Newsletter – February 2017

Enews – February 2017

In this month’s eNews we report on changes for landlords which take effect from April 2017, increased NMW and NLW rates and progress on Making Tax Digital. We also include several announcements from HMRC on tax return excuses, a new Helpline and details of successful prosecutions.

We also include the latest announcements regarding Pensions Auto Enrolment. Please do get in touch if you would like any further guidance on any of the areas covered.

Making Tax Digital

The government published their responses to the six consultations on making tax digital (MTD).

In response to the consultations the government have decided the following:

  • businesses will be able to continue to use spreadsheets for record keeping, but they must ensure that their spreadsheet meets the necessary requirements of Making Tax Digital for Business (MTDfB). This is likely to involve combining the spreadsheet with software
  • businesses eligible for three line accounts will be able to submit a quarterly update with only three lines of data (income, expenses and profit)
  • free software will be available to businesses with the most straightforward affairs
  • the requirement to keep digital records does not mean that you have to make and store invoices and receipts digitally
  • activity at the end of the year must be concluded and sent either by ten months after the last day of the period of account or 31 January, whichever of these is soonest
  • charities (but not their trading subsidiaries) will not need to keep digital records
  • for partnerships with a turnover above £10 million, MTDfB is deferred until 2020 due to the complexity of their tax affairs.

The MTD consultations also specifically explored the appropriate level of the initial exemption and deferral for the self-employed, landlords and businesses. Given the range of views expressed on this matter from respondents to the consultation, the government has decided to take more time to consider these issues alongside the fiscal impacts. Final decisions will be made before the law is finalised later this year.

In addition, HMRC will begin piloting digital record keeping and quarterly updates for a full year from April 2017, building up to working with hundreds of thousands of businesses and landlords before rolling the services out more widely. The stated aim of this pilot is to ensure the software is user-friendly and give individuals and businesses time to prepare and adapt. Piloting of the system had been recommended by the Treasury Select Committee.

Select Committee’s findings

The Treasury Select Committee has urged HMRC to implement a series of wide-ranging pilots in order to better test the government’s plans for the new digital tax initiative, Making Tax Digital (MTD), before it becomes compulsory for the majority of taxpayers.

The report found that, while the government had already carried out trials of the new initiative, those businesses which took part had done so at HMRC’s invitation.

The Committee stated that comprehensive pilots of MTD are ‘essential’, and that these need to be designed to collect information over the entire reporting cycle.

It also suggested that an evaluation of these pilots should be carried out before the full implementation of the scheme which is expected, for all but the smallest businesses to be implemented from April 2018 onwards.

Andrew Tyrie MP, Chairman of the Committee, said:

‘Without sufficient care, MTD could be a disaster. Implemented carefully, with long transitional arrangements where necessary, and, having drawn on information from fully inclusive pilots, MTD could be designed for the benefit both of the economy and of the tax yield. But with a rushed introduction, it will benefit neither.’

MTDfB will still be phased in from April 2018. We will keep you informed of developments.

Internet links: Parliament MTD GOV.UK MTD responses Consultations

Pay the NMW – no excuses

The government has revealed ten of the most bizarre excuses used by unscrupulous business owners who have been found to have underpaid workers the NMW.

These employers used excuses such as ‘only wanting to pay staff when there are customers to serve and believing it was acceptable to underpay workers until they had ‘proved’ themselves’.

The government has launched an awareness campaign to encourage workers to check their pay to ensure they are receiving at least the statutory minimum ahead of the NMW and NLW increases on 1 April 2017.

Employers need to ensure they are paying their employees at least the NMW and NLW.

Rate from 1 October 2016 Rate from 1 April 2017
NLW for workers aged 25 and over (introduced and applies from 1 April 2016) £7.20 £7.50
the main rate for workers aged 21-24 £6.95 £7.05
the 18-20 rate £5.55 £5.60
the 16-17 rate for workers above school leaving age but under 18 £4.00 £4.05
the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship £3.40 £3.50

This will be the second increase in six months for the NMW rates. Going forward the NMW and NLW rates will both be reviewed annually in April.

In a recent article in the Employer Bulletin, HMRC cite common errors:

  • not paying the right rate, perhaps missing an employee’s birthday,
  • making deductions from wages which reduce the employee’s pay below the NMW/NLW rate,
  • including top ups to pay that do not qualify for NMW/NLW,
  • failure to classify workers correctly, so treating them as interns volunteers or self employed and
  • failure to include all the time a worker is working, for example time spent shutting up shop or waiting to clear security.

What are the penalties for non-compliance?

The penalties imposed on employers that are in breach of the minimum wage legislation are 200% of arrears owed to workers. The maximum penalty is £20,000 per worker. The penalty is reduced by 50% if the unpaid wages and the penalty are paid within 14 days. HMRC also name and shame employers who are penalised.

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

Internet link: GOV.UK NMW news

Landlords to receive less tax relief on interest

In a change that will impact residential landlords, the amount of income tax relief available on residential property finance costs will be restricted to the basic rate of income tax. This change will mean that landlords will no longer be able to deduct all of their finance costs from their property income. They will instead receive a basic rate reduction from their income tax liability for their finance costs.

The restriction in the relief will be phased in over a four year period as follows:

  • in 2017/18, the deduction from property income will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction;
  • in 2018/19, 50% finance costs deduction and 50% given as a basic rate tax reduction;
  • in 2019/20, 25% finance costs deduction and 75% given as a basic rate tax reduction;
  • from 2020/21, all financing costs incurred by a landlord will be given as a basic rate tax reduction.

These rules do not apply to residential properties held in companies.

In addition rules may further restrict the relief which is due where the individual’s property income or total income is less than the amount on which basic rate relief is due. The computation is complex so please do get in touch if you would like us to review your position.

Internet link: GOV.UK guidance

More silly taxpayer excuses from HMRC

HMRC have released more unusual excuses from taxpayers who failed to complete their self assessment tax return on time. These include:

  1. ‘My tax return was on my yacht…which caught fire’
  2. ‘A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed’
  3. ‘My wife helps me with my tax return, but she had a headache for ten days’
  4. ‘My dog ate my tax return…and all of the reminders’
  5. ‘I couldn’t complete my tax return, because my husband left me and took our accountant with him. I am currently trying to find a new accountant’
  6. ‘My child scribbled all over the tax return, so I wasn’t able to send it back’
  7. ‘I work for myself, but a colleague borrowed my tax return to photocopy it and lost it’
  8. ‘My husband told me the deadline was the 31 March’
  9. ‘My internet connection failed’
  10. ‘The postman doesn’t deliver to my house’

With the self assessment submission deadline of 31 January now past and an automatic penalty of £100 for failing to submit your return on time, please contact us if you need help bringing your affairs up to date.

Internet link: GOV.UK news

Tax cheats – HMRC’s criminal case highlights of 2016

HMRC have revealed their top ten most significant fraud and organised crime cases of the last year.

Simon York, Director of HMRC’s Fraud Investigation Service, said:

‘Day in, day out, HMRC is coming down hard on tax cheats. As these cases show, we’ll tackle anyone committing tax fraud, regardless of how well resourced, well advised, or well organised. These ten prosecutions are among the most significant cases we’ve handled this year, and they reflect the wide range of work carried out by HMRC.’

Internet link: GOV.UK news

Tax helpline for people affected by severe weather and flooding

HMRC have made available a telephone helpline (0800 904 7900) for anyone affected by severe weather or floods. The helpline allows anyone affected to get practical help and advice on a wide range of tax problems they may be facing. These could be financial issues regarding making payment, issues regarding lost or damaged records and may include cancelling penalties where deadlines are missed due to severe weather and flooding.

Internet link: GOV.UK helpline

Pensions auto enrolment

The Department for Work and Pensions has confirmed the thresholds for pensions automatic enrolment for 2017/18.

The main qualifying threshold or ‘trigger’ for employees to be automatically enrolled will be maintained at £10,000 per annum. The lower limit of the qualifying earning band and will be £5,876 and the upper limit £45,000.

The written statement also includes:

‘Automatic enrolment has been a great success to date with almost 7 million people enrolled by more than 293,000 employers. It will give around 11 million people the opportunity to save into a workplace pension and we expect this to lead to around 10 million people newly saving or saving more by 2018, generating around £17 billion a year more in workplace pension saving by 2019/20.’

With over a million micro (1 – 4 employees) and small (5 – 49 employees) employers reaching their staging date for auto enrolment in the last quarter of 2016/17 and throughout 2017/18 it is important to ensure employers comply with their obligations. The Pensions Regulator has confirmed the exceptions which apply to employers which can be found at on their website (see the TPR link below).

Please contact us if you would like help with auto enrolment compliance or to determine whether or not your business is exempt from auto enrolment.

Internet links: Parliament written statement TPR exemptions

Newsletter – September 2015

eNews – September 2015

In this month’s eNews we report on how dividends will be taxed from 2016 and changes to ATED reporting requirements and increases in the NMW and the latest target for non compliance. We also update you on HMRC’s latest taskforce target, the new advisory fuel rates and an update on auto enrolment.

Please contact us if you would like further help or advice.

Taxing dividends from April 2016

In the Summer 2015 Budget, George Osborne announced fundamental changes to the way in which dividends are taxed and HMRC have issued a factsheet setting out examples of how the new regime will work.

An extract from the HMRC Factsheet states:

‘From April 2016 you have to apply the new headline rates on the amount of dividends you actually receive, where the income is over £5,000 (excluding any dividend income paid within an ISA).

The Dividend Allowance will not reduce your total income for tax purposes. However, it will mean that you don’t have any tax to pay on the first £5,000 of dividend income you receive.

Dividends within your allowance will still count towards your basic or higher rate bands, and may therefore affect the rate of tax that you pay on dividends you receive in excess of the £5,000 allowance.’

The changes will affect dividend receipts from 6 April 2016 however those who extract profits from their company as dividends may wish to consider whether to increase dividend payments before this date.

The table below shows a comparison between the current and prospective tax rates.

Dividend falls into : Basic rate band Higher rate band Additional rate band
Effective dividend tax rate now (taking into account notional tax credit) 0% 25% 30.6%
Rate from 6 April 2016 7.5% 32.5% 38.1%

Please contact us if you would like advice on this issue.

Internet link: Factsheet

National Minimum Wage rates and National Living Wage

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.

Employers also need to be aware that from April 2016, the government will introduce a new mandatory National Living Wage (NLW) for workers aged 25 and above. This will initially be set at £7.20 which is a 50p increase in the adult rate of NMW coming into force in October 2015. This represents an increase of in excess of £1,200 per annum in earnings for a full-time worker on the current NMW.

The NMW will continue to apply for those aged under 25. The government has issued further details of the new NLW policy.

Penalties

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

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

Internet links: Press release NLW policy

ATED updated procedures

Since 2013 a range of measures have been introduced to discourage the holding of residential property in the UK via companies, partnerships and collective investment schemes. In summary, these measures are:

  • Stamp Duty Land Tax (SDLT) is payable at 15% on the acquisition on or after 20 March 2014 of properties costing more than £500,000
  • an Annual Tax on Dwellings (ATED) applies at a fixed amount depending on value and
  • Capital gains tax (CGT) at 28% is payable on a proportion of gains for the period that the property has been subject to ATED.

There are specific reliefs and exemptions for certain types of properties.

Changes in limits

Prior to 1 April 2015 the lower property value threshold for ATED was a value of more than £2m on 1 April 2012, or at acquisition, if later. With effect from 1 April 2015, residential properties valued at more than £1m and up to £2m on 1 April 2012, or at acquisition if later, were brought into the charge.

From 1 April 2016 another new valuation band comes into effect for properties valued at more than £500,000 but less than £1 million.

The threshold for ATED-related CGT disposal consideration has also reduced from £2m to £1m from 6 April 2015 and will further reduce to £500,000 from 6 April 2016.

ATED Procedures

ATED is reported and the tax paid through an annual return. The return periods run from 1 April to 31 March each year.

Normally an ATED return must be made within 30 days of the date on which the property first comes within the charge to ATED for any chargeable period. Where the property is within the scope of ATED on 1 April each year, the return must be filed by 30 April in the year of charge. Payment of the tax is due with the return.

There is a special rule for properties coming within the scope of ATED from 1 April 2015 under the lower threshold of £1m detailed above. The rule is that returns for the chargeable period beginning 1 April 2015 must be filed by 1 October 2015 if the property was held on 1 April 2015 or within 30 days of acquisition if this is later. Payment of the tax is due 31 October 2015.

The chargeable person must submit an ATED return for any property that is within the scope of ATED for the relevant chargeable period. There are reliefs available which may reduce the liability in part or to zero. However, all claims for reliefs must be made in a new ‘relief declaration return’ and these new returns to claim relief have now been made available.

Returns for properties falling within the lower band of £500,000 are due for the chargeable period 1 April 2016 to 31 March 2017. The normal filing dates apply to properties within this new band. For example, if you hold a property valued at more than £500,000 on 1 April 2016, you must file your return and pay the tax by 30 April 2016.

Returns

In addition, a new ‘relief declaration return’ is introduced. Broadly, for each type of ATED relief being claimed, the company can submit a relief declaration return stating that a relief is being claimed in respect of one or more properties held at that time. No details are required of the individual properties or the number of properties eligible. Where a property is acquired in-year which also qualifies for the same type of relief, the existing return is treated as also having been made in respect of that property.

A normal ATED return will still be required in respect of any property which does not qualify or ceases to qualify for a relief i.e. where tax is due.

ATED and the reliefs available are a complex area. Please contact us if you would like specific advice.

Internet links: ATED relief declaration returns ATED

HMRC targets wealthy ‘tax cheats’ in Scotland

A taskforce which aims to tackle wealthy ‘tax cheats’ who are living beyond their means in Scotland has been launched by HMRC.

HMRC is identifying individuals with ‘badges of wealth’ such as large houses, investments, aeroplanes, boats and undeclared offshore bank accounts which are not in keeping with the information they report to HMRC.

HMRC expects the taskforce to recover nearly £4.5million. It will bring together specialist officers from across HMRC to identify wealth indicators and cross reference them with the data HMRC holds about their owners.

HMRC’s Michael Connolly, HMRC Taskforce Lead in Scotland, said:

‘HMRC’s intelligence shows that people being targeted by this taskforce have no intention of playing by the rules. They are deliberately failing to declare all their income to HMRC in a crude attempt to line their own pockets, and they will be investigated.

As a result of this behaviour, they could end up facing a heavy fine or even a criminal conviction. Those who pay the tax they are supposed to have nothing to worry about.

Using information we hold, we can target people whose lifestyle does not reflect the tax they are paying. It’s not fair that a small minority are living millionaire lifestyles as a result of not paying the tax they owe.’

Internet link: Press release

Auto enrolment ‘engagement’ and calculation tool

The Pensions Regulator (‘TPR’) has announced that following consultation they will develop a basic automatic enrolment tool. The basic tool should be available to download from TPR’s website by the end of 2015.

TPR consulted earlier this year on proposals to develop a basic tool to support those employers who use HMRC’s Basic PAYE Tools (BPT) to carry out their payroll function. HMRC’s BPT are used by many small employers to calculate PAYE, national insurance contributions and statutory payments such as Statutory Maternity Pay but has no pension function.

According to the TPR approximately 200,000 small and micro employers who use BPT are due to stage over the next two and half years and TPR’s experience indicates that using appropriate software either through payroll or pension provider systems helps employers to comply with their duties.

The majority of consultation responses were supportive of the TPR’s proposal, although some payroll firms and pension schemes were against the regulator developing a new tool.

Executive Director for Automatic Enrolment Charles Counsell said:

‘We will continue to recommend that BPT users consider using software with integrated automatic enrolment functionality, but by developing this basic contribution calculation tool we aim to ensure that BPT users have access to the help they need to support compliance.

The decision to develop a basic tool is recognition that significant numbers of BPT users will not seek a more integrated solution and will attempt manual calculations. This is another example of how The Pensions Regulator seeks to develop new ways to ensure we are meeting the needs of the diverse group of employers due to stage in the coming years.’

TPR has also issued the third edition of ‘Automatic enrolment: Commentary and analysis’, which reports on the impact of automatic enrolment and the increasing participation in workplace pension schemes. The commentary states:

  • By March 2015, over 5.2 million workers had been successfully automatically enrolled since the reforms began in 2012, an increase of more than 2.2 million workers from 2014, and 4.2 million from 2013.
  • Automatic enrolment is helping to turn around the decade-long decline in pension provision, with 59% of all employees now active members of a pension scheme, compared with just 47% in 2012. This increase suggests that pension saving is now becoming the norm.
  • The pensions landscape has been transformed as the majority of people are enrolled into defined contribution schemes. We have witnessed the growth in master trusts – 94% of employers who chose a trust-based scheme opted for a master trust.
  • We now expect that significantly more employers will be subject to automatic enrolment duties than originally anticipated, mainly due to an increase in the number of new companies that have started up, and fewer going out of business than was forecast. We have revised the staging profile accordingly, so that it reflects the 1.8 million employers we expect to help through the automatic enrolment process from now until 2018.

If you would like help with your payroll or advice on Pensions Auto Enrolment please contact us.

Internet links: Press release Commentary

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 September 2015. Due to the reduction in fuel prices many rates have reduced this quarter so please take care to update your expenses payments. However, the guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 September 2015 are:

Engine size Petrol
1400cc or less 11p
1401cc – 2000cc 14p
Over 2000cc 21p

 

Engine size LPG
1400cc or less 7p
1401cc – 2000cc 9p
Over 2000cc 14p

 

Engine size Diesel
1600cc or less 9p
1601cc – 2000cc 11p
Over 2000cc 13p

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: Advisory fuel rates

Newsletter – April 2015

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

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 – March 2015

eNews – March 2015

This month we report on the latest round of penalties issued by the Pensions Regulator and end of year filing and payment reminders for employers. We also include details of how to claim the new ‘Marriage Allowance’. Please contact us if you would like any further information on these or any other issues.

Fines for those who fail to comply with Pensions Auto Enrolment

The Pensions Regulator (TPR) has issued 166 Fixed Penalty Notices of £400 to employers who failed to meet their obligations in the last quarter of 2014.

The number of employers approaching the date when they must confirm that they have complied with new workplace pensions duties (known as a declaration of compliance) is now beginning to rise significantly as Auto enrolment is rolled out across all employers. In future months, TPR expects to see more employers who, despite the message to prepare early, leave it too late or do not comply at all.

The Pensions Regulator’s Director of automatic enrolment, Charles Counsell, said,

‘My message to all employers is that failing to declare within five months of your staging date means you risk being fined, which is why we recommend you start your automatic enrolment planning and preparation 12 months before staging.

It appears some medium employers waited for a prompt from the regulator before completing their automatic enrolment duties. Employers must complete all their duties including making their declaration of compliance to The Pensions Regulator.’

Experience to date also shows that employers should begin gathering the information they need to complete their declaration of compliance well in advance of their deadline.

If you would like help or advice with auto enrolment please get in touch.

Internet link: Press release

Registration opens for new married couples tax break

HMRC have announced that registration for the new ‘Marriage Allowance’ for married couples and those in civil partnerships is now open.

From 6 April 2015 certain married couples and civil partners may be eligible for a new Transferable Tax Allowance referred to by the Government as the ‘Marriage Allowance’. The allowance will enable eligible spouses and civil partners to transfer a fixed amount of their personal allowance to their spouse. The option to transfer is not available to unmarried couples.

The option to transfer will be available to couples where neither pays tax at the higher or additional rate. If eligible, one partner will be able to transfer 10% of their personal allowance to the other partner which means £1,060 for the 2015/16 tax year which could save them tax of up to £212 a year.

Couples can register their interest to receive the Allowance.

The government estimates that more than four million married couples and 15,000 civil partnerships will be eligible for the tax break.

Chancellor of the Exchequer George Osborne said:

‘We made a promise to introduce a recognition of marriage into our tax system – and now we’re delivering on that promise.

This includes updating the tax system so that it recognises marriage and civil partnerships.

Our new Marriage Allowance means saving £212 on your tax bill couldn’t be simpler or more straightforward.’

From April, HMRC will contact those who have already registered for the ‘Marriage Allowance’ to apply. People can register at any point in the tax year and still receive the full benefit of the allowance. It is also possible to claim the allowance after the end of the tax year where claimants are unsure if they will qualify.

Applying online is simple. One person in a couple will apply online to transfer the allowance to their spouse or civil partner, and HMRC will tell the recipient about the change to their Pay As You Earn (PAYE) tax code.

Internet link: GOV.UK

Charities Digital Service launched

HMRC have launched an online registration service for charities.

Until now charities have been required to complete a paper form (ChA1). Approximately 15,500 new charities are registered each year.

Chief digital and information officer at HMRC, Mike Dearnley, said:

‘We are completely changing the way we work with our customers – including charities. Our new digital services are straightforward, easy to use and convenient. The charities service minimises the risk of making mistakes, so applications are less likely to be returned to the organisation’.

All registration must now be completed online. Please contact us if you would like help with a charity.

Internet link: Charities Digital

PAYE end of year – pay on time reminder

HMRC are reminding employers that with the end of the 2014/15 tax year approaching they will soon need to make their final 2014/15 PAYE (RTI) submission.

For most employers, the final submission will be their final Full Payment Submission (FPS) which advises HMRC about the very last employee payments for 2014/15 and this needs to be made on or before 5 April 2015. Details of how to make the final submission can be found on the GOV.UK website using the link below. Alternatively if you would like help with your payroll please do get in touch.

HMRC are also advising employers to take extra care as the deadline for electronic payment of 22nd March falls on a Sunday.

HMRC are advising that employers should ensure their payment reaches HMRC on time, which means that cleared funds should be in HMRC’s account by the 20th unless employers are able to arrange a Faster Payment. For more details about paying HMRC electronically visit Pay PAYE tax.

Internet link: GOV payroll annual reporting Employer Bulletin

HMRC concession for late RTI returns and payments

HMRC have announced that employers will not incur penalties for delays of up to three days in filing RTI returns. There is no change to the filing deadlines and employers should generally file their full payment submissions (FPS) ‘on or before’ each payment date unless a concession applies.

HMRC are also advising any employer that has received an in-year late filing penalty for the period 6 October 2014 to 5 January 2015 and was 3 days late or less, to appeal online by completing the ‘Other’ box and add ‘Return filed within 3 days’.

In addition, to prevent unnecessary penalties being issued, HMRC will be closing around 15,000 PAYE schemes next month that have not made a PAYE report since April 2013 and which appear to have ceased.

HMRC will write to the affected schemes to tell them about the planned closure and what to do if they are, or should be, operating PAYE.

Employers with fewer than 50 employees are reminded that PAYE late filing penalties will apply to them from 6 March.

Internet link: News

Advisory fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 March 2015. Due to the reduction in fuel prices many rates have reduced this quarter between two and three pence so please take care to update your expenses payments. However, the guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 March 2015 are:

Engine size Petrol
1400cc or less 11p
1401 cc – 2000cc 13p
Over 2000cc 20p

 

Engine size LPG
1400cc or less 8p
1401 cc – 2000cc 10p
Over 2000cc 14p

 

Engine size Diesel
1600cc or less 9p
1601cc – 2000cc 11p
Over 2000cc 14p

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: GOV.UK

Car benefits online

As part of HMRC’s digitisation campaign, an online trial allows company car drivers to make changes to car and fuel benefits that will affect their tax codes.

It is important to ensure the benefits included in your tax code are as accurate as possible or large under or overpayments of tax may arise. For information on how to amend your tax code visit the link below. Alternatively if you would like help checking your tax code please do get in touch.

Internet link: GOV.UK

Newsletter – February 2015

eNews – February 2015

This month we report on changes to auto enrolment limits, the launch of Pension wise and the Fit for Work service. We also update you on the latest HMRC phishing scam emails and the success of Accelerated Payment Notices. Please contact us if you would like any further information on these or any other issues.

Government publishes guidance on new ‘Fit for Work’ service

The Government has published guidance on its new Fit for Work service, which aims to help tackle the problem of long-term sickness absence.

The service is being introduced to facilitate the return to work of employees who have been off sick for a period of four weeks or more. The new service will enable employers to refer their employees, with the employee’s consent, for an occupational health assessment. Following the assessment, a return to work plan will be created, including recommendations for employers on how to assist the employee with getting back to work.

A benefit in kind tax exemption of up to £500 per year per employee will be available for employer spending on medical treatments recommended by the assessment which help employees to return to work.

The Department for Work and Pensions is advising employers to update their sickness policies to reflect the existence of the new service.

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

Internet link: fit-for-work-employers-guide

Accelerated Payment notices

HMRC have announced that they have secured almost all of the disputed tax due from the first group of tax avoidance scheme users to receive Accelerated Payment notices (APNs). An APN forces the taxpayer to make payment to HMRC of tax currently under dispute within 90 days of being issued with a notice. APNs are being introduced to counteract the perceived cash flow advantage for the taxpayer of holding onto the disputed tax during an avoidance dispute.

Approximately 30 scheme users were advised in August 2014 that they had 90 days to pay a total of around £29 million of disputed tax upfront under the new Accelerated Payments regime.

HMRC have announced that over 99% of this money was paid within the deadline, with several payment arrangements also in place. HMRC have received £32 million in disputed tax to date.

Financial Secretary to the Treasury David Gauke said:

‘The high success rate for the first set of Accelerated Payments notices shows avoidance scheme users are having to face up to the reality that they should pay their tax upfront, like the vast majority of taxpayers.

As we move into 2015 and HMRC ramps up the number of notices it sends out, thousands more will get the message that Accelerated Payments has changed the economics of tax avoidance.’

Jennie Granger, Director General for Enforcement and Compliance, HMRC, said:

‘These results show HMRC is making good progress in tackling marketed tax avoidance. If anyone is concerned about being able to pay an Accelerated Payment notice, they should contact us as soon as possible to discuss their options.’

Internet link: Gov news

HMRC warn of phishing email scam

HMRC are warning taxpayers to be wary of the latest in a long line of email phishing scams that claims taxpayers have ‘made mistakes while completing their last tax form application’.

HMRC have updated their list of phishing email scams to include the latest bogus email being circulated. According to HMRC:

‘the email contains a link which should not be clicked as it may direct you to a phishing site or contain malware. Do not respond to this email. Forward it to phishing@hmrc.gsi.gov.uk then delete it.’

Internet link: HMRC examples

Auto enrolment letters and updated thresholds

The Pensions Regulator (TPR) is to write to all small and micro businesses in the coming months as part of a new campaign to give them key information on auto enrolment, including when the duties affect their businesses.

In addition the auto enrolment qualifying earnings bands and earning thresholds have been announced for 2015/16. These thresholds are relevant to employers complying with their automatic enrolment obligations to enrol and then make pension contributions for eligible employees. Employers must meet their obligations from their staging date which can be found by using TPR Website tool.

The revisions in the limits take effect from 6 April 2015 and follow the recommendations from consultation with interested parties.

TPR proposes to revise the limits to the following amounts:

  • £5,824 for the lower limit of the qualifying earnings band
  • £42,385 for the upper limit of the qualifying earnings band

These limits are used by employers to calculate how much pension contributions are due where band earnings are the basis of calculation.

The amount someone must earn to be automatically enrolled into a workplace pension (the earnings trigger) will remain at £10,000 per annum instead of being aligned with the personal allowance as it has been for previous years following concerns that low paid workers will miss out on pension contributions.

If you would like help with auto enrolment please do get in touch.

Internet links: Gov Press release

Government wants suggestions for Budget 2015

HM Treasury is encouraging groups, individuals and representative bodies to submit their ideas for consideration in advance of Budget 2015.

HM Treasury has also published guidance on the correct procedure for making a representation, which advises that ‘representations should contain policy suggestions for the upcoming fiscal event and explain the policy rationale, costs, benefits and deliverability of proposals’.

‘It should also be evidence based, providing clear arguments on how it contributes to the aims of the Budget.’

Written representations for the 2015 Budget can be submitted until Friday 13 February, via an online survey or by emailing budget.representations@hmtreasury.gsi.gov.uk.

Chancellor George Osborne will present Budget 2015 on Wednesday 18 March.

Internet link: News

Pension wise

The government has announced the launch of ‘Pension wise’ which will offer free and impartial guidance to people on the new pension freedoms which comes into effect in April.

Economic Secretary to the Treasury Andrea Leadsom has unveiled the name and logo of the new pensions guidance service.

Pension wise will offer free and impartial information and guidance to people with a defined contribution pension approaching retirement and will be available from April 2015 for individuals approaching retirement.

Economic Secretary to the Treasury Andrea Leadsom said:

‘People who have worked hard and saved all their lives will be free to choose what they do with their money from next April.

We want people to be empowered to make informed and confident choices and I’m delighted to announce Pension wise: Your money. Your choice as the brand name for the impartial guidance service we are building.

Pension wise will be a first port of call for people with a defined contribution pension who are approaching retirement. It is a distinctive brand, making it easy for consumers to know where to go for help and guidance.’

Internet link: News

Strong demand for National Savings ‘pensioner bonds’

The National Savings & Investments website and helpline are experiencing a high volume of enquiries following the launch of their 65+ Guaranteed Growth Bonds which are being referred to as ‘pensioner bonds’.

The bonds are available for a period of one or three years. The taxable bonds offer savers interest of 2.8% over one year and a fixed annual interest rate of 4% over three years with a minimum investment of £500. Investors are restricted to a maximum investment of £10,000 in each of the two products offered.

The new bonds cannot be held within a New Individual Savings Account (NISA) and only pay interest at the end of the savings term. Where investors cash in their investment early, a penalty equivalent to 90 days’ interest will be applied.

Internet link: NS&I bonds

Newsletter – December 2014

eNews – December 2014

In this month’s eNews we report on a number of issues including the Autumn Statement announcement of the changes to Stamp Duty Land Tax. We also include the latest advisory fuel rates and the EAT ruling on holiday pay and overtime.

Please do get in touch if you would like any further guidance on any of the areas covered.

Autumn Statement

The Chancellor George Osborne delivered his Autumn Statement on 3 December and said:

‘…to improve the productivity of our economy, we back business and we build infrastructure and we will support growth across the whole UK.’

‘But in the end, Britain’s future lies in the hands of its people and their aspirations.

The aspiration to save, to work, and to buy a home. Today we support each one.’

We have included details of some of the major announcements.

Internet link: gov.uk

Stamp Duty Land Tax (SDLT)

One of the Autumn Statement announcements is a major reform to SDLT on residential property transactions. Historically SDLT has been charged at a single percentage of the price paid for the property, depending on the rate band within which the purchase price falls. From 4 December 2014 each new SDLT rate will only be payable on the portion of the property value which falls within each band. This will remove the distortion created by the existing system, where the amount of tax due jumps at the thresholds.

Where contracts have been exchanged but not completed on or before 3 December 2014, purchasers will have a choice of whether the old or new structure and rates apply. This measure will apply in Scotland until 1 April 2015 when SDLT is devolved to the Scottish Parliament.

The new rates and thresholds are:

Purchase price of property New rates paid on the part of the property price within each tax band
£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1,500,000 10%
£1,500,001 and above 12%

The government believes that this reform makes SDLT more efficient and fairer, and ensures that SDLT will be cut for 98% of people who pay it.

Internet link: gov.uk

Incorporation – restriction of relief for goodwill and Entrepreneurs’ relief

Corporation tax relief is given to companies when goodwill and intangible assets are recognised in the financial accounts. Relief is normally given on the cost of the asset as the expenditure is written off in accordance with Generally Accepted Accounting Practice or at a fixed 4% rate, following an election.

In the Autumn Statement an anti-avoidance measure has been announced to restrict corporation tax relief where a company acquires internally-generated goodwill and certain other intangible assets from related individuals on the incorporation of a business.

In addition, individuals will be prevented from claiming Entrepreneurs’ Relief on disposals of goodwill when they transfer the business to a related company. Capital gains tax will be payable on the gain at the normal rates of 18% or 28% rather than 10%.

These measures will apply to all transfers on or after 3 December 2014 unless made pursuant to an unconditional obligation entered into before that date.

Prior to this announcement it was possible, for example, on incorporation of a sole trader’s business to a company which is owned by the sole trader, for the company to obtain corporation tax relief on the market value of goodwill at the time of incorporation. The disposal by the sole trader would qualify for a low rate of capital gains tax.

Internet link: gov.uk

Employment benefits changes ahead

In the Autumn Statement the government announced a package of measures which will impact the treatment of employee benefits in kind and expenses.

  • From 6 April 2015 there will be a statutory exemption for trivial benefits in kind costing less than £50.
  • From 6 April 2016, the £8,500 threshold below which employees do not pay income tax on certain benefits in kind will be removed. This threshold adds unnecessary complexity to the tax system. There will be new exemptions for carers and ministers of religion.
  • There will be an exemption for certain reimbursed expenses which will replace the current system where employers apply for a dispensation to avoid having to report non-taxable expenses. The new exemption for reimbursed expenses will not be available if used in conjunction with salary sacrifice.
  • The introduction of a statutory framework for voluntary payrolling benefits in kind. Payrolling benefits instead of submitting forms P11D can offer substantial administrative savings for some employers.

Please contact us if we can help with employee benefits and expenses reporting.

Internet link: gov.uk

Personal allowances and tax bands 2015/16

For those born after 5 April 1948 the personal allowance will be increased from £10,000 to £10,600. 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 2014/15 there is no allowance when adjusted net income exceeds £120,000. In 2015/16 the allowance ceases when adjusted net income exceeds £121,200.

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% were 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 to £5,000 from £2,880, and this starting rate will be reduced from 10% to nil. 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. If a saver’s taxable non-savings income will be below the total of their personal allowance plus the £5,000 starting rate limit then they can register to receive their interest gross using a form R85.

Internet link: gov.uk

Holiday pay and overtime

In the judgment an Employment Appeal Tribunal (EAT) has decided that holiday pay should reflect non-guaranteed overtime.

Under the Working Time Regulations 1998 most workers are entitled to paid statutory annual leave. This is 5.6 weeks (28 days) if the employee works five days a week. A worker is entitled to be paid in respect of any period of annual leave for which they are entitled, at a rate of one week’s pay for each week’s leave.

The EAT considered three cases in which employees were required to work overtime if requested by their employees. The EAT referred to this type of overtime as non-guaranteed overtime. The Tribunal decided in the context of non-guaranteed overtime:

  • overtime payments must be taken into account in the calculation of holiday pay if there is a settled pattern of work
  • if the amount of overtime varies but is regularly paid, overtime payments must also be taken into account on an average basis.

Vince Cable has announced the setting up of a taskforce to assess the possible impact of the Employment Appeal Tribunal ruling on holiday pay.

Business Secretary Vince Cable said:

‘Government will review the judgment in detail as a matter of urgency. To properly understand the financial exposure employers face, we have set up a taskforce of representatives from government and business to discuss how we can limit the impact on business. The group will convene shortly to discuss the judgment.

Employers and employees can also contact the Acas helpline for free and confidential advice.

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

Internet links: Acas guidance Gov News EAT

Advisory Fuel rates for company cars

New company car advisory fuel rates have been published which took effect from 1 December 2014. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

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

Engine size Petrol
1400cc or less 13p
1401 cc – 2000cc 16p
Over 2000cc 23p

 

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

 

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

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: gov.uk

Do you employ anyone under the age of 21?

From the 6 April 2015, if any of your employees are under the age of 21 you may no longer need to pay employer Class 1 secondary National Insurance contributions (NICs) on their earnings.

The rate of employer Class 1 NICs for employees under the age of 21 will be 0% up to the new ‘Upper Secondary Threshold’ (UST) which, for the tax year starting 6 April 2015, will be the same as the Upper Earnings Limit (UEL). Class

1 NICs will however continue to be payable on all earnings above this threshold. The basic rules and calculations of National Insurance including how Class 1 NICs are assessed will not be changed by this measure.

For employees who are at, or over, the age of 16 and under the age of 21 there will be a range of new NI category letters to available. From 6 April 2015, when submitting PAYE information for employees under the age of 21 employers will need to use the new category letter appropriate to the individual.

Seven new National Insurance category letters have been introduced. The most commonly used one will be category M:- Not contracted-out standard rate contributions for employees under 21.

Employers (or their agents) are responsible for ensuring they report the correct category letter. To do this, employers will need to make sure they hold the correct date of birth for employees.

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

Internet link: Employer Bulletin

Gift Aid declaration to be improved – potentially saving charities billions of pounds

The Gift Aid model declaration form is to be improved, to stop charities potentially losing out on billions of pounds of Gift Aid.

The National Audit Office estimates there are donations of around £2.3 billion where Gift Aid is not used. Although not all of these donations will be eligible for Gift Aid, the government is working with charities to boost the number of eligible donations.

One way it hopes to do this is by improving the model Gift Aid declaration form, as research has identified that many donors do not understand Gift Aid and the link between the tax they have paid and Gift Aid claimed by the charity. Possible improvements include making the language used about Gift Aid more straightforward to enable donors to decide if their donations qualify for relief.

Exchequer Secretary to the Treasury, Priti Patel said:

‘Gift Aid is an important tax relief for charities which helps to provide essential revenue to charitable causes. This research shows that there is more that government can do to boost eligible donations which is why we are simplifying the declaration forms to make sure donors understand when they’re eligible so that charities can maximise the financial donations they receive.’

Internet link: gov.uk

Helping employers identify a pension scheme for automatic enrolment

The Pensions Regulator (TPR) has opened consultation on a proposal to publish a list of pension schemes that are available to any employer, regardless of the number or workers the employer has or their levels of pay.

According to research carried out by the Department for Work and Pensions 48% of small and 79% of micro employers currently have no pension scheme and will have to choose a new one as they prepare for automatic enrolment.

TPR state they are ‘aware of 30-40 providers who offer a scheme for automatic enrolment. Of these, a much smaller number of schemes have indicated they will not reject employers on the basis of size or low value. Even fewer schemes have indicated they will accept all employers who approach them.’

To read more about this issue and the consultation visit the link below.

Internet link: thepensionsregulator.gov.uk

HMRC warning ‘Ten things you need to know about tax avoidance’

HMRC have published a list of factors to consider before buying into a ‘scheme’. The list sets out the risks of entering into a tax avoidance scheme including the possible monetary costs and reputational damage of tax avoidance, but also a potential criminal conviction.

This list is being published as HMRC writes to the first promoters who will be caught by new High-Risk Promoters rules. If they don’t change their behaviour, HMRC could name them publicly and fines might be imposed of up to £1 million.

The Financial Secretary to the Treasury, David Gauke, said:

‘The government has taken unprecedented steps to clamp down on the selfish minority who practise tax avoidance, because we are firmly on the side of the vast majority of taxpayers who play by the rules. As a result, tax avoidance is now very high risk.

On top of a substantial fee to join a scheme that will almost certainly fail a challenge by HMRC, tax avoiders will also have to pay the tax they dodged, plus interest and penalties.

To help protect taxpayers from unscrupulous promoters we have put in place new High-Risk Promoters rules, but people need to be aware of the dangers. So I would strongly advise anyone thinking of signing up to a scheme which they have been told will legally reduce their tax bill to carefully consider today’s list of things a promoter may not tell you.’

Internet link: Gov News

Newsletter – February 2013

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

 

Auto enrolment tool

Under Pensions Auto Enrolment employers must:

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

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

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

Internet link: Pensions regulator tool

Real Time Information

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

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

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

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

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

Internet link: HMRC news

Paying HMRC by Bill Pay

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

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

HMRC advised the ICAEW that:

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

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

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

At your bank

At the Post Office

By Debit/Credit card

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

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

Internet link: ICAEW Tax Faculty

Tax rebate phishing scam

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

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

Gareth Lloyd, Head of Digital Security for HMRC said:

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

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

HMRC also advise taxpayers to:

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

Internet link: Press release

HMRC report self assessment statistics

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

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

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

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

The penalties for late Self Assessment returns are:

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

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

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

Internet link: HMRC press release

HMRC win furnished holiday lettings test case

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

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

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

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

Internet links: Mercia Blog Decision

Shared Parental Leave

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

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

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

Under the new system:

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

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

Internet link: Press release

Tackling long term sickness absence

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

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

The Minister for Welfare Reform, Lord Freud, said:

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

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

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

Internet link: Press release

Health and Safety reforms

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

Steps taken to date include:

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

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

Internet links: Press release HSE website

Charities online Gift Aid service

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

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

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

Internet link: Press Release

Don’t let this happen to you!

I was recently visited by a potential client, who had enquired about the possibility of using our services.  We had the usual discussion about the type of business, what was needed and the current situation.

The first alarm bell rang when they told me that they had been disengaged by their previous advisor, due to non payment of fees, but then things got a whole lot worse!

There were issues with VAT registration, PAYE registration, P11D issues, current accounts being overdue by nearly six months, previous accounts submitted late and outstanding tax returns, amongst many other things.  The potential for penalties and interest were becoming very large at this stage.

This got me thinking, how on earth does one get into this mess?  I might argue that a previous accountant might shoulder part of the blame, for not picking up the lack of VAT registration, due to the amount of turnover, but I only had the potential clients word for that!  And, why did he leave it so long to try to get it sorted?

So – how can you avoid this happening to you?

  • Engage an accountant that has been recommended to you BEFORE you start out in business.
  • Discuss with the accountant ALL of the relevant facts relating to your business and your personal tax affairs – make sure they have ALL of the information they require.
  • Make sure you are clear from the outset as to what is required from you and what the accountant will be doing – this is usually done in the form of an engagement letter, if not, make sure you clarify.
  • Make sure you are clear about your VAT, PAYE, corporation tax and personal tax requirements.
  • Make sure you keep accurate and up to date records, from day one.
  • Make sure you keep your accountant notified of ANY correspondence from HMRC, Companies House and any other Government bodies – do this on the same day that you receive it – IGNORE NOTHING!
  • Keep in regular touch with your accountant, if you’re thinking of doing anything with the business, ask your accountant first, just to make sure it won’t affect anything that you are unaware of.
  • Make sure you are aware or made aware of ALL of the deadlines that are applicable to your business (there will be many!), if in doubt either ask for a list or ask your accountant to remind you – BEWARE, there are more and more penalties now for late or incorrect submissions and there will soon be more scope when PAYE Real Time Information and Pensions Auto-Enrolment kicks in!
  • Make sure your accountant is aware if you need something urgently for any reason, so that they can factor this into their workload.  Above all – PLEASE DON’T LEAVE ANYTHING UNTIL THE LAST MINUTE

Don’t forget there is also lots of FREE advice on the web, such as DirectGov, HMRC, Companies House, BIS and many more.  These can’t and shouldn’t  replace the accountants advice, but can help for further understanding or maybe even give you more questions to ask your accountant!

Once you have done all of the above for a while, it will become second nature – you will have a much less cluttered mind, fewer worries and will be able to concentrate on what you do best – running your business, let your advisors do the rest.  And finally don’t forget to consider what other advisors you might need – Legal, HR etc.

You know where we are when you need us!

 

 

Newsletter – July 2012

In this month’s enews we update you on the changes to payroll reporting procedures for Real Time Information.

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

 

The Tax Return Initiative

Higher rate taxpayers who have failed to submit tax returns are being offered the opportunity to come forward and pay up under a time limited HMRC campaign. The Tax Return Initiative is aimed specifically at people liable to pay higher rate tax that have been told to submit a self assessment tax return for 2009/10 or earlier, but have failed to do so. The Tax Return Initiative is also open to any individual who has tax returns to submit to HMRC for these years.

Individuals have until 2 October 2012 to:

  • let HMRC know that they want to take part,
  • submit completed returns, and
  • pay the tax and National Insurance Contributions (NICs) that they owe.

By coming forward voluntarily through the initiative, taxpayers will receive better terms and any penalty they pay will be lower than if HMRC comes to them first.

Where taxpayers fail to take advantage of the initiative, HMRC will use its powers to pursue outstanding returns and any unpaid tax and NIC together with significant penalties of up to 100% of tax due.

Marian Wilson, head of HMRC Campaigns, said:

‘This campaign is part of a wider HMRC initiative to provide support and guidance to the public on tax obligations and is aimed at people who fail to submit their tax returns on time and pay what they owe.’

‘The campaign provides a three-month opportunity for those who want to get their tax affairs up to date to come forward. Our aim is to make it easy for them to contact us and send in completed tax returns, putting their affairs in order. Penalties will be higher if we come and find people after the opportunity and some could face a criminal investigation. I urge people to come forward and disclose unpaid tax voluntarily.’

Internet links: Press release Tax Return Initiative Campaign

Pensions Auto Enrolment

From October 2012 the largest employers will have to comply with Pensions Auto Enrolment. Employers will have to identify eligible jobholders and advise them of the employer’s obligations under the legislation. The staging date for those with more modest workforces may be some years off. Staging dates for all employers can be found by visiting the link below.

The Pensions Regulator together with the Department for Work and Pensions have developed a set of template letters which include all the details employers are required to communicate with their employees.

The comprehensive letters can be tailored to suit an organisation and employees’ circumstances.

If you would like more information on your obligation as an employer please do get in touch.

Internet links: Pensions Regulator News Staging dates

Real Time Information

HMRC are advising that over 1,300 employers will join the Real Time Information (RTI) pilot between now and September 2012.

Stephen Banyard, Acting Director General for Personal Tax, said:

‘RTI is on track and the pilot is going very well. We started in April with just 10 employers and now we’ve successfully received over 1.7 million individual records from 338 PAYE schemes.’

‘Following the success of the first pilot stage, more PAYE schemes will join the RTI pilot, as planned, and by the end of September up to 1,300 employer schemes will be reporting PAYE in real time.’

‘We are also seeing external confidence in the pilot and we’ve responded to that by offering more large employers, payroll bureaux, new employers and software developers the opportunity to join the RTI pilot or to expand existing involvement in advance of the launch date in April 2013.’

HMRC expect most employers to begin RTI reporting in April 2013. All employers will be routinely reporting PAYE in real time by October 2013, in time for the introduction of Universal Credit.

HMRC have updated their frequently asked questions on RTI and also published information on RTI for payrolls involving ‘expat’ employees.

Internet links: Press release RTI FAQs RTI expats

Guide to importing and exporting

HMRC have updated their information pack ‘Guide to importing and exporting: Breaking down the barriers’.

The information pack is a guide for those importing or exporting goods. It acts as a guide to help anyone getting started with importing / exporting and gives details of the procedures involved in these activities.

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

Internet link: HMRC information

Online starting in business tax guide

HMRC have been working with interested parties to produce a ‘Starting your own Business’e learning tutorial.

To access the tutorial, visit the link below.

Internet link: HMRC e learning tutorial

Olympics and business

With the Olympics upon us, Acas are advising employers to be aware of a number of issues the most likely of which is employees requesting more flexible working arrangements. Employers need to consider how they are going to minimise potential disruption so that businesses run smoothly whilst managing employee expectations.

Acas expect employees to fall mainly into two groups:

  • those planning to take time off during the Games because they are spectators or volunteers.
  • those not planning to take time offbut who:
    • hope to watch on the television or via the internet whilst at work – wanting flexible working arrangements
    • get fed up with all the fuss and any perceived favouritism shown to those with sporting interests and want to take annual leave during the school holidays.

Acas has published guidance to help you plan ahead and ensure your business runs smoothly. The guidance considers such issues as:

  • managing attendance
  • working flexibly
  • dealing with performance issues, and
  • understanding the legal rights of volunteers.

Sunday Trading

Sunday Trading restrictions are suspended during the Olympic and Paralympics Games. These rules limit Sunday opening hours for some shops to six continuous hours between the hours of 10am and 6pm and are to be suspended during the Games.

The suspension is for eight consecutive Sundays commenced on 22 July and runs until 9 September 2012. This is a temporary measure and applies to England and Wales. No Sunday trading restrictions apply in Scotland.

For more details about Olympic events visit the London 2012 website.

Internet links: Acas article Acas quick tips www.london2012.com

Fuel duty

The government has announced that the 3.02 pence per litre (ppl) fuel duty increase that was due to take effect on 1 August 2012 will be deferred to 1 January 2013.

‘In the Autumn Statement 2011 it was announced that the 3.02ppl fuel duty increase that was due to take effect on 1 January 2012 would be deferred to 1 August 2012, and the inflation increase that was originally planned for 1 August 2012 would be cancelled.’

The effect will be to maintain the duty liability on all fuels at current levels until 1 January 2013.

Internet link: HMRC fuel duty

HMRC announce new taskforces

HMRC expect the new taskforces they have launched to recover over £30m from tax dodgers.

The latest round of taskforces to be announced will target traders who do not pay the right amount of tax in:

  • Scottish pubs and nightclubs
  • hair and beauty businesses in Northern Ireland
  • the motor trade in South Wales, South West, Yorkshire, Nottinghamshire and the North East
  • restaurants in South Wales and South West.

The taskforces are specialist teams that undertake intensive bursts of activity in specific high risk trade sectors and locations in the UK. The teams will visit traders to examine their records and carry out other investigations.

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

‘At a time when we are trying to rebalance the public finances and most hard-working people are making a contribution by paying the right tax, it is just not fair that a small minority try to dodge their responsibilities.’

‘These new taskforces are funded by the Government’s investment in HMRC of over £900m to crack down on avoidance and evasion. Their dedicated teams are on track to collect more than £50m from tax avoiders and evaders through the taskforces launched last year and expect to collect £30m in unpaid taxes through those launched today.’

 

Internet link: Press release

Newsletter – February 2012

eNEWS – February 2012

In this month’s enews we report on guidance which has been issued on cookies together with several HMRC announcements. Please contact us if you would like any further information.

 

 

EU Cookies

The Information Commissioner’s Office (ICO) has published guidelines on the business use and storage of cookies.

The law which applies to how businesses use cookies and similar technologies for storing information on a user’s equipment such as their computer or mobile device changed on 26 May 2011. The ICO guidance on the new cookies Regulations sets out the changes to the cookies law and explains what steps businesses need to take to ensure they are complying.

Following an EU Directive, businesses are now obliged by law to obtain the explicit consent of each of their websites’ visitors before storing any data on their device. Websites must also provide ‘clear and comprehensive information’ about the purposes of the storage.

The UK actually introduced the amendments on 25 May 2011 through The Privacy and Electronic Communications Regulations 2011. However, website owners have been given until May 2012 to make their websites compliant with the new legislation.

It remains to be seen how strictly this law will be enforced, but the ICO have already introduced a maximum penalty of £500,000.

Internet link: ICO cookie guide

Pensions Auto Enrolment Dates deferred for smaller employers

The timetable for the introduction of Pensions Auto Enrolment has been revised for smaller employers.

Employers have been aware for some time now that the government is to introduce legislation designed to encourage more people to save for their retirement.

Under the rules employers must:

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

The rules come into force from October 2012. However they only impact on the largest employers from that date, as few employers have a workforce of more than 120,000. For those employers with a more modest number of employees the start dates have been amended. This was previously announced and has been confirmed in a written ministerial statement.

Steve Webb, the Minister of State, Department for Work and Pensions confirmed:

‘On 28th November 2011, the Government announced that the timetable for the implementation of automatic enrolment will be adjusted so that small businesses are not affected by the reforms during this Parliament. This will provide them with some additional breathing space to prepare for the reforms whilst operating in tough economic times.’

‘I can now confirm that under the revised timeline, all employers with an existing staging date of on or before 1st February 2014 are unaffected. This means that no large employer will have to make any changes to their plans – which are in many cases already advanced.’

Medium sized employers will be re-allocated automatic enrolment dates between 1st April 2014 and 1st April 2015. This means that the implementation dates of some of these employers will be up to nine months later. However, this still means that around 70% of eligible workers will be automatically enrolled before the end of this Parliament compared with around 75% under previous arrangements.’

‘Small employers will be allocated automatic enrolment dates between 1st June 2015 and 1st April 2017.’

The guidance contains a table of revised implementation dates for small and medium employers, by size. We will keep you informed of further announcements.

More information on employers’ obligations is available on the Pensions Regulator website or please do contact us.

Internet links: Pensions Regulator website Statement

New approach to records checks from HMRC

HMRC have announced that they intend to make changes to their business records checks programme following a review of the pilot scheme.

HMRC will now postpone making any new business records check appointments until the revamped approach is launched early in 2012/13. The delay is to allow further consultation with representative bodies on the implementation of the recommendations in the review and on some details of the new approach.

HMRC’s Director of Local Compliance, Richard Summersgill, said:

‘Four out of ten businesses had an issue with their business records, and of those that required a follow-up visit, we found that some 90% subsequently improved their record-keeping.’

‘However, after reviewing the pilot programme and listening to the views of businesses and representative bodies, we acknowledge the need for a fresh approach to business records checks.’

Internet link: News Release

Pay up on time

A new guide ‘Get Paid!’ has been published. The guide which is aimed at smaller businesses contains tips and advice from both suppliers and customers. The guide covers advice on invoicing and developing a robust credit policy.

The government is asking businesses and public organisations to pay suppliers on time and for small businesses to pursue those who put them at risk by delaying payment.

Prompt payment is vital for SMEs, with many businesses not able to survive the cashflow problems that late payments create.

The government is encouraging SMEs to:

  • proactively agree payment terms before delivering orders.
  • sign up to the government’s Prompt Payment Code, run by the Institute for Credit Management
  • raise complaints over late payment from Code signatories and use legislation already in place to help companies pursue late payers
  • use electronic invoicing where possible.

Internet links: BIS press release Get Paid guide

HMRC latest targets

HMRC have announced that they will turn their attention to those involved in home improvement trades and direct selling (online market sellers) in their next round of Tax Catch Up Plans.

HMRC have previously offered Tax Catch Up Plans to Plumbers, Dentists and Tutors amongst others. According to the press release their latest campaigns will target:

‘Missing returns. This will contribute to wider HMRC activity tackling failure to complete tax returns. It will initially focus on those who fail to complete tax returns and who are liable to pay tax at the highest rates.’

‘Home improvement trades. This will build on campaigns aimed at plumbers and electricians, and will include several 100,000 tradespeople in construction and building work such as roofing, window fitting, bricklaying, carpentry and joinery.’

‘Direct selling. This will target customers who ought to be paying tax on income they earn from buying and selling goods direct to others, or from the commission on these sales.’

‘As with previous campaigns, the focus of the new campaigns will be on providing those in the selected groups, who may not be paying the tax they owe, a chance to put their affairs in order on the best possible terms.’

HMRC have announced that they will be using new technology to identify traders in both sectors with unpaid taxes.

Marian Wilson of HMRC said:

‘We are offering all the people targeted the opportunity to come forward. Penalties will be higher if we come and find people after the opportunity.’

Please do get in touch if you have any concerns in these areas.

Internet links: News release HMRC website

Clean up your payroll data

HMRC have launched a new online video to help employers reduce the problems caused by inaccurate employee data.

Every year HMRC receive thousands of employer returns which contain the details of millions of employees, including their names, dates of birth and National Insurance numbers. HMRC are keen to point out that whilst the vast majority of the employee data is correct, in some cases dummy, incomplete or incorrect information is included. According to the press release:

‘…a recent study of employer returns found that 128 staff were entered as Mr, Ms or Mrs Dummy, while 824 employees had the surname ‘Unknown’.’

‘Another 40 employees, according to their dates of birth, were aged over 200.’

The short YouTube video discusses how inaccurate employer returns can affect employees, employers and HMRC and offers advice on how employers can help reduce errors.

Jim Harra, HMRC’s Director of Customer Operations, said:

‘It’s really important that employers get their employees’ information right, so that HMRC can match it to the right tax records. Otherwise, it can lead to more contact from staff, trying to sort out their tax, and from HMRC, trying to sort out the data issues.’

‘So, if you’ve got a spare few minutes, watch the video and see what you can do to help your organisation get things right, for you, your employees and HMRC.’

If you would like any help with payroll issues please do get in touch.

Internet links: Press release Video

Self Assessment statistics

According to HMRC a record 9.45 million self assessment tax returns were filed on time this year and a record 7.65 million (80.9% of them) were filed online.

Although the 31 January 2012 deadline was unchanged, HMRC announced that no penalties would be issued for online returns received by midnight on 2 February, due to industrial action at HMRC contact centres.

The busiest day for online returns was 31 January, when HMRC received nearly 445,000 returns. Apparently the ‘rush hour’ occurred between 4pm and 5pm on 31 January, when 37,460 returns (more than one every 6 seconds) were received by HMRC.

David Gauke, Exchequer Secretary to the Treasury, said:

‘I’m delighted so many people filed their tax returns online this year. The record number proves that it’s quick, easy and secure to do.’

‘HMRC have always been clear that they want returns not penalties, so it is good news that over 90% of all returns were submitted on time.’

If you have not yet completed your self assessment tax return and would like some help please do get in touch.

Internet link: Press release

Budget for growth

The CBI is calling for a Budget to help businesses. To read more information on the CBI’s recommendations visit the link below.

‘The CBI called on the Chancellor to use his March Budget to score the growth and investment policy goals he put forward in his Autumn Statement and give the UK economy and jobs a real boost.’

‘In its submission to the 2012 Budget, the CBI also urged changes to the UK tax system which it believes could help persuade businesses to invest in the UK and further stimulate growth.’

The Chancellor will present his Budget on Wednesday 21 March 2012. We will update you with significant announcements.

Internet link: CBI

Penalties for failing to file payroll forms online

HMRC have confirmed in the latest Employer Bulletin that they intend to impose penalties on all employers who fail to send their payroll starter and leaver forms online from April 2012.

During the 2011/12 tax year HMRC issued penalty notices to employers with 50 or more employees when they submitted more than two paper forms in a quarter. The penalties issued ranged from £100 to £3000 depending on the number of paper forms received in the quarter.

Since April 2011 small employers (with 50 or less employees) have been required to file their in year starter (P46) and leaver (P45) forms online. However, small employers who submitted paper forms between 6 April 2011 and 5 January 2012 were only issued with warning letters. This action was taken to try and help small employers to get this right.

From 6 April 2012 penalties will be issued when the employer fails to file their starter and leaver forms online in the period 6 January 2012 to 5 April 2012 and onwards.

If you would like any help with payroll issues please do get in touch.

Internet link: Employer Bulletin