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  • EMPLOYMENT ALLOWANCE

    What is Employment Allowance?

    Employers can have a reduction in their Employer’s National Insurance Contributions (NICs) of up to £ 2,000 per tax year.

    When is the Employment Allowance effective?

    The Employment Allowance is effective from 6 April 2014 i.e in the tax year 2014/2015.

    How do you claim for the Employment Allowance?

    The Employer has to notify HMRC via their RTI  (Real Time Information) payroll system.

    Against how many payroll schemes can the Employment Allowance be claimed?

    The Employment Allowance is for one payroll scheme only where there are connected parties such as same directors, same group of people such as husband and wife.

    Can the Employment Allowance be used against Class 1A and Class 1B NICs?

    No, the Employment Allowance is only against Class 1 Employer’s NICS.

    Who is excluded from the Employment Allowance?

    The Employment Allowance does not apply to:

    - people who employ someone for personal, household or domestic work such as a nanny, au pair, chauffeur, gardener or care support worker.

     

    -businesses who carry out functions wholly or mainly of a public nature such as NHS, GP and prison services.

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    Most of us know that the filing deadline for the self assessment (personal) tax return online for 2012/2013 is due by 31st January 2014!

    Some unacceptable lame excuses

    1. A Kent Financial Services firm "doesn't really do anything".

    2. "My wife will not give me my mail" complained a self employed trader. May be he has been naughty!

    3. A woman was unable to "concentrate on anything else" when she saw a volcanic explosion on television.

    4. A pet goldfish passed away.

    5. A Midlands farmer ran into a COW.

    6. A Leicester hairdresser was told by her husband that the filing deadline was 31st March and she believed him. When in doubt, put the blame on the other half!

    7. A taxi driver had a bad back and could not go upstairs to fetch his tax return although he was able to work.

    8. A man had been cruising round the world on his yatch and could only pick up post when he was on dry land.

    9. A writer was busy touring the country with a one-man play.

    10. To top it all, a London accountant had been too busy submitting his clients' tax returns to do his own!

    Reasonable excuses

    HMRC will accept some excuses when some unforeseen or unusual event occurs beyond your control. Such examples are:

    - A failure in HMRC computer system.

    - Your computer breaks down whilst you are in the process of preparing your tax return online.

    - You suffered a serious illness, disability or serious mental health condition.

    - You registered for HMRC Online Services but did not obtain your Activation code on time.

    You need to demonstrate that you are making a reasonable effort to meet the deadline. Submit your tax return as soon as you can!

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    Autumn Statement 2013

    George Osborne delivered his Autumn Statement (mini budget) on 5 December 2013. Here are the losers and winners:

    Losers

    Overseas property buyers

    From April 2015, overseas buyers will have to pay Capital Gains Tax on the sale of a property which is not their main home.

    Pensioners

    State pension Age to rise to 68 in the mid 2030s and 69 in the mid 2040s. So prepare for those achy breaky bones.

    Younsgters

    Youths aged between 18 and 21 with no basic Maths and English have to undergo training if looking for employment. Otherwise they lose their benefits.

    Tax avoiders

    There wil be crack down of tax avoiders who cover up employment as self employment.

    Winners

    Kids in Reception, Year 1 and Year 2

    Free school meals should enable better concentration and education.

    Married couples

    Unused personal allowance (the amount you earn before paying income tax) used to be lost. Married couples will be able to transfer £ 1,000 of their personal allowance.

    Motorists

    Freeze on fuel duty! We welcome this type of freeze (rather than the curent freezing temperature)

    Householders

    Green levies reduction leading to savings of up to £ 50 on the average household energy bills.

    Developers

    Large housing developers will receive more finance leading to more houses on the horizon.

    Businesses

    Business rates increases to be restricted to 2%. Retail outlets of up to a value of £ 50,000 will get discount on their business rates for the next two years.

    Start-up loans extended and export finance has been doubled to enable businesses to reach emerging markets.

     

    So have you lost or gained from the Autumn Statement?

     

     

     

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    Rules for director's loans

    If a director borrows money from a close company (one that is controlled by 5 or fewer people), there is a 25% tax charge of the amount owed at the end of the financial year. But this is repayable if the loan is paid back within the following 9 months.

    Bed and Breakfasting

    This is where a director borrows money from a company, repays it to avoid the tax charge and then borrows money again within a short period!

    Anti-avoidance rules

    HMRC does not approve of bed and breakfasting and as such have set up 2 new rules:

    (1) 30-day rule

    (2) Intentions and arrangements rule.

    30-day rule

    If a director repays > £ 5,000 of the money he borrowed from the company, and within 30 days borrows more than £ 5,000, the reduction in the 25% tax charge will be restricted to the lower of the:

    - amount repaid and

    - amount reborrowed.

    Intentions and arrangements rule

    The above restriction on the 25% tax charge also applies where a director borrows £ 15,000 or more.

    Conclusion

    The values of the director's loans and the timing of the repayments are therefore crucial in reducing or eliminating the 25% tax charge.

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    P800 26 October 2013 | Comments (0)

    What is a P800?

    P800 is a tax calculation that HMRC sends to check whether too much or too little tax has been paid.

    Who will receive the P800 tax calculation?

    P800 will be sent to those who have income taxed under (Pay As You Earn) PAYE, and those who have not been asked by HMRC to complete a self assessment tax return.

    Estimates

    Check all entries on your tax calculation. HMRC does not have direct access to non-PAYE income such as bank interest and other investment income. HMRC may use estimates.

    Actions

    Do not panic! Contact HMRC if there are any errors on your P800.

    If you need any assistance, please contact:

    Valerie Chan

    Tel: 0208 682 3122

    Mobile: 079 39 25 89 00

    Website: www.vfaccountants.co.uk

     

     

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    REQUIREMENTS FOR A STARTUP

    1. Seek the advice of a qualified accountant, especially if you are setting up your own business for the first time.

    2. We will discuss with you your current and future situations to enable you to choose the best option as to whether you should start up as a sole trader, a partnership or a limited company. The differences will be explained to you.

    3. The business structure will determine which tax you pay, how and when you should pay it.

    4. We will advise you as to whether you need to be registered for VAT and its implications for your business.

    5. If you are going to take on employees, we can register your business for Pay As You Earn (PAYE) and carry out the payroll for you.

    6. If you want to start up as a limited company, we can set it up for you at Companies House, and register your company for Corporation Tax with HMRC.

    7. Discussions on requirements for good record keeping, and whether spreadsheets or accounting packages such as Sage or Quickbooks are appropriate.

     

    Contact Valerie Chan for your first one hour free consultation.

     

    Telephone: 0208 682 3122

    Mobile: 0793 925 8900

    Email: VChan@vfaccountants.co.uk

    Website: www.vfaccountants.co.uk

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    At VF Accountants, we understand that in this difficult economic situation, more and more people are preparing their own tax return.

     

    However, there are some matters to take into consideration:

     

    1. There are differences in which expenses the self-employed and directors of companies can and cannot claim.

     

    2. An increasing number of people are working from home. There are some expenses which will trigger Capital Gains Tax when you come to sell your main residence! Seek advice from an accountant.

     

    3. Most people do not understand how allowances work, and so do not claim. These allowances can reduce your tax bill significantly.

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