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Friday, 5 October 2018

Newsletter 130

Please click on any of the links below for further information :

UK BUDGET DATE ANNOUNCED: MONDAY 29 OCTOBER

The Chancellor of the Exchequer, Philip Hammond, has announced that the Budget will take place on Monday 29 October.

Breaking with the tradition of a Wednesday in November, perhaps in a bid to avoid the ongoing Brexit negotiations, the government is expected to set out its plans ‘to build a stronger, more prosperous economy, building on the recent Spring Statement and last year’s Budget’.

The government announcements are expected to include updates on draft legislation and consultations, and proposed tax rates and reliefs.

Internet link: GOV.UK news

SELF-EMPLOYED CLASS 2 NATIONAL INSURANCE WILL NOT BE SCRAPPED

The government has decided not to proceed with plans to abolish Class 2 National Insurance Contributions (NICs) from April 2019.

Class 2 NICs are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year. The government had planned to scrap the Class 2 contribution and had been investigating ways in which self-employed individuals with low profits, could maintain their State Pension entitlement if this inexpensive contribution had been abolished.

In a written statement to MPs, Robert Jenrick, Exchequer Secretary to the Treasury, stated that:

‘This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue and further options for addressing any unintended consequences.’

‘A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.’

Internet link: Parliament written statement

‘NO DEAL’ BREXIT GUIDANCE AND SMALL BUSINESS SURVEY

Following the issue of some ‘no deal’ Brexit technical notices, in August, the government has issued further notices with the aim of helping both businesses and individuals to prepare in the event of a UK-EU agreement not being realised.

The second and third batches of notices cover topics such as passports, driving licences together with data protection and mobile phone roaming charges amongst other topics. The full list and access to the collection of technical notices can be viewed by visiting the link at the end of this article. The government has confirmed they plan to issue further technical notices.

Although reaching a deal remains the ‘overriding priority’ unless a Withdrawal Agreement is ratified by the UK and European Parliaments, the possibility of the UK leaving the EU without a deal on 29 March 2019 remains.

Meanwhile, a survey by the Federation of Small Businesses (FSB) has revealed that:
  • Only 14% of small businesses have started planning for a no deal Brexit.
  • A further 41% believe that a no deal Brexit will have an impact on their business but have not yet started planning for the possibility.
  • 10% believe that a no deal Brexit will have a positive impact on their ability to do business whilst 48% believe that a no deal Brexit will have a negative effect on their ability to do business. This figure rises sharply to 66% for those small firms that trade with the EU and to 61% for those that employ a staff member from the EU.
FSB National Chairman, Mike Cherry, said:

‘Looking at this research it is obvious that our small firms are not prepared or ready for a chaotic no deal Brexit and the impact that it will have on their businesses. If you sell your products to the EU, buy goods from the EU or if your business relies on staff from the EU, you now see this outcome as a clear and present threat to your business.’

We will keep you informed of developments.

Internet links: GOV.UK no deal brexit collection FSB press release

DEADLINE FOR ‘PAPER’ SELF ASSESSMENT TAX RETURNS

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2017/18 return is 31 October 2018. 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 HAS PUBLISHED AN UPDATED LIST OF DELIBERATE TAX DEFAULTERS

HMRC has published an updated list of deliberate tax defaulters. The list includes details of taxpayers who have incurred a penalty because they have either:
  • deliberately provided one or more inaccurate documents to HMRC
  • deliberately failed to comply with an HMRC obligation
  • committed a VAT or excise wrongdoing.
HMRC’s criteria for publishing this information also states that ‘These deliberate acts have resulted in HMRC establishing an additional amount of tax of more than £25,000. HMRC only publish the details where the taxpayer has not made a full and immediate disclosure when HMRC started to investigate or prior to any investigation.’

Internet link: GOV.UK/deliberate tax defaulters

GENUINE HMRC CONTACT AND RECOGNISING PHISHING EMAILS AND TEXTS

HMRC has updated their guidance on how to recognise when contact from HMRC is genuine and how to recognise phishing or bogus emails and text messages.

Internet link: GOV.UK recognising phishing emails

HMRC IDENTIFY RECORD £15.6 MILLION MINIMUM WAGE UNDERPAYMENTS

HMRC has announced that they achieved record enforcement results this year, identifying £15.6million of minimum wage underpayments.

The number of workers identified as underpaid was double that in 2016/17 and the highest number since the National Minimum Wage came into force.

The figures reveal:
  • a record £15.6 million of underpayment identified for more than 200,000 workers
  • employers fined £14 million for not meeting legal obligations
  • more than 600 employers named in 2017/18 as part of ‘naming’ rounds.
Business Minister Kelly Tolhurst, said:

‘We are dedicated to stopping underpayment of the minimum wage. Employers must recognise their responsibilities and pay their workers the money they are entitled to.’

‘The UK’s lowest paid workers have had the fastest wage growth in 20 years thanks to the National Living Wage and today’s figures serve as a reminder to all employers to check they are getting their workers’ pay right.’

HMRC has prioritised the social care, retail, commercial warehousing and gig economy sectors for enforcement of the minimum wage. This is alongside employment agencies, apprentices and migrant workers. These are the sectors where HMRC believes non-compliance with National Minimum Wage is more widespread.

For advice on payroll please contact us.


Internet links: GOV.UK news GOV.UK naming

Thursday, 4 October 2018

Newsletter 129

Please click on any of the links below for more information :

WELCOME TO A NEW MEMBER OF STAFF
This month we are pleased to announce the addition of a new member of our team.
Hollie Cox has joined Walker Thompson as a trainee accountant, having concluded her A level education at King Edward VI Sixth Form College. She will shortly commence studies for her AAT qualification, which will hopefully be followed by ACCA examinations.
Outside of work Hollie enjoys swimming, jogging and walking. She also expresses an aptitude for Sudoku and card games, so should excel at solving client problems.

MAKING TAX DIGITAL FOR VAT

HMRC has published further information on Making Tax Digital for VAT (MTDfV). The VAT notice sets out some further details of the MTDfV regime, which will ultimately require taxpayers to move to a fully digital tax system.
Under the rules, businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required to keep digital records for VAT purposes using ‘functional compatible software’ and provide their VAT return information to HMRC via an application programming interface.
This notice explains:
  • the digital records businesses must keep and the ways to record transactions digitally in certain special circumstances
  • what counts as ‘functional compatible software’, and when software programs do and do not need to be digitally linked where a combination of programs is used.
The new rules have effect from 1 April 2019, where a taxpayer has a ‘prescribed accounting period’ which begins on that date, and otherwise from the first day of a taxpayer’s first prescribed accounting period beginning after 1 April 2019.
Please contact us for advice and support on the introduction of MTDfV.

Internet link: GOV.UK MTD

SCOTLAND INTRODUCES RELIEF FOR FIRST TIME BUYERS

First-time buyers in Scotland will be helped to purchase their first home through a new tax relief which applies to Scottish Land and Buildings Transaction Tax (LBTT).
According to the Scottish Parliament approximately 80% of first-time buyers will pay no LBTT once the LBTT First Time Buyer relief takes effect. The change sees the zero-rated LBTT threshold raised to £175,000 for first-time buyers. Those purchasing property at a higher value will have their tax reduced by a maximum of £600. The Scottish Parliament expect that around 12,000 first-time buyers will benefit each year.
Minister designate for Public Finance and Digital Economy Kate Forbes said:
‘From today, around 80% of first-time buyers will pay no LBTT, helping thousands of people across the country buy their first home.’

Internet link: GOV.SCOT news

ONE MILLION COUPLES STILL ELIGIBLE FOR £900 TAX BOOST

HMRC has highlighted that three million UK couples have already taken advantage of Marriage Allowance but a million more are still eligible for the tax break.
The Marriage Allowance allows certain couples, where neither pay tax at more than the basic rate, to transfer 10% of their unused personal allowance to their spouse or civil partner, reducing their tax bill by up to £238 a year in 2018/19.  The allowance was introduced in 2015 and it is possible to backdate the claim to earlier tax years.
Please contact us if you would like to know more about this allowance and whether you are eligible.

Internet link: GOV.UK news

HMRC WARNING: TIME TO DECLARE OFFSHORE ASSETS

HMRC is warning that taxpayers could face penalties if they fail to declare their income on foreign assets before new ‘Requirement to Correct’ legislation comes into force.
HMRC is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties.
New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax. The most common reasons for declaring offshore tax are in relation to foreign property, investment income and moving money into the UK from abroad. HMRC has stated that over 17,000 people have already been in contact to notify they have tax due from sources of foreign income, such as their holiday homes and overseas properties.
The Financial Secretary to the Treasury, Mel Stride MP, said:
‘Since 2010 we have secured over £2.8bn for our vital public services by tackling offshore tax evaders, and we will continue to relentlessly crack down on those not playing by the rules.’
‘This new measure will place higher penalties on those who do not contact HMRC and ensure their offshore tax liabilities are correct. I urge anyone affected to get in touch with HMRC now.’
Common Reporting Standard (CRS)
From 1 October more than 100 countries, including the UK, will be able to exchange data on financial accounts under the CRS. It is expected that the CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received.
Taxpayers can correct their tax liabilities by:
  • Using HMRC’s digital disclosure service as part of the Worldwide Disclosure Facility or any other service provided by HMRC as a means of correcting tax non-compliance.
  • Telling an officer of HMRC in the course of an enquiry into your affairs.
  • Or any other method agreed with HMRC.
Once a taxpayer has notified HMRC of their intention to make a declaration, by the deadline of 30 September, they will then have 90 days to make the full disclosure and pay any tax owed. To ensure there is an incentive for taxpayers to correct any offshore tax non-compliance on or before 30 September 2018 there are increased penalties for any failures to correct by that date.
If taxpayers are confident that their tax affairs are in order, then they do not need to worry. However if you are unsure, please contact us.

Internet link: GOV.UK news

NON-RESIDENTS CAPITAL GAINS TAX ON RESIDENTIAL PROPERTY

Non-residents are reminded that they have to inform HMRC within 30 days of completion of the conveyance of a UK residential property. You must report the disposal online using the non-resident Capital Gains Tax return even if:
  • you’ve no tax to pay
  • you’ve made a loss
  • you’re registered for Self Assessment
  • you’re registered with HMRC for Corporation Tax
  • you send HMRC Annual Tax on Enveloped Dwellings (ATED) or ATED-related Capital Gains Tax returns
If a property was jointly owned, each owner must tell HMRC about their own gain or loss. Special rules apply if you give a UK residential property to your spouse, your civil partner, or to charity.
You might also have to pay any non-resident Capital Gains Tax due within the same 30 day period, although there are exceptions to the pay now rule if you already have an existing relationship with HMRC – for example, through Self Assessment. If you do, you can either:
  • pay when you submit your return
  • defer payment until your normal due payment date

Penalties

You have 30 days from the date of conveyance to report your disposal on the non-resident Capital Gains Tax return, and pay any tax due. You’ll get a late filing penalty and be charged interest if you do not do this by the 30 day deadline.
If you miss the deadline by:
  • up to 6 months, you will get a penalty of £100
  • more than 6 months, a further penalty of £300 or 5% of any tax due, whichever is greater
  • more than 12 months, a further penalty of £300 or 5% of any tax due, whichever is greater
If you have to pay any non-resident Capital Gains Tax within the same 30 day period, late payment penalties and interest may also be due if you miss the deadline.
If any non-resident Capital Gains Tax remains unpaid after 31 January after the end of the tax year of the disposal, a late payment penalty of 5% of the tax outstanding will be charged.

Internet link: Capital Gains Tax

STAMP DUTY CUT: 121,500 HOUSEHOLDS SAVE £284 MILLION

According to the latest statistics 121,500 first-time buyers have saved a total of £284,000,000 following the introduction of a relief for first-time buyers under the Stamp Duty Land Tax rules which apply in England and Northern Ireland.
Over the next five years, it is estimated that this relief, part of the UK government’s housing policy will help over 1 million people getting onto the housing ladder.
First-time buyers purchasing homes of £300,000 and under pay no stamp duty at all, and those who bought properties of up to £500,000 will also have benefitted from a stamp duty cut.
Financial Secretary to the Treasury, Mel Stride, said:
‘Once again, we can see that our cut to stamp duty for first-time buyers is helping to make the dream of home ownership a reality for a new generation – exactly as we intended.’
‘In addition, we’re building more homes in the right areas, and have introduced generous schemes such as the Lifetime ISA and Help to Buy.’
Those purchasing properties in Wales (since 1 April 2018) pay Land Transaction Tax and those in Scotland pay Land and Buildings Transaction Tax.  First-time buyers in Scotland also benefit from a relief for first-time buyers.

Internet link: GOV.UK news

SOFTWARE SUPPLIERS – MAKING TAX DIGITAL FOR VAT

HMRC is working with more than 150 software suppliers who have said they will provide software for Making Tax Digital for VAT (MTDfV) in time for April 2019.
From 1 April 2019, businesses will be mandated to use the MTDfB system to meet their VAT obligations under MTDfV. Only businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required to use MTDfV, however HMRC is piloting the new system, on a small scale, from April 2018.
HMRC has advised that more than 40 suppliers have said they will have software ready during the first phase of the pilot and other software suppliers are expected to follow. HMRC will open up the pilot to allow more businesses and agents to join later in 2018.
HMRC has advised that the list will be updated as more software meets the criteria. HMRC are advising businesses to check with their existing software supplier to find out if they will be supplying suitable software.
Contact us for help with Making Tax Digital for VAT.

Internet link: GOV.UK software suppliers

ADVISORY FUEL RATES FOR COMPANY CARS

New company car advisory fuel rates have been published which take effect from 1 September 2018. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after
1 September 2018 are:

Engine size
Petrol
1400cc or less 12p
1401cc – 2000cc 15p
Over 2000cc 22p

Engine size
LPG
1400cc or less 7p
1401cc – 2000cc 9p
Over 2000cc 13p

Engine size
Diesel
1600cc or less 10p
1601cc – 2000cc 12p
Over 2000cc 13p

The guidance states that the rates only apply when you either:
  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances.
If you would like to discuss your car policy, please contact us.

Internet link: GOV.UK AFR

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:
  • Reporting your payroll information accurately and on time
  • Irregular payments and completion of Full Payment Submissions
  • Starter Declaration on a Full Payment Submission (FPS)
  • PAYE Settlement Agreements and Scottish Income Tax
  • National Living Wage and National Minimum Wage – are you paying the correct rate?
  • Advisory Electricity Rate for fully electric company cars
  • Welsh Rates of Income Tax
  • Construction Industry Scheme (CIS) webinars
  • Postgraduate Loans
  • Benefits and Expenses: Company cars
  • Tax avoidance loan schemes – settle now
  • Completing an EYU in respect of Employee’s National Insurance Contributions
  • Employment Income: Draft Legislation
  • Deadline for post 16 Child Benefit looms.
For help with payroll matters, please contact us.

Internet link: Employer Bulletin

‘NO DEAL’ BREXIT GUIDANCE

The government has issued some ‘no deal’ Brexit technical notices, with the aim of helping both businesses and individuals to prepare in the event of a UK-EU agreement not being realised.
The government has published the first 25 notices. Brexit Secretary Dominic Raab was keen to emphasise that reaching a deal remains the ‘overriding priority’. However, until a Withdrawal Agreement is ratified by the UK and European Parliaments, the possibility of the UK leaving the EU without a deal on 29 March 2019 remains.
The 25 documents cover a range of different areas, including VAT and trading, financial services, farming and workplace rights.
Josh Hardie, Deputy Director General at the CBI, said:
‘It’s right and responsible that the government has supplied information to businesses on issues from financial services passporting to food labelling, all of which will help lower the risks of the harshest outcomes from a ‘no deal’ Brexit.’
The government has confirmed further technical notices will be issued in September.

Internet link: GOV.UK no deal brexit collection

Thursday, 5 July 2018

Newsletter 128

Please click on any of the links below for more information :

FAREWELL

In August, Walker Thompson will be saying farewell to one of its longest serving employees.

Roger Allmark is retiring from the firm to spend more time with his wife Sandra and to enjoy the opportunity to travel more and indulge in his hobbies which include keeping his garden in order, supporting The National Trust and watching Formula One racing. (he has been an avid Ferrari supporter for many years)

Roger joined us here in 1993 after spending some time working in the finance department for a construction & plant hire company.  Prior to that he had worked in a Nuneaton based accountancy practice and Francis Webb & Son in Coventry which is where I first met him in 1976 when I started my training with that firm.  He has been regarded very much as a safe pair of hands by the many clients who have come into contact with him.

There may be a short period of time during which clients who are used to seeing or speaking to Roger will have questions or technical queries, in which case they will be directed to my partners Kim Knowles or Chris Irvine or me but in any event we want to ensure that as Roger leaves us we can continue in a seamless fashion to deal with any client matters which arise.

Finally, on a personal note, having known him for over 40 years, I would like to wish him and Sandra a very happy retirement.

Sherod Williams – Director

WORKERS’ RIGHTS FOR PIMLICO PLUMBER

A plumber has won a legal battle for working rights in a Supreme Court ruling.

The Supreme court has backed up an earlier ruling by an Employment Tribunal in the case of a contractor engaged by Pimlico Plumbers.

Plumber Gary Smith carried out plumbing jobs for Pimlico Plumbers. He was VAT registered and paid tax on a self employed tax basis.

The Supreme Court has ruled that Gary Smith was entitled to workers’ rights and confirmed that the Employment Tribunal was entitled to conclude’ that Mr Smith was a worker.

As a worker Mr Smith was entitled to rights including holiday and sick pay.  Details of workers rights can be found GOV.UK worker

Pimlico Plumbers chief executive Charlie Mullins said that he was ‘disgusted by the approach taken to this case by the highest court in the United Kingdom.

This was a poor decision that will potentially leave thousands of companies, employing millions of contractors, wondering if one day soon they will get a nasty surprise from a former contractor demanding more money, despite having been paid in full years ago. It can only lead to a tsunami of claims.’

Internet links: Press summary BBC News

LATEST GUIDANCE FOR EMPLOYERS

HMRC have issued the latest version of the Employer Bulletin. This June edition has articles on a number of issues including:
  • P11D and P11D(b) filing and payment deadlines
  • benefits in kind with cash allowances, flexible benefit packages and salary sacrifice
  • important information about childcare voucher and directly-contracted childcare schemes
  • Construction Industry Scheme – helpful reminders for subcontractors
If you have any queries on payroll matters please contact us.

Internet link: HMRC Employer Bulletin June 2018

UK ‘TAX GAP’ FALLS TO 5.7%

HMRC has confirmed that the tax gap for 2016/17 has fallen to 5.7%.

The ‘tax gap’ is the difference between the tax that should theoretically be paid to HMRC and the actual tax that has been paid. HMRC believes that the tax gap is lower as a result of its work to help taxpayers get things right from the start, and the department’s sustained efforts to tackle evasion and avoidance.

Key findings from the Measuring the Tax Gap publication include:
  • small businesses made up the largest proportion of unpaid tax by taxpayer group at £13.7 billion
  • taxpayer errors and failure to take reasonable care made up £9.2 billion of unpaid taxes by behaviour, while criminal attacks made up £5.4 billion
  • income tax, national insurance contributions and capital gains tax made up the largest proportion of the tax gap by tax type at £7.9 billion for 2016/17; equivalent to 16.4% of self assessment liabilities
  • the VAT gap showed a declining trend over time, falling from 12.5% in 2005/06 to 8.9% in 2016/17.
Mel Stride, Financial Secretary to the Treasury, said:

‘These really positive figures show that the tax gap is the lowest in the last 5 years, which reflects the hard work that HMRC and I have been doing to ensure we support businesses to pay the right tax at the right time and clamp down on tax evasion and avoidance.’

‘Collecting taxes is essential for funding our vital public services such as the NHS – indeed, had the tax gap remained at its 2005/06 level the UK would have lost £71 billion in revenue destined for public services, enough to build 200 hospitals.’

Internet link: GOV.UK tax gap

HMRC EXTENDS RTI LATE FILING EASEMENT UNTIL APRIL 2019

HMRC has extended the payroll Real Time Information (RTI) late filing easement until April 2019.

Under RTI payroll obligations employers must submit details of payments made to employees on or before the day that wages are paid via a Full Payment Submission.

The updated guidance extends the easement, introduced in April 2015 to April 2019. The easement applies where an employer’s FPS is late but all reported payments on the FPS are within three days of the employees’ payday. This easement applies from 6 March 2015 to 5 April 2019. However, HMRC go on to clarify that employers who persistently file after the payment date but within three days may be contacted or considered for a penalty. Potential monthly penalties range from £100 to £400 depending on the size of the employer.

Please contact us for help or advice with payroll matters.

Internet link: GOV.UK PAYE guidance

HMRC SAVES PUBLIC £2.4M BY STOPPING FRAUDSTERS

HMRC has announced that it has saved the public over £2.4m by tackling fraudsters that trick them into using premium rate phone numbers for services that HMRC provide for free.

HMRC has reported that scammers create websites that look similar to HMRC’s official site and then direct the public to call numbers with extortionate costs in comparison to the low cost and no cost services that HMRC provides.

These websites promote premium rate phone numbers as a means of phoning HMRC but these are call forwarding services which connect the unsuspecting to HMRC at a premium rate.

HMRC’s has confirmed that its genuine 0300 numbers are mainly free or charged at the local landline rate. In other cases, websites charge for forwarding information to HMRC which can be provided free of charge via GOV.UK website.

HMRC has successfully challenged the ownership of these websites, masquerading as official websites, and removed them from the hands of cheats. Analysis carried out shows that had HMRC not taken this action then the public would have lost £2.4m to these scams.

Mel Stride, Financial Secretary to the Treasury said:

We know that HMRC is the most spoofed government brand as criminals try to take advantage of the fact that everyone has some involvement with the tax authority. In this particular case, scammers try to dupe the public into paying large sums for services that are available for free or low cost.’

‘This is a brazen con, charging premium rates whilst simply redirecting calls to the real HMRC numbers that are available at low or no cost. It is a testament to the hard work of HMRC that they have prevented criminals extracting £2.4m from the public.’

Internet link: GOV.UK news

VAT REVERSE CHARGE FOR CONSTRUCTION SERVICES CONSULTATION

HMRC proposes to introduce new VAT rules for construction services which are subject to consultation.

HMRC has published a draft statutory instrument for technical consultation together with a draft explanatory memorandum and a draft tax information and impact note.

Under the draft legislation supplies of standard or reduced-rated construction services between construction or building businesses will be subject to a domestic reverse charge. This means that the customer will be liable to account for VAT due, instead of the supplier.

The legislation will not apply to specified supplies made to customers who are consumers, or to those that use specified supplies to make other supplies, such as those selling new houses.

The legislation is expected to take effect from 1 October 2019. More details of the proposed new rules can be found at the following link.

Internet link: GOV.UK consultation

ENTERPRISE MANAGEMENT INCENTIVE CONTINUES

It has previously been reported that the Enterprise Management Incentive scheme State Aid approval lapsed on 6 April 2018. HMRC had previously warned that EMI share options granted in the period from 7 April 2018 until EU State Aid approval was received may not be eligible for the tax advantages afforded to option holders but has now confirmed the scheme will operate as before.

On 15 May EU approval was granted and HMRC has now confirmed that the Enterprise Management Incentives scheme will continue to operate as before and no changes have therefore been made to the scheme.

The Enterprise Management Incentive (EMI) allows selected employees (often key to the employer) to be given the opportunity to acquire a significant number of shares in their employer through the issue of options. An EMI can offer significant tax advantages as the scheme allows options to be granted to employees which then allows shares to be acquired without any tax bill arising until the shares are sold.

Internet link: GOV.UK bulletin

Tuesday, 12 June 2018

Newsletter 127

Headlines from our latest newsletter.  Please click on any of the links below for more information :

ADVISORY FUEL RATES FOR COMPANY CARS

New company car advisory fuel rates have been published which take effect from 1 June 2018. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 June 2018 are:

Engine size          Petrol
1400cc or less          11p
1401cc – 2000cc          14p
Over 2000cc           22p
          LPG
1400cc or less          7p
1401cc – 2000cc          9p
Over 2000cc          14p
Engine size          Diesel
1600cc or less           10p
1601cc – 2000cc          11p
Over 2000cc          13p

The guidance states that the rates only apply when you either:
  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel
You must not use these rates in any other circumstances.

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

Internet link: GOV.UK AFR

TAX REFUND SCAMS WARNING FROM HMRC

HMRC has issued a warning to taxpayers regarding the latest tax refund scams. These scams are targeting individuals via email and SMS messages.

HMRC is currently processing genuine tax refunds for the 2017/18 tax year and the fraudsters are sending scam messages which claim that taxpayers are entitled to a rebate. These messages go on to request that they provide their personal and account details in order to make their claim.

HMRC is keen to stress that it will only ever inform individuals of a tax refund by post or through their employer, and never via email, text messaging or voicemail.

Commenting on the issue, Treasury Minister Mel Stride said

‘We know that criminals will try and use events like the end of the financial year, the self assessment deadline, and the issuing of tax refunds to target the public and attempt to get them to reveal their personal data’.

HMRC is advising taxpayers not to click on any links, download any attachments or provide any personal information, and to forward any suspect messages to HMRC.

Internet link: GOV.UK news

200,000 RECEIVE BACK PAY AS HMRC ENFORCE NATIONAL MINIMUM WAGE

BEIS and HMRC are urging underpaid workers to complain about National Minimum Wage (NMW) and National Living Wage (NLW) underpayments. Recent figures show that the number of workers receiving the money they are owed has doubled.

During 2017/18, HMRC investigators identified £15.6 million in pay owed to more than a record 200,000 of the UK’s lowest paid workers. This is an increase on the previous years figures of £10.9 million for more than 98,000 workers.

HMRC launched its online complaints service in January 2017 and believes this has contributed to the 132% increase in the number of complaints received over the last year and the amount of money HMRC has been able to recoup for those unfairly underpaid.

The figures are published as the government launches its annual advertising campaign which encourages workers to take action if they are not receiving the NMW or NLW. The online campaign urges underpaid workers to proactively complain by completing an HMRC online form.

HMRC state that the types of business receiving most complaints include restaurants, bars, hotels and hairdressing.

Business Minister Andrew Griffiths said:

Employers abusing the system and paying under the legal minimum are breaking the law. Short changing workers is a red line for this government and employers who cross the line will be identified by HMRC and forced to pay back every penny, and could be hit with fines of up to 200% of wages owed.

I would urge all workers, if you think you might be being underpaid then you should check your pay and call Acas on 0300 123 1100 for free and confidential advice.’

Please contact us for help with payroll matters.

Internet link: GOV.UK news 200000 receive back pay

OFF-PAYROLL WORKING IN THE PRIVATE SECTOR CONSULTATION

HMRC has launched a consultation on how to tackle non-compliance with the off-payroll working rules in the private sector and are asking for comments on the best way to do this.

HMRC estimates only 10% of PSCs that should apply the legislation actually do so, and the the cost of this is projected to increase from £700m in 2017/18 to £1.2bn in 2022/23.

This consultation provides an early evaluation of the public sector reform and invites responses on how best to deal with non-compliance in the private sector.

This consultation considers a number of potential options for tackling the non-compliance with the off-payroll working rules in the private sector. However, the fundamental principles of the off-payroll working rules, that the employment status test determines who should be taxed as employees, are not being considered as part of this consultation.

In respect of the public sector

‘HMRC has analysed PAYE data covering the first 10 months of the reform, from April 2017 to February 2018. This shows that in any given month since the reform was introduced, there are an estimated 58,000 extra individuals who are paying income tax and NICs undertaking work for a public authority above expected levels.

HMRC estimates that an additional £410 million of income tax and NICs has been remitted from these engagements, since the public sector reform was introduced.

On the basis of this evidence, the government’s assessment is that the public sector reform has been successful both in increasing tax compliance and resolving the compliance challenges faced by HMRC in enforcing the off-payroll working rules in the public sector.’

Private sector

‘The government considers extension of similar reform to the private sector to be the lead option which will effectively tackle non-compliance.’

The consultation closes on 10 August. We will keep you updated on this issue.

Internet link: GOV.UK consultation

UNIVERSAL CREDIT AND SELF EMPLOYMENT

The government has published a report, Universal Credit: supporting self employment which considers the issues faced by self employed claimants.

The report considers the impact of the Monthly Income Floor (MIF) earnings requirement. To be eligible for Universal Credit (UC) claimants must earn the MIF. However, the MIF assumes self employed claimants earn a regular income at least equal to the National Minimum Wage, and makes no provision for those with income and expenditure that vary from month to month. The report states that the MIF has been designed with monthly paid employed individuals in mind rather than the self employed who may have more volatile earnings.

It also considers the current system which allows self employed individuals to be exempt from meeting the MIF for the first 12 months of self employment and whether this is sufficient. The report urges the Government to extend the exemption period.

Internet link: Universal Credit Self Employed report

STATE AID APPROVAL GRANTED FOR THE ENTERPRISE MANAGEMENT INCENTIVE

It has previously been reported that the Enterprise Management Incentive State Aid approval lapsed on 6 April 2018. On 15 May EU approval was granted however HMRC have not confirmed expressly that this approval will be backdated to 6 April 2018.

The Enterprise Management Incentive (EMI) allows selected employees (often key to the employer) to be given the opportunity to acquire a significant number of shares in their employer through the issue of options. An EMI can offer significant tax advantages as the scheme allows options to be granted to employees which may allow the shares to be received without any tax bill arising until the shares are sold.

HMRC had previously warned that EMI share options granted in the period from 7 April 2018 until EU State Aid approval is received may not be eligible for the tax advantages afforded to option holders.

We await official confirmation on the position from HMRC.

Please contact us for specific advice on this issue.

Internet link: Europa press release

WALES TO SET DEVOLVED INCOME TAX RATES

From April 2019, the National Assembly for Wales will be able to vary the rates of income tax payable by Welsh taxpayers.

Responsibility for many aspects of income tax will remain with the UK government, and the tax will continue to be collected by HMRC for Welsh taxpayers.

The process for setting Welsh rates of income tax

From April 2019, the UK government will reduce each of the three income tax rates: basic, higher and additional rate, paid by Welsh taxpayers by 10 pence.

The National Assembly for Wales will then decide the three Welsh rates of income tax, which will be added to the reduced UK rates. The combination of reduced UK rates plus the Welsh rates will determine the overall rate of income tax paid by Welsh taxpayers.

If the National Assembly for Wales approves each of the Welsh rates of income tax at 10p, this will mean the rates of income tax paid by Welsh taxpayers will continue to be the same as that paid by English and Northern Irish taxpayers. However the National Assembly for Wales may decide to set different rates ‘to reflect Wales’ unique social and economic circumstances’.

Internet link: GOV.Wales

Friday, 1 June 2018

EMI Option Schemes back on track


In December 2017 someone at the Treasury dropped a clanger by not realising that EMI Option schemes would cease on 4 April 2018 because a renewal by the EU was required.

Thus with very short notice, on 4 April 2018 Accountants and Law firms were rushing around to get schemes approved before the arrangements ceased. Common sense has however prevailed and HMRC approval will be retrospectively re-instated where schemes missed the deadline. The scheme may lapse again at the point of Brexit, so planning ahead may be worth considering in the SME sector.


Friday, 11 May 2018

Interest Rates stay at 0.5%


The Bank of England yesterday backed off from raising interest rates in the face of a surprising slowdown this year, but stressed that its fundamental view on the health of the UK economy has not shifted. Threadneedle Street said the collapse in GDP growth in the first quarter of 2018 was “likely to have been overstated” thanks to temporary disruption from the poor weather suggesting the central bank is still looking to raise the cost of borrowing again later this year. ”The underlying pace of growth remains more resilient than the headline data suggest,” said the BoE’s governor Mark Carney. The Bank’s nine person Monetary Policy Committee (MPC) voted by a margin of seven to two to keep rates on hold at 0.5 per cent.

Thursday, 10 May 2018

More news on credit availability


Following on from our recent blog item on SME businesses finding it difficult to obtain credit, the Federation of Small Businesses has produced results of a survey which shows only 60% of small business applications for credit are successful, the lowest since the end of 2015.  The results also showed that only one in every four business borrower said that the credit costs were “affordable”- a fall from 33% only a year ago.  Our advice is that small businesses need to be more aware of the market for borrowing and be prepared to shop around more in order to get the finance needed at the best price.