Employing staff for the first time

 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

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.

Tax Diary January/February 2015

 1 January 2015 – Due date for Corporation Tax due for the year ended 31 March 2014.

 19 January 2015 – PAYE and NIC deductions due for month ended 5 January 2015. (If you pay your tax electronically the due date is 22 January 2015.)

 19 January 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2015.

 19 January 2015 – CIS tax deducted for the month ended 5 January 2015 is payable by today.

 31 January 2015 – Last day to file 2013-14 Self Assessment tax returns online.

 31 January 2015 – Balance of Self Assessment tax owing for 2013-14 due to be settled today. Also first payment on account for 2014-15 due today.

 1 February 2015 – Due date for Corporation Tax payable for the year ended 30 April 2014.

 19 February 2015 – PAYE and NIC deductions due for month ended 5 February 2015. (If you pay your tax electronically the due date is 22 February 2015.)

 19 February 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2015.

 19 February 2015 – CIS tax deducted for the month ended 5 February 2015 is payable by today.

Topping up your State Pension

 The Government has indicated that it wants to offer more to existing pensioners and people who reach State Pension age before 6 April 2016 when the single-tier pension is introduced.

 To achieve this a new Class 3A voluntary contribution will be available from October 2015 to April 2017.

 The Class 3A contribution will allow people to top up their additional State Pension.

The rate of contribution, which will be a lump sum payment, will be set at an actuarially fair rate that ensures that both individual contributors and the tax payer get a fair deal.

 The scheme will be only be open for a limited period as it is expected that most people who want to take-up Class 3A entitlement will do so in the first few months.

 You may want to consider the effects this may have on your State Pension at retirement.

Is your income approaching �100,000

 If you estimate that your taxable income for 2014-15 will marginally exceed £100,000, perhaps for the first time, you should consider your options.

 If your income does exceed £100,000 then for every £2 that your income exceeds this amount your personal tax allowance will be reduced by £1.

 As the basic personal allowance is £10,000 for 2014-15 this means that when your income is £120,000 or greater, you will no longer qualify for a basic personal allowance. Any steps that you can take to keep your income below £100,000 will potentially save you Income Tax at the marginal rate of 60%.

 For example you could consider negotiating a salary sacrifice arrangement with your employer or additional pension contributions. Maybe, trading salary for non-taxable benefits such as increased holiday entitlement? Further, pension premiums and gift aid payments count as deductions in arriving at your taxable income.

 If you would like to discuss your options in more detail please call.

Work out your tax position sooner rather than later

If you are required to file a Self Assessment tax return there are compelling arguments to support the notion that you should calculate your tax position as soon as you can after the 5 April. Don’t forget, it is possible to work out your tax position for 2014-15 and consider your planning options before you file the return. Certainly, we can undertake this for you.

 By the end of May or early June 2015 you should be able to draw together most of the information you need to complete your return for 2014-15.

 Here are three reasons why you should seriously consider this early-bird approach, and there are many more:

  1. You will be aware of any underpayment of tax to 5 April 2015, and more importantly, how you will fund the payment that will become due on or before 31 January 2016.
  2. If your tax arrears include Income Tax at the higher rates, you may want to consider making a charitable donation before you file your 2015 return. It is possible to carry back charitable donations made after the 5 April 2015 as long as you make the claim before you file. Knowing your tax position at an early date will give you an opportunity to consider this option.
  3. If you have overpaid tax for 2014-15 why leave it in the Treasury’s bank account? Getting the job done as soon as you can, after 5 April 2015, should ensure your refund is quickly received.

Planning your business year end

Most of the tax planning that can be employed to reduce your business tax liabilities need to be considered and implemented prior to your year end date.

If you are in business, you should consider at least one planning meeting with your professional advisor before the end of the tax year. This should be a priority.

Here’s why:

  1. You may make an ill-considered judgement to make, or refrain from making, the purchase of equipment or vehicles without considering the tax effects. As there are significant investment allowances available, appropriate action can result in cash flow advantages – securing tax relief sooner rather than later.
  2. In a similar vein, there is still an opportunity to maximise tax relief by considering the timing of significant overhead payments that are not reccurring – for example, repairs to plant or buildings or significant training costs. Should you commit before or after the tax year end?
  3. If you operate your business as a limited company have you ensured that you have sufficient post tax profits, for the current year and brought forward, to cover dividend payments to shareholders?
  4. Again, in a company environment, are directors’ loan accounts overdrawn? Can this be rectified before the end of the trading year? What are the personal and Corporate Tax consequences?

For many of our business clients this pre-year end planning is the norm – an essential part of our service. If you would like to organise your planning session please call and make an appointment; once your trading year end, or the tax year end passes, opportunities to save tax may be lost.

What are your business and tax online filing obligations

We though you would be interested to know what your legal obligations are to file information online.

 Limited companies

All companies are required to file a corporation tax return together with an electronic copy of the statutory accounts to H M Revenue & Customs. The returns have to be filed online, generally within 12 months of the end of your accounting period for corporation tax purposes. Penalties will be charged if you miss the filing deadline.

Additionally, companies need to file an annual return and a further copy of the annual accounts with Companies House. At present the requirement to file online is optional although filing fees are reduced in some circumstances if you do file online. Penalties may apply if you miss the relevant filing deadline.

 Self-employed business owners

If you are a sole trader or in partnership you are required to prepare and submit a personal self-assessment tax return. (If you are in partnership the business and partners will all have to file returns.) Self-assessment returns can still be filed as a paper version but you get an additional 3 months to file return if you file electronically. For example the paper version of the 2013 return has to be filed by 31 October 2013; the deadline for filing the same return online is 31 January 2014.

 In both cases penalties will be charged if you miss the filing deadline.

 Business owners with employees

 Employers are required to provide details of the amounts and deductions from their employees' wages and salaries when they are paid. This Real Time Information process replaced the need for annual filing of payroll data from 6 April 2013, for smaller businesses, and for all employers by October 2013.

 The information has to be filed electronically in the majority of cases and most payroll software providers allow for this. Penalties will be applied if you are late in submitting the data to HMRC.

 Building contractors and sub-contractors

 At present there is no requirement to file Construction Industry returns online. Contractors have the option to send in paper returns or file electronically.

 It is probably easier and more certain to meet filing deadlines by using software or HMRCs CIS Online facility. Penalties for late submission of monthly and other returns apply.

 VAT registered business owners

 All VAT registered businesses are legally obliged to submit their VAT returns online and pay any VAT due electronically. Only a few traders are exempt from this requirement.

 Penalties and interest apply if you are late filing or paying your returns.

 Pension scheme administrators

 Administrators of pension schemes must use Pension Schemes Online service to:

  • register a pension scheme
  • change the scheme administrator for a pension scheme – notifying that you're no longer the Scheme administrator or making the administrator's declaration and telling HMRC you're a new Scheme administrator
  • submit an Event Report
  • submit a Registered Pension Scheme Return
  • submit an Accounting for Tax (AFT) Return – including making an amendment to a previously submitted AFT Return.


Excise Movement and Control System

 Since January 2011 all intra-UK duty suspended movements of goods are tracked online. The EMCS process allows real time notification of despatch and receipt of duty suspended excise goods to HM Revenue & Customs.

 Customers in EU

 You will need to complete and file an EC Sales List (ESL) showing each of your customers in the EU and the £ value of the supplies you've made to them. You must make a separate entry for each type of supply to each customer.

 There is no minimum amount you must list every supply, no matter how small. If you haven't made any supplies (or issued any credit notes) in the reporting period, you should not submit an ESL and the Online service will not allow you to submit a nil declaration.

 In summary

 If you are a client and we are instructed you will be pleased to know that we meet these obligations on your behalf. If you are not a client, and would like a quote to outsource this work, please call…

Discount for first time buyers

A new scheme offering 100,000 first-time buyers new homes with a 20% discount was announced 15 December 2014.

The Prime Minister launched the new scheme that will offer 100,000 first-time buyers new homes with a 20% discount, as part of a major push to help people onto the housing ladder.

Aspiring home owners will be asked to register their interest in buying via the Starter Home initiative from the start of next year – at least 6 months earlier than planned. And many of the country’s leading house builders and councils are already looking at sites that could be used for new homes.

The government is today setting out how the scheme will work with a change to the planning system to free under-used or unviable brownfield land from planning costs and levies in return for a below market value sale price on the homes built on the site.

Developers and councils are being asked to respond to the proposals to ensure the changes will unlock a range of sites across the country.

100,000 homes will be available to first time buyers under 40 as part of the Starter Homes initiative – and work on the first raft will start next year.

Helping more people realise their dreams of home ownership and getting Britain building is a vital part of the government’s long-term economic plan to secure a better future for Britain and give hardworking people economic security.

The measures announced by the Prime Minister today include:

1.Innovative planning changes – to bring new homes onto the market at a minimum 20% discount

2.Backing of country’s leading house builders and councils

3.High quality design

Prime Minister David Cameron said:

Hardworking young people want to plan for the future and enjoy the security of being able to own their own home. I want to help them do just that.

Solicitors Tax Campaign

If you work within the legal profession as a solicitor in a partnership or company, or as an individual, this campaign provides an opportunity for you regularise your tax affairs.

To take advantage of this opportunity firms will need to:

  1. Fill in a notification form by 9 March 2015.
  2. Fill in a disclosure form and pay what you owe by 9 June 2015.

As with other tax settlement schemes, participation will enable practitioners to settle any outstanding matters on favourable terms: primarily, penalties will be levied at a lower rate.

How the Solicitors’ Tax Campaign works

If you work within the legal profession as a solicitor, you can benefit from the terms offered. Through notifying your intention to disclose by 9 March 2015 and making your disclosure and payment by 9 June 2015 you will have the following guarantees:

  • you can tell HMRC how much penalty you believe you should pay, what you pay depends on why you have failed to disclose your income, if you’ve deliberately kept information from HMRC you should pay a higher penalty than if you’ve simply made a mistake
  • if you can’t afford to pay what you owe in one lump sum, don’t worry, if your circumstances warrant it, you’ll be able to spread your payments
  • if you’ve simply made a careless mistake you only pay for a maximum of 6 years – no matter how many years you’re behind with your tax affairs, however if you don’t come forward and HMRC finds later that you’re behind with your tax, it may be harder to convince HMRC that it was simply a mistake, the law allows HMRC to go back up to 20 years in serious cases or HMRC may carry out a criminal investigation

You may not have to pay any penalty at all but if you do it’s likely to be lower than it would be if HMRC finds out you haven’t paid enough tax.

Under the Solicitors’ Tax Campaign you can make a disclosure:

  • about your own tax affairs
  • on behalf of someone else (for example, if you’re a personal representative of a deceased person)
  • on behalf of a company (if you’re a company director or company secretary)