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RTI concession for small employers

Posted by: edwinsmith on March 28th, 2013

HMRC have made a short term relaxation on the regulations for reporting under Real Time Information (RTI) to help small employers get to grips with the new payroll reporting regime.

The concession will last until 5 October and relates to the timing of the online submission for the Full Payment Submission (FPS) and the Employer’s Payment Summary (EPS).  LATEST UPDATE: in June 2013, HMRC announced that this will now be in place until 5 April 2014.


A new concession with a similar relaxation of regulations detailed below has been introduced from 6 April 2014 and it will run for two years ending April 2016. It is only available to employers with less than 10 employees with schemes in existence on 5 April 2014. Any other employer including all new employers/payroll schemes set from 6 April 2014 will need to comply with full regulations.

Under RTI employers are required to make:

  1. A FPS electronic submission report to HMRC before they make any payment to employees.
  2. An EPS if during a tax month an employer makes any statutory payments such as Maternity Pay, Sick Pay etc  or employer has not paid anyone or employer (limited company) has had CIS deductions from their income.

The concession will allow small employers to make submissions under RTI when they complete their payroll run providing it is on or before the last day of the tax month (5Th). This may be after the employer has made payroll payments to their employees.

As the relaxation of the rules is only temporary then it would be advisable to use the period to 5 October to introduce weekly/monthly routines so that the RTI rules can be implemented in full once the concession is withdrawn.

Please contact us  for further advice on PAYE Real Time Information (RTI)

Filed under: Employers, PAYE

HMRC benchmark scale rates for subsistence expenses

Posted by: edwinsmith on March 25th, 2013

HMRC introduced a set of advisory benchmark scale rate payments that employers can use to reimburse staff for subsistence expenses when they are travelling on business away from their normal workplace. If the employer wishes to use this system these rates are the maximum that the employer can pay without attracting a tax and/or national insurance liability for the employee or employer. The employer can pay less than these rates if they so wish. Higher tailored rates may be agreed with HMRC but if higher rates are paid without agreement with HMRC, the excess above the benchmark scale rates is liable to tax and national insurance contributions (NICs) under PAYE.

The benchmark rates that were set in April 2009 are as follows: 

Description Amount (up to)
Breakfast rate £5
One meal ( 5 hour ) rate £5
Two meal ( 10 hour ) rate £10
Late evening meal rate £15

HMRC will consider revising the rates when there is a change in the scale rate of plus or minus 10% based on the change in the Consumer Price Index from when it was last revised.

Breakfast rate - The rate may be paid where an employee leaves home earlier than usual and before 6.00 am and incurs a cost on breakfast taken away from his home after the qualifying journey has started. If an employee usually leaves before 6.00 am the breakfast rate does not apply.

Late evening meal rate - The rate may be paid where the employee has to work later than usual, finishes work after 8.00 pm having worked his normal day and has to buy a meal before the qualifying journey ends which he would usually have at home.

The breakfast and late evening meal rates are for use in exceptional circumstances only and are not intended for employees with regular early or late work patterns. (see HMRC examples).

One meal (5 hour) rate - The rate may be paid where the employee has been undertaking qualifying travel for a period of at least 5 hours and has incurred the cost of a meal.

Two meal (10 hour) rate - The rate may be paid where the employee has been undertaking qualifying travel for a period of at least 10 hours and has incurred the cost of a meal or meals.

Benchmark scale rate payments must be limited to three meal rates on one day or 24 hour period. A meal is defined as a combination of food and drink and would take a normal dictionary meaning.

Benchmark scale rates must only be used where all the following qualifying conditions are met:

  1. the travel must be in the performance of an employee’s duties or to a temporary place of work
  2. the employee should be absent from his normal place of work or home for a continuous period in excess of five hours or ten hours
  3. the employee should have incurred a cost on a meal (food and drink) after starting the journey

These benchmark scale rates would not apply to employees covered by Working Rule Agreements, for which separate specific rates are already set for particular occupations.

Subsistence payments using these benchmark scale rates made to directors and employees earning at a rate of £8,500 or more per annum still need to be reported at the end of the year under section N on form P11D, return of expenses and benefits, unless a dispensation is agreed to cover these items.

If you have any further queries please contact us

Filed under: Employers, PAYE, Tax

Budget 2013

Posted by: edwinsmith on March 21st, 2013

The key announcements in the 2013 Budget are as follows:


Income Tax

From 6 April 2014, the personal allowance for those born after 5 April 1948 will be increased by £560 from £9,440 to £10,000. Starting from 2015/16 the personal allowance will increase in line with inflation each year based on the Consumer Prices Index.

The basic rate limit threshold will be reduced to £31,865 for 2014/15 from £32,010.  The personal allowance and basic rate limit will be £41,865, a 1% increase on 2013/14. This limit will further increase by 1% for 2015/16 to £42,285.

For people born on or before 5 April 1948 there is no increase in the personal allowance, currently £10,500 with a higher allowance of £10,660 for those born before 6 April 1938.

For 2014-15 the main rates of income tax will remain at the 2013/14 rates - 20% basic rate, 40% higher rate and 45% additional rate.

New childcare scheme

A new scheme will be phased in from autumn 2015 initially for children under 5 but to be extended over time to include children under 12 to support families with both parents working and single working parents where support is not received through the childcare element of working tax credits/universal credit. The scheme will not be available to families where one parent has an income over £150,000. For childcare costs of up to £6,000 per year per child support of 20% will be available. Consultation will take place on the detail.

Exemption threshold for employer provided beneficial loans

For 2014/15 and subsequent years the current threshold of £5,000 will increase to £10,000 for employment-related taxable cheap loans. As long as the balances on all such loans do not exceed the threshold in a tax year the employer will not need to report the loan to HMRC and there will be no tax charge on the employee.

Company Car Tax rates 2015/16 and onwards

Legislation will be introduced in the  Finance Bill 2013 to introduce two new appropriate percentage bands for company cars emitting 0-50g of carbon dioxide per kilometre (with appropriate percentage set at 5%) and 51-75g of carbon dioxide per kilometre (with appropriate percentage set at 9%). For 2015/16 as set out in the 2012 budget there will be an increase in the appropriate percentage for company cars emitting more than 75g of carbon dioxide per kilometre of two percentage points to a maximum of 37 per cent. The 2013 budget also sets out a commitment to the percentage point differential for the first three bands through to 2019/20.

Van Fuel Benefit Charge 2014/15

The van fuel benefit charge will increase by inflation in 2014-15 based on the increase in the September 2013 Retail Price Index (RPI).

Company Car and Van Fuel Benefit Charge 2014/15

The rate of fuel benefit charge for company cars and fuel benefit charge for company vans will also increase in line with inflation (based on RPI) for 2014-15. The increase will be based on the September 2013 RPIfigure.

Pensions tax relief

Legislation will be introduced in the Finance Bill 2013 to reduce the annual allowance to £40,000 and to reduce the standard lifetime allowance (LTA) to £1.25m from 2014/15 onwards as announced in the Autumn Statement 2012. Where there is a reduction in the LTA an individual protection regime will be consulted on to include in the Finance Bill 2014 to add to the fixed protection regime already available.


Capital Gains Tax Annual Exempt Amount

The annual exempt amount for capital gains tax increases from £10,600 to £10,900 for 2013-14.

Seed Enterprise Investment Scheme – Capital Gains Reinvestment Relief

Legislation will be introduced in Finance Bill 2013 to extend the capital gains tax (CGT) relief for reinvesting gains in SEIS shares to gains accruing in 2013-14 when those gains are reinvested during 2013-14 or 2014-15. The relief will apply to half the qualifying re-invested amount.

Inheritance tax allowance

There have been no changes to the inheritance tax of £325,000. The intention was to freeze this at this level until April 2015 but this has now been extended to April 2018.

Inheritance tax - Limiting the deduction for liabilities on death

Legislation will be introduced in Finance Bill 2013 to amend the inheritance tax provisions which allow a deduction from the value of an estate for liabilities owed by the deceased on death. The changes are being introduced in response to avoidance schemes and arrangements which exploit the current rules that allow a deduction regardless of whether or not the liabilities are paid after death, or how the borrowed funds have been used.

Inheritance tax – spouses and civil partners domiciled overseas

Legislation will be introduced in Finance Bill 2013 to increase the lifetime cap of £55,000 on transfers to non-uk domiciled spouses or civil partners to the nil rate band of £325,000 with effect from 6 April 2013.

Also a new election regime will be introduced for individuals domiciled other than in the UK and who are married or in a civil partnership with a UK domiciled person, who will be able to elect to be treated as UK-domiciled for IHT purposes.


Corporation tax

The Finance Bill 2013 will introduce legislation to reduce the main rate of corporation tax for non-ring fenced profits for the financial year commencing 1 April 2014 to 21% (as mentioned in the 2012 Autumn Statement) and also to reduce the rate for the financial year commencing 1 April 2015 to 20% to unify with the small companies rate which remains unchanged at 20%. The main rate applies to profits in excess of £1.5m and the small profits rate to profits below £300,000. A marginal rate will be effective between these limits.

National insurance £2,000 employment allowance

For 2014/15 an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 secondary NICs liability will be introduced. The allowance will be claimed as part of the normal payroll process through RTI. Legislation will be introduced later in the year.

Tax simplification for small businesses

The Finance Bill 2013 will introduce legislation following the consultation and review of small business taxation, to introducing a voluntary cash basis for unincorporated businesses up to the VAT registration threshold with effect from 2013/14.

Class 2 National Insurance process simplification for the self-employed

The Government will consult on options to simplify the administrative process for the Class 2 National Insurance by using Self Assessment to collect Class 2 NICs alongside income tax and Class 4 NICs.

Capital allowances on low emission vehicles

Legislation will be introduced in Finance Bill 2015 to extend the 100 per cent allowance (FYA) for expenditure incurred on cars with low carbon dioxide emissions and electrically propelled cars for an additional three years to31 March 2018.


Registration and deregistration limits

From 1 April 2013, the taxable turnover threshold which determines whether a person/entity must be registered for VAT will increase to £79,000 (currently £77,000).

The de-registration threshold will increase to £77,000 (currently £75,000).

The registration and deregistration threshold for relevant acquisitions from other EU Member States will also be increased to £79,000 (currently £77,000).

Fuel Scale charges

Fuel scale charges will be revised effective from 1 May 2013. These will be published on our news feed.

Changes to the place of supply rules

Legislation will be introduced in Finance Bill 2014 to tax intra-EU business to consumer supplies of telecommunications, broadcasting and e-services in the Member State in which the consumer is located. These services are currently taxed in the Member State in which the business is established. The changes will take effect from1 January 2015and implement already agreed EU legislation into UK legislation, ensuring that these services are taxed fairly in the Member State of consumption.

To save the need for businesses affected by these changes to register for VAT in other Member States, a Mini One Stop Shop will also be introduced from1 January 2015. This is an IT system that will give businesses the option of registering in just the UKand accounting for VAT due in other Member States using a single return.


From 6pm on Wednesday 20 March 2013 the following changes will take effect:

Tobacco duty – 2% above the rate of inflation

The following increases are effective from 25 March 2013:

Alcohol duty – 2% above inflation for spirits, wine and made-wine, cider and perry. The duty rates on beer will decrease by 6% for low strength beer and 2% for the standard rate of beer duty.

A document containing the tax rates applying for 2013-14 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 2013 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.


Student loans

Posted by: edwinsmith on March 15th, 2013

Do you have a student loan but are not making loan repayments via your employer? Are your employment earnings less than £16,365 per annum from 6 April 2013 (£15,795 per annum from 6 April 2012) but savings income over £2,000 per annum? Are your self-employment earnings over £16,365 per annum from 6 April 2013 (£15,795 per annum previously)?

If so, your student loan repayments are calculated at the time you complete your self assessment tax return. You need to tick the relevant box on page 2 of your self assessment tax return and the student loan deductions are due by 31 January following the tax year along with your tax payment. If the relevant box is not completed then interest and penalties can arise from an incorrect return. The amount of student loan is calculated at 9% on relevant income above the starting limit above.

If you are employed with earning above the starting limit, £16,375, from 6 April 2013, then your employer should collect the repayments by deducting them from your salary each pay day. HMRC should tell your employer when to start the deductions from your pay and they will continue until HMRC notify your employer to stop. 

Student loan repayments are due to start on 6 April after you leave your course and once your income exceeds the starting rate limit. You can also make voluntary payments to the Student Loan Company at any time and regardless of your income level.

The Student Loan Company is only notified once a year of the loan repayments you have made through the tax system. If you are within two years of repaying your outstanding balance, the Student Loan Company should write to you and give you the option to continue to repay the loan through direct debits direct to the Student Loan Company rather than through the tax system. If this option is taken it reduces the chances of the loan being overpaid through the tax system.

If the loan is overpaid then you will need to contact the Student Loan Company for a refund rather than HMRC or your employer. It is therefore important to retain records of the student loan repayments made through the tax system whether by self assessment or by deduction by your employer.   

If you require further help please contact us

Filed under: PAYE, Self Assessment, Tax

HMRC Property Sales Campaign

Posted by: edwinsmith on March 8th, 2013

HMRC have introduced a campaign in March for individuals to bring their tax affairs up to date by voluntary disclosing profits (income or capital gains) arising from property sales or rental income (from UK or abroad) which have not been declared to HMRC. The voluntary disclosure needs to be made by 6 September 2013 to enable individuals to take advantage of the best possible terms offered by HMRC – for full details HM Revenue & Customs: Property sales campaign 

After 6 September HMRC will use information it holds to target those who should have made a disclosure under the campaign. 

HMRC are able to obtain information from various sources on property transactions (Banks, Land registry, Property purchase documents, Property websites etc) to help with tax investigations. 

This campaign will in the main affect individuals who have not declared income on second properties but in some circumstances the disposal of your main residence may incur a capital gain. 

If you sell your own home property then the profit arising from the sale will be exempt (private residence relief) from capital gains tax as long as it’s been your only home or main residence and you have used it as your home and nothing else. If these conditions apply for the whole time of your ownership of the property then the disposal does not need to be declared to HMRC. 

If there have been other uses of your main residence or the property has not always been your home (main residence) during ownership then further advice will be required on the amount of private residence relief available. 

If you wish to take part in this campaign then you have until 9 August 2013 to notify HMRC by completing a notification form DO1 (Property Sales) - Property Sales Campaign Notification Form 

Once HMRC have received notification they will send you a letter with a Disclosure Reference Number (DRN) and a Payment reference number. These will enable you to complete the Property Sales Campaign disclosure form. The disclosure form must reach HMRC by 6 September 2013 and the payment of tax made at the same time as disclosure - DO2 (Property Sales) - Property Sales Campaign Disclosure Form

If you are likely to have a problem paying the tax in full before the disclosure and payment deadline then you should contact HMRC who may agree a payment arrangement to spread the amount of tax due. The arrangement should be in place before the deadline. 

If you don’t take part in the campaign and HMRC subsequently discover undisclosed property income then they can start a criminal investigation and will charge full penalties. 

Please contact us for further advice on these matters.

Filed under: HMRC campaigns, Tax

Dates and deadlines: March 2013

Posted by: edwinsmith on March 1st, 2013

1 March: Corporation tax payment for a company not within the instalment regulations: year ending 31 May 2012

2 March: Payment of any income tax / class 4 NIC liability for 2011/12 to avoid 5% surcharge

5 March: End of month 11 for PAYE

7 March: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 31 January 2013

12 March: Direct debit VAT payment will be taken: quarter ended 31 January 2013

19 March: CIS monthly return deadline: month ended 5 March 2013

19 March: Cheque payments due for PAYE/NI, student loan and CIS: month ended 5 March 2013

22 March: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 March 2013

24 March: First time buyers land tax threshold for 0% rate on residential properties up to £250,000 ends

31 March: Company tax return CT600 due to HMRC: years ending 31 March 2012

31 March: Company accounts (Private Limited Co) due to be filed: years ending 30 June 2012

31 March: Company accounts (Public Companies) due to be filed: years ending 30 September 2012

1 April 2013: Corporation tax payment for company not within the instalment regulations: years ending 30 June 2012

Filed under: Dates and deadlines