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Agency and temporary workers – agency legislation changes from 6 April 2014

Posted by: edwinsmith on July 7th, 2014

From 6 April 2014 a worker is classified as an employee (and hence subject to PAYE) of an agency if all of the following conditions are met: 

  1. the worker must personally provide services, (which are not excluded services) to the client, and
  2. there must be a contract between the client (or a person connected with the client) and a person who is not the worker, the client or a person connected with the client (that is, “the agency”) and under or in consequence of that contract: (i) the worker’s services are provided, or (ii) the client or any person connected with the client pays, or otherwise provides consideration for the services, and
  3. the worker must be subject to (or to a right of) supervision, direction or control (by any person) as to the manner in which they provide their services, and
  4. remuneration receivable by the worker in consequence of providing the services does not constitute employment income/employed earners earnings before the provisions of the agency legislation are applied.

If it is held that the manner in which the worker provides the services is not subject to (or to the right of) supervision, direction or control by any person the agency must keep and be able to show evidence to that effect.

The agency legislation will not apply in the following circumstances: 

  1. if the remuneration the worker receives in consequence of providing the services is otherwise chargeable as employment income before the agency legislation is applied, or 
  2. when the worker is legitimately self-employed. There is an associated record keeping requirement to demonstrate when this is applicable, or 
  3. where it can be shown that the worker is not subject to (or to a right of) supervision, direction or control by anyone, as to the manner in which they provide the services. There is an associated record keeping requirement to demonstrate when this is applicable, or
  4. if the worker provides their services wholly in their own home, or on other premises which are not controlled or managed by the client, unless the worker is required to do so at those premises because of the nature of the services and work being provided to the client, or 
  5. if the worker provides their services as an actor, singer, musician or other entertainer or as a fashion, photographic or artist’s model.

The last three points are referred to as ‘excluded services’ in the new legislation.

Penalties have been introduced for the keeping and preserving of records and returns.

Prior to 6 April 2014 the conditions for the agency legislation to apply included the condition for an agency contract to exist between the worker and the agency but this is not included in the new conditions.

Self employed individuals may now find themselves classified as an employee of the agency under the new legislation. If you are ceasing self employment and require assistance with the cessation then please contact us. If you require further advice please also contact us.

Filed under: Business, Company, Employers, Individuals, Self Assessment

Withdrawal of renewals basis for residential let property

Posted by: edwinsmith on June 10th, 2014

The renewals basis which allowed for tax relief on white goods, furniture and soft furnishings for residential let property has been withdrawn from 6 April 2013 for income tax and 1 April 2013 for corporation tax.

This relief was one of the extra statutory concessions that have been available for some time but HMRC are now withdrawing these concessions.

The withdrawal of the renewals basis concession is causing some concern to tax advisers and tax payers but we have detailed below what we believe will be the affect of the withdrawal of this concession.

This will not affect furnished residential let property where the wear and tear allowance (10% statutory allowance) is available as detailed in our online article tax-relief-on-wear-and-tear-of-furniture-let-property for fully furnished lettings.

However the withdrawal of the renewal basis will affect unfurnished residential lettings. Capital allowances are not allowable against income from unfurnished residential lettings. Therefore the costs of replacing any free standing equipment (such as a fridge freezer) in an unfurnished residential property will not be deductible as an expense.

Where white goods are fitted such as integrated hobs and ovens then these will be recognised as part of the entirety of the property and so would be deductible as a repair when replaced.

Small items such crockery, rugs i.e. low cost furnishings would be tax deductible from income from unfurnished residential lettings.

For full details on HMRC updated guidance on repairs concerning furnished, part furnished and unfurnished lettings see HMRC - Property businesses deductions - repairs and renewals.

Please contact us for further advice tax implications of income from let properties.

Filed under: Company, Individuals, Self Assessment, Tax

Revised advisory fuel rates 1 June 2014

Posted by: edwinsmith on May 29th, 2014

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 14p ↔ 9p ↔
1401cc to 2000cc 16p ↔ 11p ↔
Over 2000cc 24p ↔ 16p ↓

 

Engine size Diesel
1600cc or less 12p ↔
1601cc to 2000cc 14p ↔
Over 2000cc 17p ↔

 

The changes this quarter are highlighted in red above.

The new rates will be effective from 1 June 2014. 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 2014 and any changes made will be effective from 1 September 2014. 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 claims on business mileage claims in personal cars made by employees.

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: Business, Company, Employers, PAYE, Tax, VAT

Dates and deadlines: April 2014

Posted by: edwinsmith on April 1st, 2014

Dates and deadlines: April 2014

1 April: Corporation tax payment for a company not within the instalment regulations: year ending 30 June 2013.

Reduction in main rate of corporation tax to 21%.

5 April: End of month 12 for PAYE (RTI). All FPS (Full Payment Submissions) due if taking advantage of concession. This concession ends on this date for employers with less than 50 Employees.

2013/14 tax year end.

6 April: Start of new tax year 2014/15.

Start of new PAYE (RTI) reporting concession for existing employers with less than 10 employees.

7 April: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 28 February 2014.

10 April: Direct debit VAT payment will be taken: quarter ended 28 February 2014.

14 April: Submission of forms CT61 together with payment of tax due: quarter ended 31 March 2014

19 April: CIS monthly return deadline: month ended 5 April 2014.

19 April: Cheque payments for PAYE/NI, student loan, CIS  to be cleared into HMRC bank: month ended 5 April 2014.

Final EPS submission including Employer end of tax year 2013/14 declarations should be submitted to avoid late filing penalty.

22 April: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 April 2014.

30 April : Company tax return CT600 due to HMRC: years ending 30 April 2013.

30 April: Company accounts (Private Limited Co) due to be filed: years ending 31 July 2013.

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

1 May : Corporation tax payment for company not within the instalment regulations: years ending 31 July 2013.

 

Filed under: Business, Company, Dates and deadlines, Employers, National insurance, PAYE, Self Assessment, Tax, VAT

PAYE RTI end of tax year 2013/14 and changes for 2014/15

Posted by: edwinsmith on March 10th, 2014

End of tax year 2013/14

One of the changes that arose from the introduction of PAYE Real Time Information (RTI) for 2013/14 was the ending of the requirement for employers to submit forms P35 and P14 following the end of the tax year. The payroll details are now submitted in real time under RTI.

However there are questions similar to those included on the P35 declaration that need to be answered and submitted with the final submission - HMRC - Final  submission what to report

For many employers the final submission will be the final Full Payment Submission (FPS) informing HMRC of the last employee payment in the tax year ending 5 April 2014.

The software used by some employers may be prompted to submit the answers to questions on the declaration for ‘Final Submission for the tax year’ using the Employer Payment Summary (EPS). Employers who have not made any employee payments in Month 12 (6 March 2014 to 5 April 2014) will need to use an EPS anyway to make the final submission for the tax year.

The final submission should be made on or before the date of the employer’s last employee payment or by 19 April 2014 if sending an EPS. Penalties may be charged for late submission.

Forms P60 should be provided to employees who are still working for their employer at 5 April 2014. The employer has until 31 May 2014 to provide this form.

If employers have any expense payments or benefits to declare for 2013/14 then Forms P11d, P9d and P11d(b) should be submitted to HMRC by 6 July 2014 to avoid possible penalties.

2014/15 (from 6 April 2014)

There are some changes under the PAYE/NIC and RTI regulations that will apply from 6 April 2014 as follows:

Employment Allowance - The Employment Allowance will be introduced on the 6 April 2014 and will give eligible employers a reduction of up to £2,000 in their employer Class 1 NICs liability for 2014/15 ( Edwin Smith article -  Employers Allowance ).

Change of bandings for Reporting ‘hours worked’ for employees -

From 6 April 2014 there will be an increase to the number of bandings from 4 to 5 relating to normal weekly hours worked by employees. The revised bandings will be:

A) up to 15.99 hours

B) 16 to 23.99 hours

C) 24 to 29.99 hours

D) 30 hours or more

E) Other.

It is very important that an accurate figure is provided as the number of hours is used to support claims to benefits and Tax Credits. The employer needs to make sure that they do not simply carry forward previous selections made into 2014/15 ‘hours worked' bandings which may no longer be appropriate due to the changes.

Micro employers’ concession – the concession that applied in 2013/14 for employers with less than 50 employees will end on 5 April 2014 but will be replaced by a new concession applying to existing micro employers with less than ten employees. The concession will continue the relaxation of the RTI reporting rules for these employers until April 2016 so that FPS reports can be made on or before the last payday in the tax month.

From 6 April 2014 all other employers including new employers (with less than ten employees) will be expected to report each time they pay their employees.

Late reporting - From April 2014, it will be possible to tell HMRC the reason why a particular payment is being reported after the payment date by making an entry in the new ‘Late Reporting Reason’ data field on the FPS.

There is one change for 2014/15 that takes effect this month and it is for:

Employers running payrolls in advance of paydays in new tax year – HMRC have made changes to their software to enable employers who run their payroll in advance of actual payday to make a submission (either FPS or EPS) from 6 March in respect of payments to employees on or after the commencement of the new tax year on 6 April 2014.

If you require further information or assistance regarding PAYE (RTI) or payroll then please contact us.

Filed under: Business, Charities, Company, Employers, National insurance, PAYE, Tax

Dates and deadlines: March 2014

Posted by: edwinsmith on March 1st, 2014

Upcoming deadlines for businesses and individuals

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

2 March: Automatic 5% penalty will be charged on any outstanding tax/class 4 NIC at this date in respect of  2012/13.

5 March: End of month 11 for PAYE (RTI). All FPS (Full Payment Submissions) due if taking advantage of concession.

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 2014.

19 March: Cheque payments for PAYE/NI, student loan, CIS  to be cleared into HMRC bank: month ended 5 March 2014.

22 March: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 March 2014.

31 March : Company tax return CT600 due to HMRC: years ending 31 March 2013.

31 March: Company accounts (Private Limited Co) due to be filed: years ending 30 June 2013.

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

31 March: End of CT 61 form reporting period - such as tax deducted on interest paid to individuals by companies.

1 April : Corporation tax payment for company not within the instalment regulations: years ending 3o June 2013.

 

Filed under: Business, Company, Dates and deadlines, Employers, Individuals, PAYE, Self Assessment

Capital allowances on expenditure on let property

Posted by: edwinsmith on February 25th, 2014

Carrying on from our previous article on repairs to let property, this article sets out guidelines for capital allowances on expenditure on let property. There are different tax rules depending on the type of property being let as below.

Residential properties - capital allowances on plant and machinery are not generally available on assets in residential accommodation. See our previous article on wear and tear allowance Tax relief on wear and tear of furniture – let property that may be claimed for furniture and equipment provided with a furnished residential letting.

Furnished holiday properties – capital allowances may be claimed on plant and machinery such as furniture, furnishings etc in the let property as well on equipment used outside the property (like vans and tools). This is because the letting of furnished holiday properties is treated as a trading activity provided certain criteria are met.

Commercial properties – capital allowances may be claimed on some items of plant and machinery if a commercial property is being let – like a shop, garage or lockup.

For the relevant type of property letting capital allowances are available for plant or machinery used or provided for use for the purpose of a rental business. Examples include:

  1. Fixtures in a let property
  2. Tools used for maintenance
  3. Office equipment used in running the rental business
  4. Vehicles

Capital allowances are calculated for a rental business as they are for a trade. Hence they are subject to the ‘wholly and exclusively’ rule and allowances on cars costing more than £12,000 are restricted.

Plant and machinery is not defined in the capital allowances legislation apart from ‘integral features’. There is legislation which details that most buildings, parts of buildings and structures are not plant and machinery and parts such as walls, doors, windows, mains services, waste disposal systems are specifically included as not being plant and machinery. Where items are not specifically mentioned in the legislation or guidance, HMRC will apply the following tests to the item:

  1. Is the item stock in trade?
  2. Is the item the business premises or part of the business premises (the premises test)?
  3. Is the item used for carrying on the business (the business use test)?

If the answers to 1 and 2 are no, and yes to 3, the item is plant.

The legislation also includes lists of assets that can be considered as plant and machinery but they would still need to pass the above tests. These included wash basins, sinks, sanitary ware, cookers, washing machines, sound insulation provided to meet the requirements of the qualifying activity, fire and burglar alarm systems, moveable partition walls etc.

Assets qualifying under the above rules would be eligible for the annual investment allowance and would go into the ‘main pool’ for capital allowances purposes attracting an annual writing down allowance of 18%.

Integral features were introduced in to the legislation to give allowances on the provision or replacement of main features such as electrical, cold and hot water systems. These assets are also eligible for the annual investment allowance but are included in a ‘special rate pool’ where the annual writing down allowance rate is lower than the main pool rate at 8%. The definition includes:-

  1. an electrical system (including a lighting system),
  2. a cold water system,
  3. a space or water heating system, a powered system of ventilation, air cooling or air purification, and any floor or ceiling comprised in such a system,
  4. a lift, an escalator or a moving walkway,
  5. external solar shading

If the expenditure on an integral feature represents the whole, or more than 50% of the cost of replacing  the feature, either all at once or within any period of 12 months, such expenditure is treated as capital  expenditure on the replacement of an integral feature for capital allowance purposes. The person incurring the expenditure is deemed to own the plant and machinery. If the expenditure is deemed to be capital then there can be no relief as an expense against the trading income from the qualifying activity.

This area of capital allowances on expenditure on features in a property is not well defined in the legislation. Please contact us if you require further advice concerning tax implications of let properties.

Filed under: Business, Company, Individuals, Self Assessment, Tax

Dates and deadlines: February 2014

Posted by: edwinsmith on January 31st, 2014

Upcoming deadlines for businesses and individuals

1 February: Corporation tax payment for a company not within the instalment regulations: year ending 30 April 2013.

1 February: Late filing penalty issued for Self Assessment return not filed for 2012/13.

1 February:  Submission of form P46 (car) for changes in quarter to 5 January 2014.

5 February: End of month 10 for PAYE (RTI). All FPS (Full Payment Submissions) due if taking advantage of concession.

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

12 February: Direct debit VAT payment will be taken: quarter ended 31 December 2013.

19 February: CIS monthly return deadline: month ended 5 February 2014.

19 February: Cheque payments for PAYE/NI, student loan, CIS  to be cleared into HMRC bank: month ended 5 February 2014.

22 February: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 February 2014.

28 February: First surcharge of 5% applies for self assessment tax unpaid for 2012/13 after this date

28 February : Company tax return CT600 due to HMRC: years ending 28 February 2013.

28 February: Company accounts (Private Limited Co) due to be filed: years ending 31 May 2013.

28 February: Company accounts (Public Companies) due to be filed: years ending 31 August 2013.

1 March : Corporation tax payment for company not within the instalment regulations: years ending 31 May 2013.

 

Filed under: Business, Company, Dates and deadlines, Employers, Individuals, PAYE, Self Assessment
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