Archive for January, 2015

Statutory Maternity and Paternity Pay

Friday, January 30th, 2015

What you can reclaim

As an employer, you can usually reclaim 92% of employees’ Statutory Maternity (SMP), Paternity and Adoption Pay.

You can reclaim 103% if your business qualifies for Small Employers’ Relief. You get this if you paid less than £45,000 in Class 1 National Insurance in the last complete tax year before the qualifying or matching week (or the official notification for overseas adoptions).

Statutory Maternity Leave

Eligible employees can take up to 52 weeks’ maternity leave. The first 26 weeks is known as ‘Ordinary Maternity Leave’, the last 26 weeks as ‘Additional Maternity Leave’.

The earliest leave can be taken is 11 weeks before the expected week of childbirth. Employees must take at least 2 weeks after the birth (or 4 weeks if they’re a factory worker).

Statutory Maternity Pay (SMP)

SMP for eligible employees can be paid for up to 39 weeks, usually as follows:

  • the first 6 weeks – 90% of their average weekly earnings (AWE) before tax
  • the remaining 33 weeks – £138.18 or 90% of their AWE (whichever is lower)

Tax and National Insurance need to be deducted. Most payroll software packages cope with these transactions.

Women are more likely than men to send in their tax return on time

Tuesday, January 27th, 2015

Women are more likely than men to send in their tax return on time, an HM Revenue and Customs (HMRC) analysis has revealed.

For every 10,000 tax returns received last year by HMRC from men, 394 were after the relevant deadline – 31 October for paper submissions and 31 January for online returns. This compares to 358 late returns for every 10,000 received from women.

As well as a gender gap, HMRC’s analysis showed a significant difference in filing behaviour between age ranges. People aged 18 to 20 were the worst offenders, with 1,085 in every 10,000 filing late. At the other end of the scale, those aged 65 or over were the most punctual, with only 155 out of every 10,000 missing the deadline. HMRC’s analysis found that the older you are, the more likely you are to send in your tax return on time.

In terms of differences between workers in different industries, those in the agriculture, fishing and forestry industry are the star performers, with just 109 in every 10,000 filing late returns. Lawyers and accountants came second (219 late filers per 10,000), with health and social workers (262 per 10,000) in third place. Workers in the information and communication industries fared the worst (390 per 10,000), with administrative and support services not far behind (388 per 10,000) and the construction industry the next worst performing sector (352 per 10,000).

Across the United Kingdom, taxpayers in Northern Ireland were the most punctual (301 per 10,000), followed by those in Wales (346 per 10,000), England (374 per 10,000) and Scotland (391 per 10,000). The figure for the United Kingdom as a whole was 372 late filers per 10,000.

Within the English regions, South West taxpayers were the least likely to miss the deadline (299 per 10,000), followed by the East Midlands (324 per 10,000), Yorkshire and the Humber (337 per 10,000) and the West Midlands (344 per 10,000). By some distance, the worst-performing region was London (512 per 10,000), followed by taxpayers in the North East (380 per 10,000), North West (369 per 10,000), South East (355 per 10,000) and the East of England (346 per 10,000).

Have you utilised your exempt amount for capital gains tax purposes

Thursday, January 22nd, 2015

As we are approaching the end of the 2014-15 tax year, individuals who own assets that are subject to capital gains tax (CGT) may be advised to consider the comments made in this article.

If you dispose of a chargeable asset between 6 April 2014 and 5 April 2015 you are allowed gains of up to £11,000 tax free. If you have made no chargeable disposals in this period, but are considering a disposal after 5 April 2015, you may want to reconsider the timing of the disposal.

The £11,000 allowance cannot be carried forward. If you have no gains to cover with the allowance it is a permanent loss of tax relief.

This planning opportunity is especially useful if you have a portfolio of shares. If you are advised by your broker to consider the disposal of a holding it should be possible to time the disposal (perhaps selling some shares before 5 April 2015 and some afterwards) to maximise utilisation of the exempt allowance.

The utilisation of this allowance can be enhanced if you are sitting on potential capital losses. For example, you may own shares that will never recover from a recent drop in price – they have become of negligible value. A separate claim can be made for this sort of loss of value and in some cases it may be possible to set off losses against income rather than other capital gains.

The key to these and other tax planning strategy is to consider your options before 5 April 2015. As we have said before, on numerous occasions, once the tax year end date is passed, many allowances and reliefs may be permanently lost. Spending an hour or two with your tax advisor before 5 April may be the best investment you make this year…

Government launches Pension Wise service

Tuesday, January 20th, 2015

Pension wise will offer free and impartial guidance to people on the new pension freedoms which come into effect in April 2015.

Pension wise will be a first port of call for consumers, offering free and impartial information and guidance to people with a defined contribution pension approaching retirement.

From April 2015, over 300,000 individuals a year with defined contribution pension savings will be able to access them as they wish from when they turn 55.

The creation of Pension wise follows the announcement by Chancellor of the Exchequer George Osborne in the summer that the government will provide access to free and impartial guidance on how to make the most of the new pension freedoms, which come into effect in April 2015.

Economic Secretary to the Treasury Andrea Leadsom said:

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

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

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

The Financial Conduct Authority, which was set up by the government, is working hard to tackle pension fraud. It has strong powers to prosecute those behind illegal scams and earlier this year launched scam awareness campaign Scamsmart.

Top ten excuses for late filing

Thursday, January 15th, 2015

As most self employed persons, certain pensioners and high income earners will be aware their self-assessment tax returns for 2013-14 have to be filed by the end of January 2015 in order to avoid late filing penalties                                   

There are also other costs (possible interest and further penalties) if you fail to pay your tax on time. Any balance of self-assessment tax for 2013-14, and if applicable, the first payment on account for 2014-15, may also be due on the same date (31 January 2015).                                 

If you are struggling to meet this deadline we may be able to help…

 If you are late in filing or paying your taxes you may have a possible means of avoiding penalties if you can demonstrate that you had a reasonable excuse. Readers may be interested to know that the following excuses would not be accepted by HMRC. This list of the top ten excuses (that failed) was published on 5 January 2015.

  • My pet dog ate my tax return…and all the reminders.
  • I was up a mountain in Wales, and couldn’t find a post-box or get an internet signal.
  • I fell in with the wrong crowd.
  • I’ve been travelling the world, trying to escape from a foreign intelligence agency.
  • Barack Obama is in charge of my finances.
  • I’ve been busy looking after a flock of escaped parrots and some fox cubs.
  • A work colleague borrowed my tax return, to photocopy it, and didn’t give it back.
  • I live in a camper van in a supermarket car park.
  • My girlfriend’s pregnant.
  • I was in Australia.

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

“People can have a genuine excuse for missing a tax deadline, but owning a pet with a taste for HMRC envelopes isn’t one of them.”

RTI: filing penalties and appeals

Tuesday, January 13th, 2015

Filing penalties began on 6 October for employers with schemes of 50 or more employees.


Employers who have incurred these penalties will start to receive the quarterly penalty notices from the beginning of February 2015. Agents will not be sent a copy of the penalty notice. However, the notice will contain a prominent message instructing employers who have an agent acting for them to show them the notice immediately, The notice will be in the form of a paper letter, and will set out all filing penalties incurred for quarter 3 of 2014-15 (ie for tax months 7, 8 and 9 covering the period

6 October to 5 January 2015). The penalty notice could contain more than one penalty.

Each penalty on the notice will have a Unique Identification (Unique ID) to help employers identify the penalty should they want to appeal. The penalty notice will explain what action the employer may need to take if they disagree and wish to appeal.

We want employers to understand and comply with their reporting responsibilities rather than incur penalties.

We use our electronic message service (sometimes called ‘generic notification service’ or ‘GNS messages’) to immediately advise employers when they may be in a penalty position. These messages aren’t penalty notices, they are a prompt to help employers understand their current PAYE position and bring it up to date if necessary. It’s important therefore to check these messages on a regular basis.

To prevent incurring penalties unnecessarily employers should:

  • Report PAYE on time by sending a Full Payment Submission (FPS) on or before the earliest payment date that is reported on it.
  • Make sure that, if they do need to report any payments late on an FPS, they tell us why using the late reporting reason codes: see the ‘Late reporting reason’ section of the What payroll information to report to HMRC guidance.
  • Send an Employer Payment Summary (EPS) if they don’t pay anyone during the tax month. Employers can also use an EPS to tell us if there is going to be a period of inactivity and they won’t be reporting for several months.
  • Make sure, if they use a payroll services provider or an agent to run their payroll, that they receive payroll information in good time to meet the reporting deadlines.
  • Tell us if they have changed the number of payrolls or how often they pay their employees, for example changing from weekly to monthly – for details, see the Running payroll: changing paydays guidance.
  • Tell us straight away if their PAYE scheme has now ceased and they are no longer paying anyone, using a final FPS or EPS – see the Stop being an employer guidance for details of what to do.
  • Send an FPS or EPS in advance if they know they will be unavailable (for example, on holiday) when it is time to make a report.


Appealing against a penalty online using the Penalty and Appeals Service (PAS)

Employers and their authorised representatives can use HMRC’s Online Services to make an electronic appeal against filing penalties. PAS will display the penalty and allow employers or their agents to appeal online.

Using PAS and appealing online is the quickest way to make an appeal and have HMRC process it, and it means that employers or agents will get an immediate online acknowledgement. We therefore recommend employers and agents sign up for email reminders and notifications using options in PAYE Online if they haven’t already.

To make an online appeal, employers or agents should:


  • Go into the PAYE Online section of Online Services
  • Select ‘Appeal a Penalty’. Agents will find their clients’ details under “your current


‘Appeal a Penalty’ will list all the penalties that can be appealed, showing the:

– Unique ID

– Type of penalty

– issue date as shown on the penalty notice

– tax period end date

– amount of penalty.


It will also tell you if there are no penalties that can be appealed, by stating either ‘You do not currently have any penalties that can be appealed’ or, if you are an agent ‘Your client does not currently have any penalties that can be appealed’.

  • Select the Unique ID as shown on the penalty notice for the penalty you wish to appeal against.

Select the reason for appeal from the drop-down menu list. You may also be required to provide additional information, for example ill-health or IT difficulties.

  • For an appeal to be successful:

– We must have raised the penalty on an incorrect understanding of the facts (e.g. the submission was made on time or the size of the employer is wrong);


– there must be reasonable grounds for late submission.

  • The screen will then:

– tell you that you’ve lodged your appeal successfully

– provide you with an acknowledgement reference

– tell you to check your GNS messages, to check the status of your appeal.

Please note that there isn’t a print function in the online appeal facility, so you may want to make an electronic copy of this screen for your records.


  • We will then consider your appeal and issue one of two GNS messages immediately:

– ‘HMRC has received the appeal which has been accepted and settled, the penalty has been cancelled and a revised penalty notice will be issued in due course’. This notice will cancel the penalty and reduce the charge to nil.

– ‘The appeal has been received and referred for further consideration’. Appeals can also be made in writing and should contain the following information, which can be found on the penalty notice:

  • PAYE Employer reference
  • Unique ID of the penalty
  • Default period
  • Reason for appeal

Please remember that appeals can only be made online or in writing. They will be considered in exactly the same way, whichever method of appeal you use. Appeals cannot be made by telephone.

Holiday pay and overtime update

Tuesday, January 13th, 2015

We have previously reported that in the judgment an Employment Appeal Tribunal (EAT) decided that holiday pay should reflect non-guaranteed overtime.

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

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

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

Following fears that employers may face large backdating claims the Government has taken action to reduce potential costs to employers by limiting claims by introducing regulations which will mean that claims to Employment Tribunals on this issue cannot stretch back further than two years.

Employees can still make claims under the existing arrangements for the next six months which will act as a transition period before the new rules come into force. The changes apply to claims made on or after 1 July 2015.

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

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

Internet links: ACAS guidance  Gov news

HMRC gives small businesses additional guidance on 1 January VAT changes

Tuesday, January 13th, 2015

Revenue and Customs brief issued on incoming changes for digital service suppliers


HM Revenue and Customs (HMRC) has published additional guidance forUK micro and small businesses who supply digital services to consumers in other EU Member States.

The Revenue and Customs brief tells them:

  • how to comply with new VAT rules on the place of taxation of digital services that come into force on 1 January 2015
  • how to register for HMRC’s VAT Mini-One Stop Shop (MOSS) and still benefit from the UK’s VAT registration threshold for sales to UKconsumers.

Affected are UK businesses that sell digital services cross-border to consumers in other EU Member States.

On 1 January 2015, the VAT rules for cross-border Business to Consumer supplies of ‘digital services’ (ie broadcasting, telecoms and e-services) will change. From that date, VAT must be accounted for in the Member State where the consumer normally lives, rather than where the supplier of the service is established.

The change means that sellers of digital services will no longer be able to unfairly undercut businesses in the UK by locating themselves in another EUMember State with a lower VAT rate.

More information about these changes is available here.

Employing staff for the first time

Tuesday, January 13th, 2015

 According to the tax office there are six things you need to consider when you are employing staff for the first time. They are:

  1. Decide how much to pay someone – you must pay your employee at least the National Minimum Wage.
  2. Check if someone has the legal right to work in the UK. You may have to do other employment checks as well.
  3. Apply for a DBS check (formerly known as a CRB check) if you work in a field that requires one, e.g. with vulnerable people or security.
  4. Get employment insurance – you need employers’ liability insurance as soon as you become an employer.
  5. Send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you’re employing someone for more than 1 month.
  6. Tell HMRC by registering as an employer – you can do this up to 4 weeks before you pay your new staff.  

If your employee earns less than £111 a week and they don't have another job elsewhere – or other taxable income such as a pension – you don't have to register with HMRC as an employer. It would be prudent to keep a record of the wages you pay.

 As soon as their income exceeds £111 a week you will need to deduct PAYE, and if necessary National Insurance.

 The good news is we offer an outsourced payroll service. So if you are unsure if you should or should not be registered with HMRC, give us a call so we can discuss your obligations in more detail.

The New Enterprise Allowance

Wednesday, January 7th, 2015

ver 450 new businesses every week have been set up over the last year thanks to a government scheme which helps people on benefits to become their own boss.

The New Enterprise Allowance (NEA) helps jobseekers, lone parents and people on sickness benefits with a good idea to set up their own business. New figures published today (19 December 2014) show the scheme has helped budding entrepreneurs set up over 60,000 new businesses, with help from a mentor and financial support payable through a weekly allowance.

 As part of the government's long-term economic plan to create jobs by backing small business and enterprise, the NEA has helped jobseekers of all ages. Over 4,000 young people, over 11,000 disabled people, and more than 14,000 over-50s have been helped to turn their hobbies into businesses.

 Minister for Employment, Esther McVey said:

 Small businesses are what make this country great – with their hard work, creativity, and entrepreneurial spirit they are fuelling Britain's recovery. They are also providing a significant share of new vacancies, contributing to the record number of people who now have jobs.

 As part of our long term economic plan, tens of thousands of new and innovative businesses are now up and running – from milliners to caterers and designers to counsellors – all of whom have benefited from the expert mentors who have given up their time to help the next generation of entrepreneurs.

The scheme has helped set up a wide range of new businesses across Britain, including a designer wedding dress-maker, a catering firm which has catered for big events such as the International Business Festival, and a computer-aided design business, which laser-cuts model aircraft.

 People on the scheme get expert help and advice from a business mentor who will help them to develop their business idea and write a business plan. If the business plan is approved, they are eligible for financial support payable through a weekly allowance over 26 weeks up to a total of £1,274. Participants can also access a loan through the BIS start-up loan scheme. Once a business is up and running, mentors continue to give entrepreneurs on-going support during the early months of trading.

 From the new year, NEA will be extended to give family businesses a boost as the partners of anyone who is claiming Jobseekers' Allowance will be able to apply. The scheme will also be extended to more people on sickness benefits.