Archive for the ‘business development’ Category

New National Minimum Wage Rates

Friday, April 8th, 2011

Current NMW rates

There are different levels of NMW, depending on your age and whether you are an apprentice. The current rates are:

  • £5.93 – the main rate for workers aged 21 and over 
  • £4.92 – the 18-20 rate
  • £3.64 – the 16-17 rate for workers above school leaving age but under 18
  • £2.50 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

The age at which you become entitled to the main rate was reduced from 22 to 21 on 1 October 2010.  The apprentice rate was introduced on the same date.
If you are of compulsory school age you are not entitled to the NMW. Some of your other employment rights are also different.

Rates from 1 October 2011

The NMW rates are reviewed each year by the Low Pay Commission and from 1 October 2011:

  • the main rate for workers aged 21 and over will increase to £6.08
  • the 18-20 rate will increase to £4.98
  • the 16-17 rate for workers above school leaving age but under 18 will increase to £3.68 
  • the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship will increase to £2.60

Past NMW rates can be viewed on the Low Pay Commission website

Business record checks could be expensive for smaller firms

Friday, March 11th, 2011

Plans by HM Revenue and Customs (HMRC) to scrutinise the record keeping of smaller firms could prove costly for many enterprises, it has been claimed.

In its response to HMRC’s consultation on the proposals, the Institute of Chartered Accountants of Scotland (ICAS) said that the plans are flawed.

Under the new regime, as many as 50,000 small businesses could come under HMRC scrutiny as a way of making sure their business records meet minimum reporting standards. If not, a fine of up to £3,000 could be imposed.However, the ICAS argued that HMRC’s assumptions about the spread of poor record keeping among smaller firms are unsubstantiated and that the estimated costs of the scheme are being massively understated.

HMRC has calculated that each visit, on average lasting half a day, would cost a business £54.The ICAS, on the other hand, believes that, given the level of disruption that a visit will entail, the actual cost will be ten times as great, approaching somewhere nearer £560.

Ian Dewar, convenor of the ICAS small business tax sub-committee, said that the attitude of the tax authorities that SMEs with poor records have chosen to have poor records is a misconception.He continued: “Those with the courage and tenacity to embark on new business ventures are forced to battle from the outset against a mass of Government regulation and red tape.

Typically they don’t go into business because of their record keeping skills.“HMRC should be looking for positive ways of encouraging taxpayers to maintain adequate records, rather than adopting a big-stick approach that we believe will cost owner managers a lot of resource that could have been better directed towards growing their businesses.”

The ICAS wants the first of any HMRC business record checks to be penalty-free, with the tax body simply providing practical advice or a warning if appropriate

Clienst are encouraged to join our TAX SAFE service, providing cover for the costs of HMRC investigations.

Compulsory Pension Schemes for employers …

Saturday, January 23rd, 2010

Small businesses are to be given flexibility over the introduction of the government’s new compulsory workplace pension scheme.The scheme is to be known as the National Employment Savings Trust (NEST), a change from the original Personal Accounts, and is aimed at employees aged over 22, earning between £5,035 and £33,540 and who do not have an occupational pension scheme.The scheme is to commence in October 2012 when the largest businesses – those employing 120,000 staff or more – will begin enrolling workers.However, smaller firms will join the scheme on a phased basis over the next three years. Start-up businesses formed from 2012 won’t be required to implement a NEST fund until 2016. Auto-enrolment is expected to be fully introduced by 2017.Employer contributions will also be implemented on a staggered schedule. Employers will be required to contribute a minimum of 1 per cent of an employee’s gross salary to the fund as from 2012. That will rise to 2 per cent from 2016 before reaching 3 per cent in October 2017.

Clampdown promised on minimum wage evasion

Saturday, January 23rd, 2010

A new HM Revenue and Customs team has been set up to tackle the problem of employers who breach the rules on the national minimum wage. HMRC’s Dynamic Response Team will be tasked with investigating the most high profile and complicated national minimum wage cases. Particular areas to be targeted are those in which employers use migrant labour to undercut competitors by paying employees less than the minimum wage. The team, which will comprise highly-trained specialist officers, is to be backed by £70 million of government funding.

Magnificent motorcycles – New Capital Allowance Rules

Tuesday, September 1st, 2009

Motorcycles are to be excluded from the definition of cars from April 2009. This means that they will qualify as main pool plant and machinery and willbe eligible for consideration for the following allowances: 

• the 100% AIA • the temporary FYA of 40% 

• a 20% allowance where neither of the above apply. Where there is part non business use of the asset by a self employedperson, it will have to be placed in a single asset pool and a restriction onany allowances will be made for private use

BUYING A NEW CAR ? what can you claim ??

Thursday, August 27th, 2009

The competitive deals currently available on dealers’ forecourts are tempting a number of you to consider changing your car. The tax allowances on new cars changes dramatically on 6th April 2009 and CO2 emissions affect allowances greatly.

the rules can be summarised as:

                                                                                    2008/09                       2009/10

CO2 emissions of 110 g/km or less

First Year Allowance                                                   100%                           100% 

CO2 emissions of 111-160 g/km

Writing Down Allowance                                              25%                             20%

Annual Cap  – Maximum claimable                                £3000 pa                     £16,000

CO2 emissions of over 160 g/km  

Writing Down Allowance                                               25%                             10%

Annual Cap  – Maximum claimable                                £3000 pa                     £ 8,000

RULES ON CONTRACT HIRE 

These are also changed from 6th April 2009. This particularly affects expensive cars. For example – assuming a new car costing £20,000 with emissions of less than 160 g/km can be contract hired for £5,175 including VAT.  Should you buy or lease ?? Possible allowances are:

2008/09                       2009/10

Purchase the vehicle

Writing down allowance                        £3,000                         £4,000

Or

Contract hire for £5,175pa                              

Amount Deductible                               £3,870                         £4,838

(including VAT @ 15%)

 *Note that the writing down allowance will reduce in subsequent years in line with the written down value over the vehicle’s life.

It is complex. If you are interested in a new car, ascertain all your options then we can help you pick the best one. 

WHAT NO SELF-EMPLOYMENT ?

Thursday, August 6th, 2009

For many years taxation professionals and anyone who has engaged subcontract labour have been saying that it was the intention of H M Revenue & Customs (and Inland Revenue before it) to have all workers taxed under PAYE. Yet when this point has been put to officers of the department the response has always been that that was not the case. Their intention when undertaking a review of a workers employment status was merely to ensure that the correct employment status was used.Well, as far as the Construction Industry is concerned, that could all be about to change. The Treasury are of the view that there are between 200,000 and 400,000 workers who are working under terms and conditions which are akin to employment but are treated as self-employed and which costs the Treasury some £350m a year. As a result the Treasury issued a Consultation Document on 20 July 2009 in which it set out its proposals to counter what it calls ‘false self-employment’ in the industry.In essence, the proposals are to treat every individual worker engaged to undertake ‘construction operations’ as being in receipt of ‘employment income’ which will be subject to tax and national insurance contributions under PAYE. This will become the default position with only those workers who met one of three criteria being able to continue to be treated as self-employed and paid under CIS. The criteria are:

The subcontractor provides

• Plant and equipment – not just hand tools

• All materials

• Other workers for whom the subcontractor is responsible for paying

This will clearly see the end of self-employed labour-only subcontractors in the construction industry, at least as far as tax and national insurance is concerned.

It is made clear that these are only going to be ‘deeming’ provisions and that any decision to deduct tax and national insurance under PAYE will not confer employment rights on the worker.

Whilst there is no doubt that there have been cases where workers have been reclassified as employees it is a fact that H M Revenue & Customs have been far from successful at the Commissioners and, indeed, the new Tribunals when it has come to defending their view that workers should be reclassified. It would appear in many cases the workers were rightly classified as self-employed. These proposals would appear to be a case of toys being thrown out of the pram as if these proposals are applied to many of the well known tax cases over many years then the decisions that the worker was properly self-employed would be reversed.

Anyone who engages labour only subcontractors should read the Consultation Document, which can be found at:    
www.hm-treasury.gov.uk/consult_false_selfemployment_construction.htm and should consider taking up the issue with their accountant or federation. The consultation period finishes on 12 October 2009 and if the Treasury do not receive any negative feedback to the proposals it must be assumed that it will be brought forward into legislation.

CONTRIBUTED BY ANDREW SCRIVENS -CCH TAX CONSULTANT! 

Changes to the State Pension

Thursday, July 23rd, 2009

The State Pension is still a fundamental part of peoples’ retirement plans. Over the last two years a number of changes to the basic State Pension have been announced. These include:

• increasing the basic State Pension in line with earnings, rather than prices, which means it should rise more quickly each year than it does now. This change will happen from 2012 at the earliest and by 2015 at the latest and will also apply to people currently getting their State Pension or who reach State Pension age before 6 April 2010;

• both paid and credited National Insurance Contributions (NIC) will count towards the basic State Pension in the same way; 

• reducing the number of qualifying years needed for a full basic State Pension to 30 for people who will reach State retirement age on or after 6 April 2010; 

• any number of qualifying years will give an entitlement to at least some basic State Pension;

 

• replacing the system of Home Responsibilities Protection with a weekly NI credit for people caring for children or severely disabled people and converting past years of HRP into years of credits.

• changing the way the State Second Pension (S2P) builds up, so that it will provide a simple, flat-rate weekly top-up to the basic State Pension; and 

• increasing the State Pension age for both men and women from 65 to 68 in stages between 2024 and 2046. 

It is not unknown for errors to occur due to difficulties linking national insurance contributions with pension records. However, there is any easy way to check your current pension entitlement – ask for a pension forecast. If you would like to know more about the changes or ask for a forecast, visit www. pensionsservice.gov.uk

Reduce your business rates

Thursday, July 23rd, 2009

Many businesses pay more business rates than they need to because they don’t realise they could claim a discount through the small business rate relief scheme (SBRR). This scheme has been poorly promoted by the billing authorities, but it is worth applying for relief as you could reduce your rates bill by up to 50%. 

It is the size of the property occupied that determines the discount not the size of the business. Generally business properties in England with rateable values of less than £15,000 (£21,500 in Greater London) qualify for some discount. However, where one business occupies several properties, the SBRR will only apply to one main property and then only if the total rateable value of all the properties occupied is less than £15,000 (with each property having a rateable value of less than £2,200).

 

All business properties pay rates according to their rateable value multiplied by a set multiplier, which is 48.5p for 2009/10. The English SBRR applies a lower multiplier (48.1p for 2009/10) to qualifying properties, plus the following additional reductions:

Rateable value of building Relief givenLess than £5,000 Lower multiplier, then 50% reduction in resulting figure£5,000 – £9,999 Lower multiplier, then 1% reduction from 50% for every £100 of rateable value above £5,000.£10,000 – 14,999 (£21,499 in London) Lower multiplier only

 Example

Your office has a rateable value of £5,500. You are sent a business rates bill of £2,668 (£5,500 x 0.485) for 2009/10. You apply for the SBRR and receive a refund of 1,213, calculated as follows:

Rateable value at lower multiplier rate: £5,500 x 0.481 £2,645Discount for value less than £5,000: 50%Reduced by 1% x (£5,500 – £5000) 5%Final discount for small property 45% x £2,645 £1,190Final business rates for 2009/10 £1,455 

Original rates bill £2,668 

Reduction achieved: £1,213 

You need to apply for the SBRR from the billing authority that collects your business rates, but you only have to complete one form to cover all the years from 2007/08 to 2009/10. A new claim will be required from April 2010. The extended deadline forclaims for these years is now 30 September 2010. 

Vacant properties 

If your business property is vacant you can claim an exemption from business rates, but only for restricted periods, known as permitted void periods. From 1 April 2008, the permitted void period is six months for industrial properties, and three monthsfor other commercial properties. Full business rates are due on all empty properties when the permitted void period comes to an end, subject to any SBRR reductions due. However, for just one year from 1 April 2009 all empty properties with a rateable

value of less than £15,000 are fully exempt from business rates.

High Earners and “HOT” Buget topics

Thursday, July 23rd, 2009

Alistair Darling presented his second Budget on Wednesday 22 April 2009.

Having acknowledged the depth of the recession, he hinted that the Budget measures would enable the UK economy to begin to grow ‘by the end of the year’. Our round up highlights the key budget headlines likely to affect you and your business.

• From 6 April 2010 there will be a 50% top rate of tax for those with taxable income over £150,000 and in the following tax year the government has also announced its intention to restrict tax relief on pension savings for this group.

• A phased reduction of personal allowances for those with income over £100,000 is also due to impact from 6 April 2010. 

• The amount which can be invested in an ‘ISA’ account the tax free savings vehicle

is to increase by £3,000 to £10,200.

• The ability to use trade losses through relief in earlier years by both an unincorporated business and a company has been enhanced. 

• There is a temporary additional capital allowance on plant expenditure which may benefit those with higher levels of spending on plant and machinery. 

• Changes to the rules for Furnished Holidays Lettings Losses and CGT as well as a extension of the furnished holiday lettings scheme to properties in the European Economic Area.

Please contact us for further advice on any matter which may affect you.