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Pension payments before 5 April 2012?

Posted by: edwinsmith on February 10th, 2012

From 6 April 2011 the rules changed on tax relief on pension savings. The annual allowance, which is the maximum amount of pension saving that benefits from tax relief each year, became £50,000 (£40,000 net of basic rate tax).

If you have been saving in a registered pension scheme since 6 April 2008 and your pension savings were less than £50,000 per annum in any of the tax years since then, then you will have an unused annual allowance to carry forward from that year/years. Unused allowances can only be carried forward for three years so the unused allowance from 2008/09 will not be carried forward after 5 April 2012. 

There is a strict order in which you use up your annual allowance. You use the current tax year annual allowance first, then use your unused annual allowance from earlier years, using the earliest tax year first. Hence, to use any unused allowance of 2008/09 you must have pension savings in excess of £50,000 for the current year.

If however, you have not been a member of a registered pension scheme in earlier years then you will not have unused annual allowance to carry forward.

If you are self-employed, contributed into a pension scheme in 2010/11 and have made no contributions so far in the current tax year, then your payments on account for 2011/12 are based on your 2010/11 position. If your 2011/12 total income is similar to 2010/11 and you do not make a pension contribution by 5 April 2012 then you may have a large balancing payment of tax due by 31 January 2013 together with a higher payment on account for 2013/14.

Your pension savings in a tax year is the total of the increase in value for each scheme of which you are a member. For personal pensions, the increase in value is the amount you have contributed in the period, grossed up to cover the basic rate tax added by HM Revenue & Customs (HMRC), for example if you pay £500 a month into a personal pension, this is grossed up to £625 a month and your pension savings for that scheme will be £7,500.

For workplace pension schemes, the value of contributions made by your employer is also included in your pension savings. Where the scheme is a money purchase/defined contribution scheme, the increase in value for the period is the gross amount you have contributed out of your pay together with amounts contributed by your employer. For defined benefits schemes, the amount of your pension savings is the increase in the value of your promised benefits over the pension input period ending in the tax year. The valuation is based on a notional ‘capital’ value broadly based on 16 times the amount of annual pension achieved to date and any additional separate lump sum. Your pension scheme administrator will be able to provide you with a pension savings statement if you think your savings will be over the £50,000 allowance.

There are a number of wrinkles in the general situation set out above that may apply in particular unusual situations, so you should always check with us before making decisions.

Filed under: Tax

PAYE codes 2012-13

Posted by: edwinsmith on January 23rd, 2012

HMRC are currently in the process of sending out revised tax codes for the 2012-13 tax year. Not everyone will receive a code - some codes are simply updated by the employer to reflect new levels of the personal allowance in accordance with instructions issued by HMRC.

Check your code to ensure it is correct and raise any problems with HMRC so that a correct tax code can be issued before the start of the 2012-13 tax year.

If you require help with your code then please contact us.

Filed under: PAYE, Tax

Capital expenditure before 31 March 2012 / 5 April 2012

Posted by: edwinsmith on January 16th, 2012

The Annual Investment Allowance (AIA), which enables businesses to claim full tax relief on most plant and machinery, reduces in April 2012 from £100,000 to £25,000.

Where a business has a chargeable period that spans the operative date of the decrease, the maximum allowance for that business’s transitional chargeable period comprises two parts:

(a) the AIA entitlement, based on the previous £100,000 annual cap for the portion of a year falling before the relevant operative date; and

(b) the AIA entitlement, based on the new £25,000 cap for the portion of a year falling on or after the relevant operative date.

However, capital expenditure qualifying for AIA in the period from 1 April 2012 / 6 April 2012 cannot exceed the entitlement for that period even though it is within the total available for the year.

If you are planning capital expenditure in an accounting period which straddles 31 March 2012 for companies or 5 April for businesses within the charge to income tax, then you need to consider carefully the timing of the expenditure to maximise full tax relief e.g., it may be more tax efficient to bring forward the timing of capital expenditure from May 2012 to March 2012. Please contact us for more information.

Filed under: Tax

PAYE and cancelling your payment booklet if you no longer need one

Posted by: edwinsmith on January 9th, 2012

If you pay at a bank, Post Office counter or by cheque in the post you need a PAYE payment booklet. However you don't need one if you pay HM Revenue & Customs (HMRC) electronically.

You can advise HMRC online to stop issuing further payment booklets by following the relevant link to your HMRC Accounts Office below.

Cancel Cumbernauld accounts office payment booklet

Cancel Shipley accounts office payment booklet

Filed under: PAYE

More than one job? Are you paying too much National Insurance?

Posted by: edwinsmith on January 3rd, 2012

If you have more than one job you can avoid overpaying national insurance contributions by deferring some of your contributions if both of the following apply:

 

  • you pay Class 1 National Insurance contributions with two or more different employers
  • you expect to pay contributions on weekly earnings of at least £817 in one job or £956 in two jobs throughout the tax year

 

The deadline for applying for 2011/12 is 14 February 2012.

To apply you can complete form CA72A Application for deferment of payment of Class 1 National Insurance contributions or if you require further help please contact us.

The renewals for 2012/13 should be issued by HMRC shortly.

Filed under: PAYE, Tax

HMRC Now Using Faster Payments Service

Posted by: edwinsmith on December 22nd, 2011

HM Revenue & Customs (HMRC) can now accept payments made using the Faster Payments Service. This will allow taxpayers to make faster electronic payments, typically via internet or telephone banking, enabling them to be processed on the same or next day.

Taxpayers should contact their bank or building society before making a payment to confirm:

  • the services available
  • whether there are any single transaction or daily limits on the amount that can be paid
  • their latest cut off times for making a payment

When making a payment to HMRC please make sure you always use the correct bank account details and reference number. This will ensure that the payment is received, and will help to avoid incurring a penalty, interest or surcharge for late payment.

You can find further information by following the links below.

Faster Payments

How to make a payment to HMRC

HMRC bank accounts

Filed under: PAYE, Tax, VAT

VAT returns on-line for all VAT-registered businesses

Posted by: edwinsmith on December 19th, 2011

From 1 April 2012, all VAT-registered businesses must send their VAT returns online and pay their VAT electronically. Currently, only newly-registered businesses, and those with turnovers of more than £100,000, have to file and pay their VAT online. The new rules will cover VAT returns filed for accounting periods beginning on or after 1 April 2012.
To file your VAT return online, you'll need to register for HMRC Online services. Further help and advice is available from the HMRC website or contact us.

Filed under: VAT

[Archive] Tax on Christmas Gifts and Parties

Posted by: edwinsmith on December 12th, 2011

There are various tax implications to consider on gifts and parties that you may be providing to your employees at this time of year. The points detailed below are a general overview and cover the most common situations that arise.

Cash gifts or bonuses - These are treated as normal pay and subject to PAYE and Class 1 National Insurance contributions (NIC) in the normal way. The payment should be put through the payroll. This also applies to any vouchers you give that can be exchanged for cash (see below for PSA arrangements for small cash gifts).

Gifts to employees - Gifts that can be considered trivial benefits such as a turkey, ordinary bottle of wine or box of chocolates will not need to be declared on form P11d. There is no set monetary limit below which benefits are deemed to be trivial but common sense and judgement needs to be applied in assessing these items. For the purposes of gifts then probably any amount less than £20 per employee would be considered trivial.

Any gifts of a higher value (and classed as non trivial) such as cases of wine/hampers would be subject to tax and NIC and declarable either as a benefit on form P11d or the tax/NIC could be paid on these gifts by arranging a PAYE settlement agreement (PSA).

If declared on P9d or P11d (directors and employees earning over £8,500 pa) forms then non trivial gifts are subject to tax (for the employee) and Class 1a NIC is payable by the employer on items declared on the P11d.

A PSA is voluntary arrangement that on the part of the employer made with HMRC to account for tax/NIC for minor, irregular or impractical items subject to tax/NIC.

If a PSA is arranged then the employer effectively pays the tax due and relieves the employee of any tax liability on the gift. Although there is the extra cost of the tax/NIC a PSA cuts down on the paperwork and record keeping.

Money’s worth benefits such as Store gift vouchers (exchangeable for goods) cannot be treated as trivial benefits. For practical purposes small cash and money’s worth benefits can be included in a PSA. If not dealt with on PSA then Store gift vouchers should be declared on form P9d or form P11d (if employee earns over £8,500) to account for tax. For NICs the cost of providing the vouchers should go through the payroll at the time given to employee.

Christmas parties (and summer events) - Tax and NICs are not due on any annual function if the cost to you is less than £150 per head (including employees partners). The cost per head is the total cost of putting on the function – accommodation, food, drink etc divided by the total number of guests including the non-employees.

If the cost per head is greater than £150 then the whole amount would be subject to tax and Class 1a NICs and should be declared on form P11d in section N e.g. if the cost of an event is £175 per head the employee (with a partner) is taxed on a benefit of £350.

Please contact us for any further advice.

Filed under: PAYE, Tax

Revised advisory fuel rates 1 December 2011

Posted by: edwinsmith on December 5th, 2011

H.M. Revenue and Customs (HMRC) have published the latest advisory fuel rates relating to mileage payments for business travel in company cars. These are as follows: 

Engine size Petrol LPG
1400cc or less 15p 10p
1401cc to 2000cc 18p 12p
Over 2000cc 26p 18p

 

Engine size Diesel
1600cc or less 12p
1401cc to 2000cc 15p
Over 2000cc 18p

The only change this quarter is the reduction of 1p per mile in LPG for engines sizes of 1400cc or less.

The new rates will be effective from 1 December 2011, however for the first month employers may continue to use the previously published rates if they choose to.

These rates will be reviewed again in February 2012 and any changes made will be effective from 1 March 2012.  The revised fuel rates will be published on the fuel rates page on the HMRC website when they are released.

Advisory fuel rates can be used to calculate the following:

  • Reimbursement to employees of fuel used for business travel in a company car
  • Repayment by employees of fuel used for personal travel in a company car
  • Allowable input VAT on business mileage claims

A more detailed explanation of the use of these rates is on the HMRC website.

The rates applying for earlier periods are also on the HMRC website.

If you have any questions regarding the use of advisory fuel rates or mileage payments please contact us.

Filed under: PAYE, VAT

View PAYE Coding Notices Online

Posted by: edwinsmith on November 29th, 2011

HM Revenue & Customs (HMRC) has launched a new facility to enable Self Assessment customers to view their PAYE Coding Notices online.

Before you can use this service, you must have registered for HMRC Online Services and enrolled for Self Assessment Online. Initially you will only be able to view Coding Notices issued on or after 11 October 2011, or the date you registered for the Self Assessment online service, if later. If you are already using the Self Assessment online service, Coding Notices issued on or after 11 October should be available to view online from Thursday 13 October 2011 onwards.

In due course, you will be able to view PAYE Coding Notices - issued on or after 11 October 2011 - for the:

  • current tax year
  • previous tax year
  • next tax year

Find out more about Self Assessment Online.

This facility is also available to tax agents and advisers to view client coding notices issued after 11 October and where HMRC hold authorisation with form 64-8.

Filed under: PAYE
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