A THIRD OF WOMEN HAVE NO PENSION PLAN

A recent survey has found that 34% of women do not have a private pension plan compared to 17% for men.

Of those women, 41% have no intention of investing in a pension compared to 34% for men.  17% of women said they wouldn’t invest in a pension until at least 40 years of age and 9% not until they were 50!  The survey revealed that 65% will only have the state pension at retirement age with 34% stating they will be falling back on other savings.  There were 21% that said that they would be reliant on their partner’s pensions, savings and investments and 17% will have to keep working later in life.

How People without a Private Pension Plan intend to pay for their Retirement

One in three people (35%) over the last 12 months have stopped paying into a pension scheme.  The reasons for this are,

• 28% could not afford the payments any longer
• 20% would rather use the money for other things
• 14% would prefer to use the money to move onto the property ladder

All this comes at a time when auto enrolment has been in place for a minimum of just over 16 months, dependent on employer size (by PAYE scheme size) and the Government increasing auto enrolment contributions to a minimum of 8% from April 2019, with the employee paying 5% of this.

Adrian Lowcock, head of personal investing at Willis Owen, said it is understandable that people are “opting to focus on their financial needs today, such as getting on the property ladder, as opposed to financing their needs in retirement when they stop work…….it’s alarming to see so many people without pension plans, or who have stopped paying into them…….However, it’s never too late to own your financial future and start saving into a pension scheme.”

The survey was undertaken by Willis Own, an online investment service provider, and they questioned 1,070 UK adults.

Source: FTAdviser

In the Budget of 2018, the government planned to cap R&D tax credits.  There were fears that this would hinder legitimate start-ups and small businesses from receiving such benefits.  However, a recent consultation may have put forward a possible solution.

The R&D tax credit is very popular providing £3.5bn of relief in 2016/17 increasing from £350m in 2010.  HMRC stated that this increase also resulted in fraudulent claims to the tune of £300m by “artificial corporate structures.”  The government solution to this was announcing that a cap would be introduced in April 2020.

The cap is stated to be “the amount that a loss-making company can receive in R&D tax credits were to be capped at three times it’s total PAYE and National Insurance contribution liability.”  Many quickly stated that start-ups are lossmakers, having low or nil salary costs as they rely on subcontractors and/or many directors taking no remuneration when starting up a business initially.  The result of this would be that these new businesses could not claim R&D tax credit as “if you pay nil PAYE or NICs liability, then obviously three times nil is nil.”

Though HMRC need to reduce fraudulent claims it needs to ensure that genuine research businesses are not penalised in the Finance Bill 2019-2020.

The consultation document around this does state that it is aware of this situation and does wish “to keep any impact on them to a minimum and committed to consult on the cap before it is implemented.”  HMRC have put forward a compromise in the consultation that there would be a minimum level they would pay up to before the cap applies.  What the latter is though has not been officially stated and even when announced there are fears that some businesses will be unfairly caught out.

If you need help with any R&D claims, then please contact us on 0113 286 4486

Source: Accounting Web

In March 2018 we wrote about e-mail phishing scams that were on the rounds supposedly from HMRC (http://bit.ly/BWPhishingScam).  This is something that is still ongoing with HMRC recently blocking a widespread fraud technique where calls appeared to be from genuine tax department centre numbers.

Automated phone calls have been received sounding very similar to the PPI spam calls, “Hello, this is a message for the customer or authorised representative of reference number……, please call HMRC back on 0300 XXX XXXX.”  Upon checking the number, to be cautious, then they are seem to be linked to HMRC.

There has been a staggering increase in the number of such incidents been reported to HMRC in the past year.  In 2016/17, 407 incidents were reported increasing to 104,774 in 2018/19.  Through working with network providers, they have blocked more than 1,050 fraudulent phone numbers.  The result was that in April nearly all such spoof calls were eliminated, reducing fraud reports by 25% compared to March.

HMRC have advised that they will only ever call in connection with outstanding debts where the taxpayer is already aware, having received a letter first or having reported such liabilities on the self-assessment return.  In addition, they have changed their procedures so that card details no longer need to be read to an operator over the phone.

If you are unsure of any communication received from HMRC, phone call/e-mail then send details to phishing@hmrc.gsi.gov.uk and wait a their response and guidance or contact your Accountant.

Source: Accounting Web

The Advisory Fuel Rates (AFR) as of 1 June,

Engine size                                         Petrol – amount per mile                             LPG – amount per mile

1400cc or less                                     12 pence                                                         8 pence

1401cc to 2000cc                                15 pence                                                         9 pence

Over 2000cc                                        22 pence                                                        14 pence

Engine size                                         Diesel – amount per mile

1600cc or less                                     10 pence

1601cc to 2000cc                                12 pence

Over 2000cc                                        14 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The Advisory Electric Rate (AER) which was introduced in September for 100% electric cars will remain the same at 4p per mile.  Electricity is not a fuel for car fuel benefit purposes.

The AFR and AER are deemed to be tax and National Insurance free.

Both rates can be applied for fuel per mile,

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

If your employee does not repay the private fuel used during the tax year then you will need to,

• report on their P11D
• pay Class 1A National Insurance on the value of the fuel benefit

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
• or anything else associated with business travel

Please contact us so that we can ensure the advice you are given is specific to your circumstances on 0113 2864486

Open Banking is a Government initiative which is looking at the need to improve competition in retail banking and financial services.  The intention is to make it easier for companies to offer different and innovative services at the same time as ensuring that consumers have both more choice and control over their own money and financial information.

It is a new secure way for consumers, including small businesses to enable the sharing of financial information electronically, securely and only when permission is given.  The aim being to offer quicker speed, security and smart solutions.  Plus making it easier to share information with companies.

• You decide who has access to your banking data with permissions granted and withdrawn at any time if you wish.
• Sharing data with third parties will result in a smarter service including automated accounting and access to more customised lending or budgeting options.
• When Open Banking goes live it will be more secure as there will be no need to enter online banking credentials on third party websites. You will securely grant permission (every 3 months) to third parties to share data directly from your bank.

The aim being to revolutionise the way we move, manage and make more of our money.

Initially, Open Banking will enable consumers to compare current accounts and other banking services together with providing information about ATMs and branches.  Open Banking technology and standards will enable the development of new on-line and mobile applications so enabling small businesses to share their banking information securely with banks, building societies and other regulated companies.

Source: Open Banking

IR35 came into force in April 2000 and was introduced to tackle the issue of “disguised employment.”  This is where some contractors (and their hirers) would try to take advantage of the tax efficiency of working through a limited company.  This resulted in the hirer not needing to pay employers’ National Insurance for the contractor.  However, in practice the contractor is essentially an employee and the necessary taxes and employee benefits should be paid.

IR35 assesses whether the contractor is ‘for all intent and purposes’ an employee when they are hired for a contract.  If they are, they are “inside IR35” and employer’s National Insurance needs to be paid for them plus other employee benefits applied.  If they are “outside IR35” no contributions or benefits are required.

Public sector and private sector contracts have differing rules,

• Public sector contracts – the hirer has the responsibility of working out whether the contractor falls inside or outside of IR35. If they are “inside IR35” then the hirer, agency or other third party who pays the contractor needs to deduct tax and NICs and duly report this to HMRC.
• Private sector contracts – the contractor themselves are responsible for working out whether they fall inside or outside of IR35. If they are “inside IR35” then they need to pay the tax and NICs due.

However, from April 2020, the private sector contracts are set for changes as announced in the Autumn Budget of 2018, with a promised consultation in early 2019.  The latter is still being awaited.

Given that no consultation has been provided yet then many are guessing that the IR35 changes in the private sector will be like that of the public sector.

Thereby meaning, the hirer will be responsible for deciding the IR35 status of the contractor.  Recruitment agencies and end-clients are concerned about this for a couple of reasons.  If the changes are to give them the responsibility then,

• Assess an “outside IR35” incorrectly and it will make them liable for any unpaid taxes and penalties
• An “inside IR35” brings extra costs through the taxes to be paid and the extra work this involves.

If you are a contractor working in such a scenario then it is recommended that you check with the agency and/or client how they will be assessing your IR35 status.  Business and contractors need to begin preparing for the changes.

If you require any assistance on this matter, then please call us on 0113 286 4486.

Sources: Contractor UK & Simply Business

There was a 51% rise in residential landlords being pursued by HMRC for underpaid or undeclared tax on letting income in 2018.

8,704 property landlords were investigated last year under HMRC’s Let Property Campaign which began in 2013.  A scheme where an individual landlord letting out residential property, here or abroad, voluntary informs HMRC of any undisclosed income from said property.  In return they receive the best possible terms to pay the tax owed!  The scheme was to run for a minimum of 18 months but is now running until further notice.

In 2018 HMRC saw a 67% increase in the amount of income tax clawed back from landlords, equivalent to £32.8m.  The value of the fines being £5.6m.

Property landlords who underpay tax on their letting income can be fined up to 100% of the value of the unpaid tax plus criminal charges can also be brought.  Those property landlords who disclose genuine errors are dealt with less severely with HMRC going back just 6 years and smaller fines if any.  If you voluntarily inform HMRC of undisclosed letting income you have 90 days to pay the correct amount plus any interest or penalties.

Chris Norris, of the National Landlords Association said “Tax can be a complicated and confusing process for landlords who are trying to cut costs by doing their returns themselves, rather than seeking specialist advice. It is possible some landlords have unwittingly disclosed less tax on letting income than they should have.” John Stewart, of the Residential Landlords Association, said: “The tax system is becoming ever more complex in the private rented sector, and communication from HMRC on changes to mortgage interest relief has not been sufficient.”

If you require any assistance on this matter, then please call us on 0113 286 4486.

Source: The Daily Telegraph (09/02/19)/TaxAssist Accountants

If you have shares in a company, either your own or another, then you may receive a dividend payment.  Tax may be payable on these dividends if it is above your dividend allowance for that tax year.

The dividend allowance,

• 6 April 2018 to 5 April 2019 – £2,000
• 6 April 2017 to 5 April 2018 – £5,000
• 6 April 2016 to 5 April 2017 – £5,000

The tax you pay depends on which Income Tax Band (those below are 2018/19 Bands) you are in,

• Basic rate (£11,851 – £46,350 taxable income) – 7.5%
• Higher rate (£46,351 – £150,000 taxable income) – 32.5%
• Additional rate (over £150,000 taxable income) – 38.1%

You need to add your income from dividends to any taxable income you receive to work out your tax band.  Tax could be payable at more than one rate and any dividends that fall within your Personal Allowance (i.e. up to £11,850) do not count towards your dividend allowance.

For example, £3,000 is paid in dividends in the 2018/19 tax year.  The dividend allowance is £2000 therefore the remaining £1000 is taxable.  Your taxable income is £35,000 and with your £3000 dividend gives a total taxable income of £38,000.  Therefore you pay 7.5% on £1000 of dividends as your total taxable income is within the basic tax band.

How you pay this tax depends on the amount of dividend income you receive in the tax year.

Up to £10,000 dividends

Tell HMRC by,

• Contacting the helpline 0300 200 3300
• Asking HMRC to change your tax code – the tax will then be taken from your wages or pension through PAYE
• Completing a Self Assessment tax return, if you already complete one.

If the dividends you receive are within your dividend allowance for the tax year then you do not need to inform HMRC.

Over £10,000 dividends

You will need to complete a Self Assessment tax return.  If you have not completed one before you need to register by 5 October following the tax year you had the income.

If you need further information or help on this then please get in touch 0113 286 4486.

Source: HMRC

Making Tax Digital (MTD) comes into effect on 1 April which is just a few days’ away.  If you are still not sure what MTD is and whether this applies to your business, it is where VAT registered businesses with an annual turnover of £85,000 or more need to file their VAT return online via cloud accounting software e.g. QuickBooks, Xero etc.

MPs were warned last month that MTD will seriously effect small businesses with Martin McTague, policy and advocacy chairman at the Federation of Small Businesses, informing the Treasury committee: “HMRC has underestimated the reaction they are going to get. We are literally weeks away so we are very, very close to a very serious problem for a lot of companies.”

HMRC have reported that only 70,000 businesses have signed up for MTD (as of 1 week to go) out of the estimated 1.2m that need to do so, despite research at the end of last year indicating that 83% of businesses knew about MTD and had begun preparing for it!  At present they have stated that about 3,000 are signing up each day to register and they have written to every business about the need to sign up.

HMRC have said that 1 April is not a “cliff edge” as businesses only need to sign up when they need to file their VAT.  Therefore, the first businesses that will need to file via MTD are those that have a quarter end of 30^th June, due in August.  Though you may have until August it is best to start the process now and not leave too late.

For those that have software at present they need to ensure that it is MTD compatible and need to sign up for the new service and authorise their software for MTD.  For those that do not use software or not represented by an accountant will need to choose a software to use and authorise the new software for the online service.  There are over 220 software products available for businesses to choose offering different levels of functionality at various price points, including some that are free.

During a business’ first year of mandation, HMRC have said that they will be more lenient in issuing filing or record keeping penalties if the business is doing their best to comply.  However, penalties will still apply where there is deliberate non-compliance in order to safeguard VAT revenue.

There is caution with this in that HMRC will still apply penalties for late payment so ensure that your VAT bill is paid on time.

If you need further information about MTD or bookkeeping software, then please get in touch on 0113 2864486.

Source: Accountancy Daily & The Times

Photo: Photo by Helloquence on Unsplash

The Advisory Fuel Rates (AFR) as of 1 March,

Engine size                                         Petrol – amount per mile                             LPG – amount per mile

1400cc or less                                     11 pence                                                           7 pence

1401cc to 2000cc                                14 pence                                                           8 pence

Over 2000cc                                        21 pence                                                         13 pence

Engine size                                         Diesel – amount per mile

1600cc or less                                     10 pence

1601cc to 2000cc                                11 pence

Over 2000cc                                        13 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The Advisory Electric Rate (AER) which was introduced in September for 100% electric cars will remain the same at 4p per mile.  Electricity is not a fuel for car fuel benefit purposes.

The AFR and AER are deemed to be tax and National Insurance free.

Both rates can be applied for fuel per mile,

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

If your employee does not repay the private fuel used during the tax year then you will need to,

• report on their P11D
• pay Class 1A National Insurance on the value of the fuel benefit

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
• or anything else associated with business travel

Please contact us so that we can ensure the advice you are given is specific to your circumstances on 0113 2864486

Source: HMRC