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Revised advisory fuel rates 1 September 2013

Posted by: CarolineMeredith on August 29th, 2013

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  ↑ 11p ↓
Over 2000cc 26p  ↑ 16p ↓

 

Engine size Diesel
1600cc or less 12p ↔
1601cc to 2000cc 15p  ↑
Over 2000cc 18p ↔

 

The changes this quarter are highlighted in red above.

The new rates will be effective from 1 September 2013. 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 November 2013 and any changes made will be effective from 1 December 2013.  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:

  1. Reimbursement to employees of fuel used for business travel in a company car
  2. Repayment by employees of fuel used for personal travel in a company car
  3. 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: Employers, PAYE, VAT

PAYE RTI reconciliation problems

Posted by: edwinsmith on August 28th, 2013

If you use the business tax dashboard and are an employer, then you will know that you can view your PAYE balance online. This should provide an accurate picture of your account. However, since the dashboard is not updated daily, it may provide an inaccurate picture.

HMRC have confirmed that at present, for real time submissions, updates will only be made twice a month, after the 6th and 19th for the tax month just ended.  This means that larger employers may find it difficult to review their PAYE record and discrepancies may have arisen due to the time in which it takes HMRC to process the RTI data.

There have been a number of problems reported with employers being chased for underpayments and some being advised to reduce the next payment for overpaid PAYE.

For the system to work correctly, employers must also ensure that the correct payment references are used when making PAYE payments. More information about using the correct numbers can be found here.

HMRC has admitted that it is having some problems and as a result has set up a dedicated team to look why some PAYE schemes have experienced ongoing problems in reconciling what HMRC say is due and what has been paid.

If we run your payroll scheme, then contact us for advice. If not, then review your business tax dashboard to see if you can reconcile the submissions and the payments made, and certainly make contact with HMRC if you believe HMRC to be wrong.

If you employ a large number of staff this may prove difficult under the current circumstances, meaning you may need to wait for the dedicated team to review your account.

Filed under: Employers, PAYE

The Business Tax Dashboard

Posted by: edwinsmith on August 20th, 2013

The business tax dashboard is a service provided by HMRC within your government gateway / online  account. If you wish to use the service you will need to register for it from within your online account when you log in to either your corporation tax or self assessment service.

Once registered, it can be accessed straight away. From within the dashboard you can see on a single page, the tax position for the business related taxes you are registered for.

For each tax, you will be able to see the overall position and more detailed information such as payments made, interest on late payments, penalties incurred and direct debit plans.

You can use the dashboard to view information as follows:

  1. Corporation Tax - information for accounting periods from 1 October 1993 onwards
  2. Self Assessment - information for the tax year 1996-97 onwards
  3. PAYE for employers - information for the tax year 2010-11 onwards
  4. VAT - information for the current date and previous 15 months

Contact details can also be changed from the dashboard.

The system is updated overnight from Monday to Friday but the drawback is that the dashboard will only reflect returns and payments that have reached HMRC systems. HMRC have updated their guidance and have confirmed that for real time submissions, updates will be twice a month, after the 6th and 19th for the tax month just ended.

You can sign into your online account here.

Filed under: Employers, PAYE, Self Assessment, Tax

Business use of home as office

Posted by: edwinsmith on July 26th, 2013

As many small businesses operate from home, costs can be incurred where it is possible to obtain tax relief against business income. Detailed below are the various methods that can be used in determining the allowable expense for sole traders, business partnerships and small companies.

Sole traders and business partnerships

Flat rate deductions – business use of home

From 2013/14 HMRC have introduced some fixed rate expenses that can be taken advantage of by sole traders and business partnerships. One of these relates to business use of home (These simplified expenses will be detailed in an online article next month).

The flat rate deduction can be used as an alternative to recording actual expenditure and apportioning business element. This rate includes all household running costs such as heat, light, power, telephone and broadband/internet costs and is based on the number of monthly average hours worked at home. The monthly rates are detailed below.

25 or more hours worked per month  - flat rate of £10 per month

51 or more hours worked per month  – flat rate of £18 per month

101 or more hours worked per month – flat rate of £26 per month

It would be advisable to review the business proportion of home telephone and internet costs before using the flat rates.

If a business does not wish to use the simplified expenses for business use of home, then where private use of telephone/internet costs does not form a significant proportion of the service use, HMRC will accept that the full amount of expenditure can be claimed. However business will need to use the normal statutory method of calculating the business use of home costs as detailed below.

Normal method calculating – business use of home

You can claim a proportion of the annual home costs such as insurance, council tax, mortgage interest, rent, water rates and running costs each year such as heat, light and power. You need to be able to justify the claim and the calculation would normally be based on the number of rooms used for business use compared with number of rooms in the house. You should also take into account the number of hours worked in the room at home. If only one room is partly used at home for business then there should not be any capital gains tax implications (loss of private residence exemption) but care needs to be taken if claims are made where there is sole use of a number of rooms for business use.

Small companies

Unfortunately directors working from home for small companies cannot claim business use of home costs in the same way as sole traders/partnerships’ working from home as these costs are not incurred wholly, exclusively and necessarily for their employment.

If considering charging a rent to company then in order to obtain the same effective treatment as a sole trader you would need to set up a rental agreement between the company and individual (director). The rent in effect would equate to the ‘business use of home’ costs and as long as rent did not exceed commercial arm’s length amount then rent would be allowed as deduction in arriving at taxable profits for corporation tax. The rent received by the individual (director) would need to be declared  in self assessment tax return but would be offset by costs calculated for ‘business use of home’ leaving a nil profit from the office rent.

Again care should be taken with the rental agreement to avoid any loss of private residence relief. The agreement should state that the home room/facilities are only let to company for specific hours in the week.

Employee/ (directors) allowable tax relief for household expenses

If you wish to avoid problems associated with charging rents then HMRC have agreed rates that can be used by employees or directors to claim tax relief on household expenses.

These expenses cover extra cost of gas and electricity to heat and light your work area and business telephone calls. You won’t be able to get tax relief on mortgage, council tax, telephone line rental or Internet access. In order to obtain tax relief on land lines and broadband at home then it is important to have a designated phone line/broadband and the contract in the company name.

From 2012/13 the agreed HMRC rate for household expenses (without keeping documentation) amounts to £4 per week or £18 per month. For amounts above £4 you will need supporting evidence to show that the amount you are claiming is no more than the additional household expenses you have actually incurred.

The guideline rate for 2008-09 to 2011-12 was £3.00 per week and for 2007-08 it was £2.00 per week. For further details see HM Revenue & Customs: Tax relief for household expenses when working at home

Please contact us if you require any advice on expenses that can be claimed for business use of home.

Filed under: Employers, Self Assessment, Tax

Employer payrolled benefits and P11d forms

Posted by: edwinsmith on June 21st, 2013

Employers can make arrangements with HMRC to payroll benefits in kind. This means that benefits in kind and expenses would be put through the payroll for employees. The employees would then be taxed in ‘real time’ rather than be taxed at some future time via their PAYE tax code or if applicable through their self assessment form.

In practice the cash equivalent of the benefit in kind would be calculated on an annual basis and split over 12 months if employee paid monthly or 52 weeks if paid weekly and the appropriate amount added to the payroll.

This can be done for all benefit in kinds or the employer can choose specific benefits to be payrolled which can be agreed with HMRC.

Employers making payrolled benefits still need to complete and submit P11d forms and will be liable to penalties if forms not submitted. Detailed below is an extract from HMRC on the steps to take when submitting forms - HMRC - P11d forms

If all benefits have been payrolled and P11ds filed online.

  1. notify HMRC that you will be sending P11Ds for directors or employees where payrolling has taken place in that year, in order to avoid incorrect processing of the data - there's an HMRC online form payrolled benefits you can use to do this or you can telephone HMRC's Employer Helpline.
  2. complete the 'amount made good or from which tax deducted' boxes (where this box is available for the relevant benefit).
  3. complete the P11D(b) form as normal, ensuring that the total expenses and benefits provided are included irrespective of payrolling.

If some benefits have been payrolled for some or all employees and P11ds filed online.

  1. complete the 'amount made good or from which tax deducted' boxes (where this box is available for the relevant benefit).
  2. submit P11D information, either online/electronically or on paper for non-payrolled benefits.
  3. submit P11D information, either online/electronically or on paper for payrolled benefits, where the benefits that have been payrolled have a corresponding entry for 'amount made good or from which tax deducted'.
  4. submit separately on paper, P11D information for other payrolled benefits - these separate P11Ds and lists must be clearlymarked 'PAYROLLED' .
  5. complete the P11D(b) as normal, ensuring that the total expenses and benefits provided are included, irrespective of payrolling .

Benefits have been payrolled for some employees and paper P11ds.

  1. clearly mark all relevant paper submissions 'PAYROLLED', whether they be individual P11Ds or in list format .
  2. complete the P11D(b) as normal, ensuring that the total expenses and benefits are included, irrespective of payrolling .

Please contact us if you require any further advice on payrolling benefits in future or completing p11d forms.

Filed under: Benefits, Employers, PAYE, Tax

PAYE Settlement Agreements (PSA)

Posted by: edwinsmith on June 7th, 2013

Are you preparing your P11d forms for 2012/13? Have you incurred expenditure on an annual event(s) for your employees but went over the threshold of £150 per head for tax exemption and you do not want your employees to suffer tax on the event? If so, a PAYE settlement agreement may be for you.

What is a PAYE settlement agreement or PSA?

A PAYE settlement agreement or PSA is a flexible scheme an employer can use to settle any PAYE tax and NICs due to HMRC on three groups of expenses and benefits:

  1. Minor items: e.g. a small present for an employee in hospital or an employee's use of a pool car where the conditions for tax exemption don't apply; or
  2. Irregular items: e.g. expenses of a spouse occasionally accompanying an employee abroad, or relocation expenses in excess of the £8,000 tax exemption threshold; or
  3. Impractical items: e..g items where it is impracticable to operate PAYE on or determine a value for P9D or P11D purposes, such as shared benefits (like shared cars or taxi journeys, for example) that are difficult to attribute to individual employees.

If HMRC agrees to include an expense or benefit in a PSA, you will not have to include the item on an employee's form P11D or P9D and pay Class 1A NICs on the item at the end of the tax year, or put the item through your payroll to work out any PAYE tax or Class 1 NICs due. Read more ›

Filed under: Employers, National insurance, PAYE, Tax

Revised advisory fuel rates 1 June 2013

Posted by: edwinsmith on May 29th, 2013

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 17p 12p
Over 2000cc 25p 18p

 

Engine size Diesel
1600cc or less 12p
1601cc to 2000cc 14p
Over 2000cc 18p

 

The changes this quarter are highlighted in red above. These are the reduction of 1p for petrol engines of 1401cc to 2000cc and over 2000cc, and a reduction of 1p per mile for diesel engines of 1600cc or less and 1601cc to 2000cc. There are no changes to the LPG rates.

The new rates will be effective from 1 June 2013. 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 August 2013 and any changes made will be effective from 1 September 2013.  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:

  1. Reimbursement to employees of fuel used for business travel in a company car
  2. Repayment by employees of fuel used for personal travel in a company car
  3. 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: Employers, PAYE, VAT

Companies that have CIS deductions on their own income and claiming repayments

Posted by: edwinsmith on May 7th, 2013

There are companies (Limited) that do not hold the gross payment certificate within the Construction Industry Scheme (CIS) who have CIS deductions of tax from their own income.

These deductions can be set off against their own PAYE/NI liabilities as an employer and due to be paid to HMRC each month. The PAYE/NIC liabilities would also include CIS tax that they deduct from payments to their own subcontractors.

If the company’s own deductions cannot be set off against PAYE/NIC liabilities or there is an excess being carried forward then the amount will need to be reclaimed at the end of the tax year.

For 2012/13 the claim should be made as soon as the Employer’s year end return form P35 has been submitted or for RTI Pilot employer’s the submission of the final Employer Payment Summary (EPS -see below for RTI effects on CIS) and the P11d(b) if you pay benefits to employees. A separate claim must be made for repayment as the P35 or EPS alone are not a claim for repayment. The claim can be made to the following address. 

PAYE Employer Office                                                                                
Room BP4009
Benton Park View
Newcastle Upon Tyne
NE98 1ZZ 

It is possible for the repayment to be set off against other tax liabilities such as corporation tax but the company would need to make a separate request to HMRC. The CIS deductions cannot be claimed on the company’s Corporation Tax Return (CT 600). Please refer to CIS repayment claims for full details on repayment claims to HMRC.

With the introduction of PAYE Real Time Information (RTI) on the 6 April 2013  there are changes that CIS employers need to be aware of specifically relating to CIS deductions from their income.

The regulations concerning monthly contractor returns (CIS 300) will remain unchanged.

After 6 April 2013 where a limited company employer has CIS deductions taken from their own income then the company will need to make an Employer Payment Submission (EPS) showing these deductions taken from the tax year to date in order to subtract (or set off) from the amount of PAYE/NIC/CIS charge due to be paid to HMRC for the month.

Where the company own CIS deductions exceed their monthly PAYE/CIS liabilities then the excess will be carried forward to the next month and if they continue to exceed the monthly PAYE/CIS liabilities the excess will be carried forward until the end of the tax year.

As mentioned above the company will not be able to claim a repayment until the final EPS has been submitted for the tax year (due by 19 April each year where payments to employees are made in the period 6 March to 5 April). The company tax year for CIS deductions would need to have ended and the company will need to have paid all amounts due to HMRC for the tax year in their capacity as employer/contractor.

The full details of changes for RTIand CIS scheme can be found at HMRC website RTI main changes and effects on the Construction Industry Scheme 

Please  contact us if you require any further advice or assistance on these matters

Filed under: Employers, PAYE, Tax

Submitting forms P11D, P11Db and P9D for 2012/13

Posted by: edwinsmith on April 29th, 2013

Many small employers have probably used HMRC’s Basic PAYE Tools package in the past for filing expenses and benefit forms P11D, P11Db and P9D. These forms are the Employer’s annual return of expenses payments and benefits paid to employees which need to be submitted to HMRC by 6 July 2013. 

From 6 April 2013 HMRC’s basic PAYE Tools package will no longer have the function to submit these forms.

As a reminder forms P11D are for employees earning at a rate of more than £8,500 p.a. including expenses payments and benefits and P9D for those under £8,500 p.a. P11D forms would be required for directors even if under £8,500. 

If you don’t have your own commercial package with the facility to submit these forms then you can use the HMRC PAYE online services which will allow you to complete the necessary details and submit the information on line. 

You need to be registered for PAYE online services HM Revenue & Customs: Register for HMRC taxes and sign up for online services but this should be done anyway as part of PAYE RTI. 

The P11D/P9D function under PAYE online services will lead you through the process of completing the form and highlight the various categories of expenses and benefits that may apply to the employee concerned. Once the P11D information has been completed for all employees then you will be asked to complete form P11Db as part of the submission process. A copy of the submitted form P11D can be printed out to provide the employee. 

Forms P9D can be completed in a similar way using these services. For more details on types of expenses and benefits to include on forms P11D and P9D see HM Revenue & Customs: Expenses and benefits A to Z

Paper forms can be completed if preferred and can be downloaded from the following HMRC links. 

Form P11D.pdf ,  Form P11Db.pdf and  Form P9D.pdf 

Once completed you should then post the paper forms to the following address. 

HMRC NIC&EO
Room BP2101
Lindisfarne House
Benton Park View
Longbenton
Newcastle Upon Tyne
NE98 1ZZ 

For assistance with completing your year end forms or for further information on the above topic please contact us

Filed under: Employers, PAYE, Tax

Real Time Information : Basic PAYE tools problems

Posted by: CarolineMeredith on April 23rd, 2013

Many of our small clients who run payroll themselves are using the HMRC basic tools software to do so.

We have received a few enquiries regarding problems with the software.

HMRC have a dedicated area for service issue problems for the Basic PAYE tools software on their website and this can be found in the service issues area of the website.

HMRC have also issued guidance on the Basic PAYE tools error messages on their website.

For any general questions, then do remember to talk to your usual contact.

Filed under: Employers, PAYE, Tax
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