Tag: PAYE

Are you claiming your Flat Rate Expense Allowance tax refund?

Back in December I did a Blog about how to make your claim http://stevejbicknell.com/2011/12/20/how-to-claim-tax-relief-for-employment-expenses/

 

But many employees don’t seem to realise that they could be entitled to Flat Rate Expenses

If you have to spend money on tools or specialist clothing for your job you may be entitled to either:

  • tax relief for the actual amounts you spend
  • a flat rate deduction

Flat rate deductions are amounts that HM Revenue & Customs agreed nationally – or sometimes locally if conditions are very different – with trade unions or other bodies.

The deductions cover what’s typically spent each year by employees in different trades. For example, someone working in the clothing industry can get a deduction of £60 each year. A cabinet maker can get a deduction for £140 while the deduction for a stone mason is £120.

You don’t have to be a member of a trade union to get the deduction. You’ll also benefit from less paperwork – you won’t have to keep a record of all the individual amounts you spend.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/IncomeTax/Taxallowancesandreliefs/DG_078378

There is a full list of the Flat Rates at

http://www.hmrc.gov.uk/manuals/eimanual/EIM32712.htm

For example, I am the FD of SCA Group, we employ Scaffolders and the rate for Scaffolders is £140 per year, at 20% tax that means £28 as a tax refund.

steve@bicknells.net

Plan out the Key Dates for your Business

There are so many things to remember when you have a company, accounting dates, vat dates, paye dates, corporation tax, self assessment dates, the list seems endless. The only way to keep on top of the dates is to put them in your diary.

I found this link http://www.businesslink.gov.uk/bdotg/action/keydates

Business Link can generate all your key dates, the results look like this

July 2012

05/07/12 Ensure agreement is reached with HM Revenue & Customs re Class 1B voluntary settlement.
Find out more: National Insurance: an introduction		 PAYE and NICs
06/07/12 Ensure copies of P9D/P11D are with employees. PAYE and NICs
Submit P11D(b), P9D and P11D forms to HM Revenue & Customs.  
Report shares/securities information to HM Revenue & Customs.
Form 42 is provided by HM Revenue & Customs for this purpose.
Find out more: Share schemes – Opens in a new window		  
22/07/12 Pay PAYE, NICs, student loan deductions and deductions for payments to subcontractors for the month up to the 5th of this month electronically.
Find out more: PAYE for employers: the basics		 PAYE and NICs
Pay Class 1A NICs shown to be due by your form P11D(b), electronically.  
31/07/12 If you need to make a Self Assessment payment on account, this is the date for your second payment.
You won’t have to make payments on account if your tax bill for the previous year was less than £1000, or if more than 80 per cent of your income tax for the previous year was deducted at source.
Find out more: Tax return deadlines and penalties		 Self assessment

You can then print the list and pin on the wall or fridge and pop the dates in your diary.

Brilliant!

It could save you a fortune in late filing penalties

steve@bicknells.net

 

So you think you are self employed, does HMRC agree?

As everyone probably already knows there are tax and national insurance advantages to being self employed and to employing casual workers on a self employed basis.

As an employee, on most of your income (assuming you aren’t a higher rate tax payer) you will pay 20% tax, 12% employees NI and your employer will pay 13.8% employers NI, so thats 45.8% in tax and NI.

If you are self employed the equivalents are 20% tax, 9% Class 4 NI and £2.50 per week Class 2 NI, plus you can claim business related expenses that you probably wouldn’t get as an employee.

Whether employed or self employed you will get a tax free allowance of £7475.

For full details follow these links:

http://www.hmrc.gov.uk/rates/it.htm

http://www.hmrc.gov.uk/rates/nic.htm

So why isn’t everyone self employed?

Why not start by taking the HMRC test known as the ‘Employment Status Indicator’?

https://esi2calculator.hmrc.gov.uk/esi/app/index.html

You can take the test as many times as you wish and record the answers but if the result says you are really an employee then you need to speak to your employer and discuss the risks and liabilities that they will potentially face.

The most recent HMRC case on Employment Status relates to Weight Watchers and because HMRC successfully argued that their leaders were employees and not self employed it will cost Weight Watchers an estimated £23.5m in back taxes. When employment status goes wrong its the employer that gets the bill and often can’t recover the back taxes from the ’employees’.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8501230/Weight-Watchers-to-employ-its-1700-slimming-leaders.html

http://www.telegraph.co.uk/finance/yourbusiness/7346758/Taxman-forces-slimmers-to-put-on-weight.html

One possible solution is to use Limited Companies, because a Limited Company can never be treated as an employee. Plus there are tax advantages in Dividends. But be careful of the IR35 Rules, follow my blog links to find out more.

Consultants beware of IR35 – use the QDOS Model Contract (Free)

Salary v’s Dividend – how much money could I save?

Things you need to know about Dividends…..

IR35 came into existance in 1999,  it was created to prevent workers previously employed from creating a limited company and then benefiting from lower taxes and national insurance through the use of dividends and expenses.

Follow my blog for more useful facts, tips, suggestions and ideas.

steve@bicknells.net

Free Payroll! with free updates!

If you have a business, the chances are you will need to operate a payroll.

When you set up in business the easiest and quickest way to register a payroll is on line

http://www.hmrc.gov.uk/paye/intro/register-email.htm

Once your payroll is registered its worth obtaining dispensations to hopefully avoid or at least reduce the need for P11D’s

http://www.hmrc.gov.uk/paye/exb/schemes/dispensation.htm

Having registered your payoll you will get a pack in the post from HMRC which will include a CD ‘Basic PAYE Tools’ this CD has everything you need to run your own payroll for free, as an alternative you can download ‘Basic PAYE Tools’

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1086949246&r.l1=1073858808&r.l2=1083106843&r.l3=1083106693&r.l4=1086857322&r.s=sc&type=RESOURCES

Its a great bit of software and you can set up multiple business and create employee databases.

The only thing it doesn’t do is produce payslips, but you can do that easily yourself  by creating your own template in Word or Excel.

steve@bicknells.net

 

If the taxman comes knocking…….try ESC A19

The recent press has been full of details of HMRC investigations into small businesses and individuals to try to get more tax in and penalties, the taxman is trying to recover £3.8bn in PAYE. Current figures (quoted in the Sunday Telegraph today) show that 25000 people have had their debt written off by citing the Extra Statutory Concession A19.

The Low Income Tax Reform Group has some excellent guidance on A19 and template letters, check out this link for details

Click to access LITRG_ESC_A19_Guide_Oct2010.pdf

steve@bicknells.net