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Newsletter – February 2021

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Enews – February 2021

In this month’s Enews we consider the latest Self Assessment figures, those named and shamed for failing to pay the minimum wage and Scottish Budget announcements.

With guidance on bonuses for businesses taking on trainees, calls for changes ahead of the Budget and the Supreme Court ruling on business interruption claims there is a lot to update you on.

10.7 million taxpayers submitted their 2019/20 Self Assessment tax returns

HMRC has revealed that more than 10.7 million taxpayers submitted their 2019/20 Self Assessment tax returns by the 31 January deadline.

The remaining 1.8 million whose tax return is now late will not be charged a late filing penalty provided they submit their return online by 28 February.

Taxpayers who did not pay their Self Assessment tax bill by 31 January are now incurring interest on the outstanding balance and should pay their bill as soon as possible.

Taxpayers should pay any outstanding balance, or arrange a payment plan, before 3 March 2021 to avoid a 5% late payment penalty.

Those who are not yet able to file their tax return should pay an estimated amount as soon as possible, which will minimise any interest and late payment penalty.

Karl Khan, HMRC’s Interim Director General for Customer Services, said:

‘Thank you to the 10.7 million customers who have sent in their tax returns.

‘We won’t send anyone a late filing penalty if they complete their tax return by 28 February.

‘We know that many individuals and small businesses are finding it harder to pay this year, due to the pandemic. Anyone who can’t afford to pay their tax bill in full can set up a payment plan, once they’ve filed their return, to spread their tax bill into monthly instalments.’

There are several ways that taxpayers can pay their Self Assessment tax bill or an estimated amount. They can pay online, via their bank, or by post.

Anyone who cannot pay their bill in full can apply to spread the cost. Taxpayers can set up a payment plan, in up to 12 monthly instalments, online via https://www.gov.uk/pay-self-assessment-tax-bill/pay-in-instalments provided they meet the following requirements:

Taxpayers need to have no:

  • outstanding tax returns
  • other tax debts
  • other HMRC payment plans set up.

The debt needs to be between £32 and £30,000.

The payment plan needs to be set up no later than 60 days after the due date for payment. Taxpayers should set up the payment plan as soon as possible, and certainly before 3 March to avoid a 5% late payment penalty.

Those who do not meet these requirements, or who need more than 12 months to pay their bill, can apply for a payment plan by speaking to one of HMRC’s debt advisers.

Interest accrues on all outstanding balances, including those in payment plans.

Self Assessment taxpayers who are required to make Payments on Account, and know their 2020/21 tax bill is going to be lower than in 2019/20, for example due to loss of earnings because of COVID-19, can reduce their Payments on Account. More information is available at https://www.gov.uk/understand-self-assessment-bill/payments-on-account.

Internet link: GOV.UK press release

Rogue employers named and shamed for failing to pay employees the minimum wage

HMRC has published the names of 139 named companies that failed to pay minimum wages amounting to £6.7 million to over 95,000 workers.

HMRC has named 139 companies, including major household names, that have underpaid their employees and have been fined. The offending companies failed to pay £6.7 million to their workers, in a breach of employment law.

This is the first time the government has named and shamed companies for failing to pay National Minimum Wage since 2018, following reforms to the process to ensure only the worst offenders are targeted.

Business Minister Paul Scully said:

‘Paying the minimum wage is not optional, it is the law. It is never acceptable for any employer to short-change their workers, but it is especially disappointing to see huge household names who absolutely should know better on this list.

‘This should serve as a wake-up call to named employers and a reminder to everyone of the importance of paying workers what they are legally entitled to.

‘Make no mistake, those who fail to follow minimum wage rules will be caught out and made to pay up.’

Internet link: GOV.UK news

Scottish Budget Income Tax

Finance Secretary Kate Forbes delivered the 2021/22 Scottish Draft Budget on Thursday 28 January 2021, setting out the Scottish Government’s financial and tax plans.

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

The Scottish Budget announced the following income tax rates and bands for 2021/22. These will be considered by the Scottish Parliament, and an agreed Scottish Rate Resolution will set the final Scottish income tax rates and bands for 2021/22.

The current rates and bands for 2020/21 and the proposed rates and bands for 2021/22 on non-savings and non-dividend income are as follows:

Scottish Bands

2020/21

 Scottish Bands

2021/22

 Band name Scottish Rates
£12,501* – £14,585 £12,570* – £14,667 Starter 19%
£14,586 – £25,158 £14,668 – £25,296 Scottish Basic 20%
£25,159 – £43,430 £25,297 – £43,662 Intermediate 21%
£43,431 – £150,000** £43,663 – £150,000** Higher 41%
Above £150,000** Above £150,000** Top 46%

* Assumes individuals are in receipt of the Standard UK Personal Allowance.

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

In the UK Spending Review in November 2020, the UK Government announced that the UK wide Personal Allowance and the UK higher rate threshold would be uprated by CPI inflation of 0.5% for the tax year 2021/22 (to £12,570 and £50,270 respectively). All other policy decisions about UK rates and bands will be announced at the UK Budget on 3 March 2021.

The Personal Allowance is £12,500 for 2020/21. Across the rest of the UK the basic rate of income tax is 20%. In 2020/21 the band of income taxable at this rate is £37,500 so the threshold at which the 40% band applies is £50,000 for those entitled to the full personal allowance. UK taxpayers pay 45% tax on their income over £150,000.

Internet link: GOV.SCOT publications

Scottish Land and Buildings Transaction Tax

As part of the Scottish Budget, Finance Secretary Kate Forbes also announced changes to Land and Buildings Transaction Tax (LBTT) which apply from 1 April 2021.

The Scottish Government’s stated policy priority for residential LBTT remains to help first-time buyers and to assist people as they progress through the property market. The current rates and bands which apply until 31 March 2021 are as follows:

Residential property Rate
£0 – £250,000 0%
£250,001 – £325,000 5%
£325,001 – £750,000 10%
£750,001 and over 12%

For transactions with an effective date on or after 1 April 2021 the rate bands will return to:

Residential property Rate
£0 – £145,000 0%
£145,001 – £250,000 2%
£250,001 – £325,000 5%
£325,001 – £750,000 10%
£750,001 and over 12%

The rates apply to the portion of the total value which falls within each band.

First-time buyer relief

The relief for first-time buyers of properties up to £175,000 will resume its effect by increasing the residential zero tax threshold for first-time buyers from £145,000 to £175,000. First-time buyers purchasing a property above £175,000 also benefit from the relief on the portion of the price below the threshold. According to the Government, those buying a property for more than £175,000 will receive relief on the portion of the price below the threshold and benefit from savings of up to £600.

Higher rates for additional residential properties

Higher rates of LBTT are charged on purchases of additional residential properties, such as buy to let properties and second homes. Although these are the main targets of the higher rates, some other purchasers may have to pay the higher rates.

The Additional Dwelling Supplement (ADS) potentially applies if, at the end of the day of the purchase transaction, the individual owns two or more residential properties. Care is needed if an individual already owns, or partly owns, a property and transacts to purchase another property without having disposed of the first property. An 18-month rule helps to remove some transactions from the additional rates (or allows a refund). The ADS is charged at 4%.

Internet link: GOV.SCOT publications

Bonus of £1,000 to help businesses take on trainees

The government has announced that employers can now apply for a £1,000 bonus, a cash boost, to help them take on new trainees.

The new scheme will support young people to gain the skills and experience they need from the start, helping them to get a job, an apprenticeship, or to pursue further study.

The cash boost, which is available until 31 July 2021, will help businesses with the cost of providing a high-quality work placement for a trainee. This includes providing facilities, uniforms or helping with travel costs.

Businesses offering new traineeship opportunities will receive the £1,000 bonus for every trainee they take on, up to a maximum of ten trainees.

Employers can claim the cash incentive for all work placements that have been completed since 1 September.

Gillian Keegan, Minister for Apprenticeships and Skills, said:

‘We’re pulling out all the stops to help young people get the skills and confidence they need to progress. This cash boost will help employers of all sizes provide more traineeship opportunities to invest in their workforce so they can rebuild and grow, giving young people a vital route to start their apprenticeship journey, get their first job or go on to further study.

‘I strongly encourage as many employers as possible to apply now and take advantage of this fantastic offer so more young people can gain the skills they need to progress in their careers as we build back better from the pandemic.’

Internet link: GOV.UK news

LITRG calls for a rise in the High Income Child Benefit Charge threshold

The Low Incomes Tax Reform Group (LITRG) has urged the government to raise the High Income Child Benefit Charge (HICBC) threshold to avoid it affecting basic-rate taxpayers for the first time in April 2021.

The LITRG stated that this goes against the original policy intent, and is ‘likely to cause the government additional difficulties in raising awareness about the charge among those who do not consider themselves on a high income’.

Tom Henderson, Technical Officer at the LITRG, said:

‘When the HICBC was announced in 2010, the government’s policy intent was that it would only affect higher-rate taxpayers from January 2013. For the 2012/13 tax year, the higher-rate threshold – the point at which an individual is liable to the higher rate of tax – was £42,475. Since then, the higher-rate threshold has risen broadly in line with inflation but the £50,000 threshold for the HICBC has remained static.

‘The government has so far resisted calls to up-rate the £50,000 threshold, but this is no longer tenable now the higher-rate threshold will overtake it from 6 April 2021.’

In its Budget submission, the LITRG calls for the point at which child benefit is fully clawed back to increase from £60,000 to £75,000.

The government will present the 2021 Budget on Wednesday 3 March.

Internet link: LITRG news

Government urged by CBI to act on COVID business support ahead of Budget

The Confederation of British Industry (CBI) has urged the government to provide more financial assistance to businesses affected by the coronavirus (COVID-19) pandemic ahead of the Budget on 3 March 2021.

The business group has outlined support measures required to help protect UK businesses through the spring. It has called for:

  • an extension of the Coronavirus Job Retention Scheme (CJRS) beyond April to the end of June
  • a lengthening of repayment periods for existing VAT deferrals until June 2021; and
  • an extension of the business rates holiday for at least another three months.

The CBI has also called for an announcement of details of the successor of the Coronavirus Business Interruption Loan Scheme (CBILS).

Tony Danker, Director General of the CBI, said:

‘The Budget comes at a crucial time for the UK. The Government’s support from the very start of this crisis has protected many jobs and livelihoods, and progress on the vaccine rollout brings real cause for optimism.

‘But almost a year of disrupted demand and extensive restrictions to company operations is taking its toll. Staff morale has taken a hit. And business resilience has hit a sobering new low.

‘The Government must once again stand shoulder-to-shoulder with businesses to underwrite support for the duration, helping viable enterprises to last the course.

‘Many tough decisions for business owners on jobs, or even whether to carry on, will be made in the next few weeks. If the Government plans to continue its support then I urge them to take action before the Budget which is still more than six weeks away.

‘The Government has done so much to support UK business through this crisis, we don’t want to let slip all the hard work from 2020 with hope on the horizon.

‘The rule of thumb must be that business support remains in parallel to restrictions and that those measures do not come to a sudden stop, but tail off over time. Just as the lifting of restrictions will be gradual, so must changes to the Government’s sterling support to businesses.’

Internet link: CBI article

Supreme Court backs small firms on business interruption claims

The UK’s Supreme Court has found in favour of small firms receiving payments from COVID-19 business interruption insurance policies.

The test case was brought against insurers by the Financial Conduct Authority (FCA). The ruling means that thousands of small businesses are now set to receive insurance payouts covering losses from the first national lockdown.

Commenting on the ruling, Flora Hamilton, Financial Services Director at the Confederation of British Industry (CBI), said:

‘At such an uncertain time, this court case provides much-needed clarity to companies across the UK, and relief for smaller firms struggling with cashflow.

‘This is significant news for insurers, and regulators will need to work closely with the industry as policies, products and processes are updated to reflect this ruling.’

Internet links: CBI article FCA news

Newsletter – September 2020

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Enews – September 2020

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

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

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

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

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

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

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

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

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

Internet link: GOV.UK

More than £30 million lost to pension scams

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

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

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

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

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

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

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

Internet link: FCA news

Advisory fuel rates for company cars

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

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

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

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

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

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

You must not use these rates in any other circumstances.

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

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

Internet link: GOV.UK AFR

Eat Out to Help Out – over 64 million meals

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

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

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

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

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

Chancellor of the Exchequer Rishi Sunak said:

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

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

Internet links: GOV.UK news HMRC guidance

Self assessment deadlines

Two self assessment deadlines are approaching:

  • 5th October 2020

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

  • 31st October 2020

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2019/20 return is 31 October 2020. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

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

Internet link: HMRC deadlines

HMRC latest guidance for employers

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

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

Please contact us for help with employment matters.

Internet link: Employer Bulletin

Kickstart Scheme opens for applications

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

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

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

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

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

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

Chancellor Sunak said:

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

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

Internet link: GOV.UK

Self Employment Income Support Scheme Grants

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

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

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

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

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

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

HMRC have confirmed that taxpayers can:

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

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

Internet link: GOV.UK SEISS guidance

Newsletter – January 2020

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Enews – January 2020

In this month’s Enews we consider a number of issues including increases in the minimum wage rates, the independent review of the Disguised Remuneration Loan Charge and the Chancellor’s commitment to review IR35. We also update you on retiring clinicians pensions, Structures and Buildings Allowance, a call for a review of the High Income Child Benefit Charge and a reminder that the self assessment deadline is approaching.

With the latest on deliberate tax defaulters and publication of the Welsh Draft Budget there are lots of issues to update you on.

Minimum wage rates announced

The government has announced a 6.2% increase in the National Living Wage (NLW), which applies to workers aged 25 and over. From 1 April 2020 the NLW will rise from the current rate of £8.21 to £8.72 an hour, in the largest raise since it was introduced two decades ago.

The government has confirmed that the new rate will start on 1 April 2020 and will result in an increase of £930 annually for 2.8 million full-time workers earning the NLW.

Workers aged under 25 earning the National Minimum Wage (NMW) will also see increases of between 4.6% and 6.5%, depending on their age.

Bryan Sanderson, Chair of the Low Pay Commission (LPC), said:

‘The NLW has been an ambitious long-term intervention in the labour market. The rate has increased faster than inflation, faster than average earnings and faster than most international comparators.

‘This has raised pay for millions without costing jobs, although employers have had to make a variety of other adjustments to deal with the increases.’

Internet link: GOV.UK news

Review of the Disguised Remuneration Loan Charge

The government has announced it will make a number of changes to the loan charge rules, in response to Sir Amyas Morse’s independent review of the loan charge policy and its implementation.

The government has announced the following key changes to the loan charge:

  • the loan charge will apply only to outstanding loans made on, or after, 9 December 2010
  • the loan charge will not apply to outstanding loans made in any tax years before 6 April 2016 where the avoidance scheme use was fully disclosed to HMRC and HMRC did not take action
  • affected taxpayers can elect to spread the amount of their outstanding loan balance evenly across three tax years: 2018/19, 2019/20 and 2020/21.

Please contact us for advice with this issue.

Internet link: GOV.UK independent loan charge review

Chancellor commits to review of IR35

The Chancellor of the Exchequer, Sajid Javid has announced that the major review of all aspects of self-employment, promised in the Conservatives’ manifesto, will include the proposed extension of the Off-Payroll working rules to the private sector from April 2020.

Speaking on Radio 4’s Money Box Election Special, Sajid Javid said that, as part of the review, he wanted in particular to look again at the proposed changes to the IR35 rules. He said:

‘I value the work of consultants and I want to make sure that the proposed changes are right to take forward.’

Internet link: economia news

Retiring clinicians payments

The Secretary of State has confirmed that the commitments being entered into, to make payments to clinicians affected by annual allowance pension tax, will be honoured when clinicians retire.

In a written statement Matt Hancock, Secretary of State for Health and Social Care stated:

‘I have agreed to support this proposal from NHS England and NHS Improvement for reasons of urgent operational necessity….

‘The scheme involves employers making binding contractual commitments to be given to every affected NHS clinician so as to ensure that this commitment is honoured. Full details of the terms of the payment arrangements are set out in letters that are being sent to each affected clinician by their employer including the terms and conditions of the offer.

‘Clinicians are therefore now immediately able to take on additional shifts or sessions without worrying about an annual allowance charge on their pensions.’

Internet link: GOV.UK statement

Guidance on Structures and Buildings Allowance

The latest HMRC Agent Update includes guidance on the Structures and Buildings Allowance (SBA). This capital allowance is designed to provide tax relief for businesses and to support investment in constructing new structures and buildings and improving existing ones.

The SBA relieves the construction costs for new structures and buildings used for qualifying purposes and the improvement of existing structures and buildings, including the cost of converting existing premises for use in a qualifying activity.

The SBA is available at a flat rate of 2% a year, for up to 50 years, on the eligible costs of building, converting or renovating non-residential structures or buildings that have been brought into qualifying use. Certain costs are specifically excluded such as those costs that qualify for plant and machinery allowances, planning permission, landscaping, cost of land and integral features and fixtures.

For a claim to be valid the date of the earliest contract for construction of the structure or building must be on or after 29 October 2018. The first use of the structure or building must be non-residential.

The Agent Update confirms claims for the allowance must be made on a tax return. However for tax returns up to April 2020 there is no specific box for SBA claims. HMRC advise affected taxpayers to follow the guidance contained in the notes to the returns.

Internet link: GOV.UK Agent Update 75

Call for review of High Income Child Benefit Charge

The Low Incomes Tax Reform Group (LITRG) is calling on the government to address issues with the High Income Child Benefit Charge (HICBC).

The HICBC is designed to claw back child benefit where the claimant or their partner earns in excess of £50,000. According to LITRG some households think making a child benefit claim is not worthwhile if it will be clawed back in full via the tax charge, with the added administrative burden of needing to complete a tax return. LITRG warns that this trend will have unforeseen consequences for the lower-earning partner and for the child.

LITRG is calling for the Government to reconsider the £50,000 threshold at which the HICBC  starts to apply, if it is retained in its current form.

Victoria Todd, Head of LITRG Team, said:

‘Despite its name, the high income child benefit charge can have consequences for the lower earner in a couple even though the liability to the tax charge falls to the higher earner. This is because where the tax charge applies a household may decide, quite understandably, not to claim child benefit at all. But this means that the lower earning individual may miss out on National Insurance credits, due for the first 12 years, which help to build entitlement towards a state pension.

‘The Government’s solution is to allow couples to claim child benefit regardless and, if they wish to avoid the charge, they can choose not to receive payments – but this is not widely known and to many, claiming and receiving a benefit are the same thing.

‘This is a problem which is affecting an increasing number of families because the £50,000 threshold has remained static since the charge was introduced in 2013. At that time, the HICBC was intended to affect only the top 10 percent of earners, but each year the proportion of those affected increases as wages rise. LITRG recommends that the next Government considers uprating the £50,000 threshold, just like some other tax thresholds and allowances, to minimise the adverse consequences for those families it affects and ensure the policy works in the way originally intended.’

Please contact us for help and advice on HICBC.

Internet link: LITRG press release

Self assessment deadline approaching

The deadline for submitting your 2018/19 self assessment return is 31 January 2020. The deadline applies to taxpayers who need to complete a tax return and make direct payments to HMRC in respect of their income tax, Classes 2 and 4 National Insurance Contributions (NIC), capital gains tax and High Income Child Benefit Charge liabilities.

There is a penalty of £100 if a taxpayer’s return is not submitted on time, even if there is no tax due or the return shows that they are due a tax refund.

The balance of any outstanding income tax, Classes 2 and 4 NIC, capital gains tax and High Income Child Benefit Charge for the year ended 5th April 2019 is also due for payment by 31 January 2020. Where the payment is made late interest will be charged.

The first payment on account for 2019/20 in respect of income tax and any Class 4 NIC or High Income Child Benefit Charge is also due for payment by 31st January 2020.

HMRC revealed that more than 3000 taxpayers filed their return on Christmas Day. If you would like help with your return or agreeing your tax liability, please contact us.

Internet links: GOV.UK self assessment GOV.UK news

Current list of deliberate tax defaulters

HMRC publishes details of deliberate tax defaulters, those people who have received penalties either for:

  • deliberate errors in their tax returns or
  • deliberately failing to comply with their tax obligations.

Internet link: GOV.UK deliberate defaulters

Welsh government publishes Draft Budget

The Welsh government has published its Draft Budget, setting out revenue raising and capital spending plans for 2020/21.

The Draft Budget confirms no changes are proposed to Welsh income tax rates, or Land Transaction Tax rates and bands. The Draft Welsh spending plans for the longer term will depend on the next UK Budget and comprehensive spending review scheduled for 2020.

Internet link: GOV.WALES Budget

Newsletter – October 2017

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Enews – October 2017

In this month’s eNews we update you on the latest government announcements on Making Tax Digital for Business (MTDfB). We also include the announcement of the Budget dates by Philip Hammond and Derek Mackay. With HMRC offering a new support service for growing businesses, a new Trusts Registration Service, updated phishing guidance and the ‘paper’ tax return deadline looming, there is lots to consider.

Making Tax Digital for VAT

The government have issued information on how Making Tax Digital for Business (MTDfB) is expected to work for VAT once the rules are introduced in April 2019.

Under the proposed rules, which have been issued subject to consultation, VAT registered businesses with turnover over the VAT registration threshold will be required to submit their VAT return digitally using software. Businesses with a turnover above the VAT threshold (currently £85,000) will have to:

  • keep their records digitally (for VAT purposes only) and
  • provide their VAT return information to HMRC through Making Tax Digital (MTD) functional compatible software.

This software will either be a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API). The functions of the compatible software include:

  • keeping records in a specified digital form
  • preserving digital records in a specified digital form
  • creating a VAT return from the digital records and providing HMRC with this information digitally
  • providing HMRC with VAT data on a voluntary basis and
  • receiving information from HMRC via the API platform that the business has complied.

Businesses will need to preserve digital records in the software for up to six years. Further information on the required information can be found in Annex 1

The government will make the final detailed requirements available to the software providers by April 2018 to allow time for the software to be developed and tested prior to the rules coming into effect from April 2019.

VAT is the first tax to be reportable under MTD and businesses within the scope of MTD will need to keep their records digitally, using approved MTD functional compatible software, from 1 April 2019. The software will create the return from the digital records and this will need to be submitted under MTD for return periods starting on or after 1 April 2019.

We will keep you informed of developments in this area and ensure we are ready to deal with the new requirements. Please contact us for more information.

Internet link: GOV.UK MTD VAT legislation overview

Budget on Wednesday 22 November and 14 December

Chancellor Philip Hammond has announced that he will deliver the Autumn Budget on Wednesday 22 November.

The Autumn Budget will be the second Budget to be delivered this year, and will outline the government’s proposed tax changes and spending plans in response to forecasts from the Office for Budget Responsibility (OBR). The 2017 Autumn Budget will be the first of its kind under the government’s new fiscal timetable. During the 2016 Autumn Statement, the Chancellor announced that the annual Budget will now take place in the Autumn, as opposed to Spring.

Going forward Philip Hammond will make a Spring Statement each year, responding to a forecast produced by the OBR. The first Spring Statement will be delivered in 2018.

Meanwhile Finance Secretary Derek Mackay has confirmed the Scottish Draft Budget 2018/19 will be published on 14 December, three weeks after the Budget for the rest of the United Kingdom.

We will update you on pertinent announcements from the Autumn Budget and Scottish Budget in due course.

Internet links: GOV.UK News GOV.SCOT News

Deadline for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2016/17 return is 31 October 2017. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

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

Internet link: GOV.UK deadline

HMRC offer tax support to growing businesses

HMRC have announced the introduction of a new service to directly help mid-sized businesses as they expand and grow. This is to be known as the Growth Support Service.

According to HMRC there are approximately 170,000 mid-sized businesses registered in the UK. The businesses with either a turnover of more than £10 million or more than 20 employees, that are undergoing significant growth, can now seek help from HMRC to access the services they need.

The Financial Secretary to the Treasury Mel Stride said:

‘Mid-sized businesses make vital contribution to the UK economy and I want to see them grow, succeed and prosper.

The Growth Support Service will help these expanding businesses access tailored tax assistance so that tax administration doesn’t stand in the way of their growth and ensures businesses can focus on finding new opportunities.

Businesses who meet the eligibility requirements can apply online; they will then be contacted by their dedicated growth support specialist at HMRC, to discuss their requirements. The bespoke service will generally last between three to six months.’

Smaller business can access the Small Business Online Forum.

Please do contact us for help and support.

Internet link: GOV.UK news

Trusts Registration Service

HMRC have launched a new Trusts Registration Service (TRS), so that trustees can register their trust online and provide information on the beneficial owners of the trust. The new service launched in early July for trustees and replaces the 41G (Trust) paper form, which was withdrawn at the end of April.

Under the existing self assessment rules, the trustees (or their agents) must register details of a trust with HMRC by 5 October of the year after a liability to Income Tax or Capital Gains Tax (CGT) first arises. The registration process, which will need completing via TRS, includes providing information about the beneficial owners of the trust.

In subsequent years, or where the trust is already registered for self assessment, the trustees (or their agent) of either a UK or non-UK trust that incurs a UK tax liability are required to provide beneficial ownership information about the trust, using the TRS, by 31 January following the end of the tax year.

The new service is not currently available to agents. HMRC have advised that agents will be able to register on behalf of trustees from October 2017 and agents and lead trustees can enter updates for changes of circumstances from early 2018.

HMRC have also confirmed that in this first year of TRS there will be no penalty imposed where registration is completed after 5 October but before 5 December 2017.

A Self Assessment Trust and Estate Tax Return (SA900) must still be submitted after the end of each tax year, reporting any income and gains.

If you would like help or guidance on trusts please contact us.

Internet link: GOV.UK trusts-and-estates

HMRC phishing and scam advice

HMRC have updated their list of examples of websites, emails, letters, text messages and phone calls used by scammers and fraudsters to obtain individual’s personal information.
The guidance can be used to help you decide if a contact from HMRC is genuine, this guidance provides examples of the different methods that fraudsters use to get individuals to disclose personal information.

You can also read about how to recognise genuine contact from HMRC, and how to tell when an email is phishing/bogus.

Internet link: GOV.UK phishing-and-bogus-emails-HMRC

Newsletter – January 2016

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Enews – January 2016

In this month’s eNews we report on the new rules on the taxation of dividends, the NLW, latest ICO fines and HMRC’s advance assurance for R&D. We also advise on the self assessment deadline and the HMRC tax helpline for those affected by flooding.

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

Dividend Allowance and rates of tax

National Living Wage – employers advised to get ready

Scottish Budget – income tax and LBTT

Self assessment deadline approaching

HMRC introduce Advance Assurance for R&D

Tax helpline for those affected by severe weather and flooding

Nuisance call companies warned to expect more fines

Dividend Allowance and rates of tax

Further details have been provided of the new rates of income tax on dividends and the new Dividend Allowance which will apply to dividends received on or after 6 April 2016.

The rates of income tax on dividends will be:

● 7.5% for dividend income within the basic rate band (ordinary rate)

● 32.5% for dividend income within the higher rate band (upper rate)

● 38.1% for dividend income within the additional rate band (additional rate)

There will also be a new Dividend Allowance of £5,000 where the tax rate will be 0% – the dividend nil rate. The Dividend Allowance applies to the first £5,000 of an individual’s taxable dividend income and is in addition to the personal allowance.

Where an individual receives dividend income, from UK or non-UK resident companies, that would otherwise be chargeable at the dividend ordinary, upper or additional rate, and the income is less than or equal to £5,000, the dividend nil rate will apply to all of the dividend income. Where the dividend income is above £5,000, the lowest part of the dividend income will be chargeable at 0%, and anything received above £5,000 is taxed at the rate that would apply to that amount if the dividend nil rate did not exist.

In calculating the tax band into which any dividend income over the £5,000 allowance falls, savings and dividend income are treated as the highest part of an individual’s income. Where an individual has both savings and dividend income, the dividend income is treated as the top slice.

The following example illustrates how the new Dividend Allowance and rates will work:

Patricia has a salary of £40,500 and dividend income of £7,000 in 2016/17. Her total income is therefore £47,500. The total of her personal allowance and basic rate band comes to £43,000. Therefore part of her dividend income would be taxed at the upper rate were it not for the operation of the new dividend nil rate.

So £5,000 will be taxed at 0% and £2,000 will be taxed at the upper rate of 32.5%

If you would like advice on how the new dividend rules will affect you please do get in touch.

Internet link: GOV.UK dividend

National Living Wage – employers advised to get ready

The Department for Business, Innovation and Skills (BIS) is advising employers to begin preparing for the introduction of the National Living Wage (NLW) which comes into effect from 1 April 2016. The rate is £7.20 an hour and applies to employees aged 25 and over.

Businesses are being advised to prepare early for the changes on 1 April 2016, when the new wage will become law, and make sure they follow these 4 simple steps:

  • know the correct rate of pay – £7.20 per hour for staff aged 25 and over
  • find out which staff are eligible for the new rate
  • update the company payroll in time for 1 April 2016
  • communicate the changes to staff as soon as possible.

Business Minister Nick Boles said:

‘The government’s new National Living Wage will provide a direct boost to over two-and-a-half million workers in the UK – rewarding and providing security for working people.’

‘I am urging businesses to get ready now to pay the new £7.20 rate from 1 April 2016. With just under 4 months left, there are some easy steps employers can take to make sure they are ready.’

‘By taking these measures, companies will be able to properly reward their staff and avoid falling foul of the law when it takes effect.’

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

Internet link: GOV.UK news

Scottish Budget – income tax and LBTT

Income tax

The Scottish Government set out tax and financial plans for the future in their draft Budget on 16 December 2015. The Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, John Swinney, announced that the Scottish Rate of Income Tax (SRIT) would be set at 10p in the pound for 2016/17. The effect of this is to ensure that Scottish Taxpayers will pay tax at the same rates as their counterparts in the rest of the UK, at 20%, 40% and 45%.

Income tax bands for the basic and higher rates are the same in Scotland as in the rest of the UK.

The Scotland Act 2012 granted the Scottish Parliament landmark new powers to set a separate annual rate of income tax for Scottish taxpayers. The Scottish rate of income tax (SRIT) comes into effect in April 2016 and represents a fundamental change to the UK tax system.

Land and Buildings Transaction Tax

As well as paving the way for the changes to income tax outlined above, the Scotland Act 2012 also resulted in the introduction of Land and Buildings Transaction Tax (LBTT) in Scotland from 1 April 2015. This replaces Stamp Duty Land Tax which applies in the rest of the UK. The draft Budget proposes changes to LBTT with the introduction of a LBTT supplement on purchases of additional residential properties, such as buy-to-let properties and second homes. This supplement will be 3 percentage points of the total price of the property for all relevant transactions above £40,000 and will be levied in addition to the current LBTT rates.

The Scotland Bill 2015 proposes the further devolution of additional tax and spending powers to the Scottish Parliament. The Scotland Bill 2015 is still subject to consideration and amendment by the UK Parliament.

Internet link: GOV.UK news SRIT

Self assessment deadline approaching

HMRC have reported that:

  • a record breaking 24,546 people submitted their tax return online on New Year’s Eve
  • more than 11,467 people sent off their self assessment tax return on New Year’s Day
  • and in excess of 2,000 taxpayers submitted their tax returns on Christmas Day.

Ruth Owen, Director General of Personal Tax, HMRC, said:

‘As we all enjoy the festive season it’s easy to see how completing your tax return can be forgotten, but the 31 January deadline will be here quicker than we think.’

The deadline for sending 2014/15 tax returns to HMRC, and paying any tax owed, is 31 January 2016. Please contact us if you need help with your self assessment return.

Internet link: GOV.UK news

HMRC introduce Advance Assurance for R&D

HMRC have introduced Advance Assurance for companies that claim Research and Development (R&D) tax relief.

If a company carries out R&D for itself or other companies, it could qualify for Advance Assurance. This means that for the first three accounting periods of claiming for R&D tax relief, HMRC will allow the claim without further enquiries.

Internet link: GOV.UK guidance

Tax helpline for those affected by severe weather and flooding

HMRC have set up a helpline (number is 0800 904 79000800 904 7900 FREE) and will enable anyone affected to get practical help and advice on a wide range of tax problems they may be facing. HMRC will also:

  • agree instalment arrangements where taxpayers are unable to pay as a result of the floods
  • agree a practical approach when individuals and businesses have lost vital records in the floods
  • suspend debt collection proceedings for those affected by the floods
  • cancel penalties when the taxpayer has missed statutory deadlines.

Internet link: GOV.UK news

Nuisance call companies warned to expect more fines

The Information Commissioner’s Office (ICO) is warning companies making nuisance calls to expect more fines in 2016.

The ICO has reported that they imposed more than £1,000,000 worth of penalties for nuisance calls and text messages in 2015, and anticipates they will issue a similar amount in early 2016.

The fines issued in 2015 included:

  • £295,000 of fines for companies offering call blocking or nuisance call prevention services
  • an £80,000 fine to a PPI claims firm that sent 1.3 million text messages
  • a £200,000 fine to a solar panels company that made six million nuisance calls
  • a £130,000 fine to a pharmacy company that was selling customer details to postal marketing companies

In addition the ICO report that the fines related to nuisance marketing in 2015 amounted to £1,135,000. These included £400,000 fines for nuisance texts, £575,000 fines for nuisance calls and a £130,000 fine for selling customer records for marketing. Details of the businesses penalised and fined can be found by using the hyperlink.

Andy Curry, ICO Enforcement Group Manager, said:

‘Nuisance marketing calls frustrate people. The law is clear around what is allowed, and we’ve been clear that we will fine companies who don’t follow the law. That will continue in 2016. We’ve got 90 on going investigations, and a million pounds worth of fines in the pipeline.’

According to the ICO, PPI claims prompted the most complaints, followed by accident claims. Areas identified as emerging sectors for nuisance calls and texts included call blocking services, oven cleaning services and industrial hearing injury claims.

Internet link: ICO news

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Newsletter – October 2015

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Enews – October 2015

This month we report on changes to business rates, tougher NMW sanctions and tax guidance for charities. We also include a reminder that the deadline for ‘paper’ self assessment returns is approaching and details of the 5p carrier bag charge.

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

Deadline for ‘paper’ self assessment tax returns

Autumn Statement date announced

5p carrier bag charge comes into force

Making tax simpler for charities

Government toughens National Minimum Wage (NMW) sanctions

Business rates appeal proposals are a ‘barrier to justice’

Deadline for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2014/15 return is 31 October 2015. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

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

Internet link: GOV.UK Self Assessment

Autumn Statement date announced

The government has announced that the date of the Autumn Statement will be 25 November 2015.

The Chancellor of the Exchequer, George Osborne, has announced that there will be an Office for Budget Responsibility forecast alongside the Spending Review on Wednesday 25 November 2015. The government will therefore publish a joint Autumn Statement and Spending Review on this date.

We will keep you informed of key announcements.

Internet link: GOV.UK News

5p carrier bag charge comes into force

Carrier bag charges will begin in England on 5 October 2015. For a large retailer the minimum charge is 5p for single-use plastic carrier bags. For small or medium-sized businesses no charge is required but can be made on a voluntary basis.

A business that employs 250 or more full-time equivalent employees, in all roles not just in retail roles, will be treated as being large and must charge the 5p. The number of employees is calculated at the start of each reporting year. The first reporting year will start on 5 October and run to 6 April 2016. Subsequent reporting years will start on 7 April.

When calculating full-time equivalent employees a business that is operated under a franchise needs to only include employees in that business, not the whole franchise.

The type of bags that will carry the charge will be:

  • unused
  • plastic
  • with handles and
  • 70 microns thick or less.

Where deliveries or online sales are made to customers any plastic bags used will also have to be included in the total cost. It may be that the amount of bags to be used is unknown when the order is placed. In this situation an average number of bags can be used in the charge as long as 5p or more is charged per bag overall.

There are a number of specific exemptions on the types of bags which would not be subject to the charge. These include bags for:

  • uncooked fish and fish products
  • uncooked meat, poultry and their products
  • prescription medicine
  • free promotional material given away.

Retailers will need to maintain reporting records and also make a report to Defra on or before 31 May following the end of the reporting year. The first report should therefore be sent to Defra by 31 May 2016.

The details to be sent to Defra are as follows:

  • number of bags distributed
  • the amount of money received from selling the bags
  • any VAT paid from the money received from selling bags
  • what the business did with the proceeds from the charge
  • any reasonable costs (see below) and how they break down.

Reasonable costs include costs to comply with the legislation and do not include the costs of the bags. Examples would be:

  • costs of changing till systems
  • training staff
  • communicating the policy to staff.

Once reasonable costs have been deducted, the remaining proceeds should all be donated to good causes.

The local authority, where the shop is based, is authorised to make inspections to ensure the law is being followed. Where there is non-compliance, they will have the authority to issue a notice to the retailer to correct the non-compliance or issue a fixed fine of up to £200 or a variable penalty of up to £20,000. In additional the local authority can order the retailer to advertise that they have broken the law.

Internet link: GOV.UK Guidance

Making tax simpler for charities

In September HMRC updated their detailed guidance notes which outline how the tax system operates for charities. The notes include how to apply to be recognised as a charity for tax and the operation of gift aid and payroll giving.

Over the last five years the government has brought in a range of changes to the tax system to make it simpler for charities to make the most of tax reliefs, so that more money can go to good causes.

Gift aid small donation scheme

Through the gift aid small donations scheme charities can claim a gift aid-style top-up on small donations eg a donation to a charity vendor in the street, up to a limit of £5,000 per year. This limit will increase to £8,000 per year from April 2016.

Charities online

Charities can submit claims for gift aid tax relief online which speeds up the claims process. 95% of charities now use this online system and the claims are processed within five working days.

HMRC outreach team

To date an HMRC outreach team has delivered face-to-face presentations to over 650 charities to spread awareness and help charities to successfully claim tax relief.

Community amateur sports clubs

The government has amended the law so that local sports clubs registered as community amateur sports clubs can receive corporate gift aid to help these clubs benefit their local communities.

Social investment tax relief

The social investment tax relief scheme has been created to encourage people to invest in social enterprises including charities. Individuals making an eligible investment will be able to deduct 30% of the cost of that investment from their income tax liability.

Lower IHT rate

If people leave at least 10% of the net value of their estate (its worth, minus any debt, other liabilities and reliefs) to charity, then 36% inheritance tax can be paid instead of 40%.

If you want further details on the tax treatment of charities please contact us.

Internet links: GOV.UK news GOV.UK guidance

Government toughens National Minimum Wage (NMW) sanctions

The government has announced a package of measures including tougher NMW penalties to ensure employees receive the pay they are entitled to.

The measures include:

  • doubling the penalties for non-payment of the NMW and the new National Living Wage
  • increasing the enforcement budget
  • setting up a new team in HMRC to take forward criminal prosecutions for those who deliberately do not comply
  • ensuring that anyone found guilty will be considered for disqualification from being a company director for up to 15 years

Business Secretary Sajid Javid said:

‘There is no excuse for employers flouting minimum wage rules and these announcements will ensure those who do try and cheat staff out of pay will feel the full force of the law.

This one nation government is committed to making work pay and making sure hardworking people get the salary they are entitled to.’

The government has announced the introduction of a new team of HMRC compliance officers who will investigate the most serious cases of employers not paying the NMW and National Living Wage. The team will have the power to use all available sanctions, including penalties, prosecutions and naming and shaming the most exploitative employers.

Stiffer penalties

Employers who fail to pay employees the minimum wage will have to pay penalties which will be up to twice what they currently are. This reform is intended to increase compliance and make sure those who break the law face tough consequences.

The calculation of penalties on those who do not comply will rise from 100% of arrears to 200%. This will be halved if employers pay within 14 days. The overall maximum penalty of £20,000 per worker remains unchanged.

Other changes

In other related changes a new Director of Labour Market Enforcement and Exploitation will be created to oversee enforcement of the NMW, the Employment Agency Standards Inspectorate and the Gangmasters Licensing Authority. The Director will set priorities for enforcement based on a single view of the intelligence about exploitation and non-compliance.

A consultation will be launched in the autumn on the introduction of a new offence of aggravated breach of labour market legislation. The consultation will also propose giving the Gangmasters Licensing Authority additional investigatory powers and a wider remit to tackle serious labour exploitation more effectively.

The government has also announced they will improve the guidance and support made available to businesses on compliance. They will also work with payroll providers to be sure payroll software contains checks that staff are being paid what they are entitled to.

If you would like help with payroll or employment law please do get in touch.

Internet link: GOV News

Business rates appeal proposals are a ‘barrier to justice’

The Enterprise Bill is currently going through Parliament. Part of the Bill reforms the business rates appeals system. The government’s changes have been criticised by rates experts and business groups, amid concerns that the changes will act as a ‘barrier to justice’.

The Valuation Office Agency (VOA), which is part of HMRC, is responsible for compiling and maintaining non-domestic rating lists. Currently officers of the VOA are prevented from sharing the information they collect about properties and ratepayers with local government. This means that businesses have to provide the same information twice to the VOA and local government. It can also mean that the properties have to be inspected by both the VOA and the local authority.

The Bill therefore allows the VOA to disclose information to a ‘qualifying person for a qualifying purpose’ such as a local authority.

The changes have been criticised by some people. They say the legislation will act as a ‘barrier to justice’ for businesses seeking to appeal.

Transparency around how business rates or tax on commercial property is measured has long been called for by small businesses. Critics of the bill claim that it has failed to address this issue, as it permits the VOA to share rate measurement information with local authorities but not with individual businesses.

Jerry Schurder, former chairman of the Royal Institution of Chartered Surveyors said:

‘In business rates, your own liability depends not on your own property but what’s being paid by lots of other people and you have no right to obtain that information. In any other tax, the taxpayer has the relevant information to make an appeal but not on rates.’

Meanwhile John Allan, national chairman at the Federation of Small Businesses, commented:

‘While we support moves to make it easier to navigate business rates appeals, we have concerns around the proposals in the Bill.

Their primary aim seems to be reducing the number of appeals by making the process more difficult, rather than by addressing the underlying issues, in particular making the appeals system and the VOA more transparent.

If increased transparency is not delivered, then confidence in the business rates system will continue to be undermined.’

Internet links: Link to legislation Telegraph

Newsletter – October 2014

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eNews – October 2014

In this month’s enews we report on mis-sold interest rate hedging products, guidance on Gift Aid and free admission, an update on the broadband voucher scheme and HMRC’s latest phishing scam.

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

Mis-sold interest rate hedging products

Gift Aid and free admission

UK broadband voucher scheme overhauled

Latest fake ‘HMRC’ phishing scam

Deadline for ‘paper’ self assessment tax returns

Latest labour market employment figures

Mis-sold interest rate hedging products

Following a review of the way some banks sold Interest Rate Hedging Products (IRHP), some businesses are entitled to redress payments. These redress payments are now starting to be made to those businesses which were affected.

Mis-sold interest hedging products (IRHP)

The Financial Conduct Authority (FCA) has identified failings in the way some banks sold IRHP to businesses taking out business loans, which were intended to offer protection against rising interest rates.

The banks calculate the amount due which can be made up of three elements:

basic redress – represents the difference between the actual payments made and the payments that would have been made without the productcompensatory interest – at 8% per year and consequential losses – losses suffered due to not having the use of the money.

If you do receive a redress payment please let us have the paperwork so we can review the position. There are certain circumstances where the tax treatment of the payment will be different so please do contact us so we can investigate the position and ensure the correct accounting and tax treatment.

Internet link: HMRC news

Gift Aid and free admission

HMRC have updated their guidance for charities to explain that the terms and conditions attached to a donation that gives a right of admission to property cannot include a right to a full or partial refund of the admission payment.

To read the full HMRC guidance click on the link below.

Internet link: HMRC guidance

UK broadband voucher scheme overhauled

Businesses are being urged to take advantage of a scheme to get faster, cheaper broadband. The government is overhauling its plans for getting ultra-fast broadband to UK businesses after disappointing take-up of its current scheme.

As reported by the BBC only £7.5m out of a possible £100m has so far been spent, with just 3,000 businesses taking up vouchers. As reported by the BBC:

‘Initially the government had expressed hope of reaching 200,000 small businesses.

With a March 2015 deadline for the money to be spent, the government is keen to galvanise interest.

Changes aimed at making it easier to get the money include a redesigned website and a more streamlined process of applying for a grant.

Other changes include:

  • Qualifying businesses no longer need to fill in an application form but can access the government grant with a call to a pre-approved broadband supplier
  • Businesses that already have a different supplier in mind need only to fill in a form to get their quote approved
  • Suppliers can also apply to BDUK (the group overseeing the process) with a set of eligible connection costs, cutting the need for businesses to apply at all
  • Once a broadband package has been approved, suppliers can market them to eligible businesses with no more need for forms or rubber-stamping.’

As reported by the BBC, Sajid Javid, Secretary of State for Culture, Media and Sport said:

‘This is a golden opportunity for businesses to take advantage of better broadband. The grant takes away the costs of installation, which are normally charged up front or added to monthly charges.’

Internet link: BBC news

Latest fake ‘HMRC’ phishing scam

We are aware that there is a new bogus email which is phishing scam aimed at taxpayers. The email which is supposed to come from HMRC states that the recipient is no longer eligible to receive a tax return and needs to sign up with their current details to get back into the system.

It is possible to check HMRC’s website for security advice and examples of phishing emails. Suspicious emails should be sent to HMRC at phishing@hmrc.gsi.gov.uk

Internet link: ICAEW

Deadline for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2013/14 return is 31 October 2014. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

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

Internet link: HMRC deadlines

Latest labour market employment figures

The Office for National Statistics has announced that the latest statistics, based on the period May to July 2014, show that employment continued to rise and unemployment continued to fall.

According to the ONS:

‘There were 30.61 million people in work. This was 74,000 more than for February to April 2014, the smallest quarterly increase since April to June 2013.

Comparing May to July 2014 with a year earlier, there were 774,000 more people in work.

The proportion of people aged from 16 to 64 in work (the employment rate), was 73.0%, slightly higher than for February to April 2014 (72.9%) and higher than for a year earlier (71.6%).

There were 2.02 million unemployed people, 146,000 fewer than for February to April 2014 and 468,000 fewer than a year earlier.’

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

‘The fact that unemployment is lower now than at any time since late 2008 is good news. There is more to do, but it’s clear that our growing economy is feeding through to new jobs.

Jobs growth is coming from the private sector, more than making up for public sector job losses, and more young people are finding their feet in our labour market.

With unemployment dropping, and wage settlements in larger firms starting to pick up, we expect to see average earnings growth begin to rise in time.’

Internet links: ONS CBI press release

Newsletter – September 2013

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In this month’s enews we report on a variety of issues including an update for employers on payroll and NMW increases. We also report on the implementation of Universal Credit and the latest crackdown by HMRC utilising card payment transactions.

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

eNEWS quicklinks
Advisory fuel rates for company cars Data payment crackdown
HMRC chase those who have missed RTI deadlines Universal Credit criticised by NAO
HSE guidance on new first aid training rules RTI issue affecting student loan borrowers
HMRC issue guidance on the Statutory Residence Test National Minimum Wage
Deadline for ‘paper’ self assessment tax returns Latest Job figures

Advisory fuel rates for company cars

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

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

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

Engine size Petrol LPG
1400cc or less 15p 10p
1401cc – 2000cc 18p (17p) 11p (12p)
Over 2000cc 26p (25p) 16p (18p)

 

Engine size Diesel
1600cc or less 12p
1601cc – 2000cc 15p (14p)
Over 2000cc 18p

Please note that not all of the rates have been amended, so care must be taken to apply the correct rate. The amounts for the previous quarter are shown in brackets where the rate has been amended.

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

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

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

Internet link: HMRC advisory fuel rates

Data payment crackdown

HMRC have announced that for the first time they now have access to information on all credit and debit card payments to UK businesses. HMRC intend to use this information to aid them in a new crackdown on tax evasion.

Under new powers introduced from 1 September, HMRC can now access information from ‘merchant acquirers’ which are the companies that process card payment transactions. HMRC will use the information to determine the amount and value of transactions completed by a specific trader.

HMRC do not have access to personal data identifying the card owners or card numbers but this data will be used to ensure that traders have correctly accounted for all taxes due.

HMRC estimate that this information could reduce fraud by over £50 million a year.

Exchequer Secretary to the Treasury David Gauke said:

‘Tax evasion and the hidden economy cost the taxpayer £9 billion a year. While the majority of traders are honest, they may find themselves undercut by the minority who seek to lower prices by cheating the tax system.’

‘The Government has given HMRC nearly £1 billion to tackle fraud and evasion, and these new powers give HMRC an extra tool to ensure a level playing field between businesses, and also reducing opportunities for those who try and cheat the system.’

Internet link: News

HMRC chase those who have missed RTI deadlines

HMRC are writing to the 167,000 employers who have missed one or more of the deadlines for reporting their PAYE information in real time.

The majority of employers should have started to report their PAYE information under RTI from the first payday on or after 6 April 2013. According to HMRC more than 1.6 million employer PAYE schemes, covering over 40 million individual records, are already reporting under RTI.

If you receive a letter and would like help with your payroll procedures, or do not believe you need to report any payments, please do get in touch.

Internet link: Press release

Universal Credit criticised by NAO

The implementation of the Government’s welfare reform programme, Universal Credit, has been criticised in a report by the National Audit Office (NAO).

Universal Credit will merge a number of existing benefits into a single payment in order to reduce the costs and fraud associated with the current multi-benefit system.

Amyas Morse, head of the National Audit Office said

‘The Department’s plans for Universal Credit were driven by an ambitious timescale, and this led to the adoption of a systems development approach new to the Department. The relatively high risk trajectory was not, however, matched by an appropriate management approach. Instead, the programme suffered from weak management, ineffective control and poor governance. Universal Credit could well go on to achieve considerable benefits if the Department learns from these early setbacks and puts realistic plans and strong discipline in place for its future roll-out.’

The DWP will now extend pilot schemes to six more areas of the UK, with these sites taking on simple welfare claims.

Internet links: Response NAO report

HSE guidance on new first aid training rules

The Health and Safety Executive has issued guidance to help employers assess their first aid training needs and comply with amendments to the Health and Safety (First Aid) Regulations.

Under the amended regulations the requirement for workplace first aid training providers to be approved by the HSE is removed from 1 October 2013.The amendments cover carrying out a first aid needs assessment and selecting a first aid training provider.

Internet link: HSE press release

RTI issue affecting student loan borrowers

HMRC would like employers to be aware that they have identified an issue with some employees who have student loans.

A few of the employees in this situation have had their employment status incorrectly ‘ceased’ on HMRC’s PAYE systems and this incorrect information has been passed to the Student Loans Company (SLC).

The SLC have written to these borrowers, querying their employment status. Employees affected by this issue are being asked to reply to the SLC saying they have not ceased or changed employer.

HMRC are hoping to correct their systems in the next few weeks. They have identified that there is an issue getting this corrected information on to the student loans system and are taking steps to resolve this issue.

Internet link: HMRC website

HMRC issue guidance on the Statutory Residence Test

HMRC have issued some updated guidance on the Statutory Residence Test which took effect from 6 April 2013.

Residence is a complex issue, if you would like any advice in this area please do get in touch.

Internet link: SRT guidance

National Minimum Wage

National Minimum Wage rates increases come into effect on 1 October 2013:

  • the adult rate will increase by 12p to £6.31 an hour
  • the rate for 18-20 year olds will increase by 5p to £5.03 an hour
  • the rate for 16-17 year olds will increase by 4p to £3.72 an hour
  • the apprentice rate will increase by 3p to £2.68 an hour and
  • the accommodation offset increases from the current £4.82 to £4.91 a day.

The accommodation offset rate is used where the employer provides you with accommodation, some of the value of which can count towards NMW pay.

It is important to note that these rates, which are in force from 1 October 2013, apply to pay reference periods beginning on or after that date.

Most workers in the UK over school leaving age are entitled to be paid at least the National Minimum Wage (NMW) for details of exceptions see the Acas website.

Internet links: Gov.uk ACAS

Deadline for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2012/13 return is 31 October 2013. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

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

Internet link: HRMC deadlines

Latest Job figures

According to the latest information published by the ONS, employment rose by 80,000 and unemployment fell by 24,000 in the three months to July.

The employment rate for those aged from 16 to 64 (for May to July 2013) was 71.6%, an increase of 0.2%. There were 29.84 million people in employment aged 16 and over.

The unemployment rate for May to July 2013 was 7.7% of the economically active population a reduction in 0.1%. There were 2.49 million unemployed people.

Between May to July 2012 and May to July 2013 total pay rose by 1.1% and regular pay rose by 1.0%.

Stephen Gifford, CBI Director of Economics, said:

‘These figures show the upturn in economic data we’ve seen through the spring and summer is starting to show up in job creation. Encouragingly, jobs growth in the private sector was more than three times greater than losses in the public sector.’

‘Despite better news on the direction of travel, youth unemployment is persistently high and growth alone will not address this problem.’

‘We’ve called on the Government to reduce employers’ National Insurance to help tackle this, and the launch of the Million Jobs campaign further emphasises the need for action to help young people enter a tough jobs market.’

Internet links: ONS report Press release

Newsletter – January 2013

Posted on by

eNEWS – January 2013

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

 

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

Employment rights – statutory limits

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

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

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

Internet links: Legislation Gov.uk calculator

HMRC target those with outstanding VAT returns

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

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

Marian Wilson, Head of HMRC Campaigns, said:

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

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

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

Internet links: Press release VAT Outstanding Returns Campaign

‘Tax cheats’ sentenced to over 150 years behind bars

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

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

Exchequer Secretary to the Treasury, David Gauke, said:

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

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

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

Internet link: Press release

PAYE coding notices

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

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

Good news for many

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

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

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

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

Internet links: Press release HMRC income tax rates and allowances

RTI is coming

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

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

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

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

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

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

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

Internet link: Press release

Start up loan scheme for young entrepreneurs extended

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

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

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

Internet link: News release

State Pension reform

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

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

The single tier pension will:

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

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

Internet link: DWP website

Child Benefit opt out

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

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

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

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

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

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

Internet links: BBC news HMRC Child Benefit guidance

Deadline looming for self assessment returns

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

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

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

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

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

Internet links: HMRC SA deadlines and penalties Press release

HMRC bank account details for employers

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

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

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

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

Internet link: HMRC payments

Newsletter – October 2012

Posted on by

eNEWS – October 2012

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

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

 

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

High income child benefit charge letters

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

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

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

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

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

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

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

Internet link: Press release

Too late for ‘paper’ self assessment tax returns

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

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

Internet link: HMRC press release

Plans for a new type of Employment contract

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

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

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

Internet link: Press release

RTI – Closing payroll schemes

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

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

Internet link: Employer Bulletin

Guidance on reclaiming National Insurance contributions paid in error

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

HMRC’s briefing states:

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

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

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

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

Internet link: HMRC brief

Health and Safety Executive Fee for Intervention

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

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

The HSE website advises:

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

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

Internet link: HSE website

Retirement funds set to fall

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

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

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

Dr Ros Altmann, Director General of Saga, said:

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

Internet link: Saga press release

HMRC checklist for EC VAT registration numbers

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

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

Internet link: VAT Notice 725