New penalty regime for late payment of PAYE
1/4/2010 POSTED BY BJW
From Month 1 of the new tax year (2010//11) PAYE and National Insurance Contributions will have to be paid to HM Revenue & Customs \(HMRC) within the monthly due date of payment, otherwise a penalty surcharge will be applied on the amounts of tax that has not been paid on time.
The rates of penalty range from 0% if there is one omission in a tax year up to 4% if there is persistent default over eleven months. As such, this a new departure and follows the VAT penalty surcharge regime for late payment.
Where employers have traditionally taken as much credit as possible from the taxman, they face the prospect of paying any arrears for 2009/10 before the due date and then commencing payments for the new tax year. This will have an impact on cash flow.
HMRC recognises that at the current time this may produce hardships and employers that do not think they can pay by the due date should contact the Business Support Payment Service on 08453 021 435 to make payment arrangement with HMRC and thereby avoid incurring penalties.
If assistance is required in any of these maters, please call the office for advice to suit your individual circumstances.
There may be benefits for employers and employees to have salary sacrifice schemes in place whereby childcare vouchers are offered in lieu of salary. There was discussion that the voucher scheme was to be scrapped but it has now been confirmed that it will be continued for at least a further two years. Employers looking to remunerate their staff in a tax efficient manner could well consider the benefit of offering childcare vouchers.
ISA
1/4/2010 POSTED BY BJW
Clients should be considering reviewing their savings plans and in particular whether they should contribute to ISAs. It was reported in the press recently that a couple who had invested the maximum annual allowance in ISAs (formerly PEPs) since the scheme’s inception have now achieved an investment fund in excess of £1m. Given the continued low rate offered on savings, we would recommend that clients consider using the monthly cash savings they are making on reduced repayments on loans and mortgages into an ISA savings account. There is discussion as to whether these savings should be used to accelerate repayments of the mortgage or use them elsewhere. The advice very much depends upon personal circumstances and, if you feel this is something would like to investigate, please call the office to make a mutually convenient appointment to review the situation.
MorePension forecasts
1/4/2010 POSTED BY BJW
Where taxpayers may have a chequered history in respect of making National Insurance Contributions, having periods of employment and self employment or are now taking dividends as apposed to NICable salary, they should ensure that they are making sufficient contributions to keep them within the basic state scheme. Taxpayers can make inquiries online for a pension forecast, (
http://www.direct.gov.uk/en/Diol1/DoItOnline/DG_4017970) which should keep them up-to-date with what contributions they need to make to maintain their state entitlements and also allow them to review their positions generally to ensure they are making adequate provision for retirement needs.
Email scams
1/4/2010 POSTED BY BJW
A very large amount of email users will have received inquiries from dubious sources asking for personal details as they purport the represent themselves as HMRC trying to confirm that there are tax repayments due. These emails are scams. If HMRC owe you any monies, you will either be notified by your accountant or receive a statement of account from HMRC directly. For those taxpayers who have online access to their HMRC account, they can check the position online. Under no circumstances should anybody give any personal details, including date of birth, bank account details or passwords to any third party.
MoreNew higher rates of tax
1/4/2010 POSTED BY BJW
In the last few weeks before P35 and Tax Returns for 2010 need to be filed, taxpayers should review their situations generally to see whether it is to their advantage to accelerate income into the tax year 2009/10. After this year, higher rate income will be charged at 50% and marginal rates of tax will be even higher. Although there are cash flow consequences from accelerating income, clients need to review their individual situations to see whether these outweigh the benefits of an absolute reduction of tax by capping liabilities at 40%. If there are any concerns about this, please call the office to make a mutually convenient appointment so the matter can be reviewed.
More VAT and supply in the EU
1/4/2010 POSTED BY BJW
In January 2010, the rules relating to the charging of VAT for services sold into the EU changed. The basic rule is now that VAT is determined by where the recipient resides rather than the provider. However, there are a number of exceptions which need to be reviewed in detail. For services, VAT does not generally have to be charged if there is a perceived export of the services, but only in the case where the recipient of those services is a business user. There is no actual requirement to quote the recipient’s VAT number on the invoice, as is the situation with goods, but this does assist. Otherwise, where a VAT number is not quoted, the provider needs to have sufficient detail to justify that he is making supplies to a business rather than to an individual privately.
MoreCoding notices
5/4/2010 POSTED BY BJW
Many clients will have read in the press the complete mess up HMRC have made of issuing code numbers for 2010/11. Apart from issuing numbers which are patently in error, HMRC also seems to be reducing code numbers with the express purpose of trying to accelerate tax payments at a time where tax revenues are down. To this extent, they are overestimating income from other sources, such as interest receivable, pensions, etc. In this situation, there is no problem in objecting to a code number and asking for HMRC to adjust it inline with practical circumstances so that tax is not overpaid during the course of the year and any unpaid tax is settled according to the normal due date.
MoreBudget Review
6/4/2010 POSTED BY BEN
UPDATE – BUDGET REVIEW
Following Alistair Darling’s recent Budget, the following items stand out as being of some interest.
Most commentators have suggested that this was mainly a politically motivated Budget rather a financially motivated Budget and that with the forthcoming General Election whichever Party forms the next Government a second Budget is likely and the finer details of the tax rates and legislation affecting the fiscal year 2010/11 might be further altered.
Update for Businesses
The headline rates for Corporation Tax for small and large companies will stay consist with current rates, i.e. 21% and 28%, respectively.
There are currently tax allowances available for businesses investing in plant and machinery of up to £50,000 per annum. This limit has been increased to £100,000 per annum.
Business Rates
The Government has announced that it will fund a business rates holiday for those businesses occupying properties with a rateable value up to £6,000. This holiday will be for one year from October 2010. Additionally, small businesses benefiting from business rates relief on rateable values up to £12,000 will also receive further reductions.
Personal Tax
All headline rates and allowances have been held the same; however, the implication of this is that as inflation rates are scheduled to be over 3% per annum, this will effectively mean tax increases to all individuals.
ISAs
From 6 April 2010, the ISA annual subscription limit is being increased for all savers to £10,200 (previously the limit was £7,200).
From 6 April 2011, and over the course of the next Parliament, the ISA limit will increase annually inline with the Retail Price Index.
Capital Gains Tax
Capital Gains Tax rates and exemptions have been held at the same level. The most notable adjustment to the Capital Gains Tax regime was the increase in Entrepreneur’s Relief from a £1m lifetime limit to a £2m lifetime limit whereby the effected rate of Capital Gains Tax will be reduced from 18% to 10%.
Inheritance Tax
The Inheritance Tax nil rate band has been held at £325,000.
As well as the normal increases in duties on cigarettes, spirits, beers, ciders and fuel, there was a key announcement in relation to Stamp Duty Land Tax for first time buyers whereby the threshold for purchase before which Stamp Duty will be payable has been increased to £250,000 and the top rate of Stamp Duty has been increased to 5% on residential properties over £1m.
VAT
No change announced in the rate of VAT.
More
