Students – claiming a tax refund

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The Low Incomes Tax Reform Group (LITRG) is reminding students who have been working over the summer to make sure they have not overpaid tax and, if they have, to claim a refund from HMRC. Students are more likely to overpay tax as they usually only work – or earn more – at certain times […]

HMRC update guidance on paying the Apprenticeship Levy

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HMRC have updated guidance on how to allocate the apprenticeship levy allowance across multiple PAYE schemes and/or connected companies and charities. Pay Apprenticeship Levy explains when the apprenticeship levy needs to be paid and how to report payments. The guidance has been updated at the section about ‘how to allocate your allowance’. The apprenticeship levy […]

HMRC publish guidance on pension savings annual allowances

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If pension savings are more than the annual allowance, unused annual allowances from previous years can be brought forward. The annual allowance is the limit on the amount of pension savings that can be made to all pension schemes in a tax year before tax has to be paid on them. Pension savings over the […]

Classifying food and drink expenditure

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The subject of classifying food and drink expenditure is a tricky area, not helped by HMRC’s vague guidance on the matter. There are VAT and corporation tax consequences depending on what classification you use so it is important to get it right. Generally, food and drink expenses incurred by a business can be categorised into […]

Simplifying PAYE Settlement Agreements

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The process for administering and agreeing PSA has changed to reduce the burden for employers. From 6 April 2018, a PSA will be agreed between the employer and HMRC and will remain in place for subsequent tax years unless changed or cancelled by the employer or HMRC. This means that employers will no longer have […]

Young workers

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With the school summer holidays approaching, many businesses will look to employ young workers to help meet seasonal demands and to provide valuable work experience. Young workers have additional rights which must be followed strictly: Children below age 13 cannot work.  Children aged 13 to 15 can only work part time.  Children aged 16 or […]

Working during hot weather

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With summer approaching, it is important to consider the affect of hot weather on the working conditions of your employees. Whilst there is no legal upper limit to temperature in the workplace, it must remain ‘reasonable’. What is considered reasonable must be judged against your particular work environment. The risks of high temperature must be […]

Changes to termination payments

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The tax treatment of termination payments changed from 6 April 2018 and further changes will come into effect in 2019. Pay In Lieu of Notice Employers now need to pay Income Tax and Class 1 National Insurance Contributions (NICs) on an element of all termination payments from 6 April 2018, whether or not they are […]

How your maternity pay is calculated

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If you are planning to go on maternity leave from your employment, it is important to be aware of the dates which affect how much statutory maternity pay you will receive. The basic rules of pay are 90% of you average weekly earnings for the first 6 weeks and then the statutory figure of £145.18 […]

Worker status

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Employment law has developed to acknowledge that some individuals are not self-employed or employed, but are “workers” with some limited employment rights.  In tax law there are still only two statuses: employed or self-employed.  If an individual is a worker for employment law they are likely, but not necessarily, they will be self-employed for tax […]

Increase your Pension Savings on or before 5 April 2018 to reduce payments on account

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Investing more in your pension on or before 5 April 2018 that payment can be taken into consideration in computing your 2017/18 liability and hence you might be able to claim to reduce your payments on account, if you make them.  The maximum pension contribution is generally £40,000 each tax year, although this depends on […]

Pension Planning

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For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and their employer. Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the […]

Training Costs

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It is long established that training costs learning new skills is not tax deductible for self-employed.  This is because costs of learning new skills is deemed by HMRC to be capital not revenue expense. The government are now consulting on extending the scope of tax relief currently available for work-related training costs. As with all […]

IR35 in the Private Sector

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The government are undertaking a consultation on shifting the burden in IR35 cases to private sector employers in the same way as has already been done for employers in the public sector. Please see our previous blog about shifting IR35 to public sector bodies here. As with all of our tax tips and web pages […]

Reclaiming Input Tax on Director Entertainment

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The general rule is that if the entertainment is provided only for directors (or partners) of a business the VAT incurred is not input tax. This is because the goods or services are not deemed used for a business purpose. The VAT therefore cannot be reclaimed on the VAT return. However, where directors and partners […]

Voluntary Living Wage Increase

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On the first Monday in November each year, the voluntary living wage is increased. From 6 November 2017, the voluntary UK living wage has increased from £8.45 to £8.75 per hour. The London living wage has increased from £9.75 to £10.20 per hour. The annual November increases to the voluntary living wage do not affect […]

Christmas Trivial Benefits

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An employer can provide a gift to it’s employees over the festive period without it being a benefit in kind provided that it meets the following criteria: the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it […]

What is a tax code?

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For anyone in employment, you might have noticed a tax code on your payslip, most commonly 1150L. But what does this actually mean? Your tax code determines the allocation of your personal allowance against your income from that job. If you only have one job you will likely have 1150L tax code which means the […]

Auto Enrolment – Not an employer

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Auto enrolment does not apply if a company is not considered an employer by The Pension Regulator. Reasons for not being an employer include: Director only company, none of the directors have an employment contract No longer employ any staff Ceased trading, Although you will not have any auto enrolment duties you must inform The […]

Auto Enrolment – New Employers

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From the 1 October 2017 all new employers will immediately have legal duties due to Auto Enrolment. These duties will apply from the first day an employee starts working for you. Please visit The Pension Regulator website to find out about your duties as a new employer. If you fail to comply with these duties then […]

New government childcare schemes

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Working parents can start applying for two new Government childcare schemes that are now launched. This new scheme is designed for working families, including the self-employed, in the UK. For every £8 you pay in, the government will add an extra £2, up to £2,000 per child, or £4,000 per year for disabled children under […]

Trivial benefits

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This is a reminder that from 6 April 2016, benefits are exempt from tax and NICs if all the following conditions are satisfied: · the cost of providing the benefit   does not exceed £50; · the benefit is not cash or a cash voucher; · the employee is not entitled to the benefit as part […]

PAYE tax codes

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From 6 April 2017 HMRC will be updating tax codes on a much more regular basis.  For some employees this could mean a new tax code every month.  The aim of this change is to ensure employees pay the correct tax, or benefit from tax relief and refunds, during the tax year. If we prepare […]

Working in the “GIG” economy

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The House of Commons Work and Pensions Committee has recently published a report calling on the Government to close the loopholes that allow “bogus” self-employment practices, which burden the welfare state but reduce the tax contributions needed to sustain it. This follows the Matthew Taylor inquiry which took evidence during February and March 2017 from […]

Reporting expenses and benefits provided to employees

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HMRC have recently updated their toolkit dealing with the reporting of expenses and benefits provided to employees and directors in the light of significant recent changes in this area. HMRC toolkits are designed to help minimise the risk of errors in returns and computations and their use, although voluntary, will be taken into consideration in […]

HMRC beats Glasgow Rangers in Supreme Court

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A scheme using Employee Benefit Trusts (EBTs) as a means of remunerating directors and staff whilst avoiding tax has been defeated by HMRC in a recent Supreme Court case. Such schemes had been used by many employers to avoid PAYE and national insurance contributions (NICs) and involved complicated trust structures and “loans” to the employees. […]

The Apprenticeship Levy

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From 5 April 2017 HMRC has introduced an apprenticeship levy. The levy is charged at 0.5% of the businesses total payroll cost and applies to all businesses operating payroll.   Each business receives a £15,000 allowance each tax year which means that they do not have to pay the levy until 0.5% of their payroll […]

Auto Enrolment Rates Increase

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The current minimum pension contributions for employees inside Auto Enrolment are 2%, with the employer being required to contribute at least 1%.   From 6 April 2018 the minimum contributions will increase to 5%, with the employer required to contribute at least 2%.   This will increase further to 8% from 6 April 2019 onwards, […]

National Minimum Wage update

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All National Minimum Wage / National Living Wage rates revised from 1 April 2017.  This is in addition to the rise on 1 October 2016. The new rates from 1 April 2017 will be: Year 25 and over £7.50 0 21 to 24 £7.05 18 to 20 £5.60 Under 18 £4.05 Apprentice £3.50 Some tips […]

No national insurance rise for the self-employed after all

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Philip Hammond has announced that the planned national insurance rise for the self employed has been scrapped at least for the current parliament.  He has said he will announce how extra funds will be raised in the autumn statement. Meanwhile Theresa May has said the government await the Taylor report on the future of employment.  […]

Salary sacrifice – changes ahead

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Salary sacrifice arrangements are where employees give up some part of their salary in return for an employer provided benefit.  These are often tax efficient as the benefit chosen is often a no or low tax benefit in kind. We posted more details on salary sacrifice as a FAQ here. Changes announced in 2016 Budget […]

Tax Free Childcare Accounts To Start 6 April 2017

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New tax-free childcare accounts were announced in 2014 to replace the employer-provided childcare voucher scheme. Introduction has been delayed by legal disputes with organisations involved in administering the existing scheme, but the new accounts will at last be introduced on a trial basis in early 2017. The new scheme will then be rolled out across […]

How to ensure your office party is tax free

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Paying for directors and staff entertainment generally creates a taxable benefit on the individual.  However annual parties can be paid for tax free.  The criteria includes there being a cap on costs of £150 per head.  This can include food, drink, travel and accommodation.  The total cost of the party including VAT, is divided by […]

Living wage update

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The current UK Living Wage is £8.45 an hour The current London Living Wage is £9.75 an hour These are voluntary rates – more information at http://www.livingwage.org.uk/ The current National Living Wage (legal minimum for most workers) is £7.20 per hour.  All current legal minimum wage rates are here.

Uber case – does this affect you?

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The crux of the recently highly publicised Uber case is the question of who is supplying the end client. Uber argued it was the drivers supplying the end client:  Client buys service (transport) from driver; driver buys service from Uber (logistics).  (Uber just an agent) The Employment Tribunal found that it was Uber supplying the […]

Quarterly reporting by employment intermediaries

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Ever since 6 April 2015 employment agencies and other intermediaries have been required to make quarterly reports of payments made directly to workers or via partnerships, LLPs and companies where no tax has been deducted from the payments. These requirements apply if you supply a person rather than supply a service.  If your client needs […]

National Minimum Wage – HMRC names offenders

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HMRC have taken to naming and shaming those not paying the full national minimum wage.  If you are a sole trader, partnership or any kind of company with shares, or operating a social enterprise with a profit motive, then you cannot avoid NMW by classifying your workers as voluntary.  The latest rates (from 1.4.16) are: […]

Student Loan Plans

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From April 2016 there will be 2 student loan plan types known as Plan 1 and Plan 2.   Each plan will have a different threshold before loan repayments are made.   For the tax year beginning 6 April 2016, the thresholds will be £17,495 for Plan 1 and £21,000 for Plan 2.   HMRC […]

Employment Allowance

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A reminder that the employment allowance will be £3000 this coming year (2016/17) up from £2000.  However for the first time, single person employers will not be eligible for the employment allowance this year. David Wilsdon

Register now to use the Payrolling Benefits in Kind online service if you want to start or continue payrolling in the 2016 to 2017 tax year

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From 6 April 2016 PAYE legislation is changing. If you intend or already payroll benefits and expenses you must register them with HMRC using the online Payrolling Benefits in Kind (PBIK) service. If you use this service and payroll benefits and expenses you won’t have to report them on a P11D. If you do not […]

Auto Enrolment – On and after your staging date

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The Auto Enrolment staging dates for many businesses is approaching. Below summarises the key points you should be aware of. Key points Your staging date is when the Automatic Enrolment duties come into force for your business. You’ll need to identify what your duties are for each member of staff on your staging date or […]

End of year PAYE return reminder

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Under RTI the end of year form P35 was replaced by the Final Full Payment (FPS) submission. Send your final FPS on or before your employees’ last payday of the tax year (5 April) instead of the old 19 April deadline. Remember to put ‘Yes’ in the ‘Final submission for year’ field in your payroll […]

National Living Wage

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A reminder that from April 2016, the national living wage will be £7.20 an hour for workers aged 25 and older. The minimum wage will still apply for workers aged 24 and under. For full details of all national minimum wage (NMW) rates check https://www.gov.uk/national-minimum-wage-rates Note that all workers including interns generally have to be […]

Employment Allowance

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For the past two tax years (2014-15 and 2015-16) most employers have been able to reduce their employers national insurance bill by £2000. We have applied this to all clients that we prepare payroll for. For the next tax year (2016-17) the employment allowance increases to £3000. However there will be a restriction which prevents […]

Exemption for trivial benefits in kind

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The government intend to legislate that trivial benefits in kind, where the cost to the employer is no more than £50, will not need to be reported in future and will be exempt from tax. HM Revenue and Customs raised concerns that some directors of family companies might abuse the new rules and have insisted […]

HMRC clearance on salary sacrifice

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You can ask HMRC Clearances Team to confirm the tax and NICs implications of a salary sacrifice arrangement once it is in place. However, this is not a requirement.   HMRC would want to see: evidence of the variation of terms and conditions (if there is a written contract) payslips before and after the variation […]

No employment allowance for single person companies

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Single person companies will not be able to claim the employment allowance from April 2016. The employment allowance is a reduction of employers national insurance of up to £3,000. It is not yet clear whether taking on a new employee, perhaps part time or short term, will be sufficient to reinstate the allowance.

Dispensations – Required Checking Systems

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We routinely get a dispensation in place for our payroll clients. This is a notice from HMRC that removes the requirement for the employer to report certain expenses at the end of the tax year on forms P11D or P9D. In order to have the dispensation in place HMRC require that your company has systems […]

National Living Wage (NLW)

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The adult National Minimum Wage (NMW) rate is currently £6.70. From 1 April 2016 a new National Living Wage (NLW) for workers aged 25 and above will come into force which will initially be set at £7.20. For employee aged 21 to 24 the NMW will still apply.

Termination Payments Under Review

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A further consultation taking place this summer is into the simplification of the tax and national insurance treatment of termination payments. There is a widespread but mistaken belief among employees and employers that the first £30,000 of any pay-off is not subject to income tax and NICs. This often leads to difficulties when employees discover […]

Calculating holiday entitlement

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An area of your business which may need some clarification is when you are calculating holiday entitlement of your employees. An important thing to note is that employees cannot be paid “holiday pay” on top of normal pay. Instead, holiday has to actually be taken off work. In effect, the employee is effectively paid as […]

New “National Living Wage” Tax Credit Changes

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The most radical announcement by the Chancellor on 8th July was a significant reduction in the amount the government plans to spend on tax credits and other State benefits. At the same time he announced that there would a new national living wage to be paid by employers, rising to £9 an hour by 2020. […]

Scam emails

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Always be suspicious of any email mentioning a refund from a “tax credit office agent”. Look out for links to fake version of the GOV.UK website. Never provide details or similarly sensitive information on the basis of an email request. HMRC’s director general of benefits and credits, Nick Lodge, HMRC, said the department never asks […]

Flexible pensions to go ahead in 2015

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In his March 2014 Budget, the Chancellor announced that there would be significant changes to allow individuals to have greater access to their pension funds from 2015. The proposed changes have been consulted on during the summer and the Treasury have now published the outcome, together with draft pensions legislation, enabling the new flexible regime […]

RTI penalties delayed

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HMRC have announced that the start date for RTI late filing penalties for PAYE schemes with fewer than 50 employees has been postponed until 6 March 2015. The start date had originally been scheduled for 6 October 2014. HMRC have said that the extra time will give smaller employers, who appear to be experiencing the […]

RTI penalties begin in October 2014

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Earlier this year, HMRC announced that the RTI penalties for late returns of payroll information (RTI) would start from October 2014 instead of April 2014. If you operate your own payroll, make sure that your RTI submissions are made on time to avoid an automatic penalty. Remember that the RTI submission should normally be made […]

Consultation planned on employee’s travel rules

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The Office of Tax Simplification is seeking to make the current tax rules for dealing with travelling and subsistence claims clearer for both employees and employers. As a result, the treasury are consulting on possible changes to the rules and the way that such expenses are reported. The government intends for any new rules to […]

Agency workers and PAYE

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Changes in the Finance Act 2014 have tightened up the rules for “self-employed” workers supplying their services through UK agencies, employment businesses and other intermediaries. From 6 April 2015 the agency must decide whether the way in which the worker does their work is subject to (or to a right of) supervision, direction or control […]

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