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Mar 19

Changes to Minimum Wage Rates

From April 2019, minimum pay rates will increase as set out below.

  • National Living Wage (NLW) rates for workers aged 25 and over - from £7.83 to £8.21 per hour.
  • National Minimum Wage rates:
    • workers aged 21–24 — from £7.38 to £7.70 per hour
    • workers aged 18–20 — from £5.90 to £6.15 per hour
    • workers aged 16–18 — from £4.20 to £4.35 per hour
    • apprentice rate — from £3.70 to £3.90 per hour.

The accommodation offset rate will rise to £7.55.

This should mean that a full-time worker aged 25 and over on the NLW will receive an annual pay increase of £690.
Employers are reminded that these rates are not optional. HMRC police the National Minimum Wage and NLW regulations and employers found to be in breach will be subject to penalties and have to repay any arrears to affected employees.

Mar 19

Last call for VAT traders to prepare for new filing regulations

As we have mentioned before in this newsletter, VAT returns filed for periods commencing on or after 1 April 2019, may need to be filed using the new Making Tax Digital (MTD) protocols. The new filing obligations will apply to VAT registered businesses with turnover above the current VAT registration limit, £85,000.

To comply with MTD firms will need to file their returns – for periods commencing on or after 1 April 2019 – using software that can link with HMRC’s MTD servers.

Readers affected, and who have not yet considered their options, should take advice, and quickly. We can offer advice on the use of appropriate software, but time is running out. Avoid last minute challenges and call now to discuss your options.

Mar 19

Loans to employees

 A reminder that if your business makes a loan to your employees or their relatives this can create tax problems for both employees and employers. And please don’t forget that the term “employee” includes directors, and also that loans to family members may be caught.

For example, the employer will have an obligation to report a beneficial loan to HMRC (and pay Class 1A NIC) and the deemed benefit would be a taxable benefit in kind for the relevant employee. A beneficial loan is one that is interest free or the rate charged is below the “official rate” and the benefit is the difference between these interest rate charges.

Fortunately, not all loans create a tax problem, certain loans are exempt from this reporting obligation. These could include loans employers provided:

  • in the normal course of a domestic or family relationship as an individual (not as a company you control, even if you are the sole owner and employee),
  • with a combined outstanding balance due from an employee of less than £10,000 throughout the whole tax year,
  • to an employee for a fixed and never changing period, and at a fixed and constant rate that was equal to or higher than HMRC’s official interest rate when the loan was taken out – the official rate for 2018-19 is 2.5%,
  • under identical terms and conditions as those provided to the public (this mostly applies to commercial lenders),
  • that are ‘qualifying loans’, meaning all the interest charged to the loan account qualifies for tax relief.
    Loans written off also create a National Insurance Class 1 charge for the employee. They must be reported on a P11D and the employer has an obligation to deduct and pay Class 1 NIC from the employee’s salary, on the amount written off for tax purposes.

Calculating the taxable benefits for chargeable loans can be somewhat complex and readers are advised to take advice if they are unsure of their tax and NIC responsibilities.

Feb 22

Tax Diary February/March 2019

1 February 2019 - Due date for Corporation Tax payable for the year ended 30 April 2018.

19 February 2019 - PAYE and NIC deductions due for month ended 5 February 2019. (If you pay your tax electronically the due date is 22 February 2019)

19 February 2019 - Filing deadline for the CIS300 monthly return for the month ended 5 February 2019.

19 February 2019 - CIS tax deducted for the month ended 5 February 2019 is payable by today.

1 March 2019 - Due date for Corporation Tax due for the year ended 31 May 2018.

2 March 2019 – Self assessment tax for 2017/18 paid after this date will incur a 5% surcharge.

19 March 2019 - PAYE and NIC deductions due for month ended 5 March 2019. (If you pay your tax electronically the due date is 22 March 2019)

19 March 2019 - Filing deadline for the CIS300 monthly return for the month ended 5 March 2019.

19 March 2019 - CIS tax deducted for the month ended 5 March 2019 is payable by today.

Feb 22

What is the government doing to prepare us for Brexit?

 According to a recent announcement on the GOV.UK website, preparations include:

  • Recruitment of 700 new staff to work on EU Exit policy using additional funding allocated by HM Treasury for Brexit preparedness.
  • Passing of new legislation to lay the groundwork for our future outside the EU with 57 out of 63 required statutory instruments required by Exit day, including new laws for a nuclear safeguards regime that will maintain the UK industry’s ability to trade in the nuclear sector while ensuring the UK remains on track to meet its international obligations on day one of exit.
  • Laying of legislation and the putting in place of new measures to ensure a robust and effective product safety and metrology regime post-Exit by the Office for Product Safety and Standards.
  • The publication of 28 technical notices, including oil and gas, climate change, company law and state aid. These will continue to be updated. These notices also include guidance about what actions businesses need to take in order to carry on exporting and importing a range of goods and services.
  • Continuing to work closely with the UK research community to maintain collaboration with the EU while laying legislation to ensure laws governing areas like employment rights and renewable energy remain world-leading after we leave.
  • Retaining a general system for recognition where UK regulators will be required to recognise EEA and Swiss qualifications which are of an equivalent standard to UK qualifications in scope, content and level.
  • Working with Ofgem, the Northern Ireland Utility Regulator and interconnector operators to put in place arrangements that aim to ensure that electricity and gas continue to flow across borders through interconnectors.
  • Signing Nuclear Cooperation Agreements (NCA) with Australia, Canada and the United States. The NCAs allow the UK to continue civil nuclear cooperation when current European Atomic Energy Community (Euratom) arrangements cease to apply in the UK.
  • Protecting our climate ambition by taking steps to ensure that, if we leave the EU Emissions Trading Scheme, on day one companies will still have to report their carbon emissions and there will be a carbon tax of equivalent impact – to make sure that these important emissions don’t increase as a result of a no deal scenario.
  • Publishing a package of secondary legislation in December to ensure our energy laws function effectively after exit day, including: European Network Codes, Electricity and Gas Acts, and EU regulations under the Third Energy Package.
  • £92 million of funding work on the development of options for a UK Global Navigation Satellite System; and
  • Working with Cabinet Office, DExEU and other departments to ensure all business sectors are appropriately informed on all major issues.
Feb 22

Are you ready for the VAT filing changes?

A reminder that from 1 April 2019, VAT registered traders with turnover in excess of the current VAT registration limit, £85,000, will need to file returns after 1 April 2019 linked to HMRC’s Making Tax Digital (MTD) systems.

Accounts software providers have been working at some pace to change their software, so they “speak” to HMRC’s MTD servers using a dedicated link called an API (an application program interface).

If we complete your VAT returns, you can be assured that we will be using approved software. If you manage your own VAT filing, you should check with Advoco to make sure your software supplier is going to provide the MTD VAT filing facility.

Any issues please get in touch as we can either take over this chore for you or advise which software to use.

Any mention of software thus far in this article refers to your account’s software. It does not include spreadsheets. Spreadsheets create a particular issue for filing VAT numbers via MTD. If the data in the spreadsheets is linked electronically to the final VAT filing software all is well. If you have to cut and paste data from a spreadsheet into accounts software this will not be sufficient for MTD purposes. However, HMRC has said that they will allow a period of time – a soft landing – for businesses to have digital links in place on or before 31 March 2020.

Do get in touch if you are struggling to achieve MTD compatibility before 1 April 2019.

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