FINES ARE NOT FINE

Following the deadline on the 31^st of January 890,000 people face fines for failing to submit their self-assessment tax return on time. There is an initial £100 penalty for failing to submit a tax return by this time, subsequent fines are as follows:

• After 3 months, daily penalties of £10 per day up to a maximum of £900
• After 6 months, a further penalty of 5% of the tax due or £300 whichever is greater.
• After 12 months, another 5% or £300 whichever is greater.

Ruth Owen, HMRC’s director general of personal tax advised ‘if you’re one of the minority who missed the deadline you still need to get your tax return to us as soon as possible, to avoid further penalties and interest mounting up’.

Despite many missing the deadline, HMRC oversaw the biggest digital Self assessment event ever, receiving 10.24 million tax returns by midnight on the 31^st of January. A record 85.5% of these were sent online. Around 4.3 million customers left it until January to file their tax returns, which were issued in April 2014.

Are you one of the 890,000 people who did not file their return on time?  If you need our help to avoid further penalties, please do do avoid contacting us.  It will not go away if you ignore it.

Small UK businesses are about to receive a letter from the Pensions Regulator…It Could Be You!

We know that as a small/medium sized business owner that you wear a lot of hats and your time is very precious. That can often mean you spend more and more time concentrating on core activities, and less on things like compliance. The danger, however, is if you don’t keep up to date with current legislation your business could be vulnerable.

Over 1.3 million small and micro employers are due to stage over the next two years … are you one of them? In the next few months these SME’s will receive letters telling them about their new duties to automatically enrol staff into a workplace pension.

As an employer there are a number of duties that you must comply with as part of the automatic enrolment scheme. Here is an outline of some of the duties:

Compliance and Enforcement

You must comply with the regulations and enforce the scheme in the correct way ensuring each and every qualifying employee has the option of a pension scheme suitable for them. Failing to comply with the rules and regulations of auto enrolment can result in penalty notices, fines and court action.

Keeping Records

Both the employer and pension scheme must keep the following records as proof of compliance. These include: their name, national insurance number, date of birth, gross qualifying earnings in each relevant pay period, contributions payable in each relevant pay period, the date contributions were paid to the scheme, opt in/opt out notices, date with effect from which the worker became an active member.

Creating an action plan

You can complete an action plan which details the specific duties at each stage of auto enrolment.

Safeguards and employer duties

Some of the safeguards come into effect from 1^st July 2012 so all employers must be compliant now and not just from their staging date. The safeguards are intended to protect individuals both before a person begins working for an employer and once the person is a member of the pension scheme.

Donations by individuals, sole traders and partnerships to charity are tax free. This is called tax relief.   The tax goes to you or the charity. How this works depends on whether you donate through Gift Aid, a Payroll Giving scheme, in your will or by donating land, property or shares.

Gift Aid

Your donations will qualify as long as they’re not more than 4 times what you have paid in tax in that tax year (6 April to 5 April). The tax could have been paid on income or capital gains.  You must tell the charities you support if you stop paying enough tax.

If you pay tax at a rate of 40% or above, you can claim the difference between the higher and basic rate on your donation. You can do this through your Self Assessment tax return or by asking HM Revenue and Customs (HMRC) to amend your tax code

Payroll Giving

If your employer, company or personal pension provider runs a Payroll Giving scheme, you can donate straight from your wages or pension. This happens before tax is deducted from your income.

Land, property or shares

You don’t have to pay tax on land, property or shares you donate to charity. This includes selling them for less than their market value. You get tax relief on both Income Tax and Capital Gains Tax

In your will

Your will says what will happen to your money, property and possessions after you die.  Your donation will be taken off the value of your estate before Inheritance Tax is calculated or reduce your Inheritance Tax rate, if more than 10% of your estate is left to charity.  You can donate a fixed amount, an item or what’s left after other gifts have been given out.

Keeping Records

To be able to claim the tax back, you will need to keep records of your donations.

For gift aid donations you must keep records if you:

• pay higher rate tax
• claim tax credits
• get a higher Personal Allowance because of your age
• get Married Couple’s Allowance

If you’re claiming tax back through your Self Assessment tax return or by asking HM Revenue & Customs (HMRC) to amend your tax code keep records showing the date, the amount and which charities you’ve donated to.

Land, buildings and shares

For donations of land, property or shares you need to keep legal documents showing the sale or transfer to charity and any documents from a charity asking you to sell land or shares on its behalf.  You normally have to keep your records for at least 22 months from the end of the tax year they’re for.

There are different guidelines for limited companies

Your limited company pays less Corporation Tax when it gives the following to charity:

• money
• equipment or trading stock (items it makes or sells)
• land, property or shares in another company (shares in your own company don’t qualify)
• employees (on secondment)
• sponsorship payments

You can claim tax relief by deducting the value of your donations from your total business profits before you pay tax.

For more information or if you have any queries, please call us on 0113 864486.

Source and more information at https://www.gov.uk/donating-to-charity/overview

The advisory fuel rates should only be used in the following circumstances:

• to reimburse employees for business travel in their company cars
• to require employees to repay the cost of fuel for private travel

Advisory fuel rates (per mile) from the 1 December 2014 are:

These are not to be confused with the mileage payments for business travel.

The current rate per business mile for a car is as follows:

• For Tax purposes – 45pence for the first 10,000 business miles in a tax year, then 25 pence for each subsequent mile.
• For National Insurance Contribution (NIC’s) purposes – 45 pence for all business miles.

The current rate per business mile for a motorcycle is 24 pence for both tax and NIC’s purposes and for all business miles.

If you travel ?as a result of running your business (other than home to work) and:

• Are unsure on what you can claim
• Are considering your options regarding the company purchasing a vehicle
• Want to understand the rules around company car benefits in kind
• Are unsure whether to lease or buy a vehicle
• Or anything else associated with business travel.

Please contact business works so that we can ensure the advice you are given is specific to your circumstances.

Call us on 0113 2864486

You can only charge VAT if your business is VAT registered.

It can be charged on the following:

• Business Sales- when you sell goods and services
• Hiring or loaning goods someone
• Selling business items
• Commission
• Items sold to staff for example canteen meals
• Business goods used for personal reasons
• Non sales including part exchanges or gifts

VAT registered businesses must charge VAT on all of the goods or services that they sell. They may reclaim any VAT they’ve paid on business related goods or services. They must also file a VAT return which is usually due every 3 months. This details the amount of VAT you’ve charged and the amount of VAT you’ve paid. If the amount of VAT you have charged exceeds the amount of VAT you’ve paid, you have to pay the difference to HMRC. If you’ve paid more VAT than you have charged, you can reclaim the difference from HMRC.

You must charge the correct rate of VAT which is usually 20% though some items have a discounted VAT rate. You can find out more about this by following this link: https://www.gov.uk/vat-rates . To work out a price including the standard rate of VAT multiply the excluding price by 1.2. To work out a price excluding the standard rate of VAT divide the price including VAT by 1.2.

For prices which are discounted VAT ought to be charged on the discounted price rather than the full price. Prices that include money off vouchers no VAT is due if given away for free at the time of purchase, if they were not free VAT is due on the price charged.

Goods and services VAT exempt must not have VAT charged on them or be included in your VAT records. If you buy or sell an exempt item you should still record the transaction in your general business accounts. Examples of exempt items include- insurance, postage stamps or services, health services provided by doctors.

Businesses that sell only VAT exempt goods and services don’t have to be VAT registered. If you start selling items that aren’t exempt you must register for VAT within 30 days, otherwise you could face penalties.

For more information on VAT please follow this guide:

https://www.gov.uk/vat-businesses/how-vat-works

When you are employing new people it is important that you follow the rules and regulations. According to the government, there are six key things you ought to know when employing staff for the first time.

1.  When deciding on how much to pay someone you must ensure that the rate is at least the minimum wage. The current hourly rates as of October 2014 are

• Aged 21 and above £6.50
• Aged 18-20 £5.13
• Under 18 year old employees are entitled to £3.79
• Apprentices are entitled to £2.73.

If you are unsure you can use the Wage calculator: https://www.gov.uk/am-i-getting-minimum-wage .

2.  You must check that the candidate for the job is eligible to work in the UK. https://www.gov.uk/legal-right-work-uk
3.  If you work in a field that requires a DBS check you must ensure that you apply for them for every employee. Formerly known as a CRB check, a DBS check is a ‘Disclosure barring service check’. Fields that require these checks include working in security, with vulnerable people, working with children or healthcare etc. To get a DBS check the employer must:

• Get an application form
• Fill in and return form along with documents providing their identity
• If the application is successful the DBS will send the applicant a certificate.

To find out more information follow this link: https://www.gov.uk/disclosure-barring-service-check

4.  You will need employer’s liability insurance as soon as you start employing people. Employer’s liability insurance will help you pay compensation if an employee is injured or becomes ill because of the work they do for you. You could face fines of £2500 everyday you are not properly insured. You can also be fined £1000 if you do not display your Employers Liability Certificate or refuse to make it available to inspectors.
5.  If you are employing someone for more than 1 month you must send details of the job including Terms and Conditions in writing to your employee. This must include the business name, employees name, job title, description of work and start date, how much and how often they will be paid, hours of work, holiday entitlement, the location of work etc. For more advice on employee contracts follow this link: https://www.gov.uk/employment-contracts-and-conditions/written-statement-of-employment-particulars
6.  You must inform HMRC by registering as an employer. You can do this up to 4 weeks before you pay your new staff.  https://www.gov.uk/register-employer

The previously successful but short lived ‘Green Deal Home Improvement Fund’ reopened on the 10^th of December with an initial £30 million available for more home improvements. The government have pledged that a further £70 million will be released for the fund in February. The fund allows householders to apply for free cash to pay for home improvements in the hope of making them more energy efficient.

You can get up to £1000 towards the cost of installing any 2 of the following:

• A condensing gas boiler
• Double or triple glazing in replacement for single glazing windows
• Energy efficient external doors
• Cavity wall insulation
• Floor or flat roof insulation
• A replacement warm air unit
• Fan assisted storage heaters
• A waste water recovery system

You can get up to £500 more if you apply within 12 months of buying a home.

To be eligible

• you’re improving a domestic property in England or Wales that you own or live in
• you have either a Green Deal advice report or an Energy Performance Certificate (EPC) that’s less than 2 years old
• the improvements you’re applying for are covered by the scheme and recommended in your EPC or Green Deal advice report
• you use a Green Deal provider or installer registered with the GDHIF

How to Claim

• Get a Green Deal assessment or an EPC for your property.
• Get and agree a quote from a Green Deal installation company that’s registered with the Home Improvement Fund.
• Apply for a Home Improvement Fund voucher before you start the work.
• Complete the work.
• Ask your Green Deal provider or installer to fill in the rest of the voucher.
• Follow the instructions on the voucher to make your claim. You must do this before the expiration date on the voucher.

Energy and Climate Change Secretary Ed Davey says: “The best way people can cut their energy bills, this winter and every winter, is to improve their homes so that they leak less heat and use less energy. That’s why we’ve increased the funding available for the Green Deal to help even more people start saving money sooner.”

For more information on how you could start reducing your energy bills follow this link:

https://www.gov.uk/green-deal-energy-saving-measures/overview

The Employment Appeal Tribunal ruled that employees must take overtime into account when calculating holiday pay.  This could potentially benefit up to five million employees.

Workers who regularly participate in overtime are likely to see an increase in their holiday pay, as non-guaranteed overtime they would otherwise have worked must now be included up to the first four weeks of holiday taken.

Businesses are likely to take steps to minimise the financial impact for themselves. They may alter contacts to include ‘voluntary’ overtime as opposed to ‘non-guaranteed’ or businesses may consider using part-time agency staff to cover overtime. This may have a negative impact in the long run for workers, despite their increased holiday pay.

Six years ago HMRC took steps to cut some of this red tape on travel expenses. Since then employers can now pay tax and NI free meal allowances, so called benchmark subsistence payments to employees, and these can be completely ignored for P11D and self-assessment purposes.

The benchmark rates include:

• £5 for breakfast if the business journey starts before 6am
• £5 if the employee spends more than five hours away and buys one meal
• £10 if they’re out for more than ten hours and they buy two meals
• £15 if they are out beyond 8pm and buy an evening meal

Despite inflation running at around 3% per year the rates haven’t increased since they were introduced. The maximum payment per day remains at £25. Paying HMRC’s benchmark subsistence rates reduces your tax admin. Up to £25 per day can paid irrespective of whether the employee spends this on food or not. Whatever they keep is tax and NI free, meaning that it’s a cheap way for you to increase their pay.

The government is encouraging businesses to employ apprentices as they play an important part in its employment policy. As an incentive to employers the government pays cash incentives and provides free advice for employers who take on trainees. Also from the 6^th April 2015 if you employ someone of the age of 20 years or younger you will not have to pay employers National Insurance Contributions on their wages.

This also includes exemptions for Scholarship Income, further legislation links the exemption to payments for trainee workers as well. Employers can pay an employee up to £15,480 tax and NI free for periods where they are undergoing training at an educational establishment for their job. Including colleges, universities and educational institutes which are open to the public.

To qualify for this tax break the training must last for at least one year and the worker must attend for at least 20 weeks. If you decrease their pay for working time and increase it for periods of training you can cut the cost of employing them by up to 10%.