Archive for the ‘HMRC’ Category

Tax gap falls to 6.5%

Sunday, November 13th, 2016

The Office for National Statistics has announced that the UK tax gap fell in 2014/15 to its lowest ever level of 6.5%.

The press release confirms that the UK tax gap, the difference between the amount of tax due and the amount collected, is one of the lowest in the world.

HMRC have reduced the tax gap from 8.3% in 2005/06. If the tax gap had remained at the 2005 to 2006 level of 8.3%, it would have grown to £47 billion and the country would have been £11 billion a year poorer.

HMRC believe that the tax gap has fallen, in part, due to digital reporting. In particular Real Time Information reporting for the PAYE system has led to more accurate recording of information on payroll taxes, and the shift to VAT online has helped bring the VAT gap in 2014/15 to its lowest level of 10.3% (£12.7 billion).

The Financial Secretary to the Treasury, Jane Ellison said:

This government is committed to tackling tax evasion and avoidance wherever it occurs.

The UK has one of the lowest tax gaps in the world. By investing £1.8 billion since 2010 in boosting HMRC compliance capabilities, we’ve brought our tax gap down to its lowest ever level. And to make it even easier for people to pay the right tax in the future, we’ve invested £1.3 billion in new digital tools.

More information visit to Gov website:  GOV.UK

HMRC Latest Employee Bulletin

Sunday, November 13th, 2016

The HMRC have published the latest issue of the Employer Bulletin with articles on a variety of topics relevant to employers, including PAYE late filing penalties and Statutory Maternity Leave and Childcare Vouchers so instead of going into each topic in detail we thought we’d share the Bulletin in full.

 

employer-bulletin

 

 

Click here to download the latest Employee Bulletin

 

Any questions

If you have any queries on any of the topics raised then please do not hesitate to contact us to see how they may impact you.

 

 

Christmas is coming – rules for gifts to staff

Sunday, November 13th, 2016

From 6 April 2016 new rules were introduced to allow employers to provide their directors and employees with certain “trivial” benefits in kind, tax-free.

The new rules were a simplification measure so that certain benefits in kind would not need to be reported to HMRC, as well as being tax free for the employee. There are of course a number of conditions that need to be satisfied to qualify for the exemption.

CONDITIONS FOR THE EXEMPTION TO APPLY:

• the cost of providing the benefit does not exceed £50
• the benefit is not cash or a cash voucher
• the employee is not entitled to the benefit as part of any contractual obligation such as a salary sacrifice scheme
• the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)

So this exemption will generally apply to small gifts to staff at Christmas or on their birthday.

Prior to this change in the rules, the benefit in kind would have had to be reported on the employee’s P11D form at the end of the year, or alternatively the employer would have dealt with the tax and national insurance under a PAYE settlement agreement. Under such an arrangement a £50 Christmas turkey to a higher rate taxpayer could end up costing the employer nearly £95!
Note that where the employer is a “close” company and the benefit is provided to an individual who is a director or other office holder of the company, the exemption is capped at a total cost of £300 in the tax year.

Any questions

Please feel free to contact us if you are considering taking advantage of this new exemption.

National Minimum Wage Rate

Wednesday, October 12th, 2016

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. NMW rates increases come into effect on 1 October 2016.

  • the rate for 21 to 24 year olds will increase by 25 pence to £6.95 per hour
  • the rate for 18 to 20 year olds will increase by 25 pence to £5.55 per hour
  • the rate for 16 to 17 year olds will increase by 13 pence to £4.00 per hour
  • the apprentice rate will increase by 10 pence to £3.40 per hour.

The mandatory National Living Wage (NLW) applies for workers aged 25 and above. This is £7.20 an hour.

NLW and NMW rates will in the future be uprated every April starting in April 2017.

Penalties

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

National Living Wage hits small business costs

According to research, 47% of small business owners blame increased wages following the introduction of the NLW as the main contributor to rising costs.

The research, carried out by the Federation of Small Businesses (FSB), revealed that a third of FSB members claim that the NLW has led to a small increase in their wage costs while one in five have said that their staff costs have increased significantly. Although 59% of FSB members absorbed the increased costs through reduced profitability, 35% have increased prices, 24% reduced staff hours and 23% cut investment.

Updated guidance

HMRC have updated their guidance on payroll reporting including what employers should include on the Full Payment Submission (FPS) and Employer Payment Summary (EPS) returns.

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

Internet links: ACAS article FSB press release Payroll guidance

Government urged to delay the launch of Lifetime ISA

Tuesday, September 6th, 2016

The government is being urged by both pension providers and banks to delay the April 2017 launch of the new Lifetime ISA as they are warning that they will not be ready to offer the savings product by this time.

A new Lifetime ISA introduces a new type of savings account for adults under the age of 40. Individuals will be able to contribute up to £4,000 per year and receive a 25% bonus from the government. Funds, including the government bonus, can be used to buy a first home at any time from 12 months after opening the account, and can be withdrawn from age 60 completely tax-free.

Further details of the new account, which is expected to be available from 2017, are as follows:

  • Any savings an individual puts into the account before their 50th birthday will receive an added 25% bonus from the government.
  • There is no maximum monthly contribution and up to £4,000 a year can be saved into a Lifetime ISA.
  • The savings and bonus can be used towards a deposit on a first home worth up to £450,000 across the country.
  • Accounts are limited to one per person rather than one per home, so two first time buyers can both receive a bonus when buying together.
  • Where an individual already has a Help to Buy ISA they will be able to transfer those savings into the Lifetime ISA in 2017, or continue saving into both. However only the bonus from one account can be used to buy a house.
  • Where the funds are withdrawn at any time before the account holder is aged 60 they will lose the government bonus (and any interest or growth on this) and will also have to pay a 5% charge.
  • After the account holder’s 60th birthday they will be able to take all the savings tax-free.

In the article published by This is Money pension providers Aegon and Standard Life have stated that they have delayed their plans until final details regarding the Lifetime ISA are released.

The Financial Conduct Authority (FCA) is yet to consult on the initiative. Steven Cameron, Pensions Director at Aegon, stated that a consultation is ‘likely to take three months’ to carry out.

Meanwhile, a spokesperson for Standard Life said: ‘As we want the Lifetime ISA to be a success, we would prefer that its launch is delayed until providers receive more detail on the product and how it is to be implemented.’

The Treasury is expected to confirm full details in the autumn.

Internet link: Article

HMRC genuine and phishing/bogus emails and calls

Tuesday, September 6th, 2016

HMRC have issued an update of their guidance on how to recognise genuine HMRC contact be it via email or text.

They have also issued a warning regarding two telephone scams that they are aware of.

The details of the two phone scams are as follows:

  • Taxpayers receive telephone calls claiming to be from HMRC requesting personal information in order to receive a tax refund, or to demand money for an unpaid tax bill.
  • A recorded message is left, allegedly from HMRC, advising ‘that HMRC are bringing a lawsuit against the individual and is going to sue them. The recipient is asked to phone 0161 8508494 and press “1” to speak to the officer dealing with the case.

HMRC are advising that taxpayers should not reply to the message and should report this to Action Fraud, or you can call Action Fraud on 0300 123 2050.

If you have any queries on this then please also do not hesitate to contact us.

Internet links: HMRC guidance Employer Bulletin

Have you accessed your Personal Tax Account?

Wednesday, July 6th, 2016

HMRC are advising employers that their employees may benefit from accessing their Personal Tax Account. These accounts allow taxpayers to view information about their tax affairs and advise HMRC online about changes that may affect the tax they pay. The services available through the Personal Tax Account include:

  • checking income tax estimates and tax codes
  • advising HMRC about changes affecting company cars
  • using the online forms available to claim tax deductible work expenses or a tax refund
  • checking the expected level of their state pension
  • renewing tax credits
  • advising HMRC of a change of address.

In a recent development the system for registering for this service has been revised and it is now possible to register using your National Insurance Number and P60 information. To register visit https://www.gov.uk/personal-tax-account

Employers may wish to promote the service to their employees as this should result in fewer enquiries being made by them to their payroll or HR departments

Internet link: Employer Bulletin

HMRC urges claimants to renew tax credits online

Wednesday, June 8th, 2016

HMRC are urging people to renew their tax credits claim well before the 31 July deadline.

HMRC have made improvements to the online renewal service and recommend claimants renew their claim online once they receive their renewal pack which is issued between April and June. The online service can now accommodate all changes in circumstances (working hours, childcare costs or income) which affect the amount of someone’s entitlement.

Nick Lodge, HMRC’s Director General, Benefits and Credits, said:

‘Our online service means that you can renew at any time of the day or night, and on any device, without having to call us. Online help can also answer most queries you may have and a web chat facility will be available to support people renewing online. We urge everyone who can to go online.

Our customers should check their details and renew early to ensure they get the right money. The sooner people renew their claim, the sooner we can check payments are correct, meaning we avoid paying too little money, or too much, which claimants then have to pay back.

This year, claimants renewing online will be able to access further information, including viewing their next payment, through their own online Personal Tax Account.

Internet link: Press release

Tax and Interest implications of new accounting rules

Wednesday, May 4th, 2016

The introduction of a new accounting standard (FRS 102) means that some of the figures in your accounts may need to be restated and these changes may have tax implications.

Calculating Tax

The calculation of profits for tax purposes is based on the profits of the business computed in accordance with Generally Accepted Accounting Principles.

At Slaters & Co we will work with our clients to discuss these changes and seek to minimise the tax impact where possible.

 

Interest Free Loans

One of the areas where there may be a change in your company’s accounts is where you have received or made a loan that is interest free or at less than market rates. Unless the loan is repayable on demand the new accounting rules require the loan to be recorded in the accounts on an amortised cost basis.  For example this means that a £20,000 interest free loan repayable in two years time would be valued at £18,141 if the market rate of interest is 5%.

This method recognises that £20,000 today is worth more than £20,000 in two years time. If your company is borrowing the £20,000 then there would be finance expenses of £907 in year 1 and £952 in year 2 reflecting the initial £1,859 discount. These finance expenses would be deductible for corporation tax provided the lender is also charged to UK corporation tax on the interest. But if the interest free loan was from an individual such as a director there would be no tax deduction, a point clarified in the latest Finance Bill.

 

Paying Interest on Directors Loans

The new 32.5% rate on dividends received by higher rate taxpayers means paying interest on directors’ loan account credit balances is now more tax efficient than paying dividends, once the new £5,000 dividend allowance has been used. This will also avoid the accounting issue mentioned above if a market rate of interest is paid. Unlike bank interest the company is still required to deduct 20% basic rate income tax and pay this over to HMRC quarterly with form CT61. Remember that higher rate taxpayers can receive £500 interest income tax free from 6 April 2016.

 

Contact Us

If you want to discuss any of this in more detail with on our Tax experts then do not hesitate to Contact Us today on 01782 566101 or Contact@SlatersCA.co.uk

 

Are you the Single Director of your Company?

Wednesday, May 4th, 2016

The Employment Allowance may have increased to £3,000  but not to single director companies.

For the last two years there has been a £2,000 allowance available to employers to set against their employers National Insurance liability for the year. This increased to £3,000 from 6 April 2016 and no action is required if you claimed the allowance for 2015/16. However, from 6 April 2016, limited companies where the director is the only employee paid earnings above the Secondary Threshold for Class 1 National Insurance Contributions (£156 a week) will no longer be entitled to claim the Allowance.

 

HMRC guidance states that if more than one employee or director earns above the Secondary Threshold, the company will continue to be eligible for Employment Allowance for the whole tax year. This other employee could be the director’s spouse or partner.

 

The HMRC guidance is not consistent with the legislation however  and we hope to clarify the matter so that you don’t miss out.

 

If you’re unsure how this affects you then contact us