Newsletter – December 2021

Enews – December 2021

In this month’s Enews we consider the impact of the pandemic on HMRC’s receipts as well as the tax details published on the first Tax Administration and Maintenance (TAM) Day.

With guidance on the rules around Statutory Sick Pay, new laws for pensions trustees and an increase to the Real Living Wage, there is a lot to update you on.

HMRC’s tax take falls by billions due to pandemic

HMRC saw a drop of almost £30 billion in tax revenues in the latest financial year because of the pandemic, according to its annual accounts.

In its 2020/21 annual report, HMRC reported that it had collected £608.8 billion in tax revenues, which is down from £636.7 billion collected in 2019/20.

HMRC said the drop was due to the ‘unprecedented economic circumstances caused by COVID-19, and because pandemic restrictions meant HMRC had to reduce its compliance activity’.

The reduction in compliance activity resulted in a drop of 18% in the additional tax generated by HMRC’s work tackling avoidance, evasion, and other non-compliance. This fell from £36.9 billion to £30.4 billion. The tax authority has estimated that the tax gap is now 5.3%.

HMRC reported that it delivered £60.7 billion in grants through the Coronavirus Job Retention Scheme (CJRS).

Jim Harra, HMRC’s First Permanent Secretary and Chief Executive, said:

‘Throughout this exceptionally challenging year, we kept all our core services running and ensured customers could access the right help when they needed it. To do this, we had to make choices about how we balanced our resources – for example, we took the conscious decision to divert some of our skilled advisers from PAYE and Self Assessment services to provide COVID-19 support because that’s what individuals and small businesses needed from us most urgently at a time of acute crisis.’

Internet link: GOV.UK

Government sets out tax details on TAM Day

The UK government marked the inaugural Tax Administration and Maintenance (TAM) Day with the publication of 30 papers covering a wide range of tax issues.

Chancellor Rishi Sunak made the commitment to have a TAM Day in the Autumn Budget. The aim was for a dedicated day for the administration and maintenance of the UK tax system. The 30 publications released by the government on TAM Day (30 November) include Calls for Evidence, Draft Regulations, Policy Papers and Corporate Reports.

The government has set out further detail on the conclusions to its review of business rates, including more frequent revaluations, improvement relief, exemptions for green technology, and administrative reforms.

A report on Research and Development (R&D) tax reliefs was published, providing further details on announcements made at the Budget which included refocusing relief in the UK; targeting abuse; and supporting innovation by expanding qualifying expenditure to capture cloud and data costs.

Additionally, an update on reforms to Small Brewers’ Relief was published, which will see the government invest around £15 million of additional funding into the craft brewing sector.

Jim Harra, HMRC’s First Permanent Secretary and Chief Executive, said:

‘As we continue our work to improve the tax system for UK taxpayers and clamp down on avoidance and evasion, we know that an open dialogue with our stakeholders is vital.

‘With thanks to the tax profession for their views, we can now announce the next steps for how we will simplify the legislative framework and raise standards in the tax advice market. We are also announcing new areas on which we are inviting views, including reforming Income Tax Self-Assessment registration for the self-employed.’

Internet link: GOV.UK

Three-day wait for Statutory Sick Pay to return next year

The standard three-day waiting time for Statutory Sick Pay (SSP) will be reinstated for coronavirus (COVID-19)-related claims from 25 March 2022, unless the government intervenes.

Under standard rules in the UK, employers do not have to pay SSP to an employee until the fourth qualifying day in the Period of Incapacity for Work (PIW). The PIW is a period of sickness lasting four or more consecutive calendar days, not all of which may be qualifying days.

During the COVID-19 pandemic, the government suspended the three-day wait for COVID-related SSP, meaning that employers must pay it from the first qualifying day.

The amendment to the SSP rules was made in the Coronavirus Act 2020 which is due to expire after two years. This means that, unless there is an intervention to continue the measure, COVID-related SSP waiting time will automatically revert to three days on 25 March 2022.

Frank Haskew, Head of the Tax Faculty at the Institute of Chartered Accountants in England and Wales (ICAEW), said:

‘The SSP rules were not really designed with a highly infectious global pandemic in mind, which is why the current easements have been welcome.

‘While some employees who are ill from coronavirus or required to self-isolate may be unable to afford not to go to work unless they are paid SSP for the first three days, there are also small businesses where the unreimbursed cost of paying three days’ coronavirus-related SSP to employees is a real burden.’

Internet links: ICAEW website

 

HMRC issues warning on self assessment scams

HMRC has warned taxpayers completing their 2020/21 tax returns to ‘be on their guard’ and stay vigilant in regard to tax-related scams.

Nearly 800,000 tax scams were reported in the last year, HMRC revealed. It said that fraudsters use self assessment to attempt to steal money or personal information from taxpayers.

In the last year, HMRC received almost 360,000 bogus tax rebate referrals. HMRC will send more than four million emails and SMS messages this week to self assessment taxpayers, prompting them to think about how they intend to pay their tax bill.

It is warning taxpayers ‘not to be taken in’ by malicious emails, phone calls or texts, and to not mistake them for genuine HMRC communications.

Myrtle Lloyd, Director General for Customer Services at HMRC, said:

‘Scams come in many forms. Some threaten immediate arrest for tax evasion, others offer a tax rebate. Contacts like these should set alarm bells ringing, so if you are in any doubt whether the email, phone call or text is genuine, you can check the ‘HMRC scams’ advice on GOV.UK and find out how to report them to us.’

The self assessment deadline is 31 January 2022.

Internet link: HMRC press release

New law introduced to help protect pension savers from scammers

New rules to help protect pension savers from scammers have become law.

Under the regulations, pension trustees and scheme managers will be given the power to stop suspicious transfers before cash gets into the hands of fraudsters.

Fraudsters frequently offer ‘too good to be true’ incentives to pension savers, such as free pension reviews, early access to pension cash and other time-limited offers. Lured in by these bogus offers, individuals are then tricked into transferring their savings into a scam scheme and defrauded out of their money.

Between January and May 2021, pension scam losses totalling over £2.2 million were reported to Action Fraud.

The new regulations will take force on 30 November. From this date, trustees and scheme managers will be able to prevent transfer requests if suspicious activity is suspected by giving it a ‘red flag’. If a red flag is present, the transfer cannot go ahead.

Where fraud is suspected, trustees and scheme managers will be able to pause transfer requests by giving it an ‘amber flag’. In this scenario, the pension saver will need to prove they have taken scam specific guidance from the free Money and Pensions Service before the transfer can go ahead. This is the only way a transfer can then proceed.

Nicola Parish, The pension Regulator’s (TPR) Executive Director of Frontline Regulation, said:

‘We welcome these new regulations which further empower trustees to act as the first line of defence against scammers.

‘We are pleased these new rules enshrine in legislation two of the key parts of the pledge to combat pension scams – around due diligence measures and issuing members warnings of high-risk transfers.

‘We urge all trustees and pension providers to take note of these new rules and continue to play their part in stopping scams.’

Internet links: TPR website

Services sector continues to recover despite rising costs

Optimism improved for firms across the services sector in the three months to November, according to the latest Service Sector Survey from the Confederation of British Industry (CBI).

However, cost growth continued to pick up, increasing at the fastest pace since survey records began in 1998. Additionally, business volumes continued to grow at a strong pace across the services sector, although there are signs of slowing growth.

The CBI found that cost pressures are building, with both consumer services and business and professional services seeing costs rise at the fastest pace in survey history.

As a result, selling price growth accelerated too, with expectations for significantly faster growth in the coming quarter for both sub-sectors. Despite elevated cost pressures, profitability grew in business, professional and consumer services, with the strongest growth recorded since February 2018 for the latter.

Charlotte Dendy, Head of Economic Surveys and Data at the CBI, said:

‘With COVID still a concern with impacts for consumer confidence together with cost and supply chain issues continuing to bite, a difficult winter lies ahead.

‘It is therefore vital that the government works with business to help address these challenges, ease cost and supply pressures, giving businesses the platform to ensure the recovery does not fizzle out before Christmas.’

Internet link: CBI website

Advisory fuel rates for company cars

New company car advisory fuel rates have been published and took effect from 1 December 2021.

The guidance states: ‘you can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 December 2021 are:

 

Engine size Petrol
1400cc or less 13p
1401cc – 2000cc 15p
Over 2000cc 22p

 

Engine size LPG
1400cc or less 9p
1401cc – 2000cc 10p
Over 2000cc 15p

 

Engine size Diesel
1600cc or less 11p
1601cc – 2000cc 13p
Over 2000cc 16p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 5p per mile. Electricity is not a fuel for car fuel benefit purposes.

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

Internet link: GOV.UK AFR

Costs ‘weighing on businesses’ sustainability intentions’, FSB finds

A report published by the Federation of Small Businesses (FSB) has revealed that the costs associated with going green have impacted small firms’ plans for becoming more sustainable.

The FSB’s report found that the majority of UK small firms are concerned about climate change but just one in three has plans in place to combat it.

67% of firms polled stated that they have started to address their energy usage, and 18% said they have invested in microgeneration.

However, 24% of businesses said that uncertainty around return on investment has prevented them from taking action, and 22% cited a lack of sufficient capital to invest in assets as a barrier.

The business group is urging the government to launch a ‘Help to Green’ initiative and roll out a nationwide scrappage scheme.

National Chair of the FSB, Mike Cherry, said:

‘If we are to successfully transition to net zero, it’ll be through grassroots action, enabled by smart and supportive policies.

‘Whilst the Chancellor rightly embraced some of our proposed changes in this area at the Budget, it was disappointing to see that the government’s recent net zero strategy contained only four specific mentions of small business.’

Internet links: FSB website

Newsletter – September 2021

Enews – September 2021

In this month’s Enews we consider HMRC’s changes to late payment penalties; the consultation on how digital marketplaces should collect and share information; and warnings over stamp duty refund claims.

With guidance on digital tax scams, national minimum wage penalties and the latest advisory fuel rates, there is a lot to update you on.

HMRC outlines changes to late payment penalty regime

HMRC has published a policy paper outlining the forthcoming changes to the penalties for late payment and interest harmonisation for taxpayers.

The government intends to reform sanctions for late submission and late payments to make them ‘fairer and more consistent across taxes’. Initially the changes will apply to VAT and Income Tax Self Assessment (ITSA).

The changes will see interest charges and repayment interest harmonised to bring VAT in line with other tax regimes, including ITSA.

Under the new regime, there are two late payment penalties that may apply: a first penalty and then an additional or second penalty, with an annualised penalty rate. All taxpayers, regardless of the tax regime, have a legal obligation to pay their tax by the due date for that tax. The taxpayer will not incur a penalty if the outstanding tax is paid within the first 15 days after the due date. If tax remains unpaid after day 15, the taxpayer incurs the first penalty.

This penalty is set at 2% of the tax outstanding after day 15.

If any of the tax is still unpaid after day 30 the penalty will be calculated at 2% of the tax outstanding after day 15 plus 2% of the tax outstanding after day 30. If tax remains unpaid on day 31 the taxpayer will begin to incur an additional penalty on the tax remaining outstanding. This will accrue at 4% per annum.

HMRC will offer taxpayers the option of requesting a Time To Pay arrangement which will enable a taxpayer to stop a penalty from accruing by approaching HMRC and agreeing a schedule for paying their outstanding tax.

For VAT taxpayers, the reforms take effect from VAT periods starting on or after 1 April 2022. The changes will take effect for taxpayers in ITSA from accounting periods beginning on or after 6 April 2023 for those with business or property income over £10,000 per year (that is, taxpayers who are required to submit digital quarterly updates through Making Tax Digital for ITSA).

For all other ITSA taxpayers, the reforms will take effect from accounting periods beginning on or after 6 April 2024.

Internet link: GOV.UK

Digital marketplaces to report sellers’ incomes from 2023

HMRC has published a consultation that outlines plans to implement reporting rules for digital platforms first put forward by the Organisation for Economic Co-operation and Development (OECD).

In February 2020, the OECD consulted on proposed rules setting out how digital platforms should collect information about the income of sellers and report it to tax authorities.

Under the new rules, websites and applications based in the UK will be required to report sellers’ income arising in the previous calendar year to HMRC. The reporting deadline will be 31 January of the year following the calendar year.

HMRC stated that the new rules will improve international co-operation in regard to the exchange of information for tax purposes. They will also allow HMRC to access data from platforms based outside the UK quickly and efficiently, which should encourage compliance and increase the visibility of transactions.

The rules will also help taxpayers to get their tax right and will assist HMRC in detecting and tackling tax non-compliance.

HMRC’s consultation will close on 22 October 2021.

Internet links: GOV.UK

CIOT warns over stamp duty refund claims

The CIOT has warned that some claims being made by firms offering help with Stamp Duty Land Tax (SDLT) refunds are too good to be true.

The CIOT says an increasing number of firms are contacting buyers of properties after completion of a purchase, suggesting that SDLT has been overpaid.

The most common issues raised are that multiple-dwellings relief (MDR) has not been claimed or that the buyer could have paid non-residential rates of SDLT (which are generally lower than residential rates) because the property was a mixture of residential and non-residential land.

The CIOT said:

‘SDLT is complicated and sometimes reliefs are overlooked, so it can be worth revisiting transactions if a letter is received.

‘However, many unsolicited approaches are indeed too good to be true and responsible taxpayers should act with caution and check independently whether a refund is due.

‘The suggested fee arrangements can also seem attractive as it appears that the claims are made on a ‘no win no fee’ basis. But it is important to remember that receiving a refund is not necessarily a win as HMRC may revisit the claim and deny that it was valid. In these circumstances, the fee may already have been paid.’

Internet link: CIOT website

Contactless limit to increase to £100 from 15 October

The national roll-out of the new £100 spending limit for contactless card payments will begin from 15 October 2021, banking trade body UK Finance has confirmed.

The decision to raise the contactless limit from £45 to £100 was made by HM Treasury and the Financial Conduct Authority (FCA) following a public consultation and discussions with both the retail and banking sectors. It follows on from the successful increase in the limit from £30 to £45 in April 2020.

From 15 October 2021, consumers will start to see retailers accepting contactless payments up to the new £100 limit, which will give customers more flexibility when shopping in store.

David Postings, Chief Executive of UK Finance, said:

‘Contactless payment has proved very popular with consumers and an increasing number of transactions are being made using contactless technology.

‘The increase in the limit to £100 will allow people to pay for higher value transactions like their weekly shop or filling up their car with fuel. The payments industry has worked hard to put in place the infrastructure to enable retailers to update their payments systems so they can start to offer their customers this new higher limit.’

Internet link: UK Finance website

HMRC urges taxpayers to stay alert to digital scams

HMRC has urged taxpayers to stay alert to the threat of digital scams and scammers claiming to represent HMRC.

Research published by HMRC revealed that the number of tax-related scams has doubled in the past 12 months.

In the past year HMRC has received more than one million referrals from the UK public in regard to suspicious contact, with many fraudsters offering ‘tax refunds’ or ‘rebates’. The research showed that HMRC received 441,954 reports of phone scams and more than 13,315 reports of malicious websites.

HMRC also stated that, over the last year, it has asked internet providers to take down 441 coronavirus (COVID-19) support scheme scam webpages.

Mike Fell, Head of Cyber Security Operation at HMRC, said:

‘The pandemic has given criminals a fresh hook for their activity and we’ve detected more than 460 COVID financial support scams alone since early 2020.

‘HMRC takes a proactive approach to protecting the public from tax-related scams and we have a dedicated Customer Protection Team that works continuously to identify and close them down.’

Internet link: ICAEW website

BCC calls for government to extend skills training

The BCC has urged the government to extend skills training in light of the publication of research which showed that one in five companies are considering making redundancies as a result of the coronavirus (COVID-19) pandemic.

The BCC has stressed concerns that older workers could go unutilised unless support for retraining is put into place immediately.

The BCC survey, which polled over 250 businesses with employees still on furlough, revealed that one in five are planning to make staff redundant following the rise in employer contributions to the Coronavirus Job Retention Scheme (CJRS).

Jane Gratton, Head of People Policy at the BCC, said:

‘The changes to the furlough scheme will likely result in many thousands of people being released back into the labour market, as employers who are still struggling to recover from the recession are forced to make redundancies and cuts to working hours.

‘With widespread skills shortages across the economy, some will find new jobs where their skills are in demand, while others will need to retrain for opportunities in a different sector.’

Internet links: BCC website

Advisory fuel rates for company cars

New company car advisory fuel rates have been published and took effect from 1 September 2021.

The guidance states: ‘you can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 September 2021 are:

 

Engine size Petrol
1400cc or less 12p
1401cc – 2000cc 14p
Over 2000cc 20p

 

Engine size LPG
1400cc or less 7p
1401cc – 2000cc 8p
Over 2000cc 12p

 

Engine size Diesel
1600cc or less 10p
1601cc – 2000cc 12p
Over 2000cc 15p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 4p per mile. Electricity is not a fuel for car fuel benefit purposes.

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

Internet link: GOV.UK AFR

Employers ‘named and shamed’ for paying less than minimum wage

The government has ‘named and shamed’ 191 companies that have broken National Minimum Wage (NMW) laws.

Following investigations by HMRC, the named firms have been fined for owing £2.1 million to over 34,000 workers. The breaches took place between 2011 and 2018. Named employers have since been made to pay back what they owed to employees and were fined an additional £3.2 million.

According to HMRC, 47% of firms wrongly deducted pay from workers’ wages, including for uniforms and expenses. In addition, 30% failed to pay workers for all the time they had worked, such as when they worked overtime, while 19% paid the incorrect apprenticeship rate.

Business Minister Paul Scully said:

‘Our minimum wage laws are there to ensure a fair day’s work gets a fair day’s pay – it is unacceptable for any company to come up short.

‘All employers, including those on this list, need to pay workers properly.

‘This government will continue to protect workers’ rights vigilantly, and employers that short-change workers won’t get off lightly.’

Internet link: GOV.UK

 

Newsletter – September 2020

Enews – September 2020

In this month’s Enews we consider changes to the plastic bag tax, pension scams and the latest advisory fuel rates. With the latest figures on the success of the Eat Out to Help Out scheme, self assessment deadlines, the latest guidance for employers, the launch of the Kickstart Scheme and the Self Employed Income Support Scheme Grants there is lots to consider.

Plastic bag tax charge to be doubled and extended to all retailers

The fee for plastic shopping bags in England will be doubled to 10 pence and extended to all shops from April 2021.

Small retailers, those employing 250 people or fewer, will no longer be exempt, the Department for Environment, Food and Rural Affairs (Defra) said.

According to Defra, since the charge was first introduced in 2015 it has successfully prevented billions of plastic bags being sold and ending up in the ocean and environment.

Government data shows the current levy, which stands at 5 pence per bag and applies to any retailer employing 250 or more people, has led to a 95% cut in plastic bag sales in major supermarkets since 2015.

Commenting on the announcement, Environment Secretary George Eustice, said:

‘We have all seen the devastating impact plastic bags have on the oceans and on precious marine wildlife, which is why we are taking bold and ambitious action to tackle this issue head on.

‘The UK is already a world-leader in this global effort, and our carrier bag charge has been hugely successful in taking billions of harmful plastic bags out of circulation. But we want to go further by extending this to all retailers so we can continue to cut unnecessary waste and build back greener.’

Internet link: GOV.UK

More than £30 million lost to pension scams

Over £30 million has been lost to pension scams since 2017, according to the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR).

A total of £30,857,329 in pension savings has been lost to scammers since 2017, data published by the FCA and the TPR revealed. Reported losses ranged from under £1,000 to as much as £500,000. The average victim was a man in his 50s, the FCA and the TPR found.

65% of pension savers said they felt confident they could spot a scam. However, four in ten would put themselves at risk unknowingly by engaging with a common scam tactic, such as being told it’s a time-sensitive offer.

The FCA and the TPR have advised savers not to be pressured into making any decisions about their pensions, and to reject unexpected pension offers, whether these are made online, via social media or over the phone.

Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:

‘During these uncertain times, it is more important than ever to defend your lifetime savings from scammers.

‘Fraudsters will seek out every opportunity to exploit innocent people, no matter how much or how little you have saved.’

Internet link: FCA news

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 September 2020. The rates only apply to employees using a company car. The guidance states:

‘You can use the previous rates for up to one month from the date the new rates apply.’

The advisory fuel rates for journeys undertaken on or after 1 September 2020 are:

Engine size Petrol
1400cc or less 10p
1401cc – 2000cc 12p
Over 2000cc 17p
Engine size LPG
1400cc or less 7p
1401cc – 2000cc 8p
Over 2000cc 12p
Engine size Diesel
1600cc or less 8p
1601cc – 2000cc 10p
Over 2000cc 12p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars or
  • require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.

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

Internet link: GOV.UK AFR

Eat Out to Help Out – over 64 million meals

The government has announced that more than 64 million meals were enjoyed by diners across the country during the government’s Eat Out to Help Out discount scheme. The scheme closed on 31 August 2020.

Government figures show that restaurants had claimed for more than 64 million discounted meals as Eat Out to Help Out entered its fourth week.

This continues the upward trend in the scheme’s popularity, with 10.5 million meals claimed for in the first week, growing to a total of 35 million meals in the second.

The upward trend in meals claimed for shows that millions continued to flock to eat out to support 1.8 million jobs in the hospitality sector, which has been hit hard by coronavirus (COVID-19). The government has confirmed that 87,000 claims have been made by restaurants taking part in the scheme.

Data from OpenTable shows that during Eat Out to Help Out’s third week the number of customers at UK restaurants was 61% higher than the same days last year on average for Monday to Wednesday. The average level across Monday to Wednesday in the first and second week were 12% and 41% respectively. The data also shows that the number of customers at UK restaurants was up 17% compared to the same week in 2019.

Chancellor of the Exchequer Rishi Sunak said:

‘Today’s figures continue to show that Brits are backing hospitality – with more than 64 million meals discounted so far, that’s equivalent to nearly every person in the country dining out to protect jobs.

‘This scheme has reminded us how much we love to dine out, and in doing so, how this is helping to protect the jobs of nearly two million people who work in hospitality.’

Internet links: GOV.UK news HMRC guidance

Self assessment deadlines

Two self assessment deadlines are approaching:

  • 5th October 2020

For those individuals who have not previously completed a tax return but need to report a liability for 2019/20.

  • 31st October 2020

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2019/20 return is 31 October 2020. 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 self assessment tax return, please do get in touch.

Internet link: HMRC deadlines

HMRC latest guidance for employers

HMRC has published the latest edition of the Employer Bulletin. This guidance for employers, and their agents, includes articles on:

  • Coronavirus Job Retention Scheme and what employers need to do from August onwards
  • making sure you are paying the correct workplace pension contributions
  • new laws to ensure furloughed employees receive full statutory redundancy payments
  • the deadline to report the disguised remuneration loan charge – 30 September 2020
  • COVID-19 – are you due a repayment?
  • off-payroll working rules (IR35)
  • applications for the £50 million customs grant scheme
  • the delay to the VAT reverse charge on building and construction services
  • the end of the VAT payment deferrals period
  • Student Loan repayments
  • Finance Act 2020 changes to company car tax.

Please contact us for help with employment matters.

Internet link: Employer Bulletin

Kickstart Scheme opens for applications

On 2 September 2020, the government’s £2 billion Kickstart Scheme opened for employer applications.

The scheme is part of the Plan for Jobs announced during Chancellor Rishi Sunak’s July Summer Economic Update.

The Kickstart Scheme aims to create work placements for young people who are at risk of becoming unemployed for the long-term. Businesses can join the scheme, with the government paying employers £1,500 to help set up support and training. Funding is available following a successful application process. Applications must be for a minimum of 30 job placements.

Businesses that are unable to offer this many job placements can partner with other organisations to reach the minimum number.

Selected out-of-work young people will be offered six month work placements for at least 25 hours a week to help them gain experience, skills and confidence. The scheme is designed to be a stepping stone to further employment.

Employers will receive funding for 100% of the relevant National Minimum Wage (NMW) for 25 hours a week, plus associated employer national insurance contributions (NICs) and employer minimum auto-enrolment pension contributions.

Chancellor Sunak said:

‘This isn’t just about kickstarting our country’s economy – it is an opportunity to kickstart the careers of thousands of young people who could otherwise be left behind as a result of the pandemic.

‘The scheme will open the door to a brighter future for a new generation and ensure the UK bounces back stronger as a country.’

Internet link: GOV.UK

Self Employment Income Support Scheme Grants

HMRC are inviting those individuals that are self employed or a member of a partnership and have been adversely affected by coronavirus to claim a second grant under the Self Employed Income Support Grant.

Applications for the first grant under the scheme closed on 13 July 2020.

The second and final taxable grant is worth 70% of an individual’s average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

Applications for the second and final grant are now open. The grant is only available to businesses that have been adversely affected on or after 14 July 2020. Taxpayers must make a claim for the second grant on or before 19 October 2020.

HMRC will work out businesses’ eligibility for the second grant in the same way as the first grant.

Taxpayers are able to make a claim for the second grant if they are eligible, even if they did not make a claim for the first grant.

HMRC have confirmed that taxpayers can:

  • continue to work
  • start a new trade or take on other employment including voluntary work and duties as a military reservist.

The grant does not need to be repaid if a taxpayer is eligible, but will be subject to both income tax and self employed National Insurance.

Internet link: GOV.UK SEISS guidance

Newsletter – March 2020

Enews March 2020

In this month’s Enews we report on a change to the sick pay rules as a result of the coronavirus and confirmation that the off-payroll working rules will be rolled out from 6 April 2020. We also consider the latest HMRC guidance on minimum wage increases, new company car advisory fuel rates, help for business flood victims and a consultation on freeports. With calls to raise taxes in the forthcoming Budget and a reminder to consider year end tax planning, there are lots of issues to update you on.

Coronavirus measure: Statutory Sick Pay from ‘day one’

The Prime Minister, Boris Johnson, has announced that employees will be entitled to Statutory Sick Pay (SSP) from day one when self-isolating rather than having to wait until day four under the SSP waiting days rules.

The change will be included in a package of measures, to be introduced by emergency legislation, to deal with coronavirus.

Updating Parliament on the Government’s response to the virus, Prime Minister Boris Johnson told MPs:

‘I can today announce that the Health Secretary will bring forward, as part of our emergency legislation measures, to allow the payment of Statutory Sick Pay from the very first day you are sick instead of four days under the current rules.

‘No one should be penalised for doing the right thing.’

The Prime Minister had earlier said:

‘We are not at the point yet where we are asking large numbers of people to self-isolate, but that may of course come if large numbers have the symptoms.

‘If they stay at home, they are helping to protect all of us by preventing the spread of the virus.’

The press release advises that the change will be a temporary measure to respond to the outbreak and will lapse when it is no longer required. We will keep you updated on developments.

Internet links: GOV.UK news GOV.UK guidance

Review confirms off-payroll working rules to go ahead from April 2020

The government has confirmed that reforms to off-payroll working rules for the private sector will go ahead from 6 April 2020.

The off-payroll rules have applied to the public sector since 2017 and the government has carried out a review of the roll-out to the private sector. The review has now concluded, and the changes will go ahead alongside the implementation of measures to support affected businesses and individuals.

From 6 April 2020, the new tax rules will use the 2017 changes as a starting point for the extension to medium and large organisations in the private sector. These reforms will shift the responsibility for assessing employment status to medium and large organisations engaging workers via an intermediary, typically a Personal Service Company (PSC).

HMRC said it will take a ‘light touch approach’ and businesses will not have to pay penalties for inaccuracies in the first year, except in cases of deliberate non-compliance.

The government will also introduce a legal obligation on organisations to respond to requested information about their size from the agency or worker, to make it clearer who is responsible for determining the worker’s tax status.

Commenting on the changes, Jesse Norman, Financial Secretary to the Treasury, said:

‘It is only right that the off-payroll rules are applied consistently across all sectors. Two people sitting side by side doing the same work for the same employer should be taxed in the same way.

‘Following a review, the government is announcing a package of measures to help individuals and businesses implement these changes smoothly.’

Internet links: GOV.UK review GOV.UK news

IFS calls for Chancellor to raise taxes in upcoming Budget

The Institute for Fiscal Studies (IFS) has urged Chancellor Rishi Sunak to use the forthcoming Budget to raise taxes.

The think tank stated that the Chancellor either needs to raise taxes or ‘break a fiscal rule’ in order to avoid day-to-day spending cuts beyond 2021.

However, the Conservative Party’s election manifesto promised not to raise income tax, national insurance or VAT.

The IFS has also called on the Chancellor to abolish Entrepreneurs’ Relief and end the ‘ludicrously generous tax treatment of capital gains at death and of inherited pension pots’.

Commenting on the matter, Paul Johnson, Director of the IFS, said:

‘Rishi Sunak’s first Budget could be the most important fiscal event in years. It will set the direction of policy for the next five years. If this new government is going to make radical changes to taxes and spending, this surely is the time to do it.

‘There are plenty of tax rises which would both raise revenue from better off individuals and improve the coherence of the tax system.’

We will update you on pertinent Budget announcements.

Internet link: FS publications

Minimum Wage increases

The National Minimum Wage (NMW) and National Living Wage (NLW) are the legal minimum wage rates that must be paid to employees. Employers are liable to be penalised for not complying with the NMW and NLW rules.

There are different levels of NMW and NLW, depending on age and whether the employee is an apprentice. The rates are due to increase from 1 April 2020 as shown in the following table:

Rate from 1 April 2019 Rate from 1 April 2020
NLW for workers aged 25 and over £8.21 8.72
NMW main rate for workers aged 21-24 £7.70 8.20
NMW 18-20 rate £6.15 6.45
NMW 16-17 rate for workers above school leaving age but under 18 £4.35 4.55
NMW apprentice rate £3.90 4.15

The NMW apprentice rate applies for apprentices under 19 or 19 or over and in the first year of their apprenticeship.

There are no exemptions from paying the NMW on the grounds of the size of the business.

The government has announced that HMRC will continue publicly naming employers that fail to pay their workers the NLW or NMW, following a review of the scheme. The naming scheme will resume calling out businesses failing to pay their workers their minimum wage entitlements.

The government has also increased the threshold for naming employers from £100 to £500, meaning that employers owing arrears of more than £500 in NMW payments to their employees will now be named.

Business Minister Kelly Tolhurst said:

‘Anyone who is entitled to the minimum wage should receive it – no ifs, no buts – and we’re cracking down on companies that underpay their workers.

‘We also want to make it as easy as possible for employers, especially small businesses and those trying to do right by their staff, to comply with the NMW rules, which is why we’re reforming regulations.’

The government is also revising the pay arrangements available to employers engaging ‘salaried hours workers’. These are workers who receive an annual salary in equal instalments for a set number of contracted hours. Under the revised rules, workers who are often paid hourly or per day and consequently receive different amounts of pay every month, such as those in the retail industry, can be classified as salaried workers. The aim of the changes is to provide more flexibility in how salaried workers are paid without reducing protections for workers.

The changes also mean that employers employing these workers are less likely to caught out by the NMW legislation due to the differences in their hours from one month to the next.

If you would like help with payroll matters please get in touch.

Internet links: GOV.UK NMW GOV.UK news

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 March 2020. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 March 2020 are:

Engine size Petrol
1400cc or less 12p
1401cc – 2000cc 14p
Over 2000cc 20p
Engine size LPG
1400cc or less 8p
1401cc – 2000cc 10p
Over 2000cc 14p
Engine size Diesel
1600cc or less 9p
1601cc – 2000cc 11p
Over 2000cc 13p

Hybrid cars are treated as either petrol or diesel.

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars or
  • require employees to repay the cost of fuel used for private travel.

The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.

You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR

Don’t forget to make tax efficient investments ahead of the tax year end

With the end of the tax year looming there is still time to save tax for 2019/20.

  • Make full use of your ISA allowance – ISAs can offer a useful tax free way to save, whether this is for your children’s future, a first home or another purpose. Individuals may invest up to a limit of £20,000 for the 2019/20 tax year. Savers have until 5 April 2020 to make their 2019/20 ISA investment.
  • Pensions provide significant planning opportunities. The annual allowance (AA) which is the maximum you can contribute to a pension and still get tax relief, is generally £40,000. Exceeding this can result in an AA clawback charge. However, in many circumstances individuals may have unused AA from the three previous tax years which can be used in 2019/20, providing the means of making a significant contribution without incurring a charge. Please contact us for advice specific to your circumstances.

These are only two suggestions that you may wish to consider as part of your tax planning strategy. Contact us for more information.

Internet links: GOV.UK ISAs Pensions Advisory Service AA

Freeports

The government has launched a consultation on proposals to create up to ten freeports across the UK which would have different customs rules than those which apply in the rest of the UK.

The government is considering a UK freeport model which would include multiple customs zones located within or away from a port, as well as a type of special economic zone (SEZ) designated over or around the customs zones and intends to work with the devolved administrations to develop proposals to allow freeports to be created in Scotland, Wales and Northern Ireland, in addition to those in England.

The proposals include the following customs and tariff benefits for businesses bringing goods into a freeport site:

  • duty suspension, with no tariffs, import VAT or excise to be paid on goods brought into a freeport from overseas until they leave the freeport and enter the UK’s domestic market
  • duty inversion if the duty on a finished product is lower than that on the component parts, allowing businesses to benefit by importing components duty free, manufacture the final product in the freeport, and then pay the duty at the rate of the finished product when it enters the UK’s domestic market
  • duty exemption for re-exports allowing businesses to import components duty free, manufacture the final product in the freeport and pay no tariffs when the final product is re-exported
  • simplified customs procedures for businesses accessing freeports.

Freeports are secure customs zones located at ports where business can be carried out inside a country’s land border but where different customs rules apply. Typically, goods brought into a freeport do not attract a requirement to pay duties until they leave the freeport and enter the domestic market. No duty is payable at all if the goods are re-exported.

Internet link: GOV.UK consultation

Additional financial support for flooding victims

The government has pledged thousands of pounds in additional financial support for victims of the recent floods.

The Government has announced that businesses in England affected by the floods will be eligible for 100% business rates relief for at least three months. It also stated that small and medium-sized enterprises (SMEs) that have experienced severe, uninsurable losses will be able to claim up to £2,500 from the Business Recovery Grant.

The government also announced that businesses affected by flooding will be able to apply for up to £5,000 to help make them more resilient to future flooding.

Commenting on the funding, Robert Jenrick, Secretary of State for Housing, Communities and Local Government, said:

Storm Dennis and Ciara have severely impacted a large number of households and businesses, and I recognise how destabilising this can be.

‘This extra support, including new funding, will help people in the worst hit areas to recover and get back on their feet as soon as possible.’

The announcement only applies to businesses in England. Flooding is a devolved issue for Wales, Scotland and Northern Ireland.

Internet link: GOV.UK news

Newsletter – December 2019

Enews – December 2019

In this month’s Enews we consider tax free gifts for employees, updated advisory fuel rates for company cars and tips on avoiding Self Assessment scams. We also report on the updated Check Employment Status for Tax tool and temporary pensions arrangements for some NHS staff. With guidance on cryptoassets, the latest HMRC Employer Bulletin and R&D statistics there is lots to update you on.

Making sure gifts to employees are tax-free

Some employers may wish to give a small gift to their employees. As long as the employer meets the relevant conditions, no tax charge will arise on the employee.

A tax exemption is available which should help employers ensure that the benefits provided are exempt and do not result in a reportable employee benefit in kind. In order for the benefit to be exempt it must satisfy the following conditions:

  • the cost of providing the benefit does not exceed £50 per employee (or on average when gifts are made to multiple employees)
  • the benefit is not cash or a cash voucher
  • the employee is not entitled to the benefit as part of a contractual arrangement (including salary sacrifice)
  • the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
  • where the employer is a ‘close’ company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.

No more than £50

One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50. The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. HMRC examples consider various gifts including turkeys, bottles of wine and gift vouchers.

Further details on how the exemption works, including family member situations, are contained in the HMRC manual.

However if you are unsure please do get in touch before assuming the gift you are about to provide is covered by the exemption.

Internet link: HMRC manual

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 December 2019. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 December 2019 are:

Engine size Petrol
1400cc or less 12p
1401cc – 2000cc 14p
Over 2000cc 21p
Engine size LPG
1400cc or less 8p
1401cc – 2000cc 9p
Over 2000cc 14p
Engine size Diesel
1600cc or less 9p
1601cc – 2000cc 11p
Over 2000cc 14p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.

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

Internet link: GOV.UK AFR

HMRC offers tips on avoiding Self Assessment tax scams

HMRC is giving information to taxpayers to help them avoid scams ahead of the Self Assessment deadline.

HMRC is warning millions of Self Assessment taxpayers to be aware of fraudsters in the run up to the 31 January deadline.

Over the last year, HMRC received almost 900,000 reports from the taxpayers about suspicious HMRC contact, in the form of phone calls, texts or emails. Of these more than 100,000 were phone scams and over 620,000 reports related to bogus tax rebates.

According to HMRC the most common techniques fraudsters use include phoning taxpayers offering a fake tax refund, or pretending to be HMRC by texting or emailing a link to a false page, where their bank details and money will be stolen. Fraudsters are also known to threaten victims with arrest or imprisonment if a bogus tax bill is not paid immediately.

HMRC’s Customer Protection team identify and close down scams but taxpayers should recognise the signs to avoid becoming victims. HMRC does not contact taxpayers asking for their PIN, password or bank details. Taxpayers are warned that they should never give out private information, reply to text messages, download attachments or click on links in texts or emails which they are not expecting.

Internet link: GOV.UK news

Check employment status for tax tool update

HMRC has issued an update to the Check employment status tool (CEST) in advance of the introduction of new tax rules proposed for individuals who provide their personal services via an ‘intermediary’ to a medium or large business. The tool is designed to give HMRC’s view of the status of contracts and has received criticism.

The new rules are expected to apply from 6 April 2020, similar rules were introduced in 2017 for public sector organisations receiving services from intermediaries, typically Personal Services Companies (PSC).

Please contact us for help and advice on whether you are caught by the new rules or should be applying the new rules to someone your business engages via a PSC.

Internet link: GOV.UK CEST

Temporary pensions tax arrangement for NHS staff

In a letter in November 2019, the Secretary of State for Health and Social Care, Matt Hancock, has agreed to a temporary commitment to make payments to certain clinical staff outside of the NHS pension schemes to restore the value of their pension benefits package. These rules apply if they have elected to use the scheme pays facility to settle an annual allowance tax charge arising from their pension saving in the NHS schemes in 2019/20.

Meanwhile, under a temporary measure the Scottish government is introducing, between 1 December 2019 and 31 March 2020, NHS staff in Scotland who can show they are likely to breach the pensions annual allowance for 2019/20 will be able to receive pay in lieu of employer pension contributions.

The announcements follow reports that senior NHS clinicians pension tax charges are making them retire early or change their working habits. The Department of Health and Social Care estimates that a third of consultants and GPs may be turning down extra shifts because of how the NHS Pension Scheme interacts with the wider pension tax rules.

Internet links: GOV.UK letters GOV.SCOT news

HMRC issues guidance on cryptoassets

HMRC has published guidance for people who hold cryptoassets, typically cryptocurrency or Bitcoin, explaining what taxes they may need to pay and what records they need to keep. HMRC has also published further information for businesses and companies about the tax treatment of cryptoasset transactions.

HMRC advises that these papers set out HMRC’s view of the appropriate tax treatment of cryptoassets, based on the law as it stands on the date of publication and that the tax policy in this area may develop as the sector develops.

Internet link: GOV.UK tax on cryptoassets

Latest guidance for employers

HMRC has issued the latest Employer Bulletin. This issue includes articles on a number of areas including:

  • guidance for employers on reporting PAYE information in real time when payments are made early at Christmas
  • electronic payment deadline falls on a weekend
  • Ultra Low Emission Vehicle
  • High Income Child Benefit Charge deadline 31 January
  • Tax-Free Childcare payments
  • update on termination payments: Post Employment Notice Pay for employees paid by equal monthly instalments
  • workplace pensions – remember to keep paying in.

Contact us for help with payroll matters.

Internet link: HMRC Employer Bulletin

Research and Development spend

The Office for National Statistics (ONS) has revealed that UK businesses spent £25 billion on Research and Development (R&D) in 2018.

Data from the ONS showed that total R&D expenditure increased from £23.7 billion in 2017 to £25 billion in 2018.

The report showed:

  • the aerospace industry saw the largest increase in R&D expenditure with a total spend of £210 million
  • the UK telecoms sector also experienced fast growth in R&D spending, increasing by 25.4% in 2018 to £192 million.

According to the ONS, the government’s funding of R&D amounted to £1.7 billion in 2018, which accounted for 6.9% of all R&D expenditure. The data revealed that machinery, equipment and shipbuilding were the biggest beneficiaries from government funding.

Internet link: ONS reports

Newsletter – June 2019

Enews – June 2019

In this month’s Enews we report on the latest OTS report on simplification of everyday tax for smaller businesses as well as HMRC tackling dishonest dog breeders.

We also update you on the Welsh tax code ‘mix up’ as well as the consultations on various issues including Companies House reforms, Private Residence Relief and letting relief changes.

Finally, with the latest advisory fuel rates for company cars, the P11D deadline looming and non-compliance with minimum wage regulations, there is a lot to update you on.

OTS calls for simplifying everyday tax for smaller businesses

A report by the Office of Tax Simplification (OTS) calls on the government to prioritise action to ‘address long-standing concerns about the experience of smaller businesses’. The report considers the business lifecycle, especially those starting up and provides recommendations in five areas:

  • providing simple step-by-step guidance about the key things a business needs to do in its early days to help things run smoothly
  • improving the operation of the PAYE system
  • implementation of HMRC’s Agents Strategy
  • improving the mechanics of the Corporation Tax return process
  • ensuring that tax changes are built on an understanding of business processes.

If you would like any help with your taxes at any stage of your business life cycle, please do get in touch.

Internet link: GOV.UK simplifying tax

HMRC taskforce tackles dishonest dog breeders

A taskforce has recovered more than £5 million by tackling dishonest dog breeders selling pups on the black market. HMRC set up the taskforce in October 2015 after discussions with animal welfare groups that were concerned that tens of thousands of puppies were being reared in unregulated conditions and sold illicitly every year.

The taskforce uncovered fraudsters selling puppies on a mass scale, for a huge profit and due to the underground nature of the activity, failing to declare their sales.

Using civil and criminal enforcement powers, HMRC has recovered £5,393,035 in lost taxes from 257 separate cases since the formation of the taskforce in October 2015.

The breeders and traders targeted include:

  • two unconnected puppy breeders in the west of Scotland who were handed tax bills of £425,000 and £337,000
  • a puppy breeder in the Midlands who was a former Crufts judge, given a £185,000 bill
  • a dealer in Northern Ireland told to pay £185,000 in tax
  • a Somerset puppy breeder was given a £114,000 bill
  • a puppy dealer in the east of Scotland was handed a tax bill in excess of £400,000
  • a Swansea puppy breeder was given a £110,000 tax bill.

Financial Secretary to the Treasury, Mel Stride MP, said:

‘It is utterly appalling that anyone would want to treat puppies in such an inhumane way and on such a scale. It’s also deeply unfair to all of the legitimate businesses who do pay the right tax, and the total recovered by the taskforce is equivalent to the annual salaries for more than 200 newly qualified teachers.’

‘We continue to work hard with other government agencies and our partners to tackle these traders. We urge anyone with information about tax evasion to report it to HMRC online or call our Fraud Hotline on 0800 788 887.’

Internet link: GOV.UK news

Forms P11D – reporting employee benefits

The forms P11D which report details of benefits and some expenses provided to employees and directors for the year ended 5 April 2019, are due for submission to HMRC by 6 July 2019. The process of gathering the necessary information and completing the forms 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, generally via a PAYE coding notice adjustment or through the self assessment system. Some employers ‘payroll’ benefits and in this case the benefits do not need to be reported on forms P11D but employers should advise employees of the amount of benefits payrolled.

In addition, regardless of whether the benefits are being reported via P11D or payrolled 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. The deadline for payment of the Class 1A NIC is 19th July 2019 (or 22nd for cleared electronic payment).

HMRC has produced an expenses and benefits toolkit. The toolkit consists of a checklist which may be used by advisers or employers to check they are completing the forms correctly.

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

Internet links: HMRC guidance Toolkit

Welsh taxpayers income tax code mix-up

From April 2019, Welsh taxpayers were assigned new income tax codes beginning with the letter ‘C’. However, HMRC recently revealed that some Welsh taxpayers were mistakenly given Scottish income tax codes by their employers. As a consequence, Welsh taxpayers have been charged income tax using the Scottish income tax rates and bands.

For 2019/20 the Welsh rate of income tax is set at 10% and this is added to the UK rates, which are each reduced by 10%. Therefore, the overall tax payable by Welsh taxpayers continues to be the same as English and Northern Irish taxpayers.

The income tax rates and bands that apply to employment income, self-employed trade profits and property income are different for taxpayers who are resident in Scotland, with tax rates and bands ranging from 19% to 46% rather than the 20% to 45% which apply across the rest of the UK. Tax codes for Scottish taxpayers begin with the letter ‘S’.

HMRC stated that it does not know the full extent of the error or how many Welsh taxpayers have been affected but they will carry out a review of the operation of Welsh tax codes in June 2019.

Llyr Gruffydd, Chair of the National Assembly for Wales’ Finance Committee, said:

‘We raised concerns about the flagging process for identifying Welsh taxpayers during our enquiries into fiscal devolution and the Welsh government’s draft budget.

‘On each occasion, we were told the matter was in hand, and the lessons from the devolution of income tax powers to Scotland, where there were similar issues, had been soundly learned and would be put into effect. We are seeking an immediate explanation of how this has happened and will be asking representatives from HMRC to appear before this Committee in the near future.’

If you have any concerns about tax codes, please get in touch.

Internet links: HMRC letter Welsh Assembly news

Consultation on Companies House reforms

The government has launched a consultation on proposed reforms at Companies House, including a ‘major upgrade’ of its register.

The consultation aims to tackle misuse of the register. It also strives to provide business owners with ‘greater protection from fraud’.

The consultation seeks views on a series of reforms to limit the risk of misuse:

  • knowing who is setting up, managing and controlling companies
  • improving the accuracy and usability of data on the companies register
  • protecting personal information on the register
  • ensuring compliance, sharing intelligence and other measures to deter abuse of corporate entities

Louise Smyth, Chief Executive of Companies House, said:

‘This package of reforms represents a significant milestone for Companies House as they will enable us to play a greater part in tackling economic crime, protecting directors from identity theft and fraud, and improving the accuracy of the register.’

The consultation is open until 5 August 2019.

Internet links: GOV.UK consultation GOV.UK news

Consultation on ancillary capital gains reliefs

A capital gains tax (CGT) exemption applies when an individual disposes of a dwelling that has been used as their only or main residence under the Private Residence Relief (PRR) rules. The exemption applies as long as the relevant conditions are met throughout the total period of ownership. This relief is supplemented by ancillary reliefs that aim to deal with other related situations.

The government has previously announced and legislated to reform two of the ancillary reliefs to better target PRR at owner-occupiers. The reliefs which are being amended are:

  • the final period exemption will be reduced from 18 months to nine months, although the special rules that give those with a disability, and those in care, an exemption of 36 months will not change
  • lettings relief will be reformed so that it only applies where an owner is in shared occupancy with a tenant.

These changes will take effect from 6 April 2020. The government is now consulting on the changes in more detail and on how they will work in practice. It also invites views on some technical aspects of the PRR rules.

Internet link: GOV.UK consultation

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 June 2019. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 June 2019 are:

Engine size Petrol
1400cc or less 12p
1401cc – 2000cc 15p
Over 2000cc 22p
Engine size LPG
1400cc or less 8p
1401cc – 2000cc 9p
Over 2000cc 14p
Engine size Diesel
1600cc or less 10p
1601cc – 2000cc 12p
Over 2000cc 14p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars or
  • require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.

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

Internet link: GOV.UK AFR

Non-compliance with minimum wage regulations

A recent Low Pay Commission (LPC) report sets out its findings on the number of people being paid less than the statutory minimum wage.

The LPC found that, in April 2018, 439,000 workers were paid less than the National Minimum Wage (NMW). Of this amount, 369,000 were employees aged 25 and over, who were paid less than the National Living Wage (NLW), an increase from previous years. On 1 April 2019, the NMW and NLW rates rose to the hourly rates detailed below:

Minimum wage rate Hourly rate from 1 April 2019
National Living Wage (for workers aged 25 and over) £8.21
21-24 year-old rate £7.70
18-20 year-old rate £6.15
16-17 year-old rate £4.35
Apprentice rate £3.90
Accommodation Offset £7.55 per day: £52.85 per week

The LPC also revealed that women are ‘more likely’ than men to be paid less than the NMW, and that underpayment is common amongst younger and older workers. In addition, underpayment was more common in certain sectors including hospitality, retail, cleaning, maintenance and childcare.

Commenting on the findings, Bryan Sanderson, Chair of the LPC, said:

‘Our analysis reveals a worrying number of people are being paid less than the minimum wage. We recently celebrated 20 years of the minimum wage – it has raised pay for millions of workers, but it is essential that people receive what they are entitled to.’

‘It is also vital for businesses to be able to operate on a level playing field, and not be illegally undercut on wages.’

Contact us for help with payroll issues.

Internet link: GOV.UK news

Newsletter – March 2019

Enews – March 2019

In this month’s Enews we report on the ongoing Brexit uncertainties and latest HMRC advice. We also consider National Minimum Wage, National Living Wage and pension contribution increases and the latest guidance for employers.

With confirmed income tax bands for Scottish taxpayers, year end planning, a landline scam warning and new advisory fuel rates there are lots of areas to update you on.

HMRC advice – prepare for no deal

HMRC is urging business owners to make sure they are ready for a potential no deal Brexit.

Business owners are being urged to prepare now and take steps to ensure their businesses can continue to trade with the EU if the UK leaves the EU without a deal.

HMRC advise:

  • Businesses should register for an Economic Operator and Registration Identification (EORI) number. UK businesses that have only ever traded inside the EU will not have an EORI number. HMRC are advising that in the event of a no deal exit, businesses will be unable to continue trading with the EU without an EORI number. HMRC figures show that only 17% of potentially affected businesses have registered so far.
  • Businesses also need to decide how they intend to make the required customs declarations. HMRC advise that most businesses with customs obligations choose to use a customs agent to do this for them.
  • Businesses that import goods into the UK from the EU using roll on, roll off locations, may also wish to register for new Transitional Simplified Procedures (TSP). HMRC advise that ‘TSP will allow businesses to import without having to make a full customs declaration at the border, and postpone paying any import duties. For imports using other locations, and for exports, standard customs declarations will apply.’

Financial Secretary to the Treasury Mel Stride MP said:

‘We want businesses to be able to continue trading with minimal disruption in any scenario but we also know that people tend to leave things until the last minute and we would urge against that.’

Contact us for help in this area.

Internet link: HMRC news

Start date looming for Making Tax Digital for VAT

The Financial Secretary to the Treasury, Mel Stride, has made a statement to the House of Commons setting out HMRC’s progress on delivery of Making Tax Digital (MTD). He confirmed there would be no further delays in implementation.

For most businesses, compliance with the regulations is mandated for VAT return periods beginning on or after 1 April 2019. However, MTD for VAT for some ‘more complex’ businesses has been deferred until 1 October 2019. This deferral applies to trusts; not for profit organisations not set up as companies; VAT divisions; VAT groups; public sector entities such as government departments and NHS Trusts, which have to provide additional information on their VAT return; local authorities; public corporations; traders based overseas; those required to make payments on account; annual accounting scheme users.

Contact us for help and advice on MTD for VAT.

Internet link: Hansard debate MTD

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 March 2019. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 March 2019 are:

Engine size Petrol
1400cc or less 11p
1401cc – 2000cc 14p
Over 2000cc 21p
Engine size LPG
1400cc or less 7p
1401cc – 2000cc 8p
Over 2000cc 13p
Engine size Diesel
1600cc or less 10p
1601cc – 2000cc 11p
Over 2000cc 13p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars or
  • require employees to repay the cost of fuel used for private travel.

You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR

Scottish income tax bands confirmed for 2019/20

The Scottish Parliament has confirmed the income tax bands that will apply to Scottish taxpayers for 2019/20. The bands confirm the announcement made in the Draft Scottish Budget last December.

The 2019/20 income tax rates and bands for Scottish taxpayers on income (other than savings and dividend income) are as follows:

Scottish Bands £ Band name Scottish Rate
0 – 2,049 Starter 19%
2,050 – 12,444 Basic 20%
12,445 – 30,930 Intermediate 21%
30,931 – 150,000 Higher 41%
Over 150,000 Top 46%

Scottish taxpayers are entitled to the same personal allowance as individuals in the rest of the UK which for 2019/20 is £12,500. The allowance is reduced by £1 for every £2 of adjusted net income in excess of £100,000.

The UK higher rate tax point for 2019/20 is set at £37,500 and the tax rates for non-savings and non-dividend income are 20%, 40% and 45% respectively. The additional rate of 45% is payable on income over £150,000.

Internet link: GOV.SCOT income tax

Minimum Wage increases

The National Minimum Wage (NMW) and National Living Wage (NLW) are the legal minimum wage rates that must be paid to employees. Employers are liable to be penalised for not complying with the NMW and NLW rules.

There are different levels of NMW and NLW, depending on age and whether the employee is an apprentice. The rates are due to increase from 1 April 2019 as shown in the following table:

Rate from 1 April 2018 Rate from 1 April 2019
NLW for workers aged 25 and over £7.83 £8.21
NMW main rate for workers aged 21-24 £7.38 £7.70
NMW 18-20 rate £5.90 £6.15
NMW 16-17 rate for workers above school leaving age but under 18 £4.20 £4.35
NMW apprentice rate * £3.70 £3.90

*for apprentices under 19 or 19 or over and in the first year of their apprenticeship

There are no exemptions from paying the NMW on the grounds of the size of the business.

If you would like help with payroll matters please get in touch.

Internet link: GOV.UK NMW

Pensions auto enrolment contributions to rise

Minimum pension contributions are set to increase from 6 April 2019:

Duration Employer minimum Total minimum contribution
Current contributions 2% 5%
6 April 2019 onwards 3% 8%

The Pensions Regulator has produced guidance for employers on dealing with the increase including a letter template to advise employees of the change.

Contact us if you would like help with auto enrolment.

Internet link: TPR increases

Tax efficient investments ahead of the tax year end

With the end of the tax year looming there is still time to save tax for 2018/19.

  • Make full use of your ISA allowance – ISAs can offer a useful tax free way to save, whether this is for your children’s future, a first home or another purpose. Individuals may invest up to a limit of £20,000 for the 2018/19 tax year. Savers have until 5 April 2019 to make their 2018/19 ISA investment.
  • Pensions provide significant planning opportunities. The annual allowance (AA) which is the maximum you can contribute to a pension and still get tax relief, is generally £40,000. Exceeding this can result in an AA clawback charge. However, in many circumstances you may have unused AA from the three previous tax years which can be used in 2018/19, providing the means of making a significant contribution without incurring a charge. Please contact us for advice specific to your circumstances.

These are only a couple of options that you may wish to consider as part of your tax planning strategy. Contact us for more information.

Internet links: GOV.UK ISAs Pensions Advisory Service AA

Latest update for employers

HMRC has issued Employer Bulletin (February 2019) which includes a number of interesting articles on:

  • End of year reporting
  • Reporting expenses and benefits
  • Student Loan notices and a new type of Student Loan repayment that employers will need to be able to process via payroll (Post Graduate Loans)
  • Updates to the Starter checklist – used for new employees
  • Reporting the Disguised Remuneration Loan Charge
  • Updates to P9 Notices of Coding
  • Payrolling benefits in kind
  • Scottish Income Tax and
  • the Welsh Rate of Income Tax and new codes for Welsh taxpayers.

For help and advice with payroll matters please contact us.

Internet link: Employer Bulletin

Households with landlines should be vigilant

Over recent years HMRC has increasingly cracked down on email and SMS phishing, and a number of criminals are turning to cold-calling publicly available phone numbers to steal money from taxpayers. These calls are often made to landline numbers. According to Ofcom, nearly 26 million homes have a landline, many of which could be at risk from scams, especially if they are not ex-directory.

Fraudsters often target the elderly and vulnerable using HMRC name as it is well known and adds credibility to a call. HMRC received more than 60,000 reports of phone scams in the six months up to January 2019 (an increase of 360% when compared with the previous six months).

Financial Secretary to the Treasury, Mel Stride MP, said:

‘We have taken major steps to crack down on text and email phishing scams leaving fraudsters no choice but to try and con taxpayers over the phone.’

‘If you receive a suspicious call to your landline from someone purporting to be from HMRC which threatens legal action, to put you in jail, or payment using vouchers: hang up and report it to HMRC who can work to take them off the network.’

Head of Action Fraud, Pauline Smith, said:

Fraudsters will call your landline claiming to be from reputable organisations such as HMRC. Contact like this is designed to convince you to hand over valuable personal details or your money.’

‘Don’t assume anyone who calls you is who they say they are. If a person calls and asks you to make a payment, log in to an online account or offers you a deal, be cautious and seek advice.’

‘The tax authority will only ever call you asking for payment on a debt that you are already aware of, either having received a letter about it, or after you’ve told us you owe some tax, for example through a Self Assessment return.’

During the last 12 months, HMRC has worked with the phone networks and Ofcom to close nearly 450 lines being used by fraudsters.

Internet links: GOV.UK news HMRC examples

 

Newsletter – December 2018

Enews – December 2018

In this month’s Enews we report on Making Tax Digital for VAT and the latest government Brexit documentation. We also include updated advisory fuel rates for company car drivers and advice on tax-free gifts to employees. With a warning about the latest HMRC phishing emails scam, SDLT statistics for first-time buyers and a review calling for a simplification of inheritance tax, there is lots to update you on.

Committee warns small businesses ‘could pay heavy price’ for MTD and latest ‘encouragement letters’

The Economic Affairs Committee has warned HMRC that small businesses ‘could pay a heavy price’ for Making Tax Digital for VAT (MTDfV).

The Committee stated that HMRC has ‘failed to adequately support small businesses’ ahead of the introduction of MTDfV.

MTDfV is generally set to come into effect for the from 1 April 2019 for businesses which have a taxable turnover above the current VAT registration threshold of £85,000. Under MTDfV, businesses must keep some records digitally and submit their VAT returns via an Application Programming Interface (API).

The Committee has urged HMRC and the government to ‘start listening’ to small businesses MTDfV concerns.

HMRC recently sent businesses within the scope of MTDfV so-called ‘encouragement letters’. These letters were sent to 200,000 businesses which are eligible to join the pilot scheme.

Please contact us for help with MTDfV.

Internet links: Parliament.uk/news tax.org.uk/news

Leaving the EU with no deal

The government has published a collection of documents in preparation for the scenario of the UK leaving the EU without a Withdrawal Agreement a so called ‘no deal’ Brexit.

The guidance states:

‘The government does not want or expect a no deal scenario. However, it is the duty of a responsible government to prepare for a range of potential outcomes, including the unlikely event of no deal. In the event of leaving the EU without a deal, legislation will be necessary to ensure the UK’s Customs, VAT and Excise regimes function as intended after the UK leaves the EU and so, on a contingency basis, HM Treasury and HM Revenue and Customs will lay a number of Statutory Instruments (SIs) under the Taxation (Cross-border Trade) Act 2018 (TCTA) and the EU Withdrawal Act 2018 (EUWA).’

We will keep you informed of developments.

Internet link: GOV.UK no deal brexit collection

180,500 new homeowners benefit from stamp duty tax relief

According to statistics published by HMRC more than 180,500 first-time buyers have benefitted from First Time Buyers Relief (FTBR). The relief introduced in November 2017 has saved eligible first-time buyers an estimated total amount of more than £426 million.

Mel Stride MP, Financial Secretary to the Treasury, said:

‘These statistics show that the government was right to offer a helping hand to first time buyers. Without this investment more than 180,500 new homeowners may have struggled in getting onto the property ladder. Maintaining the status quo was not an option.’

FTBR is a Stamp Duty Land Tax relief for eligible first-time buyers. The tax relief can be used when buying a residential property where the purchase price is no more than £500,000 in England and Northern Ireland. Land and Buildings Transaction Tax and Land Transaction Tax apply to property in Scotland and Wales.

The press release goes on to state:

‘The amount of relief reported should not be used to infer average house prices for first time buyers; first-time buyer purchases below £125k and above £500k are not included in the statistics as they are below the lower SDLT threshold (£125k) or ineligible for the relief (above £500k).For purchases up to £300,000 no SDLT is payable. Where the purchase price is between £300,000 and £500,000 SDLT at 5% is due on the amount above £300,000. For example, a property purchased for £450,000 would pay £7,500 SDLT (5% of £150,000). This gives a saving of up to £5,000 for each first-time buyer.’

Extension of FTBR

It was announced in the Autumn Budget 2018 that the relief for first-time buyers will be extended to purchasers of qualifying shared ownership properties who do not elect to pay SDLT on the market value of the whole property when they purchase their first share. Relief will be applied to the first share purchased, where the market value of the shared ownership property is £500,000 or less. This relief will apply retrospectively from 22 November 2017, meaning that a refund of tax will be payable for those who have paid SDLT after 22 November 2017 in circumstances which now qualify for FTBR.

Internet link: HMRC press release

Tax-free gifts to employees

Some employers may wish to give a small gift to their employees. As long as the employer meets the relevant conditions, no tax charge will arise on the employee.

A tax exemption is available which should help employers ensure that the benefits provided are exempt and do not result in a reportable employee benefit in kind. In order for the benefit to be exempt it must satisfy the following conditions:

  • the cost of providing the benefit does not exceed £50 per employee (or on average when gifts made to multiple employees)
  • the benefit is not cash or a cash voucher
  • the employee is not entitled to the benefit as part of a contractual arrangement (including salary sacrifice)
  • the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
  • where the employer is a ‘close’ company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.

No more than £50

One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50.The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. Some HMRC examples consider gifts of turkeys, a bottle of wine or alternatively a gift voucher.

Further details on how the exemption will work, including family member situations, are contained in the HMRC manual.

However if you are unsure please do get in touch before assuming the gift you are about to provide is covered by the exemption.

Internet link: HMRC manual

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 December 2018. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 December 2018 are:

Engine size Petrol
1400cc or less 12p
1401cc – 2000cc 15p
Over 2000cc 22p
Engine size LPG
1400cc or less 8p
1401cc – 2000cc 10p
Over 2000cc 15p
Engine size Diesel
1600cc or less 10p
1601cc – 2000cc 12p
Over 2000cc 14p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR

Phishing tax refund email targets university students

HMRC has warned that university students are being bombarded with fake tax refund emails. The scammers have targeted university students in an attempt to steal their banking and personal details using.ac.uk email addresses that look genuine, in order to avoid detection.

Mel Stride, Financial Secretary to the Treasury said:

‘Although HMRC is cracking down hard on internet scams, criminals will stop at nothing to steal personal information.

‘I’d encourage all students to become phishing-aware – it could save you a lot of money.’

In common with other tax scams, fraudsters send a message, including HMRC, GOV.UK or credit card branding, supposedly advising the recipient about a tax refund. Those taken in by the fake email are asked to click on a link and enter their banking and personal details. Fraudsters can use this information to steal money from bank accounts or to sell on to other criminals.

Internet link: GOV.UK press release

Inheritance Tax Review by Office of Tax Simplification

The Office of Tax Simplification (OTS) has published the first of two reports on inheritance tax.

The first report sets out an explanation of the issues and complexities of IHT, gives an overview of concerns raised by the public and professional advisors during the review and then makes recommendations. This first report examines the administrative issues that people complain about and which were raised in the responses. The second report covering other wider areas of concern to people will follow in Spring 2019.

The first report highlights the benefits of:

  • reducing or removing the requirement to submit forms for smaller or simpler estates, especially where there is no tax to pay
  • simplifying the administration and guidance
  • the advantages of banks and other financial institutions having standardised requirements
  • automating the whole system by bringing it online

Angela Knight CBE, OTS Chairman, said:

Inheritance tax is both unpopular and complicated. The basic design of the tax itself is for government, but at the OTS we can address that most frequent of all comments “at least make it easier for the families to fill in the forms”. The OTS has worked on ways to address these practical complexities, which have come through loud and clear.’

‘The recommendations in this report will make it easier for the majority, and would mean that in future, many may not have to do the forms at all. Improving the administration of this tax in these ways is important as having to deal with the current process can seem overwhelming to people at a time when they are both preoccupied and distressed.’

Internet link: GOV.UK OTS IHT report

Newsletter – September 2018

Enews – September 2018

In this month’s Enews we report on HMRC’s reminder to taxpayers regarding declaring offshore assets and available software for MTD for VAT. We also advise on the latest fuel advisory rates for company car drivers and guidance for employers.

With statistics on Stamp Duty Land Tax and a raft of ‘No deal’ Brexit notices there is lots to update you on.

HMRC warning: time to declare offshore assets

HMRC is warning that taxpayers could face penalties if they fail to declare their income on foreign assets before new ‘Requirement to Correct’ legislation comes into force.

HMRC is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties.

New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax. The most common reasons for declaring offshore tax are in relation to foreign property, investment income and moving money into the UK from abroad. HMRC has stated that over 17,000 people have already been in contact to notify they have tax due from sources of foreign income, such as their holiday homes and overseas properties.

The Financial Secretary to the Treasury, Mel Stride MP, said:

‘Since 2010 we have secured over £2.8bn for our vital public services by tackling offshore tax evaders, and we will continue to relentlessly crack down on those not playing by the rules.’

‘This new measure will place higher penalties on those who do not contact HMRC and ensure their offshore tax liabilities are correct. I urge anyone affected to get in touch with HMRC now.’

Common Reporting Standard (CRS)

From 1 October more than 100 countries, including the UK, will be able to exchange data on financial accounts under the CRS. It is expected that the CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received.

Taxpayers can correct their tax liabilities by:

  • Using HMRC’s digital disclosure service as part of the Worldwide Disclosure Facility or any other service provided by HMRC as a means of correcting tax non-compliance.
  • Telling an officer of HMRC in the course of an enquiry into your affairs.
  • Or any other method agreed with HMRC.

Once a taxpayer has notified HMRC of their intention to make a declaration, by the deadline of 30 September, they will then have 90 days to make the full disclosure and pay any tax owed. To ensure there is an incentive for taxpayers to correct any offshore tax non-compliance on or before 30 September 2018 there are increased penalties for any failures to correct by that date.

If taxpayers are confident that their tax affairs are in order, then they do not need to worry. However if you are unsure, please contact us.

Internet link: GOV.UK news

Stamp duty cut: 121,500 households save £284 million

According to the latest statistics 121,500 first-time buyers have saved a total of £284,000,000 following the introduction of a relief for first-time buyers under the Stamp Duty Land Tax rules which apply in England and Northern Ireland.

Over the next five years, it is estimated that this relief, part of the UK government’s housing policy will help over 1 million people getting onto the housing ladder.

First-time buyers purchasing homes of £300,000 and under pay no stamp duty at all, and those who bought properties of up to £500,000 will also have benefitted from a stamp duty cut.

Financial Secretary to the Treasury, Mel Stride, said:

‘Once again, we can see that our cut to stamp duty for first-time buyers is helping to make the dream of home ownership a reality for a new generation – exactly as we intended.’

‘In addition, we’re building more homes in the right areas, and have introduced generous schemes such as the Lifetime ISA and Help to Buy.’

Those purchasing properties in Wales (since 1 April 2018) pay Land Transaction Tax and those in Scotland pay Land and Buildings Transaction Tax. First-time buyers in Scotland also benefit from a relief for first-time buyers.

Internet link: GOV.UK news

Software suppliers – Making Tax Digital for VAT

HMRC is working with more than 150 software suppliers who have said they will provide software for Making Tax Digital for VAT (MTDfV) in time for April 2019.

From 1 April 2019, businesses will be mandated to use the MTDfB system to meet their VAT obligations under MTDfV. Only businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required to use MTDfV, however HMRC is piloting the new system, on a small scale, from April 2018.

HMRC has advised that more than 40 suppliers have said they will have software ready during the first phase of the pilot and other software suppliers are expected to follow. HMRC will open up the pilot to allow more businesses and agents to join later in 2018.

HMRC has advised that the list will be updated as more software meets the criteria. HMRC are advising businesses to check with their existing software supplier to find out if they will be supplying suitable software.

Contact us for help with Making Tax Digital for VAT.

Internet link: GOV.UK software suppliers

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 September 2018. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 September 2018 are:

Engine size Petrol
1400cc or less 12p
1401cc – 2000cc 15p
Over 2000cc 22p
Engine size LPG
1400cc or less 7p
1401cc – 2000cc 9p
Over 2000cc 13p
Engine size Diesel
1600cc or less 10p
1601cc – 2000cc 12p
Over 2000cc 13p

The guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR

HMRC latest guidance for employers

HMRC has published the latest edition of the Employer Bulletin. This guidance for employers, and their agents, includes articles on:

  • Reporting your payroll information accurately and on time
  • Irregular payments and completion of Full Payment Submissions
  • Starter Declaration on a Full Payment Submission (FPS)
  • PAYE Settlement Agreements and Scottish Income Tax
  • National Living Wage and National Minimum Wage – are you paying the correct rate?
  • Advisory Electricity Rate for fully electric company cars
  • Welsh Rates of Income Tax
  • Construction Industry Scheme (CIS) webinars
  • Postgraduate Loans
  • Benefits and Expenses: Company cars
  • Tax avoidance loan schemes – settle now
  • Completing an EYU in respect of Employee’s National Insurance Contributions
  • Employment Income: Draft Legislation
  • Deadline for post 16 Child Benefit looms.

For help with payroll matters, please contact us.

Internet link: Employer Bulletin

‘No deal’ Brexit guidance

The government has issued some ‘no deal’ Brexit technical notices, with the aim of helping both businesses and individuals to prepare in the event of a UK-EU agreement not being realised.

The government has published the first 25 notices. Brexit Secretary Dominic Raab was keen to emphasise that reaching a deal remains the ‘overriding priority’. However, until a Withdrawal Agreement is ratified by the UK and European Parliaments, the possibility of the UK leaving the EU without a deal on 29 March 2019 remains.

The 25 documents cover a range of different areas, including VAT and trading, financial services, farming and workplace rights.

Josh Hardie, Deputy Director General at the CBI, said:

‘It’s right and responsible that the government has supplied information to businesses on issues from financial services passporting to food labelling, all of which will help lower the risks of the harshest outcomes from a ‘no deal’ Brexit.’

The government has confirmed further technical notices will be issued in September.

Internet link: GOV.UK no deal brexit collection

Newsletter – June 2018

eNews June 2018

In this month’s eNews we report on new advisory fuel rates for company cars, the latest tax refund scam warnings, and National Minimum Wage enforcement from HMRC.

A new consultation has been launched on off-payroll working in the private sector, State Aid approval has been granted for Enterprise Management Incentive schemes and a report has been issued on Universal Credit and the self employed. We also report on the Welsh Assembly’s plans for Welsh income tax rates.

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which take effect from 1 June 2018. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 June 2018 are:

Engine size Petrol
1400cc or less 11p
1401cc – 2000cc 14p
Over 2000cc 22p
Engine size LPG
1400cc or less 7p
1401cc – 2000cc 9p
Over 2000cc 14p
Engine size Diesel
1600cc or less 10p
1601cc – 2000cc 11p
Over 2000cc 13p

The guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR

Tax refund scams warning from HMRC

HMRC has issued a warning to taxpayers regarding the latest tax refund scams. These scams are targeting individuals via email and SMS messages.

HMRC is currently processing genuine tax refunds for the 2017/18 tax year and the fraudsters are sending scam messages which claim that taxpayers are entitled to a rebate. These messages go on to request that they provide their personal and account details in order to make their claim.

HMRC is keen to stress that it will only ever inform individuals of a tax refund by post or through their employer, and never via email, text messaging or voicemail.

Commenting on the issue, Treasury Minister Mel Stride said

‘We know that criminals will try and use events like the end of the financial year, the self assessment deadline, and the issuing of tax refunds to target the public and attempt to get them to reveal their personal data’.

HMRC is advising taxpayers not to click on any links, download any attachments or provide any personal information, and to forward any suspect messages to HMRC.

Internet link: GOV.UK news

200,000 receive back pay as HMRC enforce National Minimum Wage

BEIS and HMRC are urging underpaid workers to complain about National Minimum Wage (NMW) and National Living Wage (NLW) underpayments. Recent figures show that the number of workers receiving the money they are owed has doubled.

During 2017/18, HMRC investigators identified £15.6 million in pay owed to more than a record 200,000 of the UK’s lowest paid workers. This is an increase on the previous years figures of £10.9 million for more than 98,000 workers.

HMRC launched its online complaints service in January 2017 and believes this has contributed to the 132% increase in the number of complaints received over the last year and the amount of money HMRC has been able to recoup for those unfairly underpaid.

The figures are published as the government launches its annual advertising campaign which encourages workers to take action if they are not receiving the NMW or NLW. The online campaign urges underpaid workers to proactively complain by completing an HMRC online form.

HMRC state that the types of business receiving most complaints include restaurants, bars, hotels and hairdressing.

Business Minister Andrew Griffiths said:

Employers abusing the system and paying under the legal minimum are breaking the law. Short changing workers is a red line for this government and employers who cross the line will be identified by HMRC and forced to pay back every penny, and could be hit with fines of up to 200% of wages owed.

I would urge all workers, if you think you might be being underpaid then you should check your pay and call Acas on 0300 123 1100 for free and confidential advice.’

Please contact us for help with payroll matters.

Internet link: GOV.UK news 200000 receive back pay

Off-payroll working in the private sector consultation

HMRC has launched a consultation on how to tackle non-compliance with the off-payroll working rules in the private sector and are asking for comments on the best way to do this.

HMRC estimates only 10% of PSCs that should apply the legislation actually do so, and the the cost of this is projected to increase from £700m in 2017/18 to £1.2bn in 2022/23.

This consultation provides an early evaluation of the public sector reform and invites responses on how best to deal with non-compliance in the private sector.

This consultation considers a number of potential options for tackling the non-compliance with the off-payroll working rules in the private sector. However, the fundamental principles of the off-payroll working rules, that the employment status test determines who should be taxed as employees, are not being considered as part of this consultation.

In respect of the public sector

‘HMRC has analysed PAYE data covering the first 10 months of the reform, from April 2017 to February 2018. This shows that in any given month since the reform was introduced, there are an estimated 58,000 extra individuals who are paying income tax and NICs undertaking work for a public authority above expected levels.

HMRC estimates that an additional £410 million of income tax and NICs has been remitted from these engagements, since the public sector reform was introduced.

On the basis of this evidence, the government’s assessment is that the public sector reform has been successful both in increasing tax compliance and resolving the compliance challenges faced by HMRC in enforcing the off-payroll working rules in the public sector.’

Private sector

‘The government considers extension of similar reform to the private sector to be the lead option which will effectively tackle non-compliance.’

The consultation closes on 10 August. We will keep you updated on this issue.

Internet link: GOV.UK consultation

Universal Credit and self employment

The government has published a report, Universal Credit: supporting self employment which considers the issues faced by self employed claimants.

The report considers the impact of the Monthly Income Floor (MIF) earnings requirement. To be eligible for Universal Credit (UC) claimants must earn the MIF. However, the MIF assumes self employed claimants earn a regular income at least equal to the National Minimum Wage, and makes no provision for those with income and expenditure that vary from month to month. The report states that the MIF has been designed with monthly paid employed individuals in mind rather than the self employed who may have more volatile earnings.

It also considers the current system which allows self employed individuals to be exempt from meeting the MIF for the first 12 months of self employment and whether this is sufficient. The report urges the Government to extend the exemption period.

Internet link: Universal Credit Self Employed report

State Aid approval granted for the Enterprise Management Incentive

It has previously been reported that the Enterprise Management Incentive State Aid approval lapsed on 6 April 2018. On 15 May EU approval was granted however HMRC have not confirmed expressly that this approval will be backdated to 6 April 2018.

The Enterprise Management Incentive (EMI) allows selected employees (often key to the employer) to be given the opportunity to acquire a significant number of shares in their employer through the issue of options. An EMI can offer significant tax advantages as the scheme allows options to be granted to employees which may allow the shares to be received without any tax bill arising until the shares are sold.

HMRC had previously warned that EMI share options granted in the period from 7 April 2018 until EU State Aid approval is received may not be eligible for the tax advantages afforded to option holders.

We await official confirmation on the position from HMRC.

Please contact us for specific advice on this issue.

Internet link: Europa press release

Wales to set devolved income tax rates

From April 2019, the National Assembly for Wales will be able to vary the rates of income tax payable by Welsh taxpayers.

Responsibility for many aspects of income tax will remain with the UK government, and the tax will continue to be collected by HMRC for Welsh taxpayers.

The process for setting Welsh rates of income tax

From April 2019, the UK government will reduce each of the three income tax rates: basic, higher and additional rate, paid by Welsh taxpayers by 10 pence.

The National Assembly for Wales will then decide the three Welsh rates of income tax, which will be added to the reduced UK rates. The combination of reduced UK rates plus the Welsh rates will determine the overall rate of income tax paid by Welsh taxpayers.

If the National Assembly for Wales approves each of the Welsh rates of income tax at 10p, this will mean the rates of income tax paid by Welsh taxpayers will continue to be the same as that paid by English and Northern Irish taxpayers. However the National Assembly for Wales may decide to set different rates ‘to reflect Wales’ unique social and economic circumstances’.

Internet link: GOV.Wales