Budget 2013

Please see our link at the bottom of the home page for full details of this years' budget.

Payroll RTI Reporting – The Next Stage

Payroll RTI Reporting – The Next Stage

Following on from our December article you should now be giving thought to the next steps of RTI.

Submitting your Employer Alignment Submission (EAS)

The EAS is a one-off submission and the first submission that you will make under RTI.  It provides HMRC with a snapshot of your data and a benchmark of who is or has been employed by you in the current year.

When to Submit the EAS

You should submit your EAS any time after 6 April 2013 but before you process your first payroll of the year.  This is because the EAS must be the first submission you make under RTI.

What you need to do before submitting

• Check and cleanse your data as described in our blog of 12^th December 2012.
• Enter any new starters
• Include the details of any part time or casual workers who used to be covered by completion of forms P38A and P38S

If you have any questions please speak to Richard Shaw for more information on 01623 645705.

Tax/Deadline dates for March/April 2013

• 19 March 2013 - PAYE and NIC deductions due for month ended 5 March 2013. (If you pay your tax electronically the due date is 22 March 2013)
• 19 March 2013 - Filing deadline for the CIS300 monthly return for the month ended 5 March 2013.
• 19 March 2013 - CIS tax deducted for the month ended 5 March 2013 is payable by today.
• 20 March 2013 – BUDGET DAY.
• 29 March to 1 April 2013 – Easter Holiday.
• 31 March 2013 – 100% first year allowances for ‘Qualifying Low Emission Cars (QUALECS) which were to have expired on 31 March 2013 will now be extended to 31 March 2015. However, the qualifying emission level will, from 1 April 2013, be reduced from 110 g/km to 95 g/km and leased cars will no longer be eligible for first-year allowances
• 1 April 2013 - Due date for corporation tax due for the year ended 30 June 2012.  But the effective last day for payment was the last prior business day, Thursday 28 March, except where payment is made by internet or telephone banking.
• 7 April 2013 – VAT returns for the quarter (or month) ended 28 February 2013 should be filed online by today. The relevant tax should be paid electronically so as to reach HMRC by today.
• 19 April 2013 - PAYE and NIC deductions due for month ended 5 April 2013. (If you pay your tax electronically the due date is 22 April 2013)
• 19 April 2013 - Filing deadline for the CIS300 monthly return for the month ended 5 April 2013.
• 19 April 2013 - CIS tax deducted for the month ended 5 April 2013 is payable by today.

Employment rights – redundancy/unfair dismissal payments

From February 2013:-

The limit on the amount of the compensatory award for unfair dismissal has increased. The current maximum of £72,300 is to increase to £74,200 due to inflation.

The limit of a week’s pay which is used in calculating statutory redundancy pay (SRP) or compensation for unfair dismissal has risen from £430 to £450. We can advise on the number of weeks of SRP an employee is entitled to, depending on their length of service. Please contact us for more details.

Business Records Check

HMRC have relaunched their business records check programme. The purpose of this is for HMRC to check the adequacy of the business records being kept by small and medium sized enterprises (SMEs).

It is now HMRC’s intention to write to selected SME's to conduct an interview style call to assess whether they feel a face-to-face visit is required. The call will take approximately 10-15 minutes to enable the officer to assess the SMEs record keeping. If the officer making the call deems the records to be adequate, he will confirm his decision in writing and no further action will be taken.

If, however, he feels the records can be improved he will arrange for a colleague to call and make arrangements to visit the premises.

If on visiting the records do appear to fall short of what is required, recommendations will be given for improvements. If these recommendations are not adopted and have not improved at the time when a follow up visit is made, a first offence penalty of £500 will be considered (this will be reduced to £250 if it is in the first year of trading).

If on visiting the SME the officer finds the records to have been deliberately destroyed, a penalty of up to £3,000 may be charged.

It is important that you advise us immediately if any such telephone call is received. Please contact Ray Callingham for further advice on this matter.

Employer's National Insurance Holiday

New employers can still benefit from the Employer's National Insurance holiday introduced in 2010. This exemption applies to Employer's National Insurance chargeable for the first twelve months of the business or up to 5 September 2013, whichever comes first. At up to £5,000 National Insurance for the first ten employees, this relief is worth looking at closely for those who qualify. In order to qualify, there needs to be a new business starting and paying a wage before 5 September 2013. This does not have to be a new company or individual starting in business, it applies equally to an existing business provided that it is performing wholly or mainly new activities. The key point is whether these business activities were carried on in the proceeding six months.  HMRC give the example of a traditional being closed down by a new owner, refurbished and reopened as a gastro pub as one that would qualify. A business that has simply changed ownership may well not qualify, therefore the incorporation of a sole trader or partnership into a limited company will not receive the exemption unless the business activities wholly or mainly change.

The business must have its principal place of business in one of the following regions:-

·                    Northern Ireland

·                    Scotland

·                    Wales

·                    East Midlands

·                    North East

·                    North West

·                    South West

·                    West Midlands

·                    Yorkshire and Humber

Certain sectors such as road freight and agriculture have restrictions based on EU state aid rules. Managed service companies do not qualify.

If a business has paid National Insurance when it feels that it should have qualified for this relief, an application form can be submitted to claim a repayment. The business must have commenced after 22 June 2010 and contributions after 6 September 2019 may qualify.

G M Beeley

Child Benefit Changes

From 7 January 2012, high income recipients of Child Benefit face the prospect of repaying all or part of the benefit in additional tax.

The charge, known as the high income child benefit charge, applies where there is one high earner in a couple. A high earner is defined as an individual earning more than £50,000. The tax charge claws back Child Benefit at the rate of 1% of the benefit for every £100 of additional income, hence the full benefit is clawed back at £60,000. It creates yet another unwelcome layer of complexity in the tax system and a further income range where an increase in income comes at a particularly high rate of tax. For example, an employed high earner with two children will face a tax rate of 59.5%.

HMRC are allowing individuals to opt out of the Child Benefit system to escape the administrative burden of the charge however for those with incomes between £50,000 and £60,000, opting out will mean losing out on some Child Benefit. Some commentators view the Child Benefit as an interest free loan from the government for between 10 and 22 months and recommend not opting out. Our view is that this very much depends upon the couple concerned. Whilst financially it would be better to invest the money on deposit until HMRC claw it back, albeit marginally given the paltry interest rates that we are experiencing, we are finding many people simply want the certainty these days. If there is the risk that the Child Benefit would be spent as it always has done – will a tax charge really be appreciated? In any event, with income between £50,000 and £60,000 the clawback can hardly be certain and it would be unwise to opt out provided that proper budgeting is performed for the eventual payment.

The charge is clawed back through the self assessment system. All individuals have a legal requirement to notify HMRC of an additional source of income before the 5 October after the end of the tax year. If subject to this high income tax charge, then HMRC will need to be notified. Our understanding is that HMRC will be asking for a self assessment tax return from all involved. Given the number of tax code errors we continue to see, this also allows an annual check up of the tax position.

The good news is that, in certain situations, finances can be rearranged to lower the clawback. There are certain situations however where it will pay dividends to talk in detail about financial plans, for example cashing in investment bonds at a gain. Whilst these are “top-sliced” so that higher rate tax payable is spread over the time the bond has been owned, any gain is treated as income in that year to determine the amount of child benefit to be clawed back.