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Dates and Deadlines November 2013

Posted by: edwinsmith on October 31st, 2013

Upcoming deadlines for businesses and individuals

1 November: Corporation tax payment for a company not within the instalment regulations: year ending 31 January 2013.

2 November: Submission of form P46 (car) for changes in quarter to 5 October 2013

5 November: End of month 7 for PAYE (RTI). All FPS (Full Payment Submissions) due if taking advantage of concession.

7 November: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 30 September 2013.

11 November: Direct debit VAT payment will be taken: quarter ended 30 September 2013.

19 November: CIS monthly return deadline: month ended 5 November 2013.

19 November: Cheque payments for PAYE/NI, student loan, CIS  to be cleared into HMRC bank: month ended 5 November 2013.

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

30 November : Company tax return CT600 due to HMRC: years ending 30 November 2012.

30 November: Company accounts (Private Limited Co) due to be filed: years ending 28 February 2013.

30 November: Company accounts (Public Companies) due to be filed: years ending 31 May 2013.

1 December : Corporation tax payment for company not within the instalment regulations: years ending 28 February 2013.

 

Filed under: Dates and deadlines, Employers, PAYE, Tax

HMRC Campaign – health and well being professionals

Posted by: edwinsmith on October 23rd, 2013

On 7 October 2013 HMRC introduced another campaign targeting health and well being professionals and offers them a time limited opportunity to bring their tax affairs up to date on the best terms available.

This covers health and well being professionals working with physical therapy -  physiotherapists, occupation therapists, chiropractors, osteopaths, chiropodists, podiatrists etc and those working with alternative and other therapies - dieticians, acupuncturists, speech, language and art therapists etc.

The campaign is not aimed at doctors and dentists (who have been targeted in previous campaigns) nor at nurses and social workers.

As with other similar campaigns that have been run before a specific time period is being offered to health professionals to notify HMRC by 31 December 2013 that they would like to take part in campaign and bring their tax affairs up to date. If taking part in campaign then to obtain best possible terms tax would need to be disclosed and paid by 6 April 2014.

Initially you would need to notify HMRC (by 31 December 2013):

  1. online by completing a notification form on the HMRC website
  2. by phone on Telephone: 0845 600 4507

HMRC will then send you Disclosure Reference Number and Payment Reference Number.

You will then need to make the formal disclosure to HMRC (by 6 April 2014):

  1. completing and submitting a disclosure form on the HMRC website
  2. printing and posting the completed form

Full details on the process of providing information to HMRC and obtaining best terms (reduced penalties, extended payment arrangements) can be found on  Health and Wellbeing Tax Plan: Your guide to making a disclosure - GOV.UK  which will also include the address to use if posting the disclosure form.

Health professionals need to be aware that after 31 December 2013 HMRC will be taking a lot closer look at the tax affairs of these professionals and by volunteering for the campaign then there is the opportunity to reduce possible penalties that would otherwise be charged by HMRC if they initiated any enquiries.

Please contact us for further advice

Filed under: HMRC campaigns, Self Assessment, Tax

Employee shareholder status

Posted by: edwinsmith on October 16th, 2013

On 1 September 2013 a new employment status was introduced being ‘employee shareholder status’ where employees could forego certain employment rights in exchange for acquiring shares worth at least £2,000 in their employer company (or parent company).

The main aim of this scheme is to encourage employee share ownership but although there are tax incentives for using the scheme the employee will lose some employment rights.

The employee concerned with acquiring shares must receive advice from an independent adviser on the terms and effect of the employee shareholder agreement. The employer company will be required to meet reasonable costs for the advice to employee, whether the individual accepts the employee shareholder position or not, but this will not be treated as giving rise to a taxable benefit to the employee (see below for corporation tax relief).

There are tax incentives for the employee in respect of the shares which are detailed as follows:

  1. Income tax and National Insurance is not usually chargeable on the first £2,000 of share value received by an employee shareholder. As long as they meet certain conditions then employee shareholders are treated as if they have paid £2,000 worth for their employee shares. This means if an employee shareholder receives £2,000 worth of shares under the agreement no tax or NI is chargeable at the time of the award. If the award is worth more than £2,000 then tax (and NIC if applicable) is only chargeable on the value received in excess of £2,000. It will be dependent on the type of shares issued.
  2. There will usually be a capital gains exemption for gains on the disposal of up to £50,000 worth of shares received by the employee shareholder on shares that have met the criteria for the above tax relief.

These special tax rules for income tax only apply to the initial shares received when an individual becomes an employee shareholder. Shares issued later will be taxed in the normal way.

Where the employee shareholder or anyone connected to them have a ‘material interest’ in the company because they hold 25 % or more in the company then  the special tax rules for income tax and capital gains tax will not apply and the employee shareholder shares are taxed in the normal way.

The employee will lose some employment rights such as some unfair dismissal rights, statutory redundancy pay but will retain rights such as statutory sick pay, maternity pay, paid annual leave etc – for full details see Gov UK - employee shareholders .

Employers who award employee shareholder status may obtain agreement of a proposed share valuation with HMRC.

The Employer may also be able to claim deductions for corporation tax relief on:

  1. the acquisition of shares by employee shareholders (subject to the normal qualifying rules).
  2. where a company meets the costs of advice provided to an individual considering an employee shareholder offer (providing these costs are incurred by the company wholly and exclusively for the purposes of its trade)

Further details on the above corporation tax relief can be found at HMRC - Employee shareholder

Employers will need to provide details of employee shareholder shares awarded on HMRC Form 42 (Employment-related securities) at the end of relevant tax year.

Please contact us for further advice on this new employment status scheme.

Filed under: Employers, Tax

Time limits for claiming capital gains losses

Posted by: edwinsmith on October 3rd, 2013

If you have made a capital loss on the sale of a chargeable asset you need to tell HMRC in writing about the loss within four years from the end of the tax year in which the loss occurred for it to become an allowable loss to be deducted from your gains, unless the loss was made in 1995-96 or an earlier year. If you made a loss in 1995-96 or an earlier tax year but have not used it, you do not need to tell HMRC about the loss until you want to use it.

If you completed a Self Assessment tax return for the year in which you made the loss, this should have been reported on the capital gains pages of your return. If you did not complete a Self Assessment tax return for the year in which you made the loss, use the table below to determine the deadline for a claim.

Tax year Tax year ended on You must claim by
2009-10 5 April 2010 5 April 2014
2010-11 5 April 2011 5 April 2015
2011-12 5 April 2012 5 April 2016
2012-13 5 April 2013 5 April 2017

For those not in self assessment, claim the loss by writing to HMRC either to the postal address on the most recent correspondence from them or to:

HM Revenue & Customs
Capital Gains Tax
PO Box 1970
Liverpool
L75 1WX

You must keep any records showing how you worked out your loss and include your calculations with your tax return or correspondence.

If you require any help, please contact us.

Filed under: Self Assessment, Tax

Age exception certificates and State Pension Age calculator

Posted by: edwinsmith on September 27th, 2013

Employers need to be aware that HMRC will no longer issue age exception certificates (CA4140) to confirm that a person has reached State Pension age (Spa) and therefore the employee concerned is no longer liable to pay Class 1 National Insurance Contributions (NICs). Employers still continue to be liable for their portion of the NICs if the person is working as an employee.

This means that employers will need to obtain a copy of an employee’s birth certificate or passport as evidence of the employee’s date of birth. This can be scanned or photocopied by the employer and kept on file as proof that employee Class1 NICs are not payable.

If for any reason an employee is reluctant to provide a birth certificate as it may contain sensitive information that they do not wish to disclose then the employer should advise the employee to contact HMRC at the following address to obtain a letter confirming they have reached SPa.

HM Revenue and Customs

National Insurance Contributions and Employer Office

Individuals Caseworker

BentonParkView

Longbenton

Newcastle upon Tyne

NE98 1ZZ 

State pension age calculator

If you want to confirm the date you will reach SPa there is a State Pension Age Calculator available at www.gov.uk/calculate-state-pension

Please contact us for any advice on payroll issues.

 

Filed under: PAYE, Tax

New rules affecting company loans to director/shareholders

Posted by: edwinsmith on September 23rd, 2013

Legislation was introduced in the finance Bill 2013 to counter arrangements whereby close companies seek to avoid the charge to tax under section 455 on loans to participators. This will affect small companies where loans are made to directors who are also shareholders (participators) such as overdrawn director’s current accounts.

A close company is a company which is controlled by five or fewer participators or any number of directors who are participators and broadly, a participator is a person who has a share or interest in a company.

If a loan is made to a director/shareholder of a close company and is outstanding at the end of the company’s accounting period then under section 455 (of CTA2010) a charge to tax arises equivalent to 25% of the outstanding loan or advance. The tax is payable with company’s corporation tax charge nine months after the year end.

If the loan or advance is repaid or released within nine months after the end of the company’s accounting period end then tax relief is available under section 458 (of CTA2010) which means that the tax charge is not payable.

If tax is paid on the loan and the loan is later repaid then the tax paid can be recovered.

One of the tax avoidance measures affecting these arrangements relates to situations where close companies have been able to exploit the tax relief when the loan is repaid to the company. Where a loan from a close company to a participator (director/shareholder) is repaid within nine months after the end of the company’s year end to avoid the section 455 tax charge and shortly after a new loan is made available (known as bed and breakfasting) then new rules contain specific provisions to deny this tax relief as detailed below.

With effect from 20 March 2013 there is a "bed and breakfasting" rule for claiming relief under section 458 , whereby if a loan, advance or transfer of value of £5,000 or more is made to the participator within 30 days of a loan or advance of £5,000 or more being repaid by that participator, relief will not apply and the tax charge will become payable.

In addition even if the 30 day rule does not apply to deny tax relief, relief will be denied where, prior to a loan or advance being repaid by a participator, that participator owes the company £15,000 or more and after that repayment, pursuant to arrangements in place at the time of the repayment, the company makes a loan, advance or transfer of value to the participator (or an associated person).

There were two other measures introduced to tackle avoidance of the tax charge (known as s455 tax) on loans from close companies to their participators and these were:

• to put beyond doubt that loans to various intermediaries are within the scope of the charge;

• transfers of value (other than loans) are brought within the scope of the charge when arrangements mean there is also a corresponding receipt of value by the participator.

These can be reviewed in more detail at HMRC  - new rules close company loans

Please contact us for further advice on these type of loan arrangements.

Filed under: Tax

National minimum wage rates from 1 October 2013

Posted by: edwinsmith on September 16th, 2013

There are changes to the national minimum wage (NMW) rates in some categories from 1 October 2013. The new rates per hour are as follows with the current rates shown in brackets:

  1. £6.31 (£6.19) - the main rate for workers aged 21 and over
  2. £5.03 (£4.98) - the 18-20 rate
  3. £3.72 (£3.68) - the 16-17 rate for workers above school leaving age but under 18
  4. £2.68 (£2.65) - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

If you have any queries please contact us

Filed under: Employers, Tax

Simpler income tax – cash basis 2013-14

Posted by: edwinsmith on September 6th, 2013

HMRC have introduced a cash basis for small self-employed businesses (sole traders and partnerships) to record their income and expenses for their self assessment tax return which can first be used from April 2013 for the 2013-14 tax year instead of using the traditional accruals basis.

The cash basis is a method whereby you record money when it actually comes in and goes out of your business whether it is by cash, card payment, cheque etc,. The accruals basis is whereby transactions are recorded when an invoice is issued to a customer and received from a supplier.

To use the cash basis your total business income must be below £79,000, the current VAT registration threshold. Once you are using the cash basis you can continue in the scheme if your business income grows up to an income of £158,000. Over that higher limit the accruals basis will need to be used for the next tax year’s tax return. Existing businesses switching from the accruals basis to the cash basis may need to make some adjustments when they switch - similarly when you leave the scheme.

The cash basis may not suit all businesses. Limited companies and limited liability partnerships cannot use the scheme. There are also some specific types of business that cannot use the scheme such as certain farming businesses, dealers in securities, mineral extraction businesses.

You can use the simplified expenses scheme in conjunction with the cash basis for vehicle expenses, working from home or living on your business premises. See our earlier articles simplified expenses and business use of home  .   

More information is available here.

If you require further help please contact us

Filed under: Self Assessment, Tax

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

Simplified expenses – flat rate deductions

Posted by: edwinsmith on August 15th, 2013

From 2013/14, HMRC have introduced some flat rate expenses that can be taken advantage of by sole traders and business partnerships. These are for:-

  1. Business use of vehicles;
  2. Business use of home (covered in our article last month); and
  3. Private use of business premises.

 
The flat rate deduction can be used as an alternative to recording actual expenditure and apportioning the business element.

Business use of vehicles

The flat rate deduction is calculated using a flat rate per mile according to the following table:

Vehicle type 2013/2014 flat rate per mile
Cars and goods vehicles first 10,000 miles 45p
Cars and goods vehicles after 10,000 miles 25p
Motorcycles 24p

 
The above rates were previously available to small businesses below the VAT threshold but this has been extended to all sole trader and partnerships from 6th April 2013. If you use the flat rates you cannot claim capital allowances or running costs of the vehicle.

You will need to keep a record of your business mileage but will not be required to keep details of your actual running expenditure. You do not need to use the flat rate for all your vehicles but if you start to use it for a vehicle you must continue with the flat rate for that vehicle until it is no longer used in the business.

It would be advisable to review your estimate of the actual business allowances and costs of the vehicle and compare this with the allowance that would be given on the flat rate scheme to see which would give you the most allowance against your income.

Private use of business premises

Some businesses may use their business premises as their home, for example if they are running a guest house, B&B, or small care home. Instead of working out the split of the business and private use of the premises, for costs such as utilities, food, non-alcoholic drinks, household goods etc., you can use a flat rate deduction per month from the total costs for private use depending on the number of people using the business premises as a private home.

The monthly deductions from the total costs are as shown below:

Number of people      2013/14 flat rate per month
1 £350
2 £500
3+ £650

 
The flat rate does not cover mortgage interest, rent, council tax or rates so the business proportion of these expenses will still need to be calculated.

Please contact us if you have any queries or require any further advice.

Filed under: Self Assessment, Tax
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