Newsletter – January 2018

eNews January 2018

In this month’s eNews we report on the government’s proposals on auto enrolment, the Scottish draft budget and their plans for five income tax rates and changes to Land and Buildings Transaction Tax. We also include an announcement from the Welsh Assembly on the proposals for Land Transaction Tax.

With details of an HMRC iTunes scam and the withdrawal of options to pay HMRC at the Post Office and via personal credit card there is lots to update you on.

Scottish Draft Budget

Finance Secretary Derek Mackay delivered the 2018/19 Scottish Draft Budget on Thursday 14 December 2017 setting out the Scottish government’s financial and tax plans.

The Scottish government has the power to set the rates and bands of income tax (other than those for savings and dividend income) which apply to Scottish resident taxpayers.

Since 6 April 2016 the rates and bands of Scottish income tax have been frozen at 20% and the Scottish higher and Scottish additional rates at 40% and 45% respectively. For 2017/18 the higher rate threshold in Scotland is £43,000 whilst the threshold in the rest of the UK is £45,000. This means that a Scottish higher rate taxpayer will pay £400 more tax in 2017/18 than a UK higher rate taxpayer, being £2,000 at the marginal rate of 20%.

For 2018/19 the rates and tax bands applicable to Scottish taxpayers on non-savings and non dividend income will be as follows:

Scottish Bands Band name Scottish Rates
Over £11,850* – £13,850 Starter 19%
Over £13,850 – £24,000 Basic 20%
Over £24,000 – £44,273 Intermediate 21%
Over £44,273 – £150,000** Higher 41%
Over £150,000** Top 46%

* assuming the individual is entitled to a full UK personal allowance

** the personal allowance will be reduced if an individual’s adjusted net income is above £100,000. The allowance is reduced by £1 for every £2 of income over £100,000

The UK higher rate tax point for 2018/19 has been set at £46,350 (for those entitled to the full UK personal allowance) and the tax rates for non-savings and non-dividend income have been maintained at 20%, 40% and 45% respectively.

For 2018/19 Scottish taxpayers with employment income of £26,000 will pay the same amount of income tax as those with the similar income in the rest of the UK. For higher earners, with pay of £150,000, a Scottish taxpayer will pay an extra £1,770 of income tax than those on similar income in the rest of the UK.

Internet link: GOV.SCOT publication

Land and Buildings Transaction Tax and First-Time Buyer Relief

The Scottish government announced that they will introduce a new Land and Buildings Transaction Tax (LBTT) relief for first-time buyers of properties up to £175,000. The relief will raise the zero tax threshold for first-time buyers from £145,000 to £175,000, and according to the Scottish government 80% of first-time buyers in Scotland will pay no LBTT at all. The Scottish government also announced that first-time buyers buying a property above £175,000 will also benefit from the relief on the portion of the price below the threshold.

The Scottish government announced that they will launch a consultation on the policy before introducing the first-time buyer relief in 2018/19. The relief for first-time buyers paying Stamp Duty Land Tax on first homes in the rest of the UK was introduced from 22 November 2017.

Internet link: GOV.SCOT publication

Welsh Land Transaction Tax

The Welsh Parliament have announced changes to proposed rates and bands for Land Transaction Tax which is to be introduced in Wales from 1 April 2017.

The rates and bands will be confirmed in January 2018 but details of the proposed rates and bands are included in the following statement.

Internet links: GOV.WALES land-transaction-tax GOV.WALES statement

Proposals to extend pensions auto enrolment to younger workers

The government has announced proposals to extend pensions auto enrolment to include younger workers and to amend the way in which contributions are calculated.

According to the press release:

The review’s recommendations, which will now be progressed and legislated for where necessary, will see:

  • automatic enrolment duties continuing to apply to all employers, regardless of sector and size
  • young people, from 18 years old, benefiting from automatic enrolment, introducing 900,000 young people into saving an additional £800 million through a workplace pension
  • workplace pension contributions calculated from the first pound earned, rather than from a lower earnings limit – this will bring an extra £2.6 billion into pension saving, improving incentives for people in multiple jobs to opt-in, and simplifying the way employers assess their workforces and calculate contributions
  • the earnings trigger remaining at £10,000 for 2018/19, subject to annual reviews
  • contribution levels reviewed after the implementation of the 8% contribution rate in 2019
  • the government testing a series of ‘targeted interventions’ – including through opportunities to work with organisations who act as ‘touch points’ for the 4.8 million self-employed people, such as banks and those who contract labour – to explore how technology can be used to increase their pension saving.’

Under auto enrolment, employers are required to automatically enrol all eligible workers (generally employees) into a workplace pension scheme and pay a minimum contribution into their pension. Employees do, however, have the right to opt out of auto enrolment.

Currently workers who are aged between 22 and the State Pension Age with earnings of £10,000 per annum are eligible to be auto enrolled. Younger employees and those who do not meet the minimum income requirement can opt to make pension contributions.

The government plan to reduce the lower age limit to 18 by the mid 2020s, in order to encourage younger workers to get into ‘the habit of saving’.

David Gaulke, Work and Pensions Secretary said:

‘We are committed to enabling more people to save while they are working, so that they can enjoy greater financial security when they retire. We know the world of work is changing, so it is only right that pension saving does too. This ambitious package will see more people than ever before helped onto the path towards building a secure retirement.’

Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), stated:

‘Requiring employers to contribute from the first pound of earnings will mean that, by 2019, hundreds of thousands of small employers will have to pay up to £180 more per employee each year. ‘For employers in certain sectors, such as care and hospitality where margins are tight, this will really add up.’

Contact us if you would like help with payroll and auto enrolment.

Internet links: GOV.UK news FSB press release

Paying HMRC? Not at the post office or by credit card

With many individuals having tax payments to make at the end of this month it is important to be aware that HMRC have announced that they will no longer accept payments made at the Post Office or by credit card.

HMRC have announced that with effect from 15 December 2017 it will no longer be possible to make payments to HMRC at a post office. The reason for this change is that contract with Santander, which allowed this method of payment, has expired. HMRC are advising that where electronic payment is not possible, payments can still be made at bank branches using a payslip and payments for self assessment income tax can still be posted to HMRC.

From 13 January 2018 it will no longer be possible to pay HMRC using a personal credit card. The timing of this change coincides with the date from which HMRC will no longer be permitted to charge fees for payment by credit card.

Internet link: ICAEW blog

HMRC warning about iTunes gift card scam

HMRC are urging people to stay safe from a phone scam that is conning elderly and vulnerable people out of thousands of pounds.

The scammers are preying on victims by cold calling them and impersonating an HMRC member of staff. They advise the victim that they owe a large amount of tax which they can only pay off by digital vouchers and gift cards, including Apple’s iTunes vouchers.

The scam victims are told to go to a local shop, to purchase vouchers, and then read out the redemption codes to the scammer. The conmen then sell on the codes or purchase high value products, all at the victim’s expense.

According to HMRC the scammers frequently use intimidation to get what they want, threatening to seize the victim’s property or involve the police. The use of vouchers is an attractive scam as they are easy to sell on and hard to trace once used.

HMRC have confirmed that they would never request the settling of debt through such a method.

According to figures from Action Fraud, the UK’s national fraud reporting centre, between the beginning of 2016 and August this year there have been over 1,500 reports of this scam, with the numbers increasing in recent months. The vast majority of the victims are aged over 65 and suffered an average financial loss of £1,150 each.

HMRC is working closely with law enforcement agencies, Apple and campaign groups to make sure the public know how to spot the scam and who to report it to.

HMRC’s Director General of Customer Services, Angela MacDonald, said:

These scammers are very confident, convincing and utterly ruthless. We don’t want to see anyone fall victim to this scam just before Christmas. That’s why we’re working closely with crime fighters to ensure taxpayers know how to avoid it.

These scams often prey on vulnerable people. We urge people with elderly relatives to warn them about this scam and remind them that they should never trust anyone who phones them out of the blue and asks them to pay a tax bill. If you think you’ve been a victim you should contact Action Fraud immediately.’

Internet link: GOV.UK news

Newsletter – July 2017

Enews – July 2017

In this month’s eNews we report on the Queen’s speech and the legislative process. We also include articles on recommendations to simplify corporation tax, the extended deadline for returns for employment related securities, the introduction of Land Transaction Tax in Wales and the latest fines and guidance issued by the Information Commissioner’s Office following cyber attacks. With HMRC’s latest Employer Bulletin and advice on holiday pay and entitlement there is lots to consider.

Queen’s Speech and proposed legislation

The Queen delivered the 2017 Queen’s Speech on 21 June which set out the government’s agenda for the coming parliamentary session. The speech outlined the government’s proposed policies and legislation.

This Queen’s speech announced that the government will focus on:

  • delivering a Brexit deal that works for all parts of the United Kingdom and
  • building a stronger, fairer country by strengthening our economy, tackling injustice and promoting opportunity and aspiration.

The supporting documentation confirms 27 Bills and draft Bills which are expected to be in the legislative programme, which will deliver on these themes. Details of the Bills that the government propose to introduce are available via the links at the end of this article.

The Speech and supporting documentation make little reference to delayed tax measures which were put on hold prior to the Election or the progress of the legislation on Making Tax Digital for Business. The reference to tax legislation states:

‘The programme will also include three Finance Bills to implement budget decisions. Summer Finance Bill 2017 will include a range of tax measures including those to tackle avoidance. The programme will also include a technical Bill to ratify several minor EU agreements and further Bills, which will be announced in due course, to effect the UK’s withdrawal from the EU. The government will also be taking forward a range of other measures which may not require primary legislation.’

We will update you on developments.

Internet links: GOV.UK summary what it means Speech GOV.UK background notes

Simplifying corporation tax

The Office for Tax Simplification has published their recommendations on simplifying the corporation tax computation.

This report sets out some significant steps towards creating a 21st-century corporation tax system in the UK, responding to calls from businesses of all sizes to make the calculation of corporation tax simpler, with fewer changes and more time to plan. The report looks at four broad themes:

  • simpler tax for smaller companies
  • aligning the tax rules more closely with accounting rules where appropriate
  • simplifying tax relief for capital investment
  • a range of further issues affecting the largest companies.

We will keep you informed of developments in this area.

Internet link: GOV.UK review CT

Employment Related Securities return deadline

HMRC are advising that there have been technical issues with their Employment Related Securities (ERS) annual returns online service. Employers have to complete returns for any schemes that have been registered on the ERS online service, such as Enterprise Management Incentives (EMI), a non-tax advantaged scheme or award, Company Share Option Plan, Save As You Earn Scheme and Share Incentive Plan

HMRC apologise for the difficulties which had prevented some returns from being submitted online. They have confirmed that the service is now working and allowing users to upload the necessary templates and files as part of the return process.

The deadline for filing annual returns is generally 6 July following the end of the tax year, so for the tax year 2016/17 it would usually be 6 July 2017. However, in view of the recent problems HMRC have extended the deadline to 24 August 2017 for the tax year 2016/17.

Penalties for late returns

Due to the change in deadline this year HMRC are advising that:

‘Penalties are charged if you file your return late. If your return isn’t filed by the extended deadline of 24 August 2017 the first late filing penalty of £100 will be issued on 25 August 2017.

Additional automatic penalties of £300 will be charged if the return is still outstanding 3 months after the original deadline of 6 July, and a further £300 if it’s still outstanding 6 months after that date. If a return is still outstanding 9 months after the 6 July, daily penalties of £10 a day may be charged.’

If you would like any help or guidance on share incentives or how these should be reported to HMRC please contact us.

Internet link: GOV.UK bulletin

Land Transaction Tax

From April 2018, Land Transaction Tax (LTT) will replace Stamp Duty Land Tax (SDLT) in Wales. Land and Buildings Transaction Tax (LBTT) already applies in Scotland.

Like SDLT (and LBTT), LTT will generally be payable on the purchase or lease of a building or land. The new tax may therefore be relevant to house buyers and sellers and businesses including builders, property developers and agents involved in the transaction process (such as solicitors and conveyancers).

Rates of the new tax

The proposed tax rates and bands will be announced by October 2017.

Additional residential properties

Higher rates of SDLT and LBTT apply to purchases of additional residential properties, including second homes. The National Assembly for Wales has confirmed these increased rates will continue to apply in Wales under LTT.

More details can be found at National Assembly for Wales.

Internet link:

Holiday entitlement

Now is the time of year when many of us turn our thoughts to holidays and it is important to get holiday entitlement and holiday pay right.

The June 2017 acas newsletter includes links to useful guidance on calculating holiday and holiday pay entitlements as well as guidance on hot weather working.

The GOV.UK website includes a useful calculator.

If you would like help with payroll matters please contact us.

Internet links: GOV.UK calculator acas newsletter

Latest guidance for employers

HMRC have issued the latest version of the Employer Bulletin. This edition has articles on a number of issues including:

  • P11D and P11D(b) filing and payment deadlines
  • Paying the right amount of tax through PAYE
  • Construction industry scheme repayment claims for limited companies
  • The Apprenticeship Levy and funding of apprenticeship training
  • Tax-free childcare rollout including guidance on dealing with employee opt outs of current childcare voucher schemes
  • Student Loan employer prompts where deductions have not been made
  • GCSEs in England – new grading system explained for employers.

If you have any queries on payroll matters please contact us.

Internet link: GOV.UK Employer bulletin

ICO warning as business fined £60,000 following cyber attack

The Information Commissioner’s Office (ICO) is warning SMEs to take care or face a fine. The warning comes after a company which suffered a cyber attack was fined £60,000.

The investigation by the ICO found Boomerang Video Ltd based in Berkshire failed to take basic steps to stop its website being attacked.

Sally Anne Poole, ICO enforcement manager, said:

Regardless of your size, if you are a business that handles personal information then data protection laws apply to you.’

‘If a company is subject to a cyber attack and we find they haven’t taken steps to protect people’s personal information in line with the law, they could face a fine from the ICO. And under the new General Data Protection Legislation (GDPR) coming into force next year, those fines could be a lot higher.’

‘Boomerang Video failed to take basic steps to protect its customers’ information from cyber attackers. Had it done so, it could have prevented this attack and protected the personal details of more than 26,000 of its customers.’

Further details of the case can be found using the links below together with guidance on data protection issues including guidance on the new General Data Protection Regulations which come into effect on 25 May 2018.

Internet links: ICO news ICO report Boomerang data protection reform updated toolkit for SMEs