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Renewing your tax credit claim

Posted by: CarolineMeredith on May 20th, 2013

Tax credit claimants are asked to renew  tax credits claims once a year.

By the 28 June, everyone who makes a claim for tax credits should receive a tax credit renewal pack. It is important to renew your claim to ensure that you have been paid and continue to be paid the correct amount.

What will I receive in my renewal pack?

This will depend upon your own circumstances, but you will receive either just an Annual Review Notice or the Annual Review Notice plus an Annual Declaration form.

If you are expecting a pack and have not received one by 28 June, then you should contact the tax credit helpline.

How do I renew my tax credit claim?

If you have received a pack which contains just an Annual Review Notice, your claim will be renewed automatically but you do need to make sure that you contact the tax credit office if you have had any changes in circumstances, your income is different to what’s shown in the notice, or there are mistakes or missing details.

If your pack also contains the Annual Declaration form then you will need to renew your claim. This can be done by completing that form and returning it, or by calling the tax credit helpline. A claim cannot be renewed online.

What is the tax credit renewal deadline?

The renewal deadline is normally 31 July, but your pack will state an alternative date if this does not apply to you. The sooner you renew, the sooner the tax office can make sure you have and are receiving the right amount of money.

As part of the renewal process you will need to provide the amount of your total income. This is often where we get involved and if you need assistance with the calculation of this then please contact us.

Filed under: Tax

Charities Online – Gift Aid and tax repayments

Posted by: edwinsmith on May 14th, 2013

HMRC have made available a new online service from 22 April 2013 for Charities and Community Amateur Sports Clubs (CASCs) to make Gift Aid tax repayment claims electronically.

The new service has built-in checks to prevent mistakes and should be faster to process the repayment. When you submit a claim successfully online you will get an on-screen confirmation reference number and you will also receive separate confirmation when the payment is made into your bank account.

Changes have also been made to the rules for sponsored events and aggregating donations. More information can be obtained from HMRC where you will also find the link to register for Charities Online and a demonstrator.

If you require further help please contact us

Filed under: Charities, Tax

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

Private residence – relief from capital gains tax

Posted by: edwinsmith on April 22nd, 2013

Private residence relief is available for capital gains tax on the disposal of your own home if you satisfy both of the following two conditions for the whole time you have owned it (subject to any restrictions below applying):

  1. The property has been your only home or main residence
  2. You have used it as your home and nothing else

 

This relief may also be available if you sell part of the garden without selling your home at the same time.

If you do not satisfy both the above conditions then you will need to work out the period of ownership for the purposes of calculating the relief. This commences on the later of the date of purchase or 31 March 1982, and ends on the date of disposal. As long as the property has been your only or main home at some point during your period of ownership, the last three years (36 months) always qualify for relief even if you did not live there in that period. From 6 April 2014 this has been reduced to 18 months for the final period of ownership - . Other periods of absence from the home may qualify for full relief, if for example you have been working away from home in certain circumstances or were unable to take up residence within the first 12 months of ownership.

There are restrictions to the relief if:

  1. The garden or grounds, including the site of the house, are larger than 5,000 square metres
  2. Part of the home has been exclusively used for business purposes
  3. You have let out all or part of your home – but you may qualify for letting relief
  4. The main reason you bought it was to make a profit from a quick sale

 

The maximum amount of letting relief due is the lower of:

  1. £40,000
  2. the amount of private residence relief due
  3. the amount of the gain arising by reason of the letting

 

If you have two or more homes, a nomination can be made to HMRC advising which property is to be treated as the main home as you are only entitled to private residence relief on one home. Nominations must be made within two years of the date from which you change the number of properties you live in. Each time you change the number of properties you live in a new nomination should be made. If a nomination is not made HMRC will decide which property to treat as your main home based on the facts.

The above is a brief summary of relief. Further information can be obtained from HMRC website or if you require further help please contact us

Filed under: Self Assessment, Tax

Registering for self-employment and national insurance

Posted by: edwinsmith on April 15th, 2013

If you have commenced self-employment you should register with HMRC as soon as you start business. This can be done online with HMRC. If you are taking on employees in your new business you can also register for a PAYE scheme at the same time as your online registration. 

The latest date to register is by 5 October after the tax year has ended so any self-employment which started in 2012/13 must be registered with HMRC by 5 October 2013. Normally, paper tax returns must be then be filed by 31 October after the end of the tax year or by 31 January after the end of the tax year if your return is done on line.  Any tax outstanding is also due by 31 January after the end of the tax year. For 2012/13 and assuming the return is done on line the tax return and payment of tax is due by 31 January 2014. If you register late you may incur a penalty. 

If you are self-employed you normally have to pay class 2 and class 4 national insurance contributions and you register for this when you register your business as above. 

Class 2 national insurance contributions are due at a flat rate per week, £2.70 for 2013/14. You can choose to pay your class 2 contributions either by monthly or six monthly direct debit, or you can pay in January and July in response to payment requests from HMRC which each cover a period of 26 weeks. Exceptions to class 2 NIC liability are detailed at HMRC along with further information.

Class 4 national insurance contributions are due on annual profits over a certain amount and are calculated and paid when calculating your annual tax liability. For 2013/14 the class 4 is calculated as 9% of annual profits between £7,755 and £41,450 plus 2% on profits over £41,450. Exceptions to class 4 NIC liability are detailed at HMRC along with further information. 

If you require further help please contact us

Filed under: National insurance, Self Assessment, Tax

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:

PERSONAL TAXATION

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 TAXATION

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.

BUSINESS TAXATION

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.

VAT

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.

EXCISE DUTY

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.

 

Filed under: Budget Report, National insurance, PAYE, Tax, VAT

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
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