Newsletter – April 2015

Posted on April 2, 2015 by Henry Cooper

eNews – April 2015

This month’s enews not surprisingly reflects Budget announcements. 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 these or any other issues.

Budget 2015

Personal tax rates and allowances

Proposed personal allowances to come

Help to Buy ISA

Pension freedoms for those with annuities

National Minimum Wage rises

Auto Enrolment guidance for small employers

Business rates system – have your say

Budget 2015

George Osborne presented the final Budget of this Parliament on Wednesday 18 March 2015.

In his speech the Chancellor reported ‘on a Britain that is growing, creating jobs and paying its way’.

Towards the end of 2014 the government issued many proposed clauses of Finance Bill 2015 together with updates on consultations. Due to the dissolution of Parliament on 30 March some measures have been legislated for in the week commencing 23 March, whilst others will be enacted by a Finance Bill in the next Parliament (depending on the result of the General Election).

The Budget proposed further measures, some of which may only come to fruition if the Conservative Party is in power in the next Parliament.

The articles which follow summarise some of the key changes.

Internet link: GOV.UK Budget

Personal tax rates and allowances

For those born after 5 April 1938 the personal allowance will be increased to £10,600. For those born before 6 April 1938 the personal allowance remains at £10,660.

The reduction in the personal allowance for those with ‘adjusted net income’ over £100,000 will continue. The reduction is £1 for every £2 of income above £100,000. So for 2015/16 there is no personal allowance where adjusted net income exceeds £121,200.

Tax bands and rates for 2015/16

The basic rate of tax is currently 20%. The band of income taxable at this rate is being decreased from £31,865 to £31,785 so that the threshold at which the 40% band applies will rise from £41,865 to £42,385 for those who are entitled to the full basic personal allowance.

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

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

Starting rate of tax for savings income

From 6 April 2015, the maximum amount of an eligible individual’s savings income that can qualify for the starting rate of tax for savings will be increased from £2,880 to £5,000, and this starting rate will be reduced from 10% to 0%. These rates are not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income) exceeds the starting rate limit.

This will increase the number of savers who are not required to pay tax on savings income, such as bank or building society interest. Eligible savers can register to receive their interest gross using a form R85.

Internet link: GOV.UK Budget

Proposed personal allowances to come

The Chancellor announced that the personal allowance will be increased to £10,800 in 2016/17 and to £11,000 in 2017/18. The Transferable Tax Allowance will also rise in line with the personal allowance, being 10% of the personal allowance for the year.

The higher rate threshold will rise in line with the personal allowance, taking it to £42,700 in 2016/17 and £43,300 in 2017/18 for those entitled to the full personal allowance.

Personal Savings Allowance

The Chancellor announced that legislation will be introduced in a future Finance Bill to apply a Personal Savings Allowance to income such as bank and building society interest from 6 April 2016.

The Personal Savings Allowance will apply for up to £1,000 of a basic rate taxpayer’s savings income, and up to £500 of a higher rate taxpayer’s savings income each year. The Personal Savings Allowance will not be available for additional rate taxpayers.

These changes will have effect from 6 April 2016 and the Personal Savings Allowance will be in addition to the tax advantages currently available to savers from Individual Savings Accounts.

The Personal Savings Allowance will provide basic and higher rate taxpayers with a tax saving of up to £200 each year.

Internet link: GOV.UK News

Help to Buy ISA

The government has announced the introduction of a new type of ISA, the Help to Buy ISA, which will provide a tax free savings account for first time buyers wishing to save for a home.

The scheme will provide a government bonus to each person who has saved into a Help to Buy ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum bonus of £3,000 on £12,000 of savings.

Help to Buy ISAs will be subject to eligibility rules and limits:

An individual will only be eligible for one account throughout the lifetime of the scheme and it is only available to first time buyers.
Interest received on the account will be tax free.
Savings will be limited to a monthly maximum of £200 with an opportunity to deposit an additional £1,000 when the account is first opened.
The government will provide a 25% bonus on the total amount saved including interest, capped at a maximum of £3,000 which is tax free.
The bonus will be paid when the first home is purchased.
The bonus can only be put towards a first home located in the UK with a purchase value of £450,000 or less in London and £250,000 or less in the rest of the UK.
The government bonus can be claimed at any time, subject to a minimum bonus amount of £400.
The accounts are limited to one per person rather than one per home so those buying together can both receive a bonus.
As is currently the case it will only be possible for an individual to subscribe to one cash ISA per year. It will not be possible for an account holder to subscribe to a Help to Buy ISA with one provider and another cash ISA with a different provider.
Once an account is opened there is no limit on how long an individual can save into it and no time limit on when they can use their bonus.

The government intends the Help to Buy ISA scheme to be available from autumn 2015 and investors will be able to open a Help to Buy ISA for a period of four years.

Internet link: GOV.UK factsheet

Pension freedoms for those with annuities

The Chancellor has announced a new flexibility for people who have already purchased an annuity. From April 2016, the government will remove the restrictions on buying and selling existing annuities to allow pensioners to sell the income they receive from their annuity for a capital sum.

Individuals will then have the freedom to take that capital as a lump sum, or place it into drawdown to use the proceeds more gradually.

Income tax at the individual’s marginal rate will be payable in the year of access to the proceeds.

The proposal will not give the annuity holder the right to sell their annuity back to their original provider. The government has begun a consultation on the measures that are needed to establish a market to buy and sell annuities and who should be permitted to purchase the annuity income.

The government recognises that for most people retaining their annuity will be the right choice. However, individuals may want to sell an annuity, for instance to pay off debts or to purchase a more flexible pension income product.

We will keep you informed of developments.

Internet link: GOV.UK News

National Minimum Wage rises

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. NMW rates increases come into effect on 1 October 2015:

From 1 October 2015:

the adult rate will increase by 20 pence to £6.70 per hour
the rate for 18 to 20 year olds will increase by 17 pence to £5.30 per hour
the rate for 16 to 17 year olds will increase by 8 pence to £3.87 per hour
the apprentice rate will increase by 57 pence to £3.30 per hour

Penalties

Penalties may be levied on employers where HMRC believe underpayments have occurred and HMRC ‘name and shame’ non-compliant employers.

If you have any queries on the NMW please get in touch.

Internet links: GOV.UK News

Auto Enrolment guidance for small employers

The Pensions Regulator (TPR) has launched a new step-by-step guide to help small businesses get ready for their automatic enrolment duties.

According to TPR the online guide has been written specifically for employers with between one and 50 staff.

The guide which is broken down into 11 steps, considers the legal requirements and what employers need to do to comply with their obligations.

Executive director for automatic enrolment Charles Counsell said:

‘We are determined to do all we can to reach out to all small and micro businesses preparing for their automatic enrolment duties. We want to make the process as simple as possible so that employers can avoid the risk of non compliance.’

‘Our new online 11-step guide is a key part of a wide package of measures we are rolling out to give more than a million employers all the information they need, written and produced in a way they makes sense to them.’

‘Our message to employers is ensure you know when your automatic enrolment duties begin and start planning in good time. The regulator’s website should be the first port of call for all employers and their advisers as it offers essential information about each task an employer will need to accomplish in order to comply and avoid penalties.’

If you would like help with Auto Enrolment please do get in touch.

Internet links: step-by-step guide Press release

Business rates system – have your say

The government has launched a wide-ranging review of national business rates in England.

HM Treasury’s ‘wide-ranging review’ of England’s non-domestic rates system will report its findings before the 2016 Budget. The Treasury’s discussion paper invites responses from a wide range of stakeholders on issues such as commercial property use, how the rates system can be modernised, and whether business rates should continue to be based on property values.

Written responses will be accepted from the beginning of April until 12th June 2015.

Chief Secretary to the Treasury Danny Alexander said:

‘Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition. I’ve been impressed by the representations made by the business community and I know that business rates are a considerable cost.

The government has taken measures to help businesses by capping rates and introducing reliefs for smaller businesses. But now the time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective.’

Internet link: GOV.UK News

Newsletter – June 2014

Posted on June 30, 2014 by Henry Cooper

In this month’s enews we report on a number of issues relevant to employers and employees. We also advise of the latest reported scam emails and also new rules for retailers.

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

eNEWS quicklinks
New rules for retailers	Deliberate defaulters
Advisory fuel rates for company cars	HMRC writes to taxpayers about effective tax rates
Latest employment and pay statistics	Change of approach on PAYE penalty notices
HMRC warn of ‘phishing’ emails	Employers who failed to pay NMW named

New rules for retailers

From 13 June 2014 retailers who sell to consumers, including those selling digital content, must comply with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

Some of the key rules introduced are:

consumers will be entitled to clearer and more prominent information before and after a sale is made to them
if the consumer is buying digital content, they must have more information about such issues as compatibility and functionality and the fact that a digital download may not have a cancellation period must be made clear to the consumer at the point of sale and the consumer must agree to this
the cancellation period for distance and doorstep sales will be increased from 7 to 14 days
forbidding the use of premium rate customer telephone helplines.

The Regulations will have an impact on many areas of a business including websites, marketing literature and terms and conditions.

Internet link: Regulations

Deliberate defaulters

From time to time HMRC publish details of deliberate defaulters, those who have received penalties for deliberate errors in their tax returns or deliberately failing to comply with their tax obligations.

The latest list can be viewed by following the attached link.

Internet link: HMRC website

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 June 2014. HMRC’s website states:

‘These rates apply to all journeys on or after 1 June 2014 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’

The advisory fuel rates for journeys undertaken on or after 1 June 2014 are:

Engine size	Petrol	LPG
1400cc or less	14p	9p
1401cc – 2000cc	16p	11p
Over 2000cc	24p	16p

Engine size	Diesel
1600cc or less	12p
1601cc – 2000cc	14p
Over 2000cc	17p

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 links: HMRC advisory fuel rates

HMRC writes to taxpayers about effective tax rates

HMRC is writing to certain taxpayers to tell them their effective rate of tax is lower than average and to ask them to check if it’s right.

The letter states:

‘A person’s effective rate of tax is the percentage of their income they have paid in tax.’

‘Looking at the figures in your self assessment tax calculation for the year ended 5 April 2012, we can see your effective rate of tax is lower than the average for people with a similar amount of income to you. This means there could be something wrong with your self assessment tax return.’

Recipients are then asked to check their returns for 2011/12 and contact HMRC if something is wrong.

There could be many reasons why an individual’s effective rate of tax could be low including claims having been made for tax reliefs for Gift Aid payments, pension payments and tax efficient investments such as the Enterprise Investment Scheme.

If you receive one of these letters and are concerned please do get in touch.

Internet link: ICAEW

Latest employment and pay statistics

The Office for National Statistics has announced the latest employment and pay statistics. These include:

There were 30.54 million people in work for February to April 2014, 345,000 more than for November 2013 to January 2014 and 780,000 more than a year earlier.
There were 2.16 million unemployed people for February to April 2014, 161,000 fewer than for November 2013 to January 2014 and 347,000 fewer than a year earlier.
There were 8.82 million economically inactive people (those out of work but not seeking or available to work) aged from 16 to 64 for February to April 2014. This was 80,000 fewer than for November 2013 to January 2014 and 178,000 fewer than a year earlier.
Pay including bonuses for employees in Great Britain for February to April 2014 was 0.7% higher than a year earlier, with pay excluding bonuses 0.9% higher.

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

‘While there is still lots to do to tackle unemployment, this is an unprecedented rise in the number of people in work. And more than three times as many people found full-time than part-time work in another positive sign for the recovery.’

‘The private sector is driving new jobs with positions created across a range of sectors, from entertainment to transport.’

Internet links: ONS Press release

Change of approach on PAYE penalty notices

HMRC have announced that they are changing their approach to issuing multiple penalty notices for the same PAYE non filing default.

These changes impact both the 2012/13 and 2013/14 tax years.

HMRC will issue reminder letters to those employers who have not yet filed their 2013/14 end of year, or final PAYE returns most of which should have been submitted using RTI. The deadline for submitting these returns was 19 May 2014.

If you receive a letter and would like any help with payroll or believe the returns have been submitted please do get in touch.

For 2012/13 HMRC will not issue any further updated penalty notices until the return has been filed.

Internet link: HMRC guidance on penalty notices

HMRC warn of ‘phishing’ emails

HMRC are warning tax credits claimants to be wary of scam or ‘phishing’ emails which are being sent out by fraudsters in the run up to the 31 July renewal deadline.

HMRC are advising that although they worked with other agencies to shut down over 600 scam websites during the tax credits renewal period last year, others sites continue to be created. Reported scam emails for this May are already in excess of 11,000.

HMRC advise:

Phishing emails often promise money back and, if the recipient clicks on a link, they are taken to a fake replica of the HMRC website. They are then asked to provide credit or debit card details or other sensitive information such as passwords. The fraudsters then try to take money from their account.

They often ask for the recipient’s name, address, date of birth, bank account number, sort code, credit card details, national insurance number, passwords and mother’s maiden name.

In addition to money being stolen from victims’ bank accounts, their personal details can be sold to criminal gangs, leading to possible identify theft.

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

‘HMRC will never ask people to disclose personal or payment information by email. We are committed to claimants’ online security but the methods fraudsters use to get information are constantly changing, so people need to be alert.’

‘HMRC is asking people to be wary of e-mails with attachments which might contain viruses designed to steal personal or financial information, and not to open them.’

‘One scam is contained in an email circulated from taxreturn@hmrc.gov.uk telling recipients about a 2013 tax refund report. The email appears to have been issued by ‘Tax Credit Office Preston’, but it is a scam. It includes an attachment that contains a virus. Recipients are urged not to respond and to delete it immediately.’

For more information about advice on scam emails visit the link below.

Internet links: HMRC news

Employers who failed to pay NMW named

Twenty five employers who failed to pay their employees the National Minimum Wage (NMW) have been named. According to the press release the employers owed workers more than £43,000 in arrears and in addition have incurred financial penalties totalling over £21,000.

Business Minister Jenny Willott said:

‘Paying less than the minimum wage is not only wrong, it’s illegal. If employers break the law they need to know that they will face tough consequences.’

If you would like any help with National Minimum Wage issues please do get in touch.

Internet link: News

Newsletter – April 2014

Posted on April 25, 2014 by Henry Cooper

In this month’s enews we report on pensions announcements and other issues pertinent to employers with many deadlines approaching.

Please contact us if you would like any further information.

eNEWS quicklinks
HMRC guidance on new pension flexibility	Employers no longer able to reclaim SSP
Disclosure facility for those with undisclosed second incomes	More guidance on Class 3A NIC
More HMRC guidance on the Employment Allowance	Tax-Free Childcare
Increase in NMW rates	Advisory fuel rates for company cars and fuel benefit charge
P11D deadline approaching

HMRC guidance on new pension flexibility

Following the Budget announcements regarding pension flexibility HMRC have now issued some guidance for those individuals who may wish to review their pension options.

New rules are being introduced to ensure that people do not lose their right to a tax-free lump sum if they would rather use the new flexibility this year or next, instead of buying a lifetime annuity.

Internet link: Pensions flexibility

Employers no longer able to reclaim SSP

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

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

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

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

From 6 April 2014 employers are unable to recover SSP however they will continue to be able to recover unclaimed SSP for previous years until 5 April 2016. Do contact us if you think this may apply to your business.

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

Internet link: Employer bulletin

Disclosure facility for those with undisclosed second incomes

The Second Incomes Campaign is an opportunity open to individuals in employment who have an additional untaxed source of income.

The new facility allows those with untaxed income to get up to date with their tax affairs in a simple, straightforward way and take advantage of the best possible terms.

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

Internet links: Second incomes campaign Guide to disclosure

More guidance on Class 3A NIC

Further guidance has been issued on Class 3A National insurance contributions (NIC).

In the autumn of 2013 the Government announced plans to introduce a scheme to allow pensioners to top up their Additional State Pension by paying a new class of voluntary National Insurance contribution, to be known as Class 3A.

‘The scheme will open in October 2015 and will be available to all pensioners who reach State Pension age before the introduction of the new State Pension in April 2016. The scheme is expected to run for 18 months.’

‘Class 3A will give pensioners an option to top up their pension by up to £25 a week in a way that will protect them from inflation and offer protection to surviving spouses. In particular, it could help women, and those who have been self-employed, who tend to have low additional State Pension entitlement.’

Internet link: Publication

More HMRC guidance on the Employment Allowance

The Employment Allowance of up to £2,000 is available to most employers from 6 April 2014. Employers can reduce the amount of National Insurance contributions (NICs) they pay for their employees by up to £2,000. This is called the ‘Employment Allowance’.

Employers generally won’t have to pay any employer National Insurance contributions at all if they usually pay less than £2,000 a year.

HMRC has issued more guidance on the practicalities of claiming the allowance which can be found by visiting the link below.

For help with payroll matters please do contact us.

Internet links: Employment allowance detail Employment allowance key facts

Tax-free childcare

Details of the new Tax-Free Childcare scheme which is to be launched in autumn 2015 have been announced.

The scheme will be worth a maximum of £2,000 per child per year. The maximum amount due is calculated on 20% of the costs of childcare (up to a total of childcare costs of £10,000 per child per year).

The scheme will be launched in autumn 2015. All children under 12 within the first year of the scheme will be eligible. To qualify for Tax-Free Childcare all parents in the household must:

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

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

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

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

Internet link: News

Increase in NMW rates

The Government has approved a rise in the National Minimum Wage rates which will come into effect on 1 October 2014:

a 19p (3%) increase in the adult rate (from £6.31 to £6.50 per hour)
a 10p (2%) increase in the rate for 18 to 20 year olds (from £5.03 to £5.13 per hour)
a 7p (2%) increase in the rate for 16 to 17 year olds (from £3.72 to £3.79 per hour)
a 5p (2%) increase in the rate for apprentices (from £2.68 to £2.73 per hour.

The rise will take effect in October 2014, as Business Secretary Vince Cable has accepted in full the independent Low Pay Commission’s recommendations for 2014, including plans for bigger increases in future than in recent years.

The Low Pay Commission (LPC) has said the rise, the first real terms cash increase since 2008, is manageable for employers and will support full employment.

Business Secretary Vince Cable said:

‘The recommendations I have accepted today (12 March 2014) mean that low paid workers will enjoy the biggest cash increase in their take home pay since 2008. This will benefit over 1 million workers on National Minimum Wage and marks the start of a welcome new phase in minimum wage policy.’

Meanwhile HMRC have revealed some of the excuses given for not paying the NMW.

Internet links: Press release HMRC NMW excuses

Advisory fuel rates for company cars and fuel benefit charge

Where private fuel is provided by the employer for a company car then a separate benefit is assessable on the employee. This benefit charge is calculated by applying the same percentage figure used to calculate the company car benefit to a fixed figure which for 2014/15 is set at £21,700. The percentage is linked to the car’s CO2 emission figures.

Now is a good time to consider whether this benefit is value for money for both the employee and employer.

The alternative is to reimburse the employee for business miles using the company car advisory fuel rates. The current rates are:

Engine size	Petrol
1400cc or less	14p
1401cc – 2000cc	16p
Over 2000cc	24p

Engine size	LPG
1400cc or less	9p
1401cc – 2000cc	11p
Over 2000cc	17p

Engine size	Diesel
1600cc or less	12p
1601cc – 2000cc	14p
Over 2000cc	17p

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

P11d deadline approaching

The forms P11D, and where appropriate P9D, which report details of expenses and benefits provided to employees and directors for the year ended 5 April 2014, are due for submission to HMRC by 6 July 2014. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

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

HMRC have updated their expenses and benefits toolkit for 2013/14 and record keeping for 2014/15. The toolkit consists of a checklist which may be used by advisers or employers to check they are completing the forms P11D correctly.

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

Internet links: http://www.hmrc.gov.uk/payerti/exb/forms.htm Toolkit

Newsletter – September 2012

Posted on September 30, 2012 by Henry Cooper

In this month’s enews we report on HMRC’s guidance on a number of issues including those relevant to businesses, employers and individuals.

Please browse through the articles and get in touch if you have any further queries or would like more information.

eNEWS quicklinks
Autumn Statement 2012	Check your National Insurance Number
What is a car, commercial vehicle or motor home for VAT?	VAT guidance
Seed Enterprise Investment Scheme guide	National Minimum Wage Rates
Get paid: A guide for owners and managers of small businesses	HMRC launch tracker – Where’s my reply?
Does your business still need an audit?	New proposals to streamline employment law

Autumn Statement 2012

The government has announced that the Autumn Statement will be made by the Chancellor of the Exchequer, George Osborne, on Wednesday 5 December at 12.30pm.

The Statement provides an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility.

We will let you have details of pertinent announcements following the Chancellor’s statement to Parliament.

Internet link: Treasury website

Check your National Insurance Number

HMRC have announced a new procedure whereby individuals can email them for written confirmation of their National Insurance number using form CA5403.

HMRC advise:

‘If you’ve lost or can’t remember your National Insurance number or can’t find it on official paperwork you can email HM Revenue & Customs (HMRC) for written confirmation of your number. You can also use this service to let HMRC know that you’ve changed your name or address.’

‘National Insurance cards are no longer issued and your National Insurance number is not proof of your identity.’

Internet links: Press release Form CA5403

What is a car, commercial vehicle or motor home for VAT?

HMRC have updated their guidance on the classification of vehicles.

For VAT purposes it is vital to know the difference between cars and other vehicles. This is because in most cases, VAT registered businesses cannot reclaim the input VAT incurred when they purchase a car. Generally businesses are able to reclaim the input VAT when they buy a commercial vehicle.

The HMRC guide explains the difference between a car, motorcycle, a motor home and a commercial vehicle for VAT purposes.

The link also gives access to the current list of ‘Car derived vans and combi vans’. This updated useful list considers the treatment of some borderline vehicles.

Internet link: HMRC VAT motor vehicle guidance

VAT guidance

HMRC have announced the publication of guidance covering the changes to address VAT borderline anomalies announced at Budget 2012.

The majority of the changes take effect from 1 October 2012. The changes which relate to caravans will however take effect from 6 April 2013.

Seven information sheets are available which cover the following areas:

Hot food and premises
Caravans
Sports nutrition drinks
Listed buildings
Hairdressers’ chairs
Self storage and
Anti-forestalling (in relation to the listed building and self storage changes)

HMRC have confirmed in their press release:

‘Information sheets are being published to explain how each of the changes will work. These will be incorporated into HMRC’s books of guidance as soon as possible.’

If you would like any guidance in any of these areas please do get in touch.

Internet link: HMRC VAT briefs

Seed Enterprise Investment Scheme guide

The Enterprise Investment Scheme (EIS) has been in place for a number of years and provides tax relief for individuals prepared to invest in new and growing companies. Investors can obtain generous income tax and capital gains tax reliefs for their investment and companies can use the relief to attract additional investment to develop their business.

A junior version of EIS known as Seed Enterprise Investment Scheme (SEIS) was introduced from 6 April 2012.

HMRC have issued guidance for both companies and investors on the operation of SEIS.

Please do contact us if you would like advice on SEIS or EIS.

Internet link: HMRC SEIS guidance

National Minimum Wage Rates

The National Minimum Wage (NMW) rates from 1 October 2012 are as follows:

the adult minimum wage rate will increase from £6.08 to £6.19 an hour
the rate for 18 – 20 year olds will remain at £4.98 an hour
the rate for 16 -17 year olds will remain at £3.68 an hour and
the apprentice rate will increase from £2.60 to £2.65 an hour.

HMRC are able to charge penalties to those employers found to be in breach of the NMW rules. Details of the calculation of arrears and potential penalties can be found on the BIS website.

If you have any queries on the NMW please do get in touch.

Internet links: Directgov website BIS website

Get paid: A guide for owners and managers of small businesses

The CBI is backing a new guide which encourages good practice among suppliers and customers. The guide offers advice to businesses to ensure that they get paid by their customers and also pay their suppliers on time.

To read the guidance please visit the link below.

Internet links: Press release Get paid guide

HMRC launch tracker – Where’s my reply?

HMRC have announced the introduction of a new tracker service.

Agents, employees and those paying tax on company pensions through PAYE can use a new tracker to find out when to expect to receive a reply to their enquiry from HMRC.

HMRC advise:

‘If you’re an employee or you pay tax on a company pension through PAYE (Pay As You Earn – the system used by employers and pension providers to deduct tax from your wages or pension), you can use the tracker to check how long it will take HMRC to:

pay your income tax refund
reply to your general income tax enquiry
provide a copy of individual information, such as your tax code or pay and tax details
send you HMRC forms or stationery.’

‘If you’re an agent, you can also check how long it will take HMRC to:

register you as an agent to use HMRC Online Services
process an application for authority to act on behalf of a client
amend your agent details.’

Internet link: HMRC Where’s my reply?

Does your business still need an audit?

The government has announced key changes to company and LLP audit and reporting requirements. The changes remove the need for many more companies and LLPs to have an audit and apply to financial years ending on or after 1 October 2012.

The government has announced that:

for small companies the audit thresholds will be aligned with small company accounting thresholds
for qualifying parent companies and their subsidiaries that an option will be available to not have subsidiaries audited and instead for the parent to provide a statutory guarantee over their subsidiaries’ liabilities, and
dormant subsidiaries will be exempt from the requirement to prepare and file accounts.

Whilst the changes have been marketed by the government as saving businesses millions in reporting and accountancy fees, there are, of course, a number of factors to consider in making a decision as to how to proceed.

Please contact us for guidance in this area.

Internet link: BIS response

New proposals to streamline employment law

Vince Cable has announced measures to give employers more flexibility in managing their workforce by reducing employment law red tape.

According to the press release:

‘The government has given details of:

Its support for settlement agreements to help end employment relationships in a fair and consensual way.
A consultation on how best to make this work in practice starts today and Acas has agreed to provide a new code of practice.
How it might reduce the cap on compensation for unfair dismissal claims.
Proposals to streamline employment tribunals by making it easier for judges to dismiss weak cases
Responses to its call for evidence on the TUPE rules, when staff transfer to a new employer. Government has heard that businesses want this to be more efficient, and will consult on specific proposals before the end of the year.
Recommendations on how to improve guidance for small businesses on the Acas code of practice on discipline and grievance.’

Internet link: BIS news

Newsletter – March 2012

Posted on March 30, 2012 by Henry Cooper

eNEWS – March 2012

In this month’s enews we report on the Budget. You may have already read some information following Budget Day but we have included details of the key announcements.

Please contact us if you would like any further information.

eNEWS quicklinks
Budget 2012	Increased personal allowance for 2012/13
Age allowances	Child Benefit
Corporation tax rates	Stamp duty land tax (SDLT)
Employer end of year forms	Reimbursing additional household expenses
Advisory fuel rates for company cars	Updated guidance on Gift Aid and new declarations
National Minimum Wage rates	National Loan Guarantee Scheme

Budget 2012

George Osborne presented his third Budget on Wednesday 21 March 2012.

The Chancellor started by reaffirming the need for stability in the UK economy and finished in Churchillian style with phrases such as:

‘No people will strive as the British will strive.’

‘No country will adapt as the British will adapt.’

‘This country borrowed its way into trouble. Now we’re going to earn our way out.’

The main Budget proposals announced are:

A further increase in the personal allowance but with a reduction in the basic rate band from April 2013.
A reduction in the additional rate of income tax from 50% to 45% from April 2013.
A phasing out of the age related personal allowances.
Details of how Child Benefit will be taxed on those with income in excess of £50,000.
An additional 1% cut in the main rate of corporation tax to 24% from April 2012.
Increased Stamp Duty Land Tax on high value residential properties.

Details of the announcements and supporting documentation can be found on the Treasury website using the link below.

Internet link: Treasury Website Budget page

Increased personal allowance for 2012/13

For those aged under 65 the personal allowance will be increased by £630 to £8,105. This increase is greater than the minimum required and is part of the plan of the government to ultimately raise the allowance to £10,000.

The personal allowance is reduced by £1 for every £2 of adjusted net income over £100,000. So for 2012/13, the allowance ceases at adjusted net income in excess of £116,210.

Tax band and rates 2012/13

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

The 50% additional rate of tax currently applies where taxable income exceeds £150,000.

If dividend income is part of total income this is taxed at 10% where it falls within the basic rate band, 32.5% where liable at the higher rate of tax and 42.5% where liable to the additional rate of tax.

Changes for 2013/14

The personal allowance is to increase to £9,205. The band of income taxable at this rate is being reduced to £32,245 so that the threshold at which the 40% band applies will reduce to £41,450.

For 2013/14 the 20% basic rate and 40% higher tax rates remain unchanged. However the 50% additional rate tax will be reduced to 45%. A rate of 37.5% will be payable on dividends liable to the additional rate of tax.

There had been widespread speculation that the 50% top rate of tax would be abolished.

Internet link: HMRC Budget information

Age allowances

It was announced in the Budget that from 2013/14 the higher age related personal allowances will not be increased and their availability will be restricted to people born on or before:

5 April 1948 for the £10,500 allowance
5 April 1938 for the £10,660 allowance.

This has been labelled the ‘granny tax’ by many as the increased allowances will no longer be available to those reaching age 65 and 75 respectively.

Internet link: HMRC Budget information

Child Benefit

Legislation will be introduced to impose a new charge on a taxpayer who has adjusted net income over £50,000 in a tax year where either they or their partner are in receipt of Child Benefit for the year. Where both partners have adjusted net income in excess of £50,000 the charge will apply to the partner with the higher income.

The 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. The charge on taxpayers with income above £60,000 will be equal to the amount of Child Benefit paid.

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

This charge will have effect from 7 January 2013 and for 2012/13 will apply to the Child Benefit paid from that date to the end of the tax year. The income taken into account will be the full income for 2012/13.

The removal of Child Benefit from households containing a higher rate taxpayer had been announced previously. However the detail of the way in which the restriction would apply had been subject to speculation. The following HMRC example shows how the charge will be calculated:

The Child Benefit for two children amounts to £1,752 and the taxpayer’s adjusted net income is £54,000.

The income tax charge will be £700.80 which is calculated as £17.52 for every £100 above £50,000.

For a taxpayer with adjusted net income of £60,000 or above the income tax charge will equal the Child Benefit.

Internet link: HMRC Budget information

Corporation tax rates

A further reduction in the main rate of corporation tax has been announced. The planned 1% decrease announced to take effect from 1 April 2012 is now to be a 2% decrease with the rate moving from 26% to 24%. Further 1% reductions to 23% and 22% are to take place from 1 April 2013 and 1 April 2014 respectively. The small company rate will remain at 20%.

Internet link: HMRC Budget information

Stamp duty land tax (SDLT)

A new rate of 7% will be introduced where the chargeable consideration for a residential property is more than £2 million. This will have effect where the effective date (normally the date of completion) is on or after 22 March 2012, unless the contract was entered into before that date.

An even higher rate of 15% will apply to such residential properties if the purchaser is a ‘non natural person’, for example a company. This will have effect where the effective date of the transaction is on or after 21 March 2012.

In addition the government will consult on the introduction of:

a SDLT annual charge where properties over £2 million are owned by non natural persons
a CGT charge on residential property owned by non resident, non natural persons.

Both these measures will apply from April 2013.

The intention of the 15% charge is to stop or reduce the number of schemes which claim to allow a property to be transferred without SDLT. The charges to be introduced in 2013 are aimed at charging properties already in companies which are used as residential accommodation.

Internet link: HMRC SDLT Budget changes

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 2012 which this year falls on a Saturday.

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

Reimbursing additional household expenses

From 6 April 2012 HMRC are increasing the guideline rate which employers can use to reimburse employees for additional household expenses incurred because they have to work from home to £4 per week (currently £3 a week). To find out more about the circumstances when these expenses can be reimbursed please do get in touch.

Internet link: HMRC expenses and benefits

Advisory fuel rates for company cars

New company car advisory fuel rates have been published to take effect from 1 March 2012. HMRC’s website states:

‘These rates apply to all journeys on or after 1 March 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 March 2012 are:

Engine size	Petrol	Diesel	LPG
1400cc or less	15p		10p
1401cc – 2000cc	18p		12p
Over 2000cc	26p		18p
1600cc or less		13p*
1601cc – 2000cc		15p
Over 2000cc		19p*

Please note that only two of the diesel rates have changed. These two rates marked * have both increased by one pence per mile.

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 fuel advisory rates

Updated guidance on Gift Aid and new declarations

HMRC have updated their guidance on Gift Aid declarations and provided new model declarations. They have also developed a new checklist of the minimum information to be included in a declaration if a charity decides to create and use its own declaration form.

Internet link: HMRC Charities Gift Aid

National Minimum Wage rates

The government has accepted the Low Pay Commission’s recommendations for National Minimum Wage rates from 1 October 2012.

From 1 October 2012:

the adult minimum wage rate will increase from £6.08 to £6.19 an hour
the youth development rate will remain at £4.98 an hour
the 16-17 year old rate will remain at £3.68 an hour and
the apprentice rate will increase from £2.60 to £2.65 an hour.

The Chair of the Low Pay Commission David Norgrove said:

‘Our recommendations this year are, as ever, based on extensive economic evidence and take account of the prospects for the UK economy. Although the economy is forecast to grow through 2012 and 2013, the expected pace of growth is uncertain and is likely to be low. We believe our recommendations for October 2012 balance the needs of low-paid workers against the challenges facing businesses, particularly small businesses.’

Internet link: Press release

National Loan Guarantee Scheme

The Chancellor George Osborne has launched the National Loan Guarantee Scheme (NLGS), which is designed to help ‘smaller businesses’ across the UK access cheaper finance. The loans will be available to businesses with an annual group turnover of up to £50 million.

According to the press release:

‘The government is using the UK’s budget credibility in financial markets to provide up to £20 billion of government guarantees on unsecured borrowing by banks, enabling them to borrow at a cheaper rate. Around £5 billion in guarantees will be made available in the first tranche.’

Businesses that take out an NLGS loan will receive a discount of 1% compared to the interest rate that they would otherwise have received from that bank outside the scheme.

George Osborne said:

‘The government promised to help small businesses get access to lower interest rates. Today, we deliver on that promise with a nationwide scheme. It’s only because we’ve earned credibility with our deficit reduction plan that we have low interest rates, and it’s only because of this scheme that we can pass the benefits of those low rates onto businesses.’

Internet link: Press release

Newsletter – September 2011

Posted on September 30, 2011 by Henry Cooper

In this month’s enews we report on increases to the NMW rates. Please contact us if you would like any further details on any of the issues covered.

eNEWS quicklinks
National Minimum Wage rates	Advisory fuel rates for company cars
Agreement with Switzerland to secure billions in unpaid tax	Unemployment figures
HMRC reminder on new tax return penalties	School Charities – Gift Aid and Payroll Giving guide
Revised construction industry penalties	HMRC report increase in phishing scams

National Minimum Wage rates

The adult rate of the National Minimum Wage (NMW) increases to £6.08 (£5.93) an hour from 1 October 2011. This is payable to those age 21 and over.

The rate for those aged 18 to 20 increases to £4.98 (£4.92) and for 16 and 17 year olds to £3.68 (£3.64) an hour.

The apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship, increases to £2.60 (£2.50) and hour.

Updated guidance available on the Business Link website includes specific situations such as those engaged on work experience or internships and their entitlement to the NMW. The guidance also includes a new worker checklist for employers and case study examples.

The press release confirms:

‘Entitlement to the NMW does not depend on a job title but on whether the arrangement they have with an organisation makes them a worker for NMW purposes. Where an individual is a worker – and no exemption applies – then they must be paid at least the NMW.’

Employment Relations Minister Edward Davey said:

‘Internships and work experience of all forms offer an excellent opportunity in helping to bridge the gap between education and the workplace. And for businesses it allows them access to a wide talent pool of some of our best and brightest who didn’t take the traditional route into a job.

Fairness though is absolutely paramount with all placements. When a worker is entitled to the minimum wage, they should be paid it and we will continue to enforce the law. Today’s publication will help clarify this for employers and will also make sure that all interns and those on work experience placements have a better understanding of their entitlement to the minimum wage.’

HMRC are able to charge penalties to those employers found to be in breach of the NMW rules.

If you have any queries on the NMW please do get in touch.

Internet links: NMW rates Business link guidance Press release NMW Penalties

Advisory fuel rates for company cars

New company car advisory fuel rates have been published to take effect from 1 September 2011. HMRC’s website states:

‘These rates apply to all journeys on or after 1 September 2011 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’

The advisory fuel rates for journeys undertaken on or after 1 September 2011 are:

Engine size	Petrol	LPG
1400cc or less	15p (15p)	11p (11p)
1401cc – 2000cc	18p (18p)	12p (13p)
Over 2000cc	26p (26p)	18p (18p)

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

Please note that only one rate has changed and that has been reduced and care must be taken to apply the correct rate after the one month period of grace.

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

Agreement with Switzerland to secure billions in unpaid tax

The government has agreed measures with Switzerland to tackle offshore tax evasion. Under the terms of an agreement, existing funds held by UK taxpayers in Switzerland will be subject to a significant one-off deduction of between 19% and 34% to settle past tax liabilities.

From 2013, a new withholding tax of 48% on investment income and 27% on gains will ensure the effective future taxation of UK residents with funds in Swiss bank accounts. This will be accompanied by new information-sharing rules which will make it easier for HMRC to find out about Swiss accounts held by UK taxpayers. The new charges will not apply if the taxpayer authorises a full disclosure of their affairs to HMRC.

Internet link: Press release

Unemployment figures

The latest unemployment figures show the number of people out of work rose by 80,000 to 2.51 million in the three months to July 2011.

Neil Carberry, CBI Director for Employment Policy, said:

‘This rise in unemployment is troubling, particularly the growing number of young people out of work.

With one in five 16-24 year olds currently unemployed, tackling youth unemployment must be a priority. Businesses are eager to play their part through apprenticeships, training and work placements, but now the government must do all it can to create the right conditions for the private sector to create much-needed jobs.’

Internet link: Press release

HMRC reminder on new tax return penalties

HMRC are reminding individuals and businesses about new Self Assessment penalties for late returns and late payments, which come into effect this autumn.

The changes will apply to Self Assessment returns for 2010/11 which must be submitted by 31 January 2012. As stated on the HMRC website:

‘The new penalties for late Self Assessment returns are:

an initial £100 fixed penalty, which will now apply even if there is no tax to pay, or if the tax due is paid on time
after 3 months, additional daily penalties of £10 per day, up to a maximum of £900
after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and
after 12 months, another 5% or £300 charge, whichever is greater. In serious cases, the penalty after 12 months can be up to 100% of the tax due.’

If you would like help or advice on your Self Assessment return please do contact us.

Internet links: Press release HMRC deadlines and penalties

School Charities – Gift Aid and Payroll Giving guide

HMRC have published a Gift Aid and Payroll Giving guide for School Charities.

The guide contains information and simple examples specifically related to funds received by school charities to help make the most of these donations and identify what qualifies for Gift Aid. The guidance covers the following scenarios:

‘Appeals to fund extra lessons

Non-uniform days

School fees

Appeals towards school running costs

Appeals to fund scholarships

Appeals to a general reserve fund

Educational school trips

Appeals to buy a minibus or other equipment

Revised construction industry penalties

From October 2011 the late submission Construction Industry Scheme monthly returns will result in revised penalties. The penalties are as follows:

a basic penalty of £100 for failure to meet due date of the 19th of the month
where the failure continues after two months after the due date, a further penalty of £200 will be charged
after six months an additional penalty will be due, rising to the greater of 5% of the tax or £300
after 12 months a further penalty will again be due being the greater of £300 or 5% of the tax but, where the withholding of information is deliberate and concealed, it will be 100% of the tax (or £3,000 if greater) and where information is withheld deliberately 70% of the tax (or £1,500 if greater).

Please get in touch if you would like help or advice on the Construction Industry Scheme.

Internet link: HMRC guidance on CIS penalties

HMRC report increase in phishing scams

HMRC have confirmed that reports of fraudulent ‘phishing’ emails have risen by 300% over the past year. The figure for August 2011 was 24,000. HMRC are currently helping to shut down around 100 scam websites a month.

They are stressing that if anyone receives an email claiming to be from HMRC advising that they are due a tax repayment that they do not follow the email’s instructions.

The emails provide a ‘click-through link’ to a cloned replica of the HMRC website, where the recipient is asked to provide their credit or debit card details. HMRC advise that victims risk not only having their bank accounts emptied but also their personal details being sold on to other organised criminal gangs.

Joan Wood, Director of HMRC Online and Digital, said:

‘We only ever contact customers who are due a tax refund in writing by post. We currently don’t use telephone calls, emails or external companies in these circumstances. If anyone receives an email claiming to be from HMRC, please send it to phishing@hmrc.gsi.gov.uk before deleting it permanently.

The increase in reports is partly due to improved awareness of this scam. However, I have no doubt that more of these “phishing” emails are in general circulation than ever before.

HMRC will do everything possible to ensure those receiving this email know what steps to take to protect their information, and we are working closely with other law enforcement agencies to target the criminals behind this serious crime and see them brought to justice.’

Internet link:

Newsletter – April 2011

Posted on April 30, 2011 by Henry Cooper

In this month’s enews we report on many employer related issues including the announcement of the new National Minimum Wage rates. Please do get in touch if you have any queries.

eNEWS quicklinks
Real Time Information	Cheque Guarantee Card Scheme to end
Penalties on late payment of PAYE	National Minimum Wage rates
P11D deadline looming	Online VAT returns
Implementation date announced for the Bribery Act 2010

Real Time Information

HMRC are planning to introduce significant changes to the way in which PAYE information is submitted to HMRC. Currently employers send details of employees pay, tax and national insurance deductions at the end of the tax year (forms P35 and P14). The deadline for the submission of this year’s forms is 19 May 2011. There are penalties, which apply to broadly all employers, for failing to submit the forms on time and electronically, so please get in touch if you require any help in this area.

HMRC are planning to introduce Real Time Information (RTI) a system of monthly/weekly PAYE returns which would replace the annual end of year forms.

As detailed in the HMRC consultation document:

‘RTI will collect information about tax and other deductions automatically each time employers run their payroll. This information will be submitted automatically to HMRC at the same time the employees are paid. Where employers pay their employees via BACS, the RTI data will form part of the BACS submission.’

HMRC hope that this change to the system should mean that employees pay the right amount of tax and are paid the correct amount of state benefits where appropriate.

Following a consultation by HMRC, it has been confirmed that a pilot scheme will run from April 2012. The introduction of the scheme will be phased in and it is expected that all employers will move to RTI by October 2013. Large employers will be expected to use the system from April 2013.

The start date is slightly later than had been originally announced following a consultation with interested parties.

If you would like further information or guidance on payroll issues please do get in touch.

Internet link: Press release

Cheque Guarantee Card Scheme to end

It has been announced that the Cheque Guarantee Card Scheme will come to an end.

The closure of the Scheme means that it will no longer be possible to guarantee a ‘domestic’ cheque using a card after 30 June 2011. The decision to close the Scheme was taken by the Payments Council as guaranteed cheque use is in decline. The end of the Cheque Guarantee Scheme does not necessarily mean the end of cheques as businesses may continue to accept them if they choose to do so. However businesses that currently accept cheques with a guarantee card may wish to look into alternative payment methods.

Internet link: UK Payments article

Penalties on late payment of PAYE

HMRC have been warning employers for some time that they may have to pay a penalty if they do not pay their PAYE deductions on time. The penalties apply to PAYE deductions due for a period starting on or after 6 April 2010 include PAYE, Student Loan deductions, Construction Industry Scheme payments, Class 1 NICs, annual payments of employers’ Class 1A NICs and annual PAYE Settlement Agreements payments.

Deductions of PAYE, NICs, Student Loan deductions and Construction Industry Scheme payments are generally due by 19 of each month (or 22 if paid by electronic means and cleared into HMRC’s bank account). Small employers are able to pay quarterly.

Although the penalties apply from April 2010 notices will not be issued until after the end of the tax year and are expected to be issued in April or May 2011. For the majority of late payments the penalties start at 1% increasing to 4% depending on the number of late payments in the year. Extra penalties will be added where liabilities are outstanding for a further six and then 12 months.

Internet links: HMRC guidance on late payment HMRC alert

National Minimum Wage rates

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. The rates are reviewed each year by the Low Pay Commission and from 1 October 2011:

the main rate for workers aged 21 and over will increase to £6.08 (currently £5.93)
the 18-20 rate will increase to £4.98 (currently £4.92)
the 16-17 rate for workers above school leaving age but under 18 will increase to £3.68 (currently £3.64)
the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship will increase to £2.60 (currently £2.50).

Business Secretary Vince Cable said:

‘More than 890,000 of Britain’s lowest-paid workers will gain from these changes. They are appropriate – reflecting the current economic uncertainty while at the same time protecting the UK’s lowest-paid workers. I would like to thank the LPC for doing a good job in difficult circumstances.’

Chairman of the LPC David Norgrove said:

‘We welcome the Government’s acceptance of our recommendations. The Commission was again unanimous, despite all the economic uncertainties. We believe we have struck the right balance between the needs of low-paid workers and the challenges faced by businesses.’

Penalties for non compliance

Since April 2009 HMRC have been able to charge penalties to those employers found to be in breach of the NMW rules.

Automatic penalties are levied on employers where HMRC officers find NMW arrears. The penalties range from £100 to £5,000 with 50% prompt payment discounts for employers who settle within 14 days of notification.

The penalty is payable in addition to arrears owed to the workers.

In serious cases of non compliance the employer may be tried in a Crown Court and in those cases the fines are unlimited.

If you have any queries on the NMW please do get in touch.

Internet links: Press release BIS NMW guidance

P11D deadline looming

The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2011, are due for submission to HMRC by 6 July 2011. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 12.8% (for 2010/11) on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.

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

Internet link: HMRC P11D guidance

Online VAT returns

HMRC have confirmed that all businesses will have to complete online VAT returns and pay their VAT liabilities electronically from April 2012. Currently many businesses have to comply with these rules. However smaller businesses, registered prior to 1 April 2010 with an annual turnover of less than £100,000, can currently complete paper VAT returns and pay by non electronic means.

If you would like any help with VAT matters please do contact us.

Internet link: HMRC VAT guidance

Implementation date announced for the Bribery Act 2010

At the end of March 2011, the Justice Secretary, Kenneth Clarke announced that the Bribery Act 2010 will come into force on 1 July 2011. The new Act replaces, updates and extends the existing UK law against bribery and corruption. This important new legislation:

introduces a corporate offence of failure to prevent bribery by persons working on behalf of a business. A business can avoid conviction if it can show that it has adequate procedures in place to prevent bribery;
makes it a criminal offence to give, promise or offer a bribe and to request, agree to receive or accept a bribe either at home or abroad. The measures cover bribery of a foreign public official; and
increases the maximum penalty for bribery from seven to 10 years imprisonment, with an unlimited fine.

The introduction into law of the new corporate offence of failure of commercial organisations to prevent bribery is an important development that essentially requires all businesses to consider the requirements of the new Act. This new corporate offence is coupled with a defence where, if the business can show that it had ‘adequate procedures’ in place to prevent bribery, it can be protected from committing the new criminal offence.

All businesses should now familiarise themselves with the statutory guidance and begin to assess the risk of bribery occurring in the business. The extent of any further action will be dependent on the results of this risk assessment.

The Act also requires the government to produce guidance on what constitutes ‘adequate procedures’ and the Ministry of Justice has produced this. This can be found using the links below.

Internet links: Bribery Act 2010 guidance Quick start guide