Chartered Accountants and Business Advisors

Coding 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.

TAGS: PAYE

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.

TAGS: PAYE PAYROLL

New 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.

TAGS: TAX TAXATION PAYE

Coding notices: worth checking

15/3/2010 POSTED BY BJW

Employers do not usually know how an employee’s PAYE code is made up – it’s just a number. However, with HM Revenue & Customs’ acknowledging a systems glitch last month causing many codes to be incorrect, employers may wish to remind their employees of the need to check their codes, query any discrepancies and not assume that they will be right.

Three common errors that have been identified by HMRC are where:

a previous employment stopped some time ago but a coding notice is nevertheless sent for that employment (which presumably denies the taxpayer those allowances against earnings in a new job until the mistake is corrected);
two notices have been sent from the same employment (e.g, where the employee has two payroll records that HMRC cannot differentiate); and
code BR or D0 is issued for a continuing employment or pension.

A helpline number of 0845 3000 627 has been issued for employees affected.

TAGS: TAXATION PAYE

Employees PAYE coding notice - have they paid too much tax

5/3/2009 POSTED BY BEN

I am aware that there are a signifi cant number of employees who do not retain the services of accountants and have incorrect code numbers – the Revenue seem to have a policy of reducing code numbers (which increase their tax take) on the assumption that the average employee on PAYE will be unaware of any overpayment of tax. I have therefore advised my clients to have all their employees check and if they have anything other than a basic 603L code number and that they are not aware of the reason for any differences they should either call their tax offi ce and check it out or wait until, they receive their P60 and use one of the many on line tax calculators.

From the employer’s point of view – if staff are incorrectly paying too much tax then it means that they be more inclined to query their gross wages thus adding pressure to costs.

(Likewise any taxpayers on self assessment should check that any tax refunds are being paid – HMRC can be slow to give money back)

PS: It also good practice to advise employees as to other benefi ts available – ones to check out are:

Child tax Credits
Childcare Vouchers
Early learning classes
Summer schools and activity clubs
Medical check ups

TAGS: PAYE P60 TAX