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)

New flexible approach to child care announced

Parents will gain greater flexibility in how they share the care of their child in the first year after birth as new regulations regarding Shared Parental Leave (SPL) came into force 1 December 2014.

The new rules, which apply to couples with babies due or children matched or placed for adoption on or after 5 April 2015, will allow parents to choose whether they want to share the mother’s maternity leave.

There are expected to be as many as 285,000 working couples that will be eligible to share leave from April 2015. The changes in how maternity leave can be used will kick start a culture change in workplaces where fathers feel more confident in taking time off for childcare.

Employment Relations Minister Jo Swinson said:

The new Shared Parental Leave rules will give real choice to parents. We all know that every family has its own unique set of circumstances, and Shared Parental Leave reflects that reality.

Up until now, families have had very limited options when it comes to juggling the demands of work with the arrival of a new baby. The old maternity leave system reinforced the archaic assumptions that the bulk of childcare responsibilities should be done by mums, and failed to recognise the vitally important role that dads and partners have to play.

Mothers and adopters will be able to choose when they return to work and fathers and partners will be able to spend more time bonding with their children during the precious early stages of their development.

Under the new rules, mums will still take at least 2 weeks of maternity leave immediately after birth, but after that working couples have the opportunity to share up to 50 weeks of leave and up to 37 weeks of pay.

The increased flexibility that Shared Parental Leave will create will be good for families, good for business and good for the economy. Businesses already recognise that employees are more productive and motivated when given the opportunity to work flexibly, and Shared Parental Leave will help employers to retain committed and knowledgeable staff.

Shared Parental Leave is just one strand of a wider programme of measures that the government has introduced to create a modern work environment and provide greater opportunities for parents and families – including the right to request flexible working and increased access to childcare and school meals.

New proposals to tackle late payment

New proposals obliging large and listed companies to publish detailed information about their payment practices and performance were unveiled 27 November 2014 by the Business Minister Matthew Hancock.

The proposed changes will provide robust information making it easier for small businesses to compare the role models with the less reputable. Specifically, the average payment time; the proportion of invoices paid beyond terms; and the proportion of invoices paid within 30 days, over 30 days, over 60 days and over 120 days.

The new reporting requirement has been developed in response to feedback from an earlier consultation, where a clear majority supported increased transparency. The new proposals show how the government intends to use the prompt payment power in the Small Business, Enterprise and Employment Bill which is currently going through Parliament. Reporting on a quarterly basis will be a mandatory requirement for all large and quoted companies.

Business Minister Matthew Hancock said:

Tackling late payment is at the heart of our drive to help small businesses. Coming from a small business background, I know just how critical late payment can be for small firms’ cash flow. We know that small businesses are often reluctant to risk losing business by using the redress measures we’ve put in place, so we want to tackle the underlying culture by increasing transparency on payment practices and performance.

The measures we are consulting on will make it clear to small businesses and consumers alike which large businesses behave properly, and those that think they can ride roughshod over their suppliers.

Government names employers who fail to pay the National Minimum Wage

Employers who owe their workers thousands of pounds for failing to pay them the National Minimum Wage (NMW) have been named by Business Minister Jo Swinson.

On the 27 November 2014, a further 25 employers who failed to pay their workers the National Minimum Wage were named under the revised naming scheme – introduced in October 2013. The scheme was revised to make it simpler to name and shame employers that do not comply with minimum wage rules. Between them they owe workers a total of over £89,000 in arrears and have been charged financial penalties totalling over £36,000.

The government has already named 30 employers since the new regime came into force. They had total arrears of over £50,000 and total penalties of over £24,000

Business Minister Jo Swinson said:

“Paying less than the minimum wage is wrong and illegal. Employers need to know that they will face tough consequences if they break the law.

All workers are entitled to the minimum wage. This isn’t a generous gesture, this is the law. Government takes the enforcement of workers’ rights seriously and those who don’t pay will be named, shamed and fined.

If anyone suspects they are not being paid the wage they are legally entitled to, they can call the Pay and Work Rights Helpline for free and confidential advice and to make a complaint.”

The government has introduced a series of tougher measures to crack down on employers that break National Minimum Wage law. As well as being publicly named and shamed, employers that fail to pay their workers the National Minimum Wage also face penalties of up to £20,000.

The government is also legislating through the Small Business, Enterprise and Employment Bill so that this penalty can be applied to each underpaid worker rather than per employer.