Employer CD-Rom, Tax Credits and the new Fuel Rates

Employer CD ROM

All users need to download and install the November update even though you might have previously updated it.

Tax credits

Claimants who are self employed should give the Tax Credit Office their profit figure for 2009/10 by 31 January 2011 otherwise they may receive too much benefit and have to find the repayments.

New Fuel Rates

From 1 December 2010 the following fuel rates apply;

Engine Size	Petrol	Diesel	LPG
1,400 cc or   less	13p	12p	9p
1,400 cc - 2,000 cc	15p	12p	10p
Over 2,000 cc	21p	15p	15p

VAT can be reclaimed by employers from within the above figures but they need to keep the fuel receipts. Petrol hybrid cars are classed as petrol cars.

Claiming Car Costs - A Refresher

The rules changed in 2009 and some key points are:

Cars purchased from April 2009: 

Co2 emissions	Amount of claim
Up to and including 110g/km	100% first year allowance
Up to and including 160g/km	20% per year
Over 160g/km	10% per year

Cars leased from April 2009:              

                 

Co2 emissions	Amount of claim
Up to and including 160g/km	Profit & Loss charge allowed in full as a deduction in computing taxable profits
Over 160g/km	15% disallowance of rental expenses

Pre-April 2009 cars:

 

Cost	Amount of claim
Under £12,000	Treatment is unchanged
£12,000 and over	20% per year

Basically it now takes a business much longer to receive the tax relief.

Overall, it’s still too difficult to say whether having a company car is better or taking a higher salary is.

Employers Update

The Revenue is moving towards supplying all guidance to employers online, that is, not in hard copy.

From 2011- a few months from now - they will no longer issue paper Employer packs and CD-ROM or those Post Budget packs. (There are a few exceptions but they are so very rare as not to be worth mentioning.) A new downloadable product called ‘Basic PAYE Tools’ ( naff name) is replacing the Employer CD-ROM and in September you should have downloaded an update to the latest CD-ROM which had the effect, behind the scenes, of making your PC ready to ‘receive’ the first download next February /March when you would normally expect to receive your Year End pack from the Revenue.

Given all that, you will need to register to receive ‘email alerts’ whenever a new Employer Bulletin or other useful information becomes available on their website. 

The link is at: www.hmrc.gov.uk/paye/forms-publications/register.htm

VAT Tips - VAT and vehicles and the latest on correcting errors

The VAT treatment of cars or vans are quite different so beware. If it’s a car then:

1. Input tax cannot be recovered on the purchase unless the business operates as a car-hire firm or a driving school or if you are a taxi driver. Please also remember that where the car is so much as available for private use then this will prevent you from reclaiming the input tax.
   
   
2. If it’s been bought on a lease hire agreement where VAT is charged on the monthly instalments paid to the leasing company then 50% of the tax can be reclaimed.
    
3. You can reclaim the tax on all fuel as long as you declare VAT on the private element of the motoring and this is done through the Fuel Scale charge adjustment on each VAT return. Alternatively just do not reclaim any of the VAT on the fuel bills if that is more beneficial for you.
    
4. You can claim tax on all maintenance costs as the vehicle has to be roadworthy and safe in any event.
    
5. Be wary about treating cars as vans and in particular, a double pick-up needs to have a physical payload of 1 tonne or more to be classed as a van.

VAT  - correcting Errors

Under the recent new rules an error can only be corrected if it originally happened within the last four years.

New National Minimum Wage Rates - reminder

The new rates effective from 1 October 2010 are:

	£ per hour
Aged 21 and over	5.93
Aged 18 - 20	4.92
Aged 16 - 17	3.64
Apprentices under 19	2.50
Apprentices over 19 and in the first year of apprenticeship	2.50

Capital Gains Tax and the latest Budget

The latest Budget has increased the value of the gains on the sale of your business which will only be taxed at 10%. Until 5 April 2010 the level was £1 million, from 6 April 2010 until 22 June 2010 it rose to £2 million and from 23 June 2010 it increased significantly to £5 million. Any excess gains – during your lifetime – over the limit will be taxed at 28%.

The sale of non-business assets will result in a 28% liability unless you are basic rate taxpayer when some of the gain may be liable at only 18%.  In cases such as these it would be helpful to transfer a share of the asset that is not jointly owned already to a spouse or civil partner as they will have their annual exemption available and some of the excess may only be assessed at 18%

P46(Car)

Since 6 April 2009 the Revenue have not wanted employers to submit form P46 (Car) when a car provided to an employee is replaced with another one. However, you must submit the form if;

1. You provide an employee/director with their very first car which is available for private use;
    
2. You provide them with a second or further car available for private use;
    
3. An employee has a company car but now starts to earn at the rate of £8,500 per year, or they become a director (where their rate of pay does not matter.)

Know your limits!

Over the next couple of years, businesses will have to start paying their taxes electronically but some banks have financial limits as to just how much you can process at any one time.  So, a little planning is needed to make sure that you are not caught out for late payment interest and penalties.

You may need to apply to your bank to increase the daily limits you are being allowed to pay to any one person / supplier.

AR Accountants play 'Dragons Den' with Year 1 pupils at Warmsworth Primary School!

Back in late June 2010 Doncaster Chamber threw down the gauntlet and asked for local businesses to help Warmsworth Primary School  pupils with their Summer Term ‘Enterprise’ project.

The Year 1 project was based on designing, making and selling gardening gifts at the Warmsworth Gala on Saturday 10th July.  Our job was to listen to the children’s ideas and decide whether or not we thought they were worthy of our investment and if so, to lend them £1.00 each which would be paid back after the Gala had taken place.

Alan and Amanda arrived at the school to be faced by 60 children aged 5 and 6, all very eager to explain, with help from their teachers what they had planned to do to make money at the Gala.  They had decided to sell plants from seeds they would grow in the school garden and then  plant into ‘unusual containers’  which they had decorated, such as wellington boots, buckets, mugs and bowls to name a few.  Any profit they made would be used to buy items of their choice for the school.

How could we refuse!  So we invested the requested £60 which they very carefully counted out and promised to pay us back after the Gala.

Later in the month we received an email from the school outlining the children’s success (which was spectacular) and we were invited back to the school to have our investment repaid to us – no interest was charged!  

Their enthusiasm, confidence, knowledge of profit and understanding of money was outstanding considering their age and they were all a credit to the school.  It was a privilege to help the young entrepreneurs of the future and we have pledged our further support in the years to come.

June Budget in Brief - A refresher

1. The personal allowance for 2011/12 will increase by £1,000 to £7,475 for those aged under 65 and if you are a basic rate tax payer it will save you £200 per year.  Higher rate tax payers will not benefit from this announcement at all and their allowance will be adjusted accordingly.
   
   
2. For businesses, the Employer National Insurance threshold will rise by £21 per week above indexation from 6 April 2011.
   
   
3. Anyone setting up a new business outside London, the South-East and the Eastern region of England will noy pay Employer National Insurance from up to £5,000 for each of the first ten employees they recruit.  This measure is to start almost immediately.
   
   
4. Capital Gains arising between 6 April 2010 and 22 June 2010 will be taxed at the rate of 18%.  Gains after that time will be taxed at either 18% or 28% depending on whether or not the taxpayer falls into higher rate tax.
    
5. Small Companies will enjoy a Corporation Tax rate on their profits of 20% from 1 April 2011.
    
6. VAT will rise to 20% from 4 January 2011.

Receiving Statements Online

Businesses are encouraging their customers more and more to opt for receiving statements and, just as important, invoices online rather than in the post. 

The problem with this is that you need to realise that you might not have access to uploading them to form part of your accounting records for very long. Some businesses are only allowing you access for just six months and generally it is believed that many organisations make them available for about fourteen months.

Apart from that, customers who close their account may lose their online access straight away.

If you are running a business you might not start gathering up your papers for several months after the ‘year end’ by which time some invoices and statements may no longer be accessible online.

Where information will be needed for the accounts and tax return please upload it and store it REGULARLY.

New National Minimum Wage Rates

The National Minimum Wage rates will rise in October 2010 as follows:

from £5.80 to £5.93 per hour for workers aged 21 and over

from £4.83 to £ 4.92 per hour for workers aged 18 to 20

from £3.57 to £3.64 per hour for workers aged 16 to 17.

The government has extended the adult minimum wage rate to 21 year olds from this October. Previously the qualifying age was 22.

There will be a brand new Apprentice Minimum Wage of £2.50 per hour which applies to:

• Apprentices under 19
• Apprentices aged 19 and over, but in their first year as an apprentice.

Change to the Benefit in Kind - Fuel

If your employer pays for the fuel used to run either a company car or your personal car then your tax liability increases as the amount of extra income you are treated as having earned for the year is increased from 6 April 2010 to £18,000 from £16,900.

It is believed that employees would have to travel more than 17,000 private miles each year before the benefit outweighs the cost.

Penalties - Late PAYE Payments

We posted a blog in April about the consequences of making payments of PAYE after the 19^th  or 22^nd of the month but we feel that this is so important that we are providing further details to help you in this area.

Firstly, the payment must have actually cleared the Revenue’s bank account by the 19^th or 22^nd of the month.

When there have been two or more late payments, the employer is risk assessed and selected for a review. Where your PAYE payment patterns or other information show that the liabilities have not been paid promptly you will be contacted by an Officer. They will check to confirm that the defaults are in fact correct and it will not be until May 2011 before any penalty notice is issued!

The Revenue have more details and FAQ’s at:

http://www.hmrc.gov.uk/paye/problems-inspections/late-payments.htm#2

 

 

Introduction of Online VAT Returns

The HM Revenue & Customs online filing service only keeps your VAT Returns on it's website for 15 months.  This is really important as you need to always print off a copy for your Accountant and yourselves.

Claims and Elections

For individual people any claims relating to the 2005/06 tax year onwards will have to be made by the new deadline which is now reduced from 6 years to 4 years after the end of the tax year.  So, if you are trying to go back in time and make claims related to the 2005/06 tax year, you only up to 5 April 2010 to do that.

Late PAYE Payments

A new penalty system now applies for late ‘in year’ payments of PAYE. The penalty is a percentage of the total amount which is overdue in the tax year, ignoring the very first late payment. The scale is:

Frequency	%
Only late once	Nil
2 – 4 times	1
5 – 7 times	2
8 – 10 times	3
11 or more times	4

           

If you are late so that the 1% rate applies, but then you are late several times again within the same tax year, then the penalty on the earlier arrears that are still not paid increases from the original 1% to 2,3 or 4%!

Electric Cars

Company cars are generally allocated to the employees who pay tax on the benefit from using them privately. Even so, the latest rule changes mean that employees running cars powered solely by electricity are taxed on that benefit at 0% for the next five years.

Clearly companies can no longer ignore the introduction of more attractive electric cars.

ISAs Explained

A shelter from rising taxes – the new ISA allowances

With effect from 6^th April 2010, all savers and investors have an entitlement to shelter £10,200 of their savings and investments each year from tax by using their Individual Savings Account (ISA) allowance.

An ISA is a simple and cost effective way of ensuring you minimise the income tax and capital gains tax you pay on your savings and investments and given that ISAs do not lock your money away, you may wonder why everyone doesn’t use them.

ISAs - Complicated? Expensive? In-accessible? – not at all!

When asked about ISAs, many people are under the illusion they are expensive, complicated and tie your money up for long periods of time. 

Whilst there may be some ISAs which are all three, seeking good quality financial advice should ensure that not only do you benefit from the tax breaks an ISA offers but that you continue to have access to your money, the money is working hard for you and you have a clear understanding of how your money is being put to work. Furthermore, they can also be used to provide a regular income.

T

ime for a spring clean?

Many people are either unhappy with their savings and investment performance or had an uncomfortable shock when there were significant drops in investments as the ‘banking crisis’ took hold in 2008.

Tax is also expected to continue to rise in the UK and therefore now is as good a time as any to ensure your savings and investments are on track, being well looked after and are tax efficient – particularly given that you now have larger ISA allowances to use.

Dobson and Hodge Financial Services

Given that investment advice is a specialised area, we have entered into a relationship with Dobson and Hodge who are a local firm of Independent Financial Advisers, based in Doncaster – they were established in 1920 offering advice to their clients and we are happy to recommend their services.

They will offer you an initial meeting, free of charge and without obligation, so that you can better understand the opportunities available to you in respect of savings and investments.

If you wish to speak with us first about their services, please contact Alan Roberts. Alternatively, if you would like to speak directly with Dobson and Hodge, please contact our business associate who is their Financial Services Director, Paul Stocks, on 01302 323465 or Email him at paul.stocks@dobsonandhodge.co.uk and he can begin to discuss your requirements with you.

Late PAYE Payments

The Revenue will be following a new penalty system in the new tax year for late monthly/quarterly PAYE payments where you make any of those payments late!

The amount of the penalty depends on how many times you have already made previous payments late in that same tax year. It is based on a %age of the total amount which is late but lets you off the first time it happens. The %ages are:

Frequency	%
Only late once	Nil
2 – 4 times	1
5 – 7 times	2
8 – 10 times	3
11 or more times	4

Gone are the days when you could keep the money in your business and only pay it over by the 19/22 April after the end of the tax year.

PAYE End of Year Returns - COMPULSORY ONLINE FILING

If you employ less than 50 people in your business your employer annual return has to be filed online by 19 May 2010 and this applies to every business now. 

The Revenue have written to all small employers stating that there is no longer an option to submit the end of year forms on paper.  If you still do so, then you will receive a penalty. 

As an employer you should register with the HMRC PAYE online service, in fact help is available at www.hmrc.gov.uk/paye or from their CD-ROM which hase been sent to all employers.

From May 2010 there are new penalties for late payment of your PAYE.  These amount to between 1% to 5% of the amount paid late depending on how many times you have paid late in a year.