and to support those who want to get on or move up the housing ladder, including the introduction of a new housing scheme, Help to Buy.

From April 2013, the Government will extend First Buy to provide an equity loan worth up to 20% of the value of a new build home, repayable once the home is sold, and widen the eligibility criteria, including increasing the maximum home value to £600,000 and removing the income cap constraint.

The Government will also create a mortgage guarantee for lenders who offer mortgages to people with a deposit of between 5% and 20% on homes with a value of up to £600,000, increasing the availability of mortgages on new or existing properties for those with small deposits.

Further detail is expected on these schemes.

Internet link: Treasury Infographic

RTI ‘relaxation’ for small employers

HMRC have announced that, for some smaller employers, they will relax the reporting requirement for RTI that payments to employees should be reported on or before the amount is paid to the employee.

The relaxation for small employers (those with fewer than 50 employees) who pay employees weekly, or more frequently, but only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. HMRC have therefore agreed a relaxation of reporting arrangements for these small employers.

Until 5 October 2013 employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month.

HMRC have also advised that they:

‘will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI or the success of the Department for Work & Pension’s Universal Credit’.

HMRC have also made available some guidance on exceptions to reporting PAYE information ‘on or before’ paying an employee which can be found at http://www.hmrc.gov.uk/payerti/on-or-before.pdf

Please do contact us if you would like any further help or advice on payroll procedures.

Internet link: HMRC RTI news

Advisory fuel rates for company cars

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

‘These rates apply to all journeys on or after 1 March 2013 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’

The advisory fuel rates for journeys undertaken on or after 1 March 2013 are:

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

 

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

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

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

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

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

Internet link: HMRC advisory fuel rates

Employer end of year forms

HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time. The vast majority of employers must file electronically and the deadline for submission of the forms is 19 May 2013 which this year falls on a Sunday.

To avoid unnecessary late filing penalty notices being issued, where no return is necessary, it is important to advise HMRC that no return is due. This can be done using the link below.

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

Internet links: HMRC guidance No P35 online form

Reminder to those with child benefit and higher incomes

HMRC are reminding people with income over £60,000 whose family is still receiving Child Benefit to consider ‘opting out’ before 28 March if they wish to avoid filling in a tax return and repaying the benefit for the 2013/14 tax year.

According to HMRC’s latest figures over 370,000 people have opted out of Child Benefit since the High Income Child Benefit Charge was introduced on 7 January 2013.

Those with income over £60,000 that continued to receive Child Benefit from 7 January 2013 onwards that do not already receive a self assessment return need to register for self assessment by 5 October 2013. This action is necessary so they can repay the child benefit received between January and April 2013.

However opting out before 28 March will mean they will not need to fill in a tax return in future years.

Lin Homer, Chief Executive at HMRC, said:

‘Anyone wanting to opt out of Child Benefit payments can do so at any time. It is really easy – just go to our website. Anyone with an income over £60,000 who has received Child Benefit since January needs to register for self assessment by 5 October to repay some or all of this year’s benefit, but if they opt out now this will be a one-off.’

For those with income of more than £60,000, the tax charge is 100% of the amount of Child Benefit. For income between £50,000 and £60,000, the charge is gradually increased to 100% of the Child Benefit.

The decision to stay in or opt out of receiving Child Benefit payments is not final, and families are free to change their minds. Anyone earning over £50,000 who has received Child Benefit since 7 January 2013 will need to register for self assessment if they do not currently receive a tax return and complete a tax return for that period, regardless of whether they are now opting out.

Please do get in touch if you have concerns in this area.

Internet links: Press release HMRC news

HMRC publish names of deliberate defaulters

For the first time, HMRC have published a list of ‘deliberate tax defaulters’. To read the full list, please click on the link below.

Internet link: Defaulters list

Another HMRC disclosure facility

HMRC have launched the Property Sales campaign, which is the latest in a long line of disclosure facilities. Under the campaign those individuals who have sold a residential property and made a profit are able to bring their tax affairs up to date.

To take advantage of the best possible terms, taxpayers must voluntarily disclose any income or gains and payment must be made by 6 September 2013.

According to the HMRC press release:

‘This campaign is for you if you’ve sold, or disposed of, second or additional residential properties either in the UK or abroad. These could include a holiday home or a property that you rented out. You may also be able to use this campaign where you have sold your main home. This would normally qualify for Private Residence Relief but in some circumstances the relief is restricted. Where the entitlement to this relief is restricted capital gains tax may be due if you are liable to UK taxes.’

‘If your circumstances meant that capital gains tax was due on the sale of your main home you may be able to use this campaign.’

‘Even if you didn’t originally purchase the property you may still be liable to pay tax on the gain if you acquired the property another way. For example you may have inherited it or it may have been a gift.’

HMRC are advising that after 6 September they will use the information they hold to target those who should have made a disclosure under this campaign and failed to do so.

Internet link: HMRC campaigns

The Budget 21 March 2013

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George Osborne presented his Budget on Wednesday 20 March 2013.

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

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

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

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

Newsletter – February 2013

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

 

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

Auto enrolment tool

Under Pensions Auto Enrolment employers must:

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

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

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

Internet link: Pensions regulator tool

Real Time Information

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

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

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

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

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

Internet link: HMRC news

Paying HMRC by Bill Pay

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

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

HMRC advised the ICAEW that:

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

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

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

At your bank

At the Post Office

By Debit/Credit card

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

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

Internet link: ICAEW Tax Faculty

Tax rebate phishing scam

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

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

Gareth Lloyd, Head of Digital Security for HMRC said:

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

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

HMRC also advise taxpayers to:

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

Internet link: Press release

HMRC report self assessment statistics

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

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

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

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

The penalties for late Self Assessment returns are:

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

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

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

Internet link: HMRC press release

HMRC win furnished holiday lettings test case

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

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

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

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

Internet links: Mercia Blog Decision

Shared Parental Leave

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

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

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

Under the new system:

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

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

Internet link: Press release

Tackling long term sickness absence

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

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

The Minister for Welfare Reform, Lord Freud, said:

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

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

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

Internet link: Press release

Health and Safety reforms

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

Steps taken to date include:

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

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

Internet links: Press release HSE website

Charities online Gift Aid service

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

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

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

Internet link: Press Release

SMEs in the dark about changes to the PAYE system

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SMEs in the dark about changes to the PAYE system

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

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

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

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

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

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

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

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

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

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

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

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

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

Newsletter – January 2013

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eNEWS – January 2013

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

 

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

Employment rights – statutory limits

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

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

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

Internet links: Legislation Gov.uk calculator

HMRC target those with outstanding VAT returns

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

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

Marian Wilson, Head of HMRC Campaigns, said:

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

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

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

Internet links: Press release VAT Outstanding Returns Campaign

‘Tax cheats’ sentenced to over 150 years behind bars

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

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

Exchequer Secretary to the Treasury, David Gauke, said:

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

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

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

Internet link: Press release

PAYE coding notices

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

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

Good news for many

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

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

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

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

Internet links: Press release HMRC income tax rates and allowances

RTI is coming

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

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

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

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

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

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

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

Internet link: Press release

Start up loan scheme for young entrepreneurs extended

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

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

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

Internet link: News release

State Pension reform

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

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

The single tier pension will:

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

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

Internet link: DWP website

Child Benefit opt out

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

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

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

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

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

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

Internet links: BBC news HMRC Child Benefit guidance

Deadline looming for self assessment returns

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

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

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

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

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

Internet links: HMRC SA deadlines and penalties Press release

HMRC bank account details for employers

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

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

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

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

Internet link: HMRC payments