Taxing Times – April 2018

Welcome to April’s edition of Taxing Times and HAPPY NEW YEAR! (Happy New Tax year, that is! We accountants never get tired of that joke). 

In this edition we have:

  • Spring Statement update
  • PAYE update
  • Some thoughts on General Data Protection Regulations (GDPR)
  • Dates & Deadlines for April 2018
  • What’s new in the world of tax

Spring Statement Update

Giving his update last month, Philip Hammond said he was “tigger like”, approaching the road ahead from a position of strength. Thankfully for all tax professionals he did not announce any new tax measures!

In preparation for the Autumn Budget, however, he did set 13 consultation hares running;

  • corporate tax and the digital economy;
  • tackling the plastic problem;
  • allowing entrepreneurs’ relief on gains made before dilution;
  • cash and digital payments in the new economy;
  • financing growth in innovative firms: Enterprise Investment Scheme knowledge-intensive fund;
  • business rates: delivering more frequent revaluations;
  • VAT, air passenger duty and tourism in Northern Ireland;
  • VAT registration threshold: call for evidence;
  • tax treatment of heated tobacco products;
  • taxation of self-funded work-related training;
  • extension of security deposit legislation;
  • online platforms’ role in ensuring tax compliance by their users;
  • alternative method of VAT collection – split payment;

Who knows what these consultations will herald for the Autumn Budget.  To watch out for updates/details in due course!

PAYE update

Another Year Ends

With the Easter bank holiday over, we are back in the swing of things and the payroll team are busy finalising all processing for the year end.  How time flies as it doesn’t seem that long ago since we were discussing the 2016/17 year end, yet here we are again!

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 deduction information has already been submitted throughout the 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.  Don’t forget that if you have employees who are enrolled into a workplace pension, then these contributions must be reviewed from 6 April 2018 also.

Our new 2018 / 19 Tax and PAYE tables can be found here. 

Childcare Voucher Scheme gets reprieve

Ministers have announced a delay of the scrapping of childcare vouchers by six months.  The employer backed voucher scheme, used by up to 450,000 parents, was due to be closed to new entrants in April 2018 but will now have a temporary reprieve following a succession of problems that the alternative system of tax-free childcare has encountered.  In 2013, ministers originally announced that the employee scheme – in which staff in participating companies can receive vouchers worth up to £55 a week in lieu of their salary – would effectively be replaced by a system in which parents have to open an online voucher account and have their payments topped up by the state.  But the new system, which provides support of up to £2,000 a year, has suffered many problems.  Because of glitches on the HMRC website, thousands have been unable to either set up tax-free accounts or access the money they had paid into them.

The 6 month period will be used to address concerns raised about the new scheme and to look at addressing childcare accessibility and affordability.

 

Millions to get pay rise

More than two million people will get a pay rise this week as minimum wage rates increase. The national living wage for those aged over 25 went up from £7.50 an hour to £7.83; 21- to 24-year-olds will get a 33p an hour increase to £7.38. There will be a 30p increase to £5.90 for 18- to 20-year-olds and a 15p rise to £4.20 for under-18s.

 

Reminder re company car data

From 6 April 2018, employers who have registered to payroll car and car fuel benefits in kind will have to report car data information about these benefits in kind on their full payment submission (FPS) rather than on the form P46 (car).  Employers who don’t use voluntary payrolling for these benefits and use the P11d instead, should continue to use the P46 (car) to notify an employee first being provided with a car, or having a car withdrawn, or notify changes to the make and model of car online.

 

Reminder about P11d changes and salary sacrifice

From April 2017, new rules were introduced to cover optional remuneration arrangements, which include salary sacrifice.  From 2017/18, unless the benefit provided was in the form of certain protected benefits (such as childcare vouchers, cycle to work or pensions, or company cars and accommodation subject to transitional rules), there is a new method of valuing and taxing the benefit.  The amount charged to tax is the higher of the amount of salary foregone and the cash equivalent under the normal benefit in kind rules. This means that salary sacrifice is not nearly as attractive as it was (see the July edition of Taxing Times for full details).

The form P11d for 2017/18 onwards will be slightly redesigned to take account of this change and there will be a box that says “cost to you or amount foregone”.

However, note that there are transitional rules for employees who were already in schemes for employer-provided living accommodation, school fees, cars (over 75g emissions) before 6th April 2017 – the new OPRA rules taking away the tax benefits don’t bite until after April 2021, as long as the arrangements are not modified before then, so will not need to be reported on the 2017/18 P11ds.  In addition, employees who were in other kinds of arrangements before 6 April 2017 stay protected until the 2018/19 tax year, again as long as their arrangements are not modified in the 2017/18 tax year.

Advisory Fuel Rates from 1 March 2018

The latest advisory fuel rates (AFRs) are shown in the table below. Hybrid cars are treated as either petrol or diesel cars for these purposes. AFRs can be used by employers who reimburse employees for business travel in company cars (i.e. where a fuel benefit is not provided) OR by employers who require employees to repay the cost of fuel used for private travel in their company cars.  As long as employers pay a rate no higher than these AFRs, HMRC will accept that there is no taxable benefit for the employee and no NIC either.  It is very important that employers update the AFRs they use and use the current rates, otherwise HMRC could assess taxable and NICable benefits.

General Data Protection Regulations (GDPR) is nearly here – Are your employees receiving their payslips online?

You may already be aware that the Data Protection Act 1998 will be replaced by the General Data Protection Regulations (GDPR) on 25 May this year.  At Dodd & Co, we have been investigating how this will impact the way we work and if we process your payroll then we are also reviewing how we securely deal with your employee data.

Many employers are already using the facility to email payslips direct to each employee.  However it is widely accepted that email is not the most secure way of transmitting information if it is unencrypted and in the future, our payroll software will not permit us to store personal passwords for your employees.  Therefore we are going to be sending employee payslips in a slightly different manner via a secure online portal.  This will also allow us to send and receive payroll reports and employee information via the same online system.  The process is really straight forward and allows employees to access their payslips and P60’s whenever they need the information without having to retrieve manually filed email payslips or search for historic paper payslips.

If you would like more details about the Online portal and how we can streamline processing your payroll, please get in touch with the payroll team at Dodd & Co.

Thought of the month:

When it comes to failure, be like a toddler! They fall over again and again but never give up…

Dates & deadlines for April 2018

19 April:

  • Deadline for employers to make a final payroll report for 2017/18 using either a full payment submission or employer payment summary

30 April:

  • Income Tax self assessment – further late filing penalties apply to 2016/17 returns not filed by this date
  • Annual Tax on Enveloped Dwellings (residential properties with a value over £500k owned by companies) – deadline to submit returns and pay tax (in advance) for the year 1 April 2018 to 31 March 2019
  • Corporation Tax – returns for accounting periods ended 30 April 2017 need to be with HMRC by this date
  • Company Accounts – private companies with 31 July 2017 year ends need to file their accounts with Companies House by this date

What’s new in the world of tax?

BBC in dispute over PSCs

The BBC has become embroiled in a dispute with its presenters regarding their tax arrangements and the use of personal service companies (PSCs).

A recent First Tier Tribunal (FTT) IR35 decision saw Christa Ackroyd of Look North required to pay £400,000 of tax owing following HMRC’s challenge to her employment status.

In press statements following the ruling, the BBC said it had not forced presenters to use PSCs, and pointed out that prior to April 2017 and the introduction of new rules around off payroll working in the public sector, it was not required to check the tax status of its staff, and has blamed HMRC for creating a new tax issue, saying that “HMRC introduced a new approach to how they test employment status. Which means that they regard many more people as potentially subject to PAYE and NIC at source, where they would have been paid gross in the past”.  This statement seems rather disingenuous, given that employment status is not a new issue and HMRC have always had concerns about the use of PSCs to avoid PAYE and NIC.

A number of presenters have joined together to refute the BBC’s statements, saying that “Presenters were told that if they did not form a PSC, the BBC would no longer give them any work. Many of them did not want to set up a PSC but felt they had no choice.’  MPs have heard evidence on how presenters were persuaded to use personal services companies. BBC radio presenter Kirsty Lang has stated to MPs that she felt betrayed by the broadcaster after being forced to go freelance and forego holiday pay and sick benefits.  Radio 4 presenter Reverend Richard Coles has criticised the BBC over its tax arrangements. He said that forming personal service companies “was forced upon us by the BBC, which must take responsibility for that.”

Damian Collins MP chair of the House of Commons culture select committee, said the BBC had fallen “well below” the standards expected.

 

Bring back boring!

Andrew Marr has said that the controversy over BBC presenters’ tax affairs shows that the British tax system has become far too complex. He says that taxes should be three things – unavoidable, fair and dull – and wants the government to set about shredding some of the 17,000 pages of Britain’s tax code!

 

Dodd has last laugh

Sir Ken Dodd, who was famously cleared of false accounting in the 1980s, has prevented the taxman from getting a penny from his estate by getting married two days before he died. The size of Sir Ken’s estate was estimated recently at £7m, which could have meant a £3m IHT bill had he not married Anne Jones.

 

Lisa Marie Presley down to her last $14k

Elvis’s daughter, Lisa Marie Presley, is suing her former manager Barry Siegel accusing him of “reckless and negligent mismanagement” of her inherited estate. Ms Presley inherited her father’s $100m (£71.5m) estate in 1993 at the age of 25. Now she says Seigel’s poor investment decisions have left her with only $14,000.

 

Tax bill bankrupts Coronation Street star

Coronation Street star Michael Le Vell has been declared bankrupt after failing to keep on top of his tax affairs. HMRC said Le Vell, who plays Kevin Webster, owed a six-figure sum.

 

Rooney hit with £5m tax bill

Wayne Rooney has been landed with a tax bill totalling £5m after a film finance scheme he invested in was ruled to be avoidance. The Everton striker is understood to have already paid off part of the bill, which is linked to involvement in Ingenious Media and Invicta 43.

 

Xabi Alonso accused of tax fraud

Former Liverpool and Real Madrid midfielder Xabi Alonso is accused of defrauding Spanish authorities of more than €2m in unpaid tax. Along with his financial advisor and the administrator of his shell company, Alonso is also facing a €4m fine.

 

Foul! Palace defender Souare goes bust

Crystal Palace player Pape Souare has entered into a voluntary insolvency arrangement despite earning £30,000 a week with the Premier League side. It is understood HMRC are one of his major creditors.

 

Women too squeamish about money

Chief Secretary to the Treasury Liz Truss says that women have grown up to be “squeamish about money”, putting them off high-paid jobs in economics and finance. Ms Truss pointed out the fact that “in the dim and distant past” women were not allowed to own property and that independent taxation for married women was only introduced by Margaret Thatcher in 1988. She said: “I think that girls…get the message that maybe things like maths or economics and finance aren’t for them, the City is seen as very male-dominated, and we need to change that culture and shake up that culture.”

Not at Dodds! Here, there are as many qualified female accountants as there are men!  Of 11 partners, 4 are women. Go girls!

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