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Online filing for small employers

Posted by: edwinsmith on March 31st, 2011

For small employers (fewer than 50 employees) there are various forms that must be filed online for 2011/12, some of which were not previously required to be filed online.

Starter and leaver forms (P46 and P45)

From 6 April 2011 employers with less than 50 employees will have to file starter and leaver forms online. You need to ensure that those responsible for sending starter and leaver forms are aware that the forms need to be sent online. If the information is sent on paper when it should have been sent online then you may be charged a penalty.

Employer Annual Return (P35 and P14s)

The Employer’s Annual return (P35) together with forms P14 must be filed online by 19 May 2011.

Exemptions from filing online

In certain circumstances you can claim exemption from filing online, which allow you to send your Employer Annual Return and your starter and leaver information on paper. If you want to claim exemption from filing online you must be:


  • A practising member of a religious society or order whose beliefs are incompatible with the use of electronic communication, or
  • A care and support employer. This means an employer that employs a person to provide domestic or personal services at or from the employer’s home where:

-         the services are provided to the employer or a member of the employer’s family

-         the recipient of the services has a physical or mental disability, or is elderly or infirm

-         the employer has not received a tax-free payment online with the last three years, and

-         it is the employer who delivers the Employer Annual Return and not some other person on the employer’s behalf.

If you wish to file on paper on the grounds of your religious beliefs or you employ a carer, please review the online filing exemptions section of the HMRC website to find out how to claim an exemption.

If you file your return on paper when required to file online, HMRC may charge you a penalty.

Registering to file online

Before you can file online you need to register with HMRC and you will find instructions on how to register if you go to HM Revenue & Customs: How to register for PAYE Online.

Other online filing

There are other forms that can be filed online such as returns of expenses and benefits (P11d (b), P11d and P9). For more information go to HM Revenue & Customs: Understanding and using PAYE Online for employers.

You can also receive information online such as tax codes and reminders. You can download a PAYE Desktop Viewer which can help you manage your online codes and reminders.

If you would like further information or would like to use us as your agent to deal with your PAYE affairs then please contact us.

Filed under: PAYE

Budget 2011 key announcements

Posted by: edwinsmith on March 24th, 2011

The key announcements in the 2011 Budget are as follows:


Income Tax

From 6 April 2012, the personal allowance for those under 65 will be increased by £630 to £8,105. The basic rate limit threshold will also be reduced by the same amount to £34,370.

All other income tax personal allowances and limits that are subject to indexation will be increased in line with the retail prices index in 2012.

For reference, from 6 April 2011, the personal allowance for those under 65 will be increased by £1,000 to £7,475 and the basic rate limit will be reduced to £35,000 making the level at which higher rate tax is payable £42,475 (reducing from £43,875 in 2010/11).

Future increases in National Insurance Contributions rates, limits and thresholds

From 2012/13 the Consumer Prices Index (CPI) will replace the Retail Prices Index (RPI) as the default indexation for all National Insurance contributions rates, limits and thresholds:

-    Class 1 lower earnings limit and primary threshold (the point at which employees pay NIC);

-    Class 2 small earnings exception;

-    Class 4 lower profits limit; and

-    Rates of Class 2 and 3.

The secondary threshold (the point at which employers pay NIC on the employees salary) will be over-indexed when compared to CPI and will continue to rise by the equivalent of RPI from April 2012 until 2015/16.

NIC rate

From 6 April 2011, the government previously announced that the NIC rate would be increased by 1% to 12% for employees earnings. The employer rate will be increasing by the same amount to 13.8%.

Company Car Tax rates 2013/14

From April 2013, the appropriate percentages used to multiply against a cars list price when calculating the company car benefit for employees and directors will be increased by one per cent for all vehicles with carbon emissions between 95g and 220g from April 2013. Zero emissions cars will remain at zero per cent and ultra low emissions cars with emissions up to 75g will remain at five per cent.

Company Car Fuel Benefit Charge 2011/12

Employees and directors who are provided with a company car and who also receive free fuel from their employers are subject to the fuel benefit charge. The cash equivalent of the taxable benefit is determined by multiplying a set figure (currently £18,000) by the appropriate percentage for the car, based on its CO2 emissions (grams per kilometre). This will be increased to £18,800 with effect from 6 April 2011.

Approved Mileage Allowance Payments rates from 2011/12

Employees who use their own cars for business mileage can claim reimbursement from their employers through the approved mileage allowance payments rates (AMAPs). Payments up to these rates are not regarded as a taxable benefit. There is currently a higher rate of 40p per mile for the first 10,000 miles of business use and 25p per mile thereafter.

The higher rate will be increased to 45p per mile with effect from 6 April 2011.

Combination of Income Tax and National Insurance?

The Government will consult on the options, stages and timing of reforms to integrate the operation of income tax and National Insurance contributions (NICs). In exploring potential reforms the Government aims to remove distortions created by the tax system, reduce burdens on business and improve fairness for individuals. Any change will be complex and involve a wide range of policy and implementation issues. A consultation document will be published later this year setting out the differences in the current income tax and National Insurance systems, and options to address these. The Government has stated that it will not extend NICs to individuals above State Pension age or to other forms of income such as pensions, savings and dividends.

Review of non-domicile taxation

To encourage inward investment into the UK, the Government intend to introduce the following reforms:

-    removing the tax charge when non-domiciles remit foreign income or capital gains to the UK for the purpose of commercial investment in UK businesses;

-    simplifying some aspects of the current tax rules for non-domiciles to remove undue administrative burdens; and

-    increasing the existing £30,000 annual charge to £50,000 for non-domiciles who have been UK resident for 12 or more years and who wish to retain access to the beneficial tax regime (the remittance basis). The £30,000 charge will be retained for those who have been resident for at least seven of the past nine years and fewer than 12 years.

The Government will be issuing a consultation document in June and subject to the consultation intends to implement these reforms from April 2012.


Capital Gains Tax Annual Exempt Amount

The annual exempt amount for capital gains tax will be increased in line with statutory indexation to £10,600 with effect from 6 April 2011.

Legislation will be introduced in Finance Bill 2012 to uprate the CGT annual exempt amount in line with rises in the CPI instead of the retail prices index. The first year to be affected will be 2012/13. Parliament will still be entitled to override automatic indexation and set a different figure.

Entrepreneurs’ relief

From 6 April 2011, the lifetime limit on gains qualifying for entrepreneurs' relief will increase from £5 million to £10 million. There are no other changes to the rules or conditions relating to entrepreneurs' relief.

Enterprise Investment Scheme/Venture Capital Trusts

Subject to state aid approval, from 6 April 2011, the rate of income tax relief given under the Enterprise Investment Scheme (EIS) will be increased from 20 per cent to 30 per cent.

In addition (also subject to state aid approval), the following changes will be made from 6 April 2012:

-    an increase in the thresholds for the size of qualifying company for both EIS and VCTs to fewer than 250 employees and to the company having no more than £15million of gross assets before the investment;

-    an increase in the annual amount that can be invested though both EIS and VCTs in an individual company to £10million; and

-    an increase in the annual amount that an individual can invest under EIS to £1million.

Stamp duty land tax (SDLT) reform of rules for bulk purchases

Legislation will be introduced in Finance Bill 2011 to provide a relief for purchasers of residential property who acquire interests in more than one dwelling. Where the relief is claimed the rate of SDLT is determined not by the aggregate consideration but instead is determined by the mean consideration (i.e. by the aggregate consideration divided by the number of dwellings) subject to a minimum rate of one per cent.

Inheritance tax allowance

The inheritance tax nil rate band is frozen until April 2015. The Government has announced that from 2015/16 the consumer prices index will be used as the default indexation assumption.

The Government has announced that a reduced rate of inheritance tax (IHT) will apply where 10 per cent or more of a deceased’s net estate (after deducting IHT exemptions, reliefs and the nil rate band) is left to charity. In those cases the current 40 per cent rate will be reduced to 36 per cent. The new rate will apply where death occurs on or after 6 April 2012. The Government will be consulting on the detailed implementation of this measure and will issue a consultation document before the summer.


Corporation tax

The corporation tax rates for the financial year commencing 1 April 2011 will be reduced to the following rates:

  Profits Rate
Main rate In excess of  £1,500,000 26%
Small Profits rate Below £300,000 20%


An extra 1% reduction was made to the main rate of corporation tax that was previously stated in the post election Budget 2010.

A marginal rate will be effective between these limits.

The main rate will be further reduced by 1% each year until 2014/15, when it will be 23%.

Capital allowances on plant and machinery

Previously stated: The capital allowance rates will be reduced with effect from 1 April 2012 (for Corporation Tax) or 6 April 2012 (for Income Tax) to the following rates:

Writing down allowances: Rate per annum
Main Rate Pool 18%
Special Rate Pool 8%
Annual Investment allowance £25,000


Capital allowances – short life assets

Legislation will be introduced to enable businesses incurring expenditure on an item of plant or machinery from April 2011 onwards to make a short life asset election in respect of that item if they expect to sell or scrap it within an eight-year cut-off period. This is an extension from the current four year period.

Extend small business rate relief (SBRR) holiday

The SBRR holiday will be extended by one year from 1 October 2011.

Time to pay

This will continue through HMRC’s Business Payment Support Service to provide advice and time to pay to viable businesses experiencing temporary financial difficulty. The service is available for all HMRC taxes, including VAT, corporation tax, income tax and NIC’s (PAYE).

Research and Development tax credits

Subject to State aid approval, legislation will be introduced to increase the rate of the additional deduction for expenditure on research and development (R&D) for companies that are small or medium sized enterprises (SMEs) from 75 per cent to 100 per cent from 1 April 2011, giving a total deduction of 200 per cent. The rate of vaccine research relief for SMEs will be reduced to 20 per cent from the same date.

Following consultation from November 2010 to February 2011 on the support that the research and development (R&D) tax reliefs provide to innovation, and on the recommendations of the Dyson review, the Government will publish a response in May.

The response will include further consultation on the detail of proposed changes. Subject to State aid approval and to this consultation, legislation will be introduced in Finance Bill 2012 as follows:

-    the rule limiting a company’s payable R&D tax credit to the amount of PAYE and National Insurance contributions (NICs) it pays will be abolished;

-    the £10,000 minimum expenditure condition will be abolished for all companies; and

-    changes will be made to the rules governing the provision of relief for work done by subcontractors under the large company scheme.

Again, subject to State aid approval, the rate of the additional deduction for expenditure on research and development (R&D) for companies that are small or medium sized enterprises (SMEs) will be increased by a further 25 per cent to give a total deduction of 225 per cent from 1 April 2012. Vaccine Research Relief will not be available for SMEs from the same date.

Business premises renovation allowance

The Government has confirmed it will extend the business premises renovation allowance for a further five years from 2012.

Real estate investment trusts (REITs)

The Government will commence an informal consultation with the industry and the representative body on the REITs legislation shortly after the Budget. Subject to the responses the Government will make changes both to reduce the barriers to entry and investment and to reduce the regulatory burden for existing and future REITs. The proposed legislation will be included in Finance Bill 2012.


Registration and deregistration limits

From 1 April 2011, the taxable turnover threshold which determines whether a person/entity must be registered for VAT will increase to £73,000 (currently £70,000).  The de-registration threshold will increase to £71,000 (currently £68,000).

The registration and deregistration threshold for relevant acquisitions from other EU Member States will also be increased to £73,000 (currently £70,000).

Fuel Scale charges

Fuel scale charges will be revised effective from 1 May 2011. These will be published on our news page on our website when released.

Low Value consignment relief

The threshold at which low value items can be imported from outside the EU VAT-free will be reduced from £18 to £15 effective from 1 November 2011. 


Charity benefits

From April 2013 charities (and community amateur sports clubs) that are registered with HMRC for Gift Aid purposes will be able to apply for a gift aid style repayment on small donations of £10 or less without the need to obtain gift aid declarations from the donors, up to a maximum of £5,000 in donations per year, per charity.

In 2012/13 HMRC will introduce a new online system for charities to register their details for gift aid and to make gift aid claims.


From 6pm on Wednesday 23 March 2011 the following changes will take effect:

-    Fuel duty – reduction of 1 pence per litre on unleaded petrol and diesel

-    Tobacco duty – 2% above the rate of inflation (hand rolling tobacco – additional 10%)

The following increases are effective from 28 March 2011:

-    Alcohol duty – 2% above inflation (an additional rate for high strength beers and reduced rate for low strength beers will also come into effect).

From 1 April 2011, Vehicle Excise Duty rates will increase in line with RPI inflation and Heavy Goods Vehicle rates will be frozen.

A document containing the tax rates applying for 2011/12 will be available for download from our website downloads page in due course.

Printed tax tables are also being produced and if you would like to receive a copy then please contact us.

Please contact us at Edwin Smith if you would like to discuss any of the measures announced in the 2011 Budget in more detail or to apply any changes to your specific circumstances.

This article is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this web page.

Filed under: Budget Report

Online Corporation Tax Returns and electronic payments from 1 April 2011

Posted by: edwinsmith on March 21st, 2011

From 1 April 2011 onwards, all companies and organisations will have to file their Company Tax Return online, with accompanying computations and accounts, for any accounting period ending after 31 March 2010.

Our accounts and Company Tax Return software have been updated to provide this service to our clients.

Also from 1 April 2011 Companies and organisations will also have to make electronic payment of any Corporation Tax due, which means not paying by cheque. There are various methods of making electronic payment such as:

  • Direct Debit
  • Paying by debit or credit card over the internet: BillPay
  • Paying by internet, telephone banking or Bacs Direct Credit
  • Paying by CHAPS transfer
  • Paying by Bank Giro
  • Paying at the Post Office

The HMRC website has more detailed guidance on how to pay Corporation Tax.

Please see our previous article on filing accounts and Company Tax Returns online for more details.

Please contact us if you would like to know more or if you have any questions.

Filed under: Tax

Reduction in amount of Annual Investment Allowance (AIA) – Plant & Machinery

Posted by: edwinsmith on March 15th, 2011

From April 2012 (1 April 2012 for companies and 6 April 2012 for self employed) the maximum amount of the annual investment allowance (AIA) will be reduced from £100,000 to £25,000 a year for business investment in most Plant and Machinery.

The AIA gives a 100% allowance on expenditure on the amounts mentioned above for most Plant and Machinery (excluding cars).

Businesses whose accounting period spans the relevant operative date in April 2012 will need to apportion the maximum allowances. Therefore the above changes will start affecting businesses whose accounting periods commence after 6/4/2011 (see below for example).

Where businesses spend more than the annual limit of AIA the additional expenditure is dealt with in the normal capital allowances regime. These rates will also be reduced from April 2012. The capital allowance rates that can be claimed on the balance of plant and machinery expenditure carried forward will be reduced from a) 20 % to 18% and from b) 10% to 8% for main rate and ‘special rate*’ expenditure respectively.

*Special rate expenditure includes expenditure on ‘integral features’ of a building structure.

A 100% first year allowance can still be claimed on energy and water efficient plant.


A company with an accounting year end of 30 September 2012 would calculate its maximum Annual Investment Allowance (AIA) based on -

a) Maximum AIA for period 1/10/2011 to 31/3/2012 – 6/12 x £100,000 =£50,000.

b) Maximum AIA for period 1/4/2012 to 30/09/2012 - 6/12 x £25,000 = £12,500.

The company’s maximum AIA for the transitional period would therefore be the total of a) and b) = £62,500 (£50,000 + £12,500). In relation to b) no more than £12,500 of company’s actual expenditure in that part period would be covered by the transitional AIA entitlement.

Please contact us if you require any further information.

Filed under: Tax

The Plumbers Tax Safe Plan – A new disclosure opportunity for those in the plumbing industry

Posted by: edwinsmith on March 8th, 2011

HM Revenue and Customs (HMRC) have recently announced The Plumbers Tax Safe Plan (PTSP) which is designed for people working within the plumbing industry who have not told HMRC about all their income in the past and who now want to get back on track. It is intended to cover people who work (or worked) in the plumbing, heating or gas installation trades and this includes anyone who installs and repairs pipes and fixtures for water, drainage or gas systems in a building.

HMRC has obtained information from Gas Safe and Corgi registers and compared it to various directories and databases to build up their own database to help it identify people who, it believes, are under-declaring their income.

If you have under-declared your income in the past or have not even registered with HMRC then it is likely that you will not have paid the right amount of tax and it is important that you rectify this now.

If you take advantage of the PTSP you can tell HMRC about any income that you haven't previously told them about and you will pay a lower penalty. Depending upon your circumstances you may also be able to spread your payments if you find that you can't afford to pay what you owe.

To take advantage of the PTSP you must:

  1. Notify HMRC by 31 May 2011 of your intention to take part in the PTSP. This is a simple process and can be done online, by phone or by post. At this stage, HMRC only need to know that you will make a disclosure. If you fail to notify you will not be able to make a disclosure under this PTSP.
  2. Once you have done this you will receive your disclosure reference number and then you must make your disclosure and pay HMRC what you owe by 31 August 2011 or at any time before then.

You can make your disclosure in one of two ways:

  1. online by completing the Plumbers Tax Safe Plan disclosure form
  2. by completing and posting a disclosure form

For more detailed information see the Plumbers Tax Safe Plan Guidance Pack.

These terms will not be available to people who choose not to sign up for PTSP if later HMRC find that they are behind with their tax affairs.

HMRC will look at all disclosures to see whether they think they are complete and accurate. HMRC expect that they will accept most disclosures. If they accept your disclosure, they will send you a letter confirming this. If they cannot accept your disclosure for any reason, they will contact you (or your adviser, if you have one), to let you know.

If you are not a plumber, you may still find that the forms cover everything you need to tell HMRC. If that is the case, you can still use PTSP forms. You should notify and disclose following the instructions in this guidance. Please ensure that you show your correct business or trade on the forms, making clear that you are not a plumber. If you don't provide this information your disclosure could be sent back for completion.

If you are not a plumber, and you do not want to use the PTSP forms, you should send details of your disclosure to the following address:

Local Compliance
Parkway House
49 Baddow Road

Customers who voluntarily come forward and put right their tax position can expect very similar terms to those on offer through PTSP. If you do not come forward and HMRC later find that you owe additional tax, you may face higher penalties or even criminal investigation.

If you believe that you may be affected by this, then it is important that you act now. Please contact us if you need any further information, assistance or advice.

Filed under: HMRC campaigns, Tax

PAYE Tools to Replace Employer CD-Rom

Posted by: edwinsmith on March 2nd, 2011

The new online PAYE tools replace HMRC’s Employer CD-ROM. It includes all the CD-ROM’s interactive features plus an automatic update facility, to ensure the tools are up-to-date with the latest information and figures.

Employers who have used the Employer CD-ROM will need to use the new PAYE tools for the remainder of the 2010-11 tax year and for future tax years.  However, the Employer CD-ROM will first need to be updated, be downloading and installing the November Employer CD-ROM update. Please see our previous blog article on the November Employer CD-ROM update for more information. You will need to open Employer CD-ROM 2010 to ensure that the November update has been correctly installed.  Once confirmed, the online PAYE tools procedures can be completed. 

Any employer can use these tools, but they are most useful for employers with up to and including nine employees.

HMRC strongly recommends that employers keep up to speed with other important PAYE developments by signing-up to their free Employer email alerts.  Please see our previous blog article on the employers email alert service for more information.

HMRC will no longer be mailing hard copies of guidance to employers, so these alerts are now the best way to ensure employers are up to date with PAYE issues.

Please contact us if you have any questions.

Filed under: PAYE