The May edition details the changes to Entrepreneurs' Relief and the potential pitfalls when claiming Capital Allowances on some assets.
The Spring edition of the newsletter highlights changes to IR35 and capital allowances
This edition looks at VAT in the food sector and features an article on Inheritance Tax.
Making Tax Digital is on the horizon and this edition gives an overview of the changes.
This edition includes articles on paying dividends, the new Scottish income tax bands and inheritance tax.
In this edition there are articles on the delayed Making Tax Digital plans and the new data protection rules.
A taskforce has recovered more than £5 million by tackling dishonest dog breeders selling pups on the black market. HMRC set up the taskforce in October 2015 after discussions with animal welfare groups that were concerned that tens of thousands of puppies were being reared in unregulated conditions and sold illicitly every year.
The taskforce uncovered fraudsters selling puppies on a mass scale, for a huge profit and due to the underground nature of the activity, failing to declare their sales.
Using civil and criminal enforcement powers, HMRC has recovered £5,393,035 in lost taxes from 257 separate cases since the formation of the taskforce in October 2015.
The breeders and traders targeted include:
Financial Secretary to the Treasury, Mel Stride MP, said:
'It is utterly appalling that anyone would want to treat puppies in such an inhumane way and on such a scale. It's also deeply unfair to all of the legitimate businesses who do pay the right tax, and the total recovered by the taskforce is equivalent to the annual salaries for more than 200 newly qualified teachers.'
'We continue to work hard with other government agencies and our partners to tackle these traders. We urge anyone with information about tax evasion to report it to HMRC online or call our Fraud Hotline on 0800 788 887.'
Internet link: GOV.UK news
The forms P11D which report details of benefits and some expenses provided to employees and directors for the year ended 5 April 2019, are due for submission to HMRC by 6 July 2019. The process of gathering the necessary information and completing the forms can take some time, so it is important that this process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D, generally via a PAYE coding notice adjustment or through the self assessment system. Some employers 'payroll' benefits and in this case the benefits do not need to be reported on forms P11D but employers should advise employees of the amount of benefits payrolled.
In addition, regardless of whether the benefits are being reported via P11D or payrolled the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. The deadline for payment of the Class 1A NIC is 19th July 2019 (or 22nd for cleared electronic payment).
HMRC has produced an expenses and benefits toolkit. The toolkit consists of a checklist which may be used by advisers or employers to check they are completing the forms correctly.
If you would like any help with the completion of the forms or the calculation of the associated Class 1A NIC please get in touch.
From April 2019, Welsh taxpayers were assigned new income tax codes beginning with the letter 'C'. However, HMRC recently revealed that some Welsh taxpayers were mistakenly given Scottish income tax codes by their employers. As a consequence, Welsh taxpayers have been charged income tax using the Scottish income tax rates and bands.
For 2019/20 the Welsh rate of income tax is set at 10% and this is added to the UK rates, which are each reduced by 10%. Therefore, the overall tax payable by Welsh taxpayers continues to be the same as English and Northern Irish taxpayers.
The income tax rates and bands that apply to employment income, self-employed trade profits and property income are different for taxpayers who are resident in Scotland, with tax rates and bands ranging from 19% to 46% rather than the 20% to 45% which apply across the rest of the UK. Tax codes for Scottish taxpayers begin with the letter 'S'.
HMRC stated that it does not know the full extent of the error or how many Welsh taxpayers have been affected but they will carry out a review of the operation of Welsh tax codes in June 2019.
Llyr Gruffydd, Chair of the National Assembly for Wales' Finance Committee, said:
'We raised concerns about the flagging process for identifying Welsh taxpayers during our enquiries into fiscal devolution and the Welsh government's draft budget.
'On each occasion, we were told the matter was in hand, and the lessons from the devolution of income tax powers to Scotland, where there were similar issues, had been soundly learned and would be put into effect. We are seeking an immediate explanation of how this has happened and will be asking representatives from HMRC to appear before this Committee in the near future.'
If you have any concerns about tax codes, please get in touch.
The government has launched a consultation on proposed reforms at Companies House, including a 'major upgrade' of its register.
The consultation aims to tackle misuse of the register. It also strives to provide business owners with 'greater protection from fraud'.
The consultation seeks views on a series of reforms to limit the risk of misuse:
Louise Smyth, Chief Executive of Companies House, said:
'This package of reforms represents a significant milestone for Companies House as they will enable us to play a greater part in tackling economic crime, protecting directors from identity theft and fraud, and improving the accuracy of the register.'
The consultation is open until 5 August 2019.
A capital gains tax (CGT) exemption applies when an individual disposes of a dwelling that has been used as their only or main residence under the Private Residence Relief (PRR) rules. The exemption applies as long as the relevant conditions are met throughout the total period of ownership. This relief is supplemented by ancillary reliefs that aim to deal with other related situations.
The government has previously announced and legislated to reform two of the ancillary reliefs to better target PRR at owner-occupiers. The reliefs which are being amended are:
These changes will take effect from 6 April 2020. The government is now consulting on the changes in more detail and on how they will work in practice. It also invites views on some technical aspects of the PRR rules.
Internet link: GOV.UK consultation
New company car advisory fuel rates have been published which take effect from 1 June 2019. The guidance states: 'You can use the previous rates for up to one month from the date the new rates apply'. The rates only apply to employees using a company car.
The advisory fuel rates for journeys undertaken on or after 1 June 2019 are:
|1400cc or less||12p|
|1401cc - 2000cc||15p|
|1400cc or less||8p|
|1401cc - 2000cc||9p|
|1600cc or less||10p|
|1601cc - 2000cc||12p|
HMRC guidance states that the rates only apply when you either:
You must not use these rates in any other circumstances.
The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.
If you would like to discuss your car policy, please contact us.
Internet link: GOV.UK AFR
A recent Low Pay Commission (LPC) report sets out its findings on the number of people being paid less than the statutory minimum wage.
The LPC found that, in April 2018, 439,000 workers were paid less than the National Minimum Wage (NMW). Of this amount, 369,000 were employees aged 25 and over, who were paid less than the National Living Wage (NLW), an increase from previous years. On 1 April 2019, the NMW and NLW rates rose to the hourly rates detailed below:
|Minimum wage rate||Hourly rate from 1 April 2019|
|National Living Wage (for workers aged 25 and over)||£8.21|
|21-24 year-old rate||£7.70|
|18-20 year-old rate||£6.15|
|16-17 year-old rate||£4.35|
|Accommodation Offset||£7.55 per day: £52.85 per week|
The LPC also revealed that women are 'more likely' than men to be paid less than the NMW, and that underpayment is common amongst younger and older workers. In addition, underpayment was more common in certain sectors including hospitality, retail, cleaning, maintenance and childcare.
Commenting on the findings, Bryan Sanderson, Chair of the LPC, said:
'Our analysis reveals a worrying number of people are being paid less than the minimum wage. We recently celebrated 20 years of the minimum wage – it has raised pay for millions of workers, but it is essential that people receive what they are entitled to.'
'It is also vital for businesses to be able to operate on a level playing field, and not be illegally undercut on wages.'
Contact us for help with payroll issues.
Internet link: GOV.UK news
HMRC has published guidance on the extension of the off-payroll working rules (also known as IR35) to the private sector, a year ahead of its implementation on 6 April 2020.
In the guidance, HMRC state that the responsibility to determine whether the off-payroll working rules apply will fall on the organisation receiving the individual's service. It outlines a four-step process which can be used to prepare for the changes, starting with identifying any individuals who are supplying their services through PSCs.
The consultation closes on 28 May and asks for responses on several matters, including the scope of the reform and its impact on non-corporate engagers; information requirements for engagers, fee payers and personal service companies (PSCs); and how to address disagreements on an individual's employment status.
The consultation also sets out HMRC's plans to provide education and support for those businesses that are affected.
The government has confirmed that the initiative to introduce a pensions dashboard will go ahead.
Pensions dashboards will allow those saving for retirement to view information from multiple pensions in one place stating that the dashboard will 'open up pensions to millions', and 'provide an easy-to-access online view of a saver's pensions'.
The Department for Work and Pensions (DWP) will bring forward legislation that will require pension scheme providers to make consumers' data available to them through their chosen dashboard. The plan is to include State pension information as well.
Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), said:
'The government's commitment to compel pension schemes to share data with platforms through primary legislation is particularly welcome. Some urgency is now required, and we question the three to four-year timeframe for schemes to prepare data for dashboards.'
HMRC has warned young people in the UK to 'stay vigilant' in order to avoid falling victim to 'Springtime' tax refund scams.
Criminals often target young individuals or the elderly as these groups of people are likely to be less familiar with the UK tax system. During the months of April and May, criminals often bombard taxpayers with tax refund scams at the same time as genuine rebates are processed by HMRC.
In the Spring of 2018, approximately 250,000 reports of tax scams were received by HMRC.
Individuals have been warned to be wary of text messages, calls and voicemails purporting to be from HMRC. These are often designed to extract personal or financial information from the taxpayer.
Angela MacDonald, Head of Customer Services at HMRC, said:
'We are determined to protect honest people from these fraudsters who will stop at nothing to make their phishing scams appear legitimate.
'HMRC is currently shutting down hundreds of phishing sites a month. If you receive one of these emails or texts, don't respond and report it to HMRC so that more online criminals are stopped in their tracks.'
Internet links: Action Fraud