Offices in Preston, Blackburn and Southport

Tel: 01772 812163

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Tax Tips

Most employers will be able to claim a reduction of up to £3,000 in the amount of employer’s NIC that they have to pay. We will deal with this automatically for you if we process your payroll.

Please note some employers are excluded from claiming this allowance. The excluded employers include those employing someone for personal, household or domestic work such as a nanny, au-pair or care support worker. GP practices are also excluded. Companies where the director is the sole employee will no longer be able to claim this allowance.

The allowance can only be claimed once so if you have two or more connected businesses you will need to choose which business will claim the allowance.

Some small employers can, currently, under some circumstances, reclaim part of the SSP paid to employees.

From 6 April 2014, this will no longer be possible and none of the SSP will be reclaimable.

In its place will be a Health and Work Service which offers advice to employees on returning to work, after a sickness absence of four or more weeks and a health assessment, with a view to forming a planned timetable for their return to work.

Following a consultation with the Health and Work Service an employer may choose to contribute to a course of treatment for an employee and the first £500 of this would be exempt from tax and NIC for the employee and tax deductible for the employer.

HM Revenue & Customs did change the required reporting bands for hours normally worked each week by each employee. The five bands of hours are as follows:

  • Up to 15.99 hours
  • 16 to 23.99 hours
  • 24 to 29.99 hours
  • Over 30 hours
  • Other

If we have enclosed a list showing hours worked please check it and advise us whether or not any employees are affected by this change.

Please also remember that HMRC can charge penalties for late filing of RTI reports and for late payment of PAYE/NIC. They will also charge interest on any late payments.

RTI reports have to be submitted on or before the date payments are made to employees and PAYE payments should be cleared funds with HMRC by 19th of each month if paid by cheque or 22nd of each month if paid electronically. If you pay quarterly the relevant dates are 19th or 22nd July, October, January and April.

An employer is liable to a penalty if during a tax month they fail to file one or more RTI returns by the filling date. The filing date for an RTI return is the date the payment was made. Paragraph 6C (6) provides that an employer will only be liable to one penalty for each tax month for each PAYE scheme

The amount of penalty depends on the number of employees in the PAYE scheme

>> Number of employees

>> Amount of penalty

>> From 1 to 9

>> £100

>> From 10 to 49

>> £200

>> From 50 to 249

>> £300

>> From 250 to more

>> £400

An employer may also be liable to a further penalty where the failure to make a return on or before the filling date continues beyond the period of 3 months beginning with the date after the filling date and the employer has not reported **all** of the outstanding payments on a later return.

Un-penalised first default
For each tax year an employer will not be charged a penalty for the first tax month during which they fail to file one or more returns on time. However, this exemption does not apply to employers who operate an annual PAYE scheme and are only required to file on return per year (paragraph 6C(4)).

New employers
New employers will not be charged a penalty for failing to file a return on or before the filling date during the initial period. The initial period is 30 days beginning with the date they were required to make their first RTI return in the initial period.

Gains qualifying for this relief will continue to be taxed at the rate of 10%, and the lifetime limit of gains qualifying for this relief is raised to £10 million from the previous figure of £5 million.

To qualify for this relief an individual must meet the relevant qualifying conditions throughout a period of one year ending on the date of disposal, or one year to the date when the business ceased, if that was earlier.

Business Assets
This relief can be claimed on the disposal of business assets, such as goodwill (in some circumstances) and business premises comprised in the disposal of the whole or part of your business.

Business assets sold separately and not as part of the sale of the whole or part of a business will not qualify for this relief.

The relief will be restricted in circumstances where an individual owns a business asset personally, and it is supplied to his business, or a partnership of which he is a member, or a personal trading company at a full market rent. Only the period from which rent was paid after 5th April 2008 is taken into account to restrict the relief.

Shares
The following conditions need to be met to claim this relief on the disposal of shares. Throughout the qualifying period of one year ending with the disposal, the company must be:

  • the individual`s personal company, and
  • either a trading company, or a holding company of a trading group, and
  • the individual must be either an officer or employee of the company.

A company is a personal company if the individual holds at least 5% of the ordinary share capital and that holding gives him at least 5% of the voting rights.

There are also provisions to extend the relief to associated disposals.

More information can be found on www.hmrc.gov.uk search for Helpsheet 275 for 2015-16.

From 6 April 2016 this relief is extended with the introduction of an investors’ relief for external investors in unlisted companies. The ordinary shares have to be subscribed for by the individual on or after 17th March 2016 and held for at least 3 years from 6th April 2016.

IAn employer can provide help to an employee in paying for childcare. HMRC guidance can be found in their leaflet ‘Paying for childcare’ IR115.

With effect from the 1st January 2016 Annual Investment Allowances have been pegged at £200,000 for the foreseeable future.

Writing down allowances must be used if:

  • The maximum A.I.A.s have been claimed and the cost of assets acquired exceeds the maximum
  • The asset in question does not qualify for AIAs

The annual waiting-down allowance on the main rate pool remains at 18%, whilst the special rate pool is 8%.

As you may be aware, the National Minimum Wage increases on 1 October 2015.

The new rates will be as follows;


Workers aged 21 years and above

£6.70 per hour

Workers aged 18 to 20 years

£5.30 per hour

Workers aged 16 and 17 years

£3.87 per hour

Apprentices under 19 years

£3.30 per hour


National Living Wage

In April 2016 the Government’s new National Living Wage will become law.

If you’re working and aged 25 or over and not in the first year of an apprenticeship, you’ll be legally entitled to at least £7.20 per hour.

If you’re an employer, you’ll need to make sure you’re paying your staff correctly from 1st April 2016, as the National Living Wage will be enforced as strongly as the current National Minimum Wage.

The Inland Revenue have powers to fine businesses up to £3,000 for not taking responsibility to maintain their financial books and records properly.

HMRC have decided to enforce these powers (to help generate additional revenue) and will be visiting thousands of businesses across the Country in the near future.

We are keen to ensure our clients don't fall foul of these requirements and would point out the following tips:

  • For cash businesses, ensure you have a clear trail from initiation of jobs arising (enquiries, orders, etc.) to raising of sales invoice (invoice numbers cross referenced to diaries, etc.) together with noting what enquiries didn't materialise into sales;
  • Ensure you have an up to date record (or pile of invoices!) to demonstrate who you owe money to and who owes you money;
  • Ensure your other records are up to date so that if the Inspector calls, you can lay your hands on the paperwork which is up to date within at least a month (or a week – even better!).

If you are concerned about your book keeping, please speak to the Partner you normally deal with – who will be happy to discuss options. It may work out cheaper for us to maintain your books (either here or on your premises), thus saving year end accounts costs in the process – this includes carrying out VAT returns if you're VAT registered.

A useful factsheet can be seen on the taxation implications of ultra low emission vehicles at:
www.gov.uk/government/uploads/system/uploads/attachment_data/file/315604/factsheet-tax-implications.pdf

HM Revenue and Customer (HMRC) charges late payment penalties on PAYE amounts that aren’t paid in full and on time.
These include:

  • Monthly, quarterly or annual PAYE
  • Student loan deductions
  • Construction Industry Scheme (CIS) deductions
  • Class 1 National Insurance contributions (NICs)
  • Annual payments of employers’ Class 1A and Class 1B NICs
  • Determinations made by HMRC where it appears that there may be further tax payable
  • Decisions, for example about a person’s liability to pay NICs and the amount payable

How Much You Pay
Late month and quarterly PAYE payments

! The first failure to pay on time does not count as a default

Number of defaults in a tax year

Penalty percentage applied to the amount that is late in the relevant tax month (ignoring the first late payment in the tax year)

1 to 3

1%

4 to 6

2%

7 to 9

3%

10 or more

4%

Daily interest will continue to accrue on all unpaid amounts from the due and payable date to the date of payment.

Additional penalties
You will be charged a late payment penalty if you pay less than is actually due. If you still haven’t been paid a monthly or quarterly payment in full after 6 months, you will be charged an additional penalty of 5% of the amounts unpaid. A further penalty of 5% will be charged if you have not paid after 12 months.

These additional penalties apply even where only one payment in the tax year is late.

HM Revenue & Customs (HMRC) has announced a fresh approach to its business records checks programme in 2012, following a review.

The review, which included discussions of the pilot programme with trade and professional bodies’ representatives, found clear evidence that it is effective in improving record-keeping practices in smaller businesses. However, it recommended that the checks are more targeted in future, linking to available education and support.

The pilot programme of business records checks (BRCs) began in April last year and involved checks by HMRC on the standard of small and medium-sized enterprises’ statutory business records. Up until 4 January 2012, 2,437 business records checks had been carried out. These found that 28 per cent of those businesses visited had some issue with their record keeping, and an additional 11 per cent had issues serious enough to warrant a follow-up visit.

HMRC will now postpone making any new business records check appointments until the revamped approach outlined in the report is launched early in the 2012/13 financial year. This will allow further consultation with representative bodies on the implementation of the recommendations in the review and on some details of the new approach. In the interim, HMRC will only undertake visits already booked, as well as follow-up visits to businesses that have already been identified as having seriously inadequate statutory records.

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

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

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

“The BRC visits provide benefits for the business and HMRC. We want businesses to pay the right amount of tax at the right time, avoiding potential interest and penalties. The checks also give greater assurance to HMRC when the business submits its tax returns.”

16th March 2016

Currently CGT is charged at 18% for individuals who are basic rate taxpayers, and 28% to the extent that an individual is a higher rate taxpayer or the gain exceeds the unused part of the individual’s basic rate band. Trusts and personal representatives are liable to a 28% rate of capital gains tax.

These rates will be reduced to 10% for basic rate taxpayers and 20% for higher rate taxpayers for gains accruing on or after 6th April 2016. The rate for trusts and personal representatives will be reduced to 20%. These will be an additional 8% surcharge on gains arising from ‘carried interest’ from residential property where private residence relief is not available.

Where individuals are considering the disposal of assets, it may be advisable to defer the disposal until 6th April 2016.

From 6th April 2016, if you’re a basic rate taxpayer you’ll be able to earn up to £1,000 in savings income tax-free. Higher rate taxpayers will be able to earn up to £5,000. This is called the Personal Savings Allowance.
This means:

  • Most people will no longer pay tax on saving interest
  • Banks and building societies will stop deducting tax from your account interest

If you already receive interest without tax being taken off, you’ll no longer need to tell your bank or building society that you qualify for tax-free interest.
Saving income includes account interest from:

  • Bank and building society accounts
  • Accounts with providers like credit unions or National Savings and Investment

It also includes:

  • Interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts.
  • Income from government or company bonds
  • Most types of purchased lift annuity payments
Interest from Individual Savings Accounts (ISAs) doesn’t count towards your Personal Savings Allowance because its already tax-free.

This allowance allows an individual to transfer £1,060 of their personal allowance to their husband, wife or civil partner. This transfer will reduce their tax by up to £212 in the tax year, if some of the donor’s personal allowance is not being utilised.