Taxing Times – March 2017

Hello and welcome to a “budget predictions” issue of Taxing Times.  In this edition we look at:Taxing Times

 

  • A special section on what our thoughts are for the upcoming Budget on Wednesday this week. 
  • Payroll update 
  • What’s new in the world of tax?
  • A heads up on forthcoming dates and deadlines
  • A message about some rather important changes to probate matters

Look out for our detailed Budget commentary on Wednesday which we will be sending out as soon as we have digested all of the announcements and what they will mean for you and your business! Watch this space for developments (of the hopefully not too exciting kind!)

 

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Pre-budget musingsMoney tree 11408465_L

Excited? We are! (Well, we do work in tax after all).
So what can we expect in this week’s Budget? A change to business rates has got to be a “no-brainer”. With some businesses currently facing rate increases of up to 400%, the government almost has no choice but to introduce new measures which will soften the impact of these dramatic increases.

Another area that has recently received a lot of media attention is the tax and NIC treatment of self-employed individuals (when compared to employees).  It is estimated that the government is missing out on billions of tax and NIC that would otherwise be payable if the individuals were classified as employees (as opposed to self-employed). And there are already some niche but significant and wide ranging changes on “off payroll working” in the public sector which come in from April this year.

It also seems obvious at a glance that the disparity between NIC for the employed versus the self employed is something the government may wish to address, if not now then perhaps soon, given the statistical swing towards self employment.

The general view amongst most commentators is that Philip Hammond will probably keep most of his powder dry on the 8th March as he wants to have room for manoeuvre in the Autumn Budget to react to any challenges arising from the Brexit process.  However, looking at what happened at the Oscars, there is always the possibility that he could be handed the wrong red box on Budget day which would make next week’s speech more eventful than anticipated!

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Dates and deadlines for your diary

31 March 2017

CT: company tax returns for accounting periods ending 31 March 2016 should reach HMRC

The business premises renovation allowance scheme ends for companies (it ends on 5 April for unincorporated businesses)

Accounts: Private companies with 30 June 2016 year ends must file their accounts with Companies House

5 April 2017Payroll Web Image

CGT: the last day to make disposals to use the 2016/17 CGT exemption

IHT: deadline to utilize IHT exemptions for 2016/17 (and any unused relief from 2015/16)

Pensions: deadline to make personal contributions to qualify for tax relief in 2016/17

6 April 2017

HAPPY NEW TAX YEAR!!

19 April 2017

Employers: final submission must be made to HMRC under RTI for 2016/17 including answering the end of year questions

30 April 2017

CT: company tax returns for accounting periods ending 30 April 2016 should reach HMRC

Accounts: Private companies with 31 July 2016 year ends must file their accounts with Companies House

ATED: deadline to submit returns for the Annual Tax on Enveloped Dwellings and pay the tax for the year 1 April 2017 to 31 March 2018

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Changes to probate fees

Probate fees are increasing significantly from May 2017.  At the moment if an estate is valued at more than £5,000 there is a flat fee for obtaining Probate of £215.

From May 2017 the fees will change, and a sliding scale is being introduced, based on the gross value of the estate. The percentage figures below show how many estates the Treasury indicate fall within each bracket.

Probate FeesThese changes are expected to generate an additional £250million PER YEAR for the Government. Not surprising, when you think about a jump from £215 to £20,000!

Lifetime gifts to get estates below the £2million bracket will help reduce Probate Fees, and will also enable people to qualify for the Residential Nil Rate for IHT purposes.

So now, even more than ever before, IHT planning is important to consider – even if nobody likes to think about their demise, I’m sure they like even less to think about potentially huge chunks of their hard earned estate going to HMRC!

To discuss IHT issues and potential planning opportunities please contact Jonathan, Judith or Bevan.

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Payroll Update

Payroll Year Endpiggy-bank-38867862_ml
They say time flies, and it does appear to be true as we are here again approaching another payroll year end.  As always, the tax year ends on 5 April and any pay dates from 6 April onwards fall into the new tax year.   Under Real Time Information (RTI), you still need to send a year end submission but it is much more straight forward now as employee pay and deductions have already been submitted throughout the year. Also, employers will no longer be required to answer extra questions on the payroll submissions they make to H M Revenue & Customs (HMRC) at the end of the tax year.  Once you have processed your final pay period and checked you have reconciled your PAYE liability then a final end of year submission must be sent to HMRC by 19 April.  P60’s must be issued to employees by 31 May.

Once you have completed your year end tasks, it is vital that you are prepared for the new tax year.  You should ensure your software is updated for the new tax year rates and legislation, ensure you update your employees tax codes, set up your software for claiming the employment allowance and small employers relief if applicable and make sure you are paying your employees the new minimum wage rates.

Although there is still extra work to do at the end of the year, the burden is now reduced which makes a busy time of the year just a little less frantic (!).

Firms failing on minimum wage

The government has named 360 businesses which have failed to pay either the National Minimum Wage or the National Living Wage. Hospitality businesses, including restaurants and hotels, feature in the list most often for underpaying their staff, with 84 employers underpaying 563 workers in total.

One of the big employers named was Debenhams who  failed to pay more than £134,800 to 11,858 employees. Debenhams stated that there had been a technical error iStickman money - 9676815_ln its payroll calculations, which resulted in an average underpayment of around £10 per person to affected colleagues in 2015.  They have declared that they are committed to the National Minimum Wage and as soon as the error was identified by a routine HMRC audit last year, they reimbursed all those affected.  Debenhams was fined £63,000 by HMRC for the underpayment.

Meanwhile, thousands of Argos workers will share £2.4m after it emerged they were paid below the National Living Wage.  Sainsbury’s, which took over Argos last year, said the problem related to the timings of staff briefings before they had clocked on to their shifts, and security searches which could happen after workers finished a shift. HMRC fined the retailer £1.5m for the oversight.

Excuses used by other businesses for not paying the full basic wage included using tips to top up their pay, making reductions to pay for a Christmas party, or making staff pay for their own uniforms.

Paying the right amount of tax through PAYE

From May 2017, HMRC have stated that they will use the real time information submitted through payroll to allow them to make automatic adjustments to Pay As You Earn (PAYE) tax codes as they happen, rather than waiting until the end of the tax year.

This is the next step in using real time information and brings the old annual tax cycle up to date by helping people pay the right tax on their income as they earn it.  HMRC say that for most people, there will be no more waiting for a payment of overpaid tax and no more unexpected bills at the end of the year.  This is part of HMRC’s work to transform the tax system, as set out in Making Tax Digital in the Autumn Statement 2015.

And Finally…..

Paid Paw-ternity Leave

Workers at a craft brewing company will be given a week of paid ‘paw-ternity leave’ if they adopt a dog, to help them bond with their new arrival.

Aberdeenshire firm BrewDog has launched the Puppy Parental Leave programme for any new dog owners on the staff, whether they get a puppy or adopt an older rescue dog.

The brewery prides itself on being a dog-friendly workplace, and has around 50 office dogs. It’s hoped the scheme will help dogs settle into their new homes while their owner is around, making them feel at ease sooner. The scheme is due to open in the spring.

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What’s new in22801064_s the world of tax?

Beckhams pay £153,000 in tax every week

David and Victoria Beckham
hand over £22,000 a day to HMRC.  Accounts show Beckham Brand Holdings enjoyed profits of nearly £40m in 2015 and paid £8m in tax.

Temper temper – Becks didn’t take knighthood snub well

David Beckham allegedly flew into a rage when he was denied a knighthood in the Queen’s New Year’s honours in 2013. Leaked emails show he was upset that being linked to the Ingenious tax avoidance scheme hampered his chances. HMRC had placed a flag against his nomination, but apparently without explanation.

What’s good for the goose is good for the gander – Tax inspectors benefit from HMRC mishaps

A Freedom of Information request obtained by the Daily Mail found that tax inspectors overpaid themselves £22m over the past decade. In the 2015-16 financial year, the mistakes added up to £1.4m. The findings leave HMRC workers having to chase their own colleagues and former employees for the extra cash. An HMRC spokesman said it has stringent measures to ensure overpaid money is recovered: “HMRC takes the recovery of any overpaid salaries extremely seriously – that’s why we have reduced the amount overpaid year on year and last year recovered £1.9m in overpaid salaries.”

Well, that’s alright then.Shady man 15059865_s

Finally, on a serious note….New HMRC scam

A colleague took a call from an upset client who had taken a call supposedly from HMRC saying they had issued an arrest warrant for unpaid tax!  Luckily the client knew there was unpaid tax and had a formal time to pay arrangement in place with HMRC so was pretty sure it was a scam – even so, a call out of the blue saying “pay up or be arrested” is very upsetting.  HMRC are aware of these calls and anybody who receives one is encouraged to report it to the police on 0300 123 2040 or online www.actionfraud.police.uk. If you can recover the number which called even better.

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