From 6th April 2015 every employer with employees under the age of 21 will no longer be required to pay class 1 secondary NI on earnings below the upper earnings limit (£815 per week).
In line with the change, HMRC are introducing 7 new National Insurance Table Letters to be used from April 2015 to cater for these employees as follows:
Three of the new letters (V, I and K) will be removed in April 2016 in line with the ending of ‘contracted-out’ status in relation to salary-related occupational pension schemes. [Brightpay]
Top 10 facts and rules…
- Its only available to ‘First Time Buyers’
- ‘First Time Buyers’ can only have one Help to Buy ISA with one provider
- You can pay in £1,000 when you open the account and then save a maximum of £200 per month
- The maximum government bonus is £3,000 (but you can lower amounts of bonus if you have less than £12,000)
- The scheme will run for 4 years from the date it opens (Autumn 2015)
- Couples can have a Help to Buy ISA each which means if they don’t want to wait 4 years could save £12,000 in 25 months where as a single saver would need 55 months
- Unlike ISA’s where you open one per year, the Help to Buy ISA will continue for 4 years
- You can withdraw funds but if its not to buy a home then you won’t get the bonus
- More than 100,000 homes have now been bought with government backed schemes
- You will be able to get them at banks and building societies
Money Saving Expert has some useful Q&A including this one….
A first-time buyer is someone who does not and has never owned an interest in a residential property, either inside or outside the UK.
Many people have said “I owned a property previously but now rent”, “I have a shared ownership property” or “I have inherited a property” can I still open a Help to Buy ISA? And the answer is NO – you have to be a first-time buyer to open one.
In last weeks Budget, the Chancellor George Osborne announced that during a 5 year period starting in 2016 we will see the end of tax returns and the introduction of Digital Tax Accounts.
According to Citywire
By the end of 2016, five million small businesses and the first 10 million individuals would use the new ‘digital tax account’.
‘Millions of individuals will have the information the Revenue needs automatically uploaded into new digital accounts,’ said Osborne. ‘Tax really doesn’t have to be taxing, and this spells the death of the annual tax return.’
Around 85% of those who complete self-assessment forms already do them online. But HMRC said the new accounts, unlike the current system, would be pre-populated with data HMRC already holds and that from third parties.
Those who pay tax using the pay-as-you-earn system will have their income tax, national insurance contributions and pension position already shown in their accounts, alongside any interest from banks and building societies.
HMRC said that small businesses using the system should also be able to use accounting software to feed data straight into their account.
In order for this to work, small businesses will need to keep their accounts up to date.
The top 5 common accounting problems accountants deal with are:
1. Not doing any accounts – the shoe box approach to business
This is the most common mistake, book keeping is best done as you go along, putting all the paperwork in a shoe box or carrier bag is a really bad idea as you have no idea how your business is performing.
2. Not keeping receipts. Often small business miss out on claiming all their expenses because they fail to keep receipts and lose track of their spending
3. Not reconciling. Reconciling your bank statements to your cash book is vital to make sure that all of your income and expenses have been recorded in your accounts.
4. Using the wrong accounting system. For some businesses a manual cash book and records are fine but for many accounting software such as Debitoor will be needed to keep track of debtors, creditors and VAT. Make sure you understand your accounting system and operate it correctly.
5. Mixing business and personal expenses. Some sole traders even mix up business and personal bank accounts and in extreme cases don’t even have a business bank account. This can cause errors and often means that a sole trader will either claim to many expenses or to few.
Will small businesses be able to overcome these problems or will they end up in a tax mess with Digital Tax Accounts?
Monthly payrolls never have a week 53 but weekly, fortnightly and for-weekly paid employees will have a week 53 if the process date is Sunday 5th April 2015. If it falls on any other day you don’t have a week 53 this year.
In the ‘Tax week number’ field of your FPS, put:
- ‘53’ if you pay your employees weekly
- ‘54’ if you pay them fortnightly
- ‘56’ if you pay them every 4 weeks
If you make a mistake
If you find a mistake in your final FPS of the year, what you need to do depends on the type of mistake and when you find it.
||What to do
|Wrong payments or deductions
||By 19 April
||Send an additional FPS with corrected year-to-date figures, and enter ‘0’ in ‘Pay in this period’
|Wrong payments or deductions
||After 19 April
||Send an EYU showing the difference between the amounts on the wrong FPS and the correct year-to-date amounts – don’t give the year-to-date amounts
|Wrong payment date
||By 5 April
||Send an additional FPS with the correct payment date – put ‘0’ in ‘Pay in this period’ and give the year-to-date figures
FRS102 will affect us all, even small companies will be subject to a version of FRS102.
Its not just a reporting standard it will affect your tax position too, for example
Intangible Assets and Goodwill
Under FRS102 these assets will have a maximum life of 5 years where as UK GAAP allowed them to have an infinite useful life.
There are various FRS102 changes that can effect these but one specific one is deferred tax which will be calculated on investment properties.
Leases incentives will be spread over the entire life of the lease rather than to first break clause.
Some assets such as Websites and software development could be reclassified as Intangible
Have you assessed the changes for your business?
FRS 102 is effective for periods beginning on or after 1 January 2015.
In 2012, the UK law on workplace pensions changed forever. By law, employers must now enrol their employees in a pension scheme and contribute towards that scheme. Every employer with at least one staff member now has new duties. These responsibilities include placing those employees who meet certain criteria into a workplace pension scheme where these employers, must also contribute towards the pension.
Employers are experiencing information overload when it comes to their new AE obligations. 1.2m small and micro businesses are set to start staging from June 2015. A large portion of these employers may lack the knowledge and resources to be able to process these AE tasks. Research by The Pensions Regulator reports that only 60% of employers due to stage between June 2015 and Nov 2015 have begun to plan for their Auto Enrolment duties, with a significant decline of 52% reported among employers due to stage in 2016.
The big question remains, will you help your clients prepare for Automatic Enrolment?? Whether you are a payroll professional or accountant, this change to the law will mean that your payroll clients may come to you to seek advice on the easiest way to fully comply. Automatic Enrolment is presenting accountants with a unique opportunity to offer additional services to existing clients thus bringing in new business. If accountants decide they do not want to take on this type of work then they run the risk of losing business.
Accountants will need to take time to consider the AE opportunity for their business. This AE platform presents a stepping stone for them to increase turnover, acquire new customers and build a lasting relationship with your current client base. To achieve this increased revenue, it will be essential that your payroll clients know that you are open for Auto Enrolment business. Make sure you have the correct tools and processes in place to streamline AE and increase profits. By taking the opportunity to identify payroll systems that reduce costs and resources and maintaining a strong level of best practice, then accountants will reap the rewards. It further provides a competitive edge to you over other accountants who refuse to provide AE as a service to their clients. Savvy accountants are already capitalising on auto enrolment and it has become a viable and profitable part of their practice.
Auto Enrolment Webinars
BrightPay has joined forces with Accounting for Growth to help accountants with payroll clients. The AE webinars are specifically tailored to support accountants in processing Auto Enrolment efficiently.
On the 24th March Patrick McLoughlin will present ‘Using Auto Enrolment to attract your Ideal Clients’ where he will give you practical and helpful tips to attract new business. Patrick’s presentation will help you to avoid the fee bargainers and focus on clients happy to pay premium fees for a premium service. Business owners are crying out for more information and help to comply with the legislation. You will never find a market more receptive to your support and services.
Paul Byrne from BrightPay will present ‘Embrace Auto Enrolment to increase Profits’. With the tsunami of auto enrolment staging dates ready to hit the UK’s small businesses, accountants are deliberating whether to embrace auto enrolment and whether it is worth the time and effort. Discover how all Bureaus can benefit financially from Auto Enrolment. Find out how and why AE should be a chargeable service.
Register today for our webinar to take the stress, hassle and pressure out of dealing with payroll clients.
Free Registration – Book your place here.
Written by Karen Bennett – BrightPay, auto enrolment software.
The chancellor George Osborn has announce that he plans to allow pensioners to cash in their annuities.
Before the pension reforms….
Individuals saved into a pension during their working life and so built up a pension pot.
At some point during the first years of retirement, they used the money to buy an annuity from an insurance company.
This is a transaction that occurs once, and only once.
An annuity is an annual retirement income that is paid to them for the rest of their life.
From April 2016 the proposal is to allow pensioners to swap an annuity for a fixed lump sum.
But will pensioners be able to find investments which are better than the annuity they currently have?
Broadband Connection Vouchers are being delivered by the 22 SuperConnected Cities, Each local scheme is designed to meet local needs while helping local businesses to grow and develop.
You only need to send us 1 quote as part of your application process, although you may want to talk to a number of suppliers to get the best deal for your business.
On 3 December, the Chancellor announced that the Government will make up to £40m available from April 2015 to March 2016 to support more cities administer The Broadband Connection Voucher Scheme.
Connection Vouchers will be made available on a first come, first served basis.
The current Broadband Connection Vouchers Scheme closes on 31 March 2015.
Check you eligibility https://www.connectionvouchers.co.uk/
The Office of Tax Simplification – Employment Status Report – March 2015 suggests we could see a new type of worker being created, part way between Employed and Self Employed. We could also see the term office holder removed from legislation.
Contractor Weekly reported – This involves the introduction of a new category of worker, a ‘third way’ between the employed and self-employed, acknowledging that some workers do not fit easily into either of the two traditional positions and that they should be subject to a modified set of tax rules. Freelancers might fall into this ‘third way’ and who might be seen as people who have chosen this route of working and want certainty over their status.
Click on this link to read the Employment Status Report
Will this solve the IR35 problem? who will it defined? what should the rules be?
Sometimes things take longer than expected and often business owners can feel powerless against HMRC.
HMRC set out their guidance in CRG4050 which states…
The following checklist will help you to decide whether a delay was unreasonable. It is not exhaustive and you should take account of all relevant factors in a specific case.
Establish the basic facts:
- Identify the customer. Who was affected by the delay?
- When did the customer first contact us? (This will normally be the starting point for a period of delay.)
- When did we finally resolve the issue? (This will normally be the end of a period of delay.)
- How complex was the query/process? (It would be reasonable to expect complex work to take more time to complete.)
- What are our normal practices/standards? (Take these into account but remember that failure to meet published service standards will not necessarily constitute unreasonable delay.)
- What was the impact of the delay on the customer? (This is the link between the consequences of unreasonable delay and the appropriate remedy.)
Examine our actions:
- Were there periods of inactivity on our part which should not have occurred?
- Did we contribute to the delay through poor communication?
- Did we manage the customer’s expectations? (For example, did we deal with the customer proactively and keep them informed of progress?)
- How have we treated the customer in the past? (For example, the customer may have become used to a very quick turnaround.)
Examine the customer’s actions:
- Did the customer tell us all the relevant facts? (Delays or their consequences might have been avoided if the customer had given us sufficient facts.)
- Did the customer keep us up to date?
- Did the customer tell us of changes that might have had a bearing on the urgency of our actions?
If you feel you have a valid compliant the following guidance tells you how to complain.