Accountants Reading News

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

End of tax year review for 5 April 2014

Posted by: edwinsmith on February 28th, 2014

With the current tax year drawing to a close then now is a good time to make sure where possible tax relief’s and allowances available in this tax year have been used.

Detailed below is just a brief outline of the common areas that should be considered.

Maximising pension tax relief bearing in mind that annual allowance (from £50k to £40k) and lifetime allowance (£1.5m to £1.25m) will reduce on6 April 2014.
Additional pension payment to reduce taxable income in the higher rate tax bands (40% and 45%). This is especially important if income is within the marginal rate of 60% if total taxable income is between £100,000 and £118,880 as the personal allowances are reduced by £1 for every £2 of adjusted net income over £100,000.
Although not taxable you should consider with your financial adviser whether to maximise the annual tax free ISA allowance.
Consider disposing of chargeable assets to ensure annual exemption (£10,900 for individuals) fully utilised.
If you are self employed and have a 31 March or 5 April year end then consider acquiring business assets before the tax year end so that Annual Investment Allowance (AIA) can be used. Although AIA for this tax year is £250,000 so unlikely to be fully utilised it may help reduce overall income within a higher rate tax band some of this allowance is utilised as detailed above in pensions.
NIC deferment claim if multiple employments or combined self employment and employment and maximum NIC likely to be exceeded.
Remember not to exceed £5,000 overdrawn loan account in before end of tax year as benefit in kind issues will arise.
Make full use of lesser Inheritance Tax (IHT) relief’s which if utilised each year will help reduce an individual’s inheritance tax position such as:

Annual gift exemption £3,000 which if not used in previous year can be carried forward to this year to make £6,000.
Small gifts not exceeding £250 made to any one person in each tax year exempt from IHT.
Gifts out of income –IHT exemption for annual expenditure out of income if certain criteria met.

This is not an exhaustive list and making use of tax relief’s and allowances is dependent on individual circumstances but if you consider any of the above may apply to you then please contact us for further advise to make sure that the rules applying to the above are followed.

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

Revised advisory fuel rates 1 March 2014

Posted by: edwinsmith on February 28th, 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 ↔	17p ↑

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 March 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 May 2014 and any changes made will be effective from 1 June 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:

Reimbursement to employees of fuel used for business travel in a company car
Repayment by employees of fuel used for personal travel in a company car
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, Tax, VAT

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:

Fixtures in a let property
Tools used for maintenance
Office equipment used in running the rental business
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:

Is the item stock in trade?
Is the item the business premises or part of the business premises (the premises test)?
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:-

an electrical system (including a lighting system),
a cold water system,
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,
a lift, an escalator or a moving walkway,
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

HMRC helpline – Support for individual/businesses affected by flooding

Posted by: edwinsmith on February 19th, 2014

HM Revenue & Customs (HMRC) have recently launched a new telephone helpline for anyone affected by the recent floods.

The helpline is 0800 904 7900

The helpline will enable individuals/businesses to obtain practical assistance on a wide range of tax problems they may be facing as a result of the floods.

HMRC may be able to offer the following support:

agree instalments where taxpayers are unable to pay as a result of floods;
agree a practical approach when individuals and businesses have lost vital records to the floods
Suspend debt collection proceedings for those affected by the floods and;
Cancel penalties when the tax payer has missed statutory deadlines.

Please contact us if you require any assistance in connection with HMRC support.

Filed under: Employers, Individuals, Self Assessment, Tax

Pension payments before 5 April 2014? Annual allowance reduces on 6 April 2014

Posted by: edwinsmith on February 14th, 2014

Refreshing below our previous articles on pension payments before the end of the tax year the additional point to bear in mind now is that the annual allowance reduces in 2014/15 from £50,000 (£40,000 net of basic rate tax) to £40,000 (£32,000 net of basic rate tax) together with the lifetime allowance which reduces from £1.5m to £1.25m.

From 6 April 2011 the rules changed on tax relief on pension savings. The annual allowance, which is the maximum amount of pension saving that benefits from tax relief each year per individual, became £50,000 (£40,000 net of basic rate tax). If you have been saving in a registered pension scheme since 6 April 2008 and your pension savings were less than £50,000 per annum in any of the tax years since then, then you will have an unused annual allowance to carry forward from that year/years. Unused allowances can only be carried forward for three years so the unused allowance from 2010/11 will not be carried forward after 5 April 2014. There is a strict order in which you use up your annual allowance. You use the current tax year annual allowance first, then use your unused annual allowance from earlier years, using the earliest tax year first. Hence, to use any unused allowance of 2010/11 you must have pension savings in excess of £50,000 for the current year.

If however, you have not been a member of a registered pension scheme in earlier years then you will not have unused annual allowance to carry forward.

Any member can make contributions up to the ‘basic amount’ of £3,600 (£2,880 net of basic rate tax). Contributions above this amount on which a member can claim relief in any tax year is subject to the member not exceeding the lifetime allowance, currently £1.5 million, and is the lower of:

the amount of the individual’s relevant UK earnings (broadly salary, self employment and other earned income) that are chargeable to income tax for the tax year, and
the annual allowance, currently £50,000 (£40,000 net of basic rate tax).

If you are self-employed, contributed into a pension scheme in 2012/13 and have made no contributions so far in the current tax year, then, your payments on account for 2013/14 are based on your 2012/13 position. If your 2013/14 total income is similar to 2012/13 and you do not make a pension contribution by 5 April 2014 then you may have a large balancing payment of tax due by 31 January 2015 together with a higher payment on account for 2014/15.

Your pension savings in a tax year is the total of the increase in value for each scheme of which you are a member.

For personal pensions, the increase in value is the amount you have contributed in the period, grossed up to cover the basic rate tax added by HM Revenue & Customs (HMRC), for example if you pay £500 a month into a personal pension, this is grossed up to £625 a month and your pension savings for that scheme will be £7,500.

For workplace pension schemes, the value of contributions made by your employer is also included in your pension savings. Where the scheme is a money purchase/defined contribution scheme, the increase in value for the period is the gross amount you have contributed out of your pay together with amounts contributed by your employer. For defined benefits schemes, the amount of your pension savings is the increase in the value of your promised benefits over the pension input period ending in the tax year. The valuation is based on a notional ‘capital ‘ value broadly based on 16 times the amount of annual pension achieved to date and any additional separate lump sum . Your pension scheme administrator will be able to provide you with a pension savings statement if you think your savings will be over the £50,000 allowance.

Please note that your payment should be received by your pension saving scheme by 5 April 2014 to obtain tax relief in 2013/14.

There are a number of wrinkles in the general situation set out above that may apply in particular unusual situations, so you should always check with us before making decisions

Filed under: 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

Tax return deadline extension in limited circumstances

Posted by: edwinsmith on January 31st, 2014

There has been no official deadline extension for 2012/13 tax returns but HMRC have recognised a select number of tax payers who have either registered very recently for the online services or lost their user ID and password and realise that they have left it too late to enable them to obtain the relevant passwords etc and file on time. HMRC has allowed a little extra time for taxpayers who fall into these categories.

This will only apply to taxpayers who did the following between midnight on 21 January 2014 and midnight on 31 January 2014:

Either:

Enrolled for the self assessment service, or
Requested a replacement user ID or password.

This extension only applies to taxpayers who were already registered for self assessment and have a unique tax reference (UTR), and so this will not assist those who are late to notify HMRC of a liability to charge.

The return would also need to be submitted via the HMRC software and so this cannot apply to partnerships and trustees as the HMRC free software cannot be used for these returns.

The few tax payers who can benefit can avoid the late filing penalty providing their return is submitted by 15 February 2014. However, a penalty notice is likely to still be issued leaving the taxpayer to appeal against it within 30 days of issue. You would need to show that you fall within the circumstances shown above.

Tax payments

Tax due must still be paid by 31 January 2014. If it is not, interest will accrue and the usual surcharges will also apply.

If you are struggling with your taxation affairs and need assistance, then please consider contacting us.

Filed under: Individuals, Self Assessment

Employers – Eye tests and the provision of glasses

Posted by: edwinsmith on January 24th, 2014

Where an employee is required to use display screen equipment (usually a computer with a Visual Display Unit -VDU) as part of his normal duties for an employer then there are tax reliefs available to the employer and employee concerning the employer payments for eye tests and the provision of glasses.

If an employee is required to use a VDU in the above circumstances then no taxable benefit will arise on the cost of

1. an eyesight test, and

2. glasses or contact lenses required solely for VDU use that the eye test shows is necessary where

the test is required under Health and Safety at work regulations and if shown to be necessary by the test.

A special prescription should be obtained for VDU use in order to take advantage of tax relief.

Where glasses etc are for general use, but include a special prescription for VDU use, a proportion of the cost relating to the special prescription will be exempt from a taxable benefit.

The provision or payment by an employer towards the cost of glasses etc for general use, including use with a VDU, but without a special prescription for VDU will give rise to a taxable benefit.

For Class 1 National Insurance Contributions (NIC) there are similar exemptions from liability if a special prescription for VDU use is obtained in above circumstances regardless of whether employer contracts with optician or employee arranges test etc and employer reimburses them.

However if the eye test identifies a general need for glasses (as well as special prescription for VDU use) and the employer reimburses employee for whole costs then liability for Class 1 NICs will arise on the amount exceeding VDU related prescription. This amount will effectively be treated as part of employee’s salary and PAYE/NIC calculated on this amount in normal way for salary etc.

If the employer contracts with the optician then amount paid by employer will be disregarded for Class 1 NICs but the amount exceeding VDU related prescription will need to be treated as benefit in kind to employee and entered on the relevant year end P11d forms (Employers return of benefits and expenses paid to employees). Therefore in this situation Class 1a NIC would be payable by the employer but employee would not suffer Class 1 NIC liability.

Please contact us if you would like further advice in this area.

Filed under: Benefits, Employers, Individuals, PAYE

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