S R Lynn Co - Budget Summary

Budget 2018

In a longer than usual Budget speech, and in a slightly more jocular than usual mood, the Chancellor laid out the government’s vision for post-Brexit Britain. With a raft of measures aimed at shoring up businesses, infrastructure and the health service, Mr Hammond used the better than expected public finances to present an upbeat programme. Leaving some of the major announcements for last, this was a Budget to mark the coming of the end of austerity.

Some of the main announcements were:

  • The personal allowance will be raised to £12,500 from April 2019, one year earlier than planned. The higher rate threshold will also rise to £50,000 from April 2019, also a year earlier than planned, and will remain at the same level in 2020/21.
  • The lifetime allowance for pension savings will increase to £1,055,000 for 2019/20 in line with CPI.
  • The national living wage will increase from £7.83 an hour to £8.21.
  • The annual investment allowance (AIA) will increase to £1 million for all qualifying investments in plant and machinery made on or after 1 January 2019 until 31 December 2020.
  • For entrepreneurs’ relief, the minimum period throughout which the qualifying conditions for relief must be met will be extended from 12 months to 24 months from 6 April 2019.
  • From 1 April 2020, companies will be subject to a 50% limit on the proportion of annual capital gains that can be relieved by brought-forward capital losses. Companies will have unrestricted use of up to £5 million capital or income losses each year.
  • Business rates bills will be cut by one-third for retail properties with a rateable value below £51,000 for two years from April 2019.
  • Capital gains tax lettings relief will only apply where the owner of the property is in shared occupancy with the tenant. The final period exemption will also be generally reduced from 18 months to nine months.
  • The VAT registration threshold be maintained at the current level of £85,000 until April 2022.
  • From 1 April 2020, the amount of payable research and development (R&D) tax credits that a qualifying loss-making company can receive in any tax year will be restricted to three times the company’s total PAYE and NICs liability for that year.
  • From 6 April 2020, when a business enters insolvency, HMRC will be a preferred creditor for taxes collected by the business for the government such as VAT, PAYE income tax, employee NICs, and construction industry scheme deductions – but not such taxes as corporation tax and employer NICs.
  • Large social media platforms, search engines and online marketplaces will be pay a 2% tax on the revenues they earn which are linked to UK users from April 2020.
  • Fuel duty was frozen, alongside beer and spirits.

More details available in S R Lynn Co – Budget Summary

 

 

<Back

 

S R Lynn Co - Budget Summary

Welsh Tax Codes

Who will pay Welsh rates of Income Tax?

A taxpayer who is resident in the UK for tax purposes and has their sole or main place of residence in Wales for more of the tax year than in any other part of the UK will pay Welsh rates of Income Tax (WRIT).

HMRC will identify Welsh taxpayers based on information held within its systems. Employers and pension providers will not decide an individual’s Welsh taxpayer status. Welsh taxpayer status applies for a whole tax year and can’t be applied for part of a year.

From April 2019, Welsh resident taxpayers employed or in receipt of a pension will have a tax code beginning with C. Those completing a Self Assessment tax return online will be asked about country of residence on their return.

 

 

<Back

S R Lynn Co - Budget Summary

Thinking about Christmas?

There are still 9 weeks until Christmas but, like us, you may have already received your first Christmas Party leaflet through the door encouraging you to book early.

Even if you aren’t ready to start organising the Christmas Party yet, you may want to think about the ‘benefits-in-kind’ implications before you start doing so.

You won’t need to report or pay anything to HMRC, if the party or similar social function is all of the following:  

 

  • £150 or less per head
  • annual
  • open to all your employees

If your business has more than one location, an annual event that’s open to all of your staff based at one location still counts as exempt. You can also put on separate parties for different departments, as long as all of your employees can attend one of them.

If you have more than one annual event, for example a summer bbq as well, as long as the combined cost of both events is no more than £150 per head, they’re still exempt.

If any of the events you provide aren’t exempt, you’ll have to report the costs to HM Revenue and Customs (HMRC) and pay National Insurance on them.

You must:

  • complete a form P11D for each employee
  • pay Class 1A National Insurance on the full cost of the event.

If you would like us to complete form P11Ds for you when they become due in July 2019, please give us a call on
01908 227055

 

 

<back

 

S R Lynn Co - Budget Summary

Employment Allowance – Is your business eligible to claim

The allowance has been in place since 2014.  It currently stands at £3,000 per year and seems to be a permanent fixture. 

Most payroll software automatically takes care of claiming the allowance.  However, have you considered whether you are eligible to claim?  In particular, if you own or partly own two or more businesses. 

HMRC have published guidance notes on connected companies.

 

 

<Back

 

S R Lynn Co - Budget Summary

Do you have to pay tax as a Foster Carer?

HMRC treats paid carers, which includes foster carers, as running their own business for tax purposes.  This means you may have to pay tax on money you receive. 

However, you can claim ‘Qualifying Care Relief’ (QCR), which could reduce the tax payable. 

You can use QCR  if you have children or adults placed with you by:

  • a local authority
  • health and social care trusts in Northern Ireland
  • a fostering service provider
  • a shared lives service provider

Qualifying care relief covers:

  • foster care
  • shared lives care
  • kinship care
  • staying put care – where a young person who was fostered continues to receive care after their 18th birthday
  • parent and child arrangements – where the parent is aged 18 or over and the child isn’t a ‘looked after child’
  • supported lodging schemes – unless the relationship is more similar to that of a landlord and tenant rather than that between family members

HMRC offer a factsheet, which explains QCR in more detail.

If you need help with completing a tax return, please give us a call on 01908 227055

 

 

<Back

 

 

S R Lynn Co - Budget Summary

GDPR Privacy Notice for Staff

As you will be aware, the General Data Protection Regulations (GDPR) came into force on 25 May 2018.  If you employ staff, you will have to give them detailed information on the data that you hold on them and how you process it.  

Some of the things that you should inform your staff of are: 

  • the name and contact details of the person, within your business, who is the Data Controller
  • the name and contact details of your appointed representative (if you have one)
  • the name  and contact details of your Data Protection Officer
  • what data you hold on your employees and how you process it
  • the legal basis or bases for that processing
  • the name of any third-party that you share their data with 
  • how many years you will hold this data

Your employees have a legal right to access this data, rectification, erasure, restriction of processing, objection and data portability. They also have the right to lodge a complaint about your data processing with the Information Commissioner’s Office (ICO).

The above information should be provided to staff in a privacy notice.  This should be made available either at the point you collect their personal data or before you do so, not afterwards.  

 

 

<Back

S R Lynn Co - Budget Summary

HMRC’s Dynamic Tax Coding System

2018-19 is the first tax year that HMRC will use their new dynamic coding system to issue tax codes at the beginning of the tax year.

You should check all tax codes sent to you but for 2018/19 some of the things you should look out for are:

  • the ‘S’ prefix missing for Scottish taxpayer
  • personal tax free allowances being left out
  • no pension tax relief for higher or additional rate taxpayers
  • deductions for a source of income e.g. benefits in kind bank interest that you no longer receive

 

 

<Back

S R Lynn Co - Budget Summary

Diesel Car & Fuel Benefit Charge increase

On 6th April 2018, the diesel supplement, relating to the car & car fuel benefit increased from 3% to 4%  for all diesel cars that are not certified to meet the Real Driving Emissions 2 (RDE2) standard.

You can find out if your car is RDE2 compliant by asking the manufacturer for the “Certificate of Conformity”.    The diesel supplement will continue to apply to cars using diesel only (not diesel hybrids) and registered on or after 1 January 1998, which do not have a registered Nitrogen Oxide (NOx) emissions value. It will also apply to models registered on or after 1 January 1998, which have a registered NOx emissions value which exceeds the RDE2 standard. 

 

 

 

<Back

S R Lynn Co - Budget Summary

Trivial Benefits

Since April 2016, employers have been able to provide  small benefits-in-kind to their employees without them counting as taxable perks. 

These should not

  • cost more than £50
  • be cash or cash vouchers
  • in recognition of a service performed by the employee as part of their job
  • form part of their contract of employment 

Whilst you can provide any number of small benefits to your employees, the rules for Directors are different.  Directors are limited to £300 per year.

More information can be found on HMRC’s website https://www.gov.uk/expenses-and-benefits-trivial-benefits

If you would like us to complete you P11Ds, please give us a call on 01908 227055

 

 

<Back

S R Lynn Co - Budget Summary

HMRC Online Services – 2 step verification

In order to use your HMRC online business tax account for corporation tax, PAYE and other business services, you will need to use two step verification. 

How does it work?  Once you have entered your username and password, you will now also need to enter an access code.  This code changes each time you log in and is received either through HMRC’s app, by text message to your mobile phone or as a voice message on your landline. 

What if you would like multiple users?  If you would like your Bookkeeper or Accountant to log into your HMRC online account, you will need to set them up as a user.  They will receive a User ID and can create their own password and register their mobile.   You can create  an additional user by logging into your online account and clicking on the ‘Manage account‘, ‘Account Users‘ then ‘Manage Users‘.

 

 

<Back

S R Lynn Co - Budget Summary

Are you calculating the National Minimum Wage correctly?

Are you including other payments and benefits when calculating the National Minimum Wage (NMW)?  You may be doing so incorrectly.  

Here are a few things you should/should not include:  

Mileage Allowance
Mileage allowance only counts, when calculating a worker’s total remuneration for NMW purposes, if it is above the tax approved mileage allowance payments rate.

Tips and Gratuities
Tips and gratuities do not count towards the NMW or the National Living Wage. 

Living Accommodation
Living accommodation provided by an employer to a worker is the only benefit in kind which counts towards a worker’s NMW pay.  A notional amount, called the accommodation offset (currently £6.40 per day) , counts towards a worker’s NMW pay. 

Other things to note: 

Student Placements
If you have student placements who are part of a further/higher education course then the student does not qualify for the national minimum wage in respect of work done for an employer as part of that course, providing:

  • the work experience is undertaken before the course ends, and
  • the period of work experience does not exceed one year

Apprentices
An apprentice should have a contract which specifies: 

  • the pay rate
  • the length of the apprenticeship
  • what training is to be provided and to what level
  • the rights and obligations of the employer and the apprentice

Birthdays
Keep a check on your employees birthdays so you can increase their pay on the day when they fall into the next age bracket.

Annual NMW increases
The National Minimum Wage increases each year on 1 April.  We always publish the rates on our website.

HMRC fines
HMRC fines are 200% of the total amount you have underpaid your employee, up to £20,000.  

 

 

<Back

S R Lynn Co - Budget Summary

A Guide to Shared Parental Pay and Leave

Shared Parental Leave enables eligible mothers, fathers, partners and adopters to choose how to share time off work after their child is born or placed for adoption.

If you are unsure as to whether you qualify for SPL or how SPL is calculated, we have put together a short guide, which we hope you will find useful: 

  • Both parents must have been employed by their companies for 26 weeks prior to the Qualifying week (Qualifying week is 15 weeks before the week the baby is due to be born)
  • Both parents must still be in the same job  a week before the Shared Parental leave is due to start
  • The father or  civil partner must have earned at least £30 per week in the 26 weeks prior to the Qualifying week
  • You cannot get Shared Parental leave if you got Maternity Allowance rather than Statutory Maternity Pay
  • Agency workers are not entitled to shared parental leave but may be entitled to shared parental pay
  • As with Maternity pay, Shared Parental pay is paid for 39 weeks.  You can decide to share that between you and your partner, so if the mother/civil partner/adopter takes 15 weeks pay – their partner can take the remaining 24 weeks pay
  • The same with Shared Parental leave – if the mother/adopter takes 15 weeks leave – their partner can take the remaining 37 weeks leave. 
  • Both parents needs to give their employer 8 weeks notice of the leave they wish to take, The number of weeks available to take, how much each partner will take and declaration from their partner that they agree to the shared leave process.  There are no legal forms but you can download a form from ACAS website
  • Shared Parental Leave cannot start until the child is born – the mother/adopter must take at least 2 weeks after the birth or 4 weeks if she works in a factory.
  • It can be split into 3 separate blocks – both parents can take SPL at the same time
  • Each parent can work up to 20 days during SPL without bringing it to an end (similar to KIT days)
  • A mother/adopter can have these days in addition to KIT days (so effectively she could have 34 days back to work with full pay without bringing her maternity leave to an end)
  • KIT days are not available during Statutory Paternity leave

HMRC have online calculators to help you check if you are entitled to Shared Parental Pay and Leave:

 https://www.gov.uk/pay-leave-for-parents

More detailed guidance  can be found on the ACAS website 

 

 

<Back

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Facebooktwittergoogle_pluslinkedin
S R Lynn Co - Budget Summary

Procedures for taking on a New Employee

Did you know a starter declaration should be completed by every new employee? 

The declaration needs to be completed to determine which tax code your employee should be put on before the first FPS is done.  One of the most common reasons for incorrect tax codes is due to the declaration not being completed before the FPS. 

Usually information from your employee is on their P45.  However, if your employee doesn’t have a P45 then you should ask them to complete a ‘New Starter Checklist‘  This checklist will provide you with all the information you need to get your new employees on the correct code, avoiding late payroll adjustments. 

It’s good practice to get new employees to complete the checklist on day one. 

Here is a link to HMRC’s guidance on what the checklist should include: 

www.gov.uk/new-employee/employee-information

 

 

<Back

S R Lynn Co - Budget Summary

On Maternity Leave? Have you heard of ‘KIT’ days?

To keep in toucMaternity Leaveh during maternity leave and ease your return to work, you can work for your employer during your SMP pay period for up to 10 days without ending your maternity leave or losing your SMP for any weeks that you do some work. These 10 days are called ‘keeping in touch’ (KIT) days and allow you to undertake the odd day’s training or do some occasional work for your employer.

Your employer has no right to demand that KIT work is undertaken and you have no obligation to undertake such work.

Before any work is done, you must agree with your employer:

  • what work you’ll be doing
  • whether the KIT days are used in a row, singly or in blocks, but any work on any day (even an hour) will count as a whole KIT day
  • how much you’ll be paid for work done

Your employer may count the amount of SMP towards the contractual pay agreed with you but they must pay the weekly SMP rate you are entitled to and comply with statutory obligations, for example paying at least the National Minimum Wage.

If you work more than 10 days in your SMP pay period:

  • Your employer can’t pay SMP to you for any weeks where you work
  • Your maternity leave will come to an end

Once you have used your 10 KIT days, you’ll lose one week’s SMP for each week or part week you work.

The SMP pay period isn’t extended to take account of any such weeks. Any SMP lost in this way is always at the standard rate first, or 90% of the AWE if this is lower than the standard rate.

You must take 2 weeks (or 4 weeks if working in a factory) compulsory maternity leave immediately after the date your child is born and can’t work or use a KIT day during that time.

Tracy

 

 

Last updated: 27 November 2018

S R Lynn Co - Budget Summary

Making Tax Digital

The Government recently announced a new timetable for Making Tax Digital (MTD).

Under the new timetable:

  • only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
  • they will only need to do so from 2019
  • businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
Making Tax digital
Making Tax Digital

Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.

This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.

As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.

All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.

 

Tracy

 

 

<Back

Last updated: 28 November 2018

S R Lynn Co - Budget Summary

Lifetime ISAs (LISA)

If you are between the ages of 18 and 40, you can open a Lifetime ISA (LISA).

There is no maximum monthly contribution – you can save as little or as much as you want each month, up to £4,000 a year, and any savings you put into it before your 50th birthday will  receive a government bonus of 25% – that’s a bonus of up to £1,000 a year! 

You can use some or all of the money to buy your first home, or keep it until you’re 60.

The total amount you can save each year into all ISAs is £20,000.


Use it to save for a first home

Your savings and the bonus can be used towards a deposit on a first home worth up to £450,000 across the country.

Accounts are limited to one per person rather than one per home – so two first time buyers can both receive a bonus when buying together.

If you have a Help to Buy: ISA you can transfer those savings into the Lifetime ISA in 2017, or continue saving into both – but you will only be able to use the bonus from one to buy a house.


Alternatively, use it to save for retirement

After your 60th birthday you can take out all the savings tax-free.

You can withdraw the money at any time before you turn 60, but you will lose the government bonus (and any interest or growth on this). You will also have to pay a 5% charge.

 

 

<Back

Last updated: 25 June 2018