Keep up to date with all the latest tax and financial news from CKLG

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Latest News From CKLG Accountants

Employment allowance

November 25, 2014

You may have seen the TV adverts urging you to claim the employment allowance worth up to £2,000. Those adverts imply this is free money for your business, and the GOV.UK  website says you can use any used employment allowance to pay any tax liability.
 
Unfortunately both are wrong. The employment allowance cannot be set against any tax other than employer’s class 1 national insurance contributions (NIC) due in respect of wages or salary paid. If your business doesn’t pay employer’s class 1 NIC for the year, as the wages paid to its employees (including you) are too low, there is nothing to set the employment allowance against. You cannot claim a cash payment of £2000 if you don’t “use” the employment allowance in the tax year. 
 

Planning pay for 2015/16

November 20, 2014

Working out the starting salary for a new member of staff is quite tricky. Here are two things to take into account from 6 April 2015.

  1. From that date there will be no employer’s NI on the pay of employees aged under 21, up to the upper earnings limit (currently £817 per week).You will need to keep a sharp eye on the birthdays of your younger employees as the zero rate of employer’s NI will only apply if your employee is under 21 at the time he or she is paid.
  2. The threshold from which student loan repayments must be collected through the payroll will increase from £16,910 to £17,335 per year.

Employer Bulletin no.50: page 4 for NIC and page 11 for student loan thresholds


Company vans

November 19, 2014

If you have employees who use an electric van for private and business purposes, they currently pay no tax on the benefit of private use of that van. This will change from 6 April 2015, when the taxable benefit will be 20% of the normal van benefit charge (now £3,090).

The taxable benefit will increase each year by 20 percentage points, until electric vans are taxed as normal vans from April 2020. Using the van to get from home to work is not counted as a private journey.

You can use this email address (mailbox.zeroemissionvans@hmrc.gsi.gov.uk) to inform HMRC about employees who use zero-emissions vans, so their PAYE code can include the van benefit charge for 2015/16.

Employer Bulletin no.50 – see page 10 for Vans


RTI reports

November 18, 2014

Changes have been made the Employer Payment Summary (EPS) used to report set-offs of statutory payments or CIS tax against PAYE due.

Until recently the RTI computer couldn’t tell which month an EPS related to. This meant you had to submit your RTI reports in two stages: the FPS on or before the day employees were paid, then the EPS between 20th of the tax month and 19th of the following month. Now the EPS can be attributed to the current tax month or to the previous tax month, so it can be submitted at the same time as the FPS.

The EPS can also be used to report no activity for the payroll, for up to 12 months rather than 6 months.

Employer Bulletin no 50 – see page 3 for EPS improvements


Employer helpline

November 18, 2014

As an employer you have probably suffered the frustration of trying to contact HMRC through the employer helpline (0300 200 3200). Half the battle is trying to get the automated telephone answering system to understand what you are calling about. Here are a few tips to help you beat the system:

  • before your call think of the few words that describe why you are calling such as “Maternity Pay”, and speak those words when prompted;
  • call from an area with limited background noise;
  • avoid calling in the lunch hour or just after 9am;
  • speak at a steady pace, not rushed but not too slowly either.

Alternatively you can always call us, as we may be able to help with your payroll problem. 

How to beat the HMRC automated telephone system 


Tax summaries

November 17, 2014

Between now and Christmas most people taxed under PAYE will receive a tax summary through the post from HMRC. This is supposed to explain what tax you paid in 2013/14, how it was calculated, and how the money has been spent. If your tax position for 2013/14 has not been finalised, or didn’t pay tax for the year (perhaps because you have low income), you won’t receive a tax summary.

If you file a self-assessment return online, your personal tax summary should be available to view through the HMRC online services. You don’t have to do anything with the information on the tax summary. 

Facts about tax summaries


Minimising your personal tax liability

November 13, 2014

This guide is intended to help individuals with their financial and tax planning

Good tax planning is an essential component in personal financial planning. Everyone's situation is different and tax rates, allowances and legislation change every year. Without personal tax planning, you may pay more tax than you should.

Each member of your family is taxed as an individual and is entitled to his or her own allowances and exemptions. 

Income

Earnings etc.

Savings income

UK dividends

First £10,000 *

Tax free

Tax free

10%

Next £2,880

20%

10%/20%**

10%

Next £31,865

20%

20%

10%

Next £118,135***

40%

40%

32.5%

Above £150,000

45%

45%

37.5%

* The personal allowance is withdrawn by £1 for every £2 by which total income exceeds £100,000 (to £120,000).

** The first £2,880 of savings income is taxed at 10% provided taxable non-savings income does not exceed £2,880.

*** Where income exceeds £100,000 the personal allowance is withdrawn and so up to an additional £10,000 can be at a tax rate of up to 40%. In this instance, you should ignore the £10,000 income line in calculating your cumulative position on the table.    

Download our tax planning factsheet for more information


SME costs rise above inflation

November 12, 2014

The cost of doing business has continued to rise in 2014 despite the falling rate of inflation, research from the Forum of Private Business (FPB) has found.

The survey reveals that prices for micro, small and medium-sized businesses have risen 4.7% in 2014.

However, the Consumer Price Index (CPI) rate of inflation has fallen from 2.7% in September 2013 to 1.2% in September 2014.

According to the FPB:

  • 63% of firms have experienced an increase in business costs

  • 7 in 10 said their energy costs had risen

  • 65% reported a rise in transport costs

  • 76% said they were paying more for marketing

  • 65% said staff costs were more expensive.

The majority of surveyed firms expect the trend to continue, with 82% predicting further price rises and 16% expecting significant increases.

Phil Orford MBE, chief executive of the FPB, said:

"The major reasons for increases in prices are predominantly down to transport and energy prices rising. The economic outlook continues to improve but costs still remain an issue for our members.

"This is a timely reminder that despite all the talk of a need for above-inflation wage rises businesses continue to feel the strain of rising costs."


Middle-market firms consider reshoring

November 11, 2014

A quarter of middle-market firms in the UK are considering bringing back some business activities to the UK over the next 3 years, a study by GE Capital and Warwick Business School has found.

The research found that 26% of mid-market firms are looking to reshore at least some of their activities, potentially creating 378,000 jobs.

According to the report re-shoring could:

  • increase annual revenues by £3.8 million per firm

  • increase total revenues by £27.6 billion per year.

However, not all regions will benefit evenly from re-shoring:

  • 42% of surveyed businesses will re-shore to either London or the South East

  • London is the most popular destination, with 28% of surveyed firms reporting they will head to the capital

  • in contrast, Wales (1%) and Northern Ireland (2%) are the least popular.

The top 3 reasons for businesses wanting to re-shore business operations were:

  • management or control issues

  • the UK business culture

  • levels of productivity in the UK.

Professor Stephen Roper of Warwick Business School said:

"Historically, re-shoring activity has focused on regions outside London, yet our research indicates that mid-market firms see the value of being active in the Capital, despite the high costs associated with doing business here."

Talk to us about business planning. 


Small business banking faces competition probe

November 11, 2014

The Competitions and Markets Authority (CMA) will launch an in-depth market investigation into small business banking.

The full inquiry confirms its provisional decision of 18 July and will look at issues such as switching banks, the lack of smaller competitors to the big banks, and lending to businesses.

Potential outcomes of the probe could include the break-up of the biggest banks, more transparency over fees, and branch networks being split up.

Read the full story here


Death charge on pensions

November 4, 2014

The Chancellor has promised that the 55% tax charge where an unused pension pot is passed on at death will be abolished from 6 April 2015. As a result if an individual dies before the age of 75 he will be able to pass on his pension fund on death without a tax charge. The new owner of the pension fund will also have no tax to pay when they make withdrawals (known as drawdown) from the fund.

Where the deceased is aged 75 or more the person who receives the pension fund will pay tax at their marginal income tax rate on money they withdraw from that fund. These proposals are likely to radically change how individuals view pension savings as part of IHT planning. Our IHT and pension experts can guide you through the likely implications for you and your family.

Death charge on pensions to be abolished


New guidance on employee benefits

October 31, 2014

Recently all the PAYE guidance has been moved from the HMRC website to GOV.UK, including the very useful A-Z of employee benefits. However, the guidance has not been copied directly on to the new website – it has been edited, some would say: “dumbed down”.

As a result the casual reader could be led to believe that it is easy to make a particular benefit tax-exempt. It is not. There are always “ifs” and “buts” to consider which are detailed in HMRC’s technical guidance. If you are providing your employees with a new benefit check the tax position with our employment tax experts. Don’t rely on the dumbed-down summary on GOV.UK.

Employee benefits A- Z on GOV.UK


Deceased tax returns

October 28, 2014

If you need to tie-up the tax affairs of a deceased person, you can be faced with a pile of paperwork and worrying forms to complete. The good news is HMRC has simplified the procedures for deaths on and after 13 October 2014.

Where the deceased person previously submitted self-assessment tax returns the tax inspector will write to the personal representatives or executors of the will, asking for the specific information he needs. Where the deceased taxpayer was entirely taxed under PAYE, the Tax Inspector already has all the information he needs concerning income and tax deducted, so no other return will be required.

We can help you with all the forms required following a death.

Changes to bereavement service


National Minimum Wage rates

October 26, 2014

Do you know when your young employees will reach their key birthdays: 18 and 21? It is important to keep an eye on those dates as reaching such a milestone can make a significant difference to the level of national minimum wage (NMW) which must be paid to that worker.

An employee’s pay must be increased from the beginning of the pay period that starts on or after the date the NMW rate changes, either because all the NMW rates have changed (as they did on 1 October 2014), or because the employee has moved into a different rate band due to their age. We can help you check whether you are paying the right amount to every employee.

New National Minimum Wage 


Free Will writing

October 24, 2014

In November 2014 solicitors across the country are offering to write basic Wills for free in return for a charitable donation to Will Aid, which will distribute the funds raised to a number of UK and overseas charities. The participating solicitors can be contacted through the Will Aid website or by ringing 0300 0300 013.

This basic service will not cover IHT planning, so talk to us first about the most tax efficient ways to distribute your estate. 

Will Aid – free Will writing in November


Saving Inheritence Tax (IHT) for non-residents

October 22, 2014

When you emigrate from the UK you will retain your UK domicile for at least three years, possibly longer - until you have made a settled decision to make the new country your permanent home. While you have UK domicile your entire estate remains subject to UK inheritance tax (IHT), even if you are resident for tax purposes outside the UK.

You can reduce the value of their estate which is exposed to IHT by investing in UK Government securities (Gilts) issued after 29 April 1996. These gilts are not subject to IHT if held by non-residents, irrespective of the holder’s domicile. Ask our IHT experts about the domicile and IHT rules.

IHT treatment of gilts

Please contact us for more information on reducing Inheritance Tax for non-residents.


Late filing RTI penalties

October 21, 2014

If you employ 50 people, and you file your RTI returns late after 6 October 2014, you will receive an automatic late filing penalty of £300 or £400. Smaller penalties of £100 or £200 will apply other employers (those with up to 49 employees) who file RTI returns late, but only from 6 March 2015.

HMRC will warn you that an RTI return is late by way of an electronic message within the PAYE online system. You need to go to the PAYE online section of the HMRC website to read those electronic messages, or view them using the PAYE desktop viewer (PDV) software.

PAYE penalties and appeals helpsheet


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