Tag Archives: child benefit

Newsletter – March 2013

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

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

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

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

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

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

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

2013/14 income tax bands

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

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

Internet link: Budget TIIN

National Insurance – £2,000 employment allowance

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

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

Internet link: HMRC key employer Budget announcements

New scheme for tax free childcare

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

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

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

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

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

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

Internet link: Treasury infographic

Support for the housing market

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

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

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

Further detail is expected on these schemes.

Internet link: Treasury Infographic

RTI ‘relaxation’ for small employers

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

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

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

HMRC have also advised that they:

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

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

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

Internet link: HMRC RTI news

Advisory fuel rates for company cars

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

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

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

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

 

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

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

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

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

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

Internet link: HMRC advisory fuel rates

Employer end of year forms

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

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

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

Internet links: HMRC guidance No P35 online form

Reminder to those with child benefit and higher incomes

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

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

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

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

Lin Homer, Chief Executive at HMRC, said:

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

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

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

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

Internet links: Press release HMRC news

HMRC publish names of deliberate defaulters

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

Internet link: Defaulters list

Another HMRC disclosure facility

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

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

According to the HMRC press release:

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

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

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

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

Internet link: HMRC campaigns

Newsletter – January 2013

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eNEWS – January 2013

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

 

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

Employment rights – statutory limits

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

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

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

Internet links: Legislation Gov.uk calculator

HMRC target those with outstanding VAT returns

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

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

Marian Wilson, Head of HMRC Campaigns, said:

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

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

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

Internet links: Press release VAT Outstanding Returns Campaign

‘Tax cheats’ sentenced to over 150 years behind bars

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

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

Exchequer Secretary to the Treasury, David Gauke, said:

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

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

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

Internet link: Press release

PAYE coding notices

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

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

Good news for many

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

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

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

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

Internet links: Press release HMRC income tax rates and allowances

RTI is coming

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

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

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

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

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

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

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

Internet link: Press release

Start up loan scheme for young entrepreneurs extended

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

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

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

Internet link: News release

State Pension reform

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

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

The single tier pension will:

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

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

Internet link: DWP website

Child Benefit opt out

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

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

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

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

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

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

Internet links: BBC news HMRC Child Benefit guidance

Deadline looming for self assessment returns

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

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

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

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

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

Internet links: HMRC SA deadlines and penalties Press release

HMRC bank account details for employers

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

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

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

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

Internet link: HMRC payments

Newsletter – December 2012

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eNEWS – December 2012

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

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

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

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

 

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

Tenfold increase in Annual Investment Allowance

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

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

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

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

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

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

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

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

Internet link: HMRC TIIN

Personal allowance for 2013/14

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

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

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

Tax band and rates 2013/14

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

Additional rate tax payers

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

Tax bands for 2014/15 and 2015/16

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

Internet link: HMRC autumn statement personal

Pensions Saving

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

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

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

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

Please contact us if you would like any pensions advice.

Internet link: HMRC pensions tax relief

A simpler tax system for smaller businesses

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

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

Cars, vans and motorcycles

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

Business use of a home

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

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

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

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

Internet link: HMRC update

Statutory residence test

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

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

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

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

Internet link: HMRC finance bill draft

Government must tackle red tape

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

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

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

Katja Hall, CBI Chief Policy Director, said:

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

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

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

Internet link: Press release

Reminder to those with high income and child benefit

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

Lin Homer, HMRC’s Chief Executive, said:

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

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

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

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

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

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

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

Internet links: Press release HMRC Child Benefit guidance

Advisory fuel rates for company cars

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

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

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

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

 

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

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

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

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

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

Internet link: HMRC advisory fuel rates

2013/14 statutory payments

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

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

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

Internet link: Proposed benefit rates

Charities and Gift Aid

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

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

Internet link: HMRC charities online

File your self assessment return

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

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

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

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

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

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

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

Internet links: Press release HMRC SA deadlines and penalties

Newsletter – October 2012

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eNEWS – October 2012

In this month’s enews we report that HMRC are about to issue letters to those families likely to be affected by the High Income Child Benefit Charge.

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

 

eNEWS quicklinks
High income child benefit charge letters Too late for ‘paper’ self assessment tax returns
Plans for a new type of Employment contract RTI – Closing payroll schemes
Guidance on reclaiming National Insurance contributions paid in error Health and Safety Executive Fee for Intervention
Retirement funds set to fall HMRC checklist for EC VAT registration numbers

High income child benefit charge letters

HMRC are about to write to taxpayers who they believe will be affected by the High Income Child Benefit Charge.

In Budget 2012, as part of the reforms to the welfare system, it was confirmed that Child Benefit will be withdrawn from households that include certain higher earners.

Although the change applies from January 2013 the calculation to decide whether or not a household is affected by the reform includes the full income for 2012/13.

The legislation imposes a new charge (the High Income Child Benefit Charge) on a taxpayer who has adjusted net income over £50,000 in a tax year where either they or their partner, if they have one, are in receipt of Child Benefit for the year. Where there is a partner and both partners have adjusted net income in excess of £50,000 the charge will apply to the partner with the higher income.

An income tax charge will apply at a rate of 1% of the full Child Benefit award for each £100 of income between £50,000 and £60,000, rounded down to the nearest pound. The charge on taxpayers with income above £60,000 will be equal to the amount of Child Benefit paid.

Further information on the changes and what steps those affected should take can be found at http://www.hmrc.gov.uk/childbenefitcharge.

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

Internet link: Press release

Too late for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2011/12 return was 31 October 2012. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

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

Internet link: HMRC press release

Plans for a new type of Employment contract

Chancellor George Osborne has announced a new type of employment contract to be known as an employee-owner. Under the new contract employees will be able exchange some of their UK employment rights for shares in the business they work for. Gains on the disposal of the shares will be exempt from capital gains tax.

Companies of any size will be able to use this new kind of contract and employees will be given between £2,000 and £50,000 of shares. In exchange, they will give up their UK rights on unfair dismissal, redundancy, the right to request flexible working and time off for training, and will be required provide 16 weeks’ notice of a firm date of return from maternity leave.

Employee-owner status will be optional and legislation to bring in the new contract is expected to be introduced later this year so that companies can use the new type of contract from April 2013.

Internet link: Press release

RTI – Closing payroll schemes

HMRC are about to write to employers who they believe have a payroll scheme which is not being used. The letters are being sent in preparation for the introduction of RTI as HMRC are planning to close any payroll schemes which they believe are no longer needed.

If you receive a letter regarding a payroll scheme which you believe will be used in the future please do get in touch so that we can advise HMRC accordingly.

Internet link: Employer Bulletin

Guidance on reclaiming National Insurance contributions paid in error

HMRC have issued guidance to cover the situation where vocational or recreational trainers may be entitled to claim a refund of National Insurance contributions. The refunds are due following a change in guidance on charging national insurance contributions.

HMRC’s briefing states:

‘Refunds may be made by trainers or instructors, or those who engaged them, and where amounts of NICs were paid in error following HMRC’s guidance. This is primarily going to affect those engaged in the provision of vocational or recreational training as set out in HMRC’s guidance prior to repeal of the relevant provisions of the Regulations.’

‘Refunds are not due where educational training providers applied the Regulations. This is because there is no dispute or doubt that the Regulations prior to 6 April 2012 applied to the providers of educational training. In this context educational training provider means a school, college, university or any such similar educational establishment.’

‘Refunds are also not due where any trainer or instructor was engaged under an employment contract and Income Tax (PAYE) and Class 1 NICs were correctly accounted for.’

Please get in touch if you would like any help in this area.

Internet link: HMRC brief

Health and Safety Executive Fee for Intervention

The Health and Safety Executive has announced that it has implemented a Fee for Intervention (FFI) cost recovery scheme, which came into effect on 1 October 2012.

Under The Health and Safety (Fees) Regulations 2012, those who break health and safety laws are liable for recovery of HSE’s related costs, including inspection, investigation and taking enforcement action.

The HSE website advises:

‘The Fee for Intervention hourly rate for 2012/13 is £124. The many businesses that comply with their legal obligations will continue to pay nothing.’

For more information on how the new scheme works visit the link below.

Internet link: HSE website

Retirement funds set to fall

According to a report issued by the Saga Foundation, millions of Britons due to retire over the next few years risk seeing £11.5 billion wiped off their retirement funds.

The report factors in tax and benefit changes, which include the freezing of age related personal allowances from April 2013 and reduction in winter fuel payments, together with low interest rates.

Compiled by experts from the Centre for Economics and Business Research, the report comes to the conclusion that the changes will cost pensioners an average of £1,318 each by 5 April 2014.

Dr Ros Altmann, Director General of Saga, said:

‘Pensioners are being hammered. They didn’t cause our economic meltdown yet they have been paying a heavy price as we try to fix it and they face an even tighter financial squeeze in future.’

Internet link: Saga press release

HMRC checklist for EC VAT registration numbers

HMRC have issued a revised Notice 725, The Single Market, which includes a useful checklist (see section 16.19) to enable businesses to help spot incorrect VAT registration numbers at a glance.

Customer’s VAT registration numbers can be verified using the Europa website VIES http://ec.europa.eu/taxation_customs/vies/ or by contacting the VAT Helpline on 0845 010 9000.

Internet link: VAT Notice 725