All employers must go through a one-off ‘alignment’ process in order to synchronise their data with HMRC by sending the first Full Payment Submission (FPS) or, if appropriate, an Employer Alignment Submission

· Where there are adjustments to sum total of deductions on the FPS (statutory payments claimed, CIS deductions suffered etc.), these will be reported on an Employer Payment Summary

· Employers and pension providers will tell HMRC about Tax, National Insurance contributions and other deductions on or before pay day – weekly, monthly or any other period – via the FPS

· Payment date to HMRC remains unchanged – 19th or 22nd of the following month or special arrangement if in place (e.g. quarterly payment)

· The year-end process will be different, with no P14s or P35s

· P45s will remain in place for leavers

· P60s will still be issued to all current employees at year-end

· Leavers and new starters will be reported via the FPS

· Employer will return year-to-date figures each time they run their payroll

· There will be a single process tying information and employee payment together, with the employer sending information about the payment to HMRC at the time they pay the employee

· If adjustments are necessary for items such Statutory Maternity Pay recovery, an Employer Payment Summary will also need to be sent to HMRC

Remember there is no need to panic. If its all too much just give us a call. And we will be more than happy to help.

Income tax returns submitted after this date will incur an additional penalty of £10 per day for up to a maximum of 90 days (£900).

31 May

• Last date for providing form P60 (showing how much employees have been paid and how much tax and NI has been deducted) to each employee who has been working for you up to 5 April 2013.

6 July

• Last date for Forms P9D (record of earnings, expenses and benefits of employees receiving less than £8,500 per year) to reach HMRC.
• Last date for Forms P11D (record of earnings, expenses and benefits of employees receiving more than £8,500 per annum and all directors) to reach HMRC.
• Last date for the return of Form P11D(b) (employer’s declaration) relating to Class 1A NI Contributions.

19 July

• Last date for payment of any Class 1A NI Contributions to reach HMRC. Interest will be charged on payments received after this date. (If you make payments electronically you have an extra three days to pay – by the 22^nd of the month.)
• Class 3 NI Voluntary Contributions can be paid to make a tax year count for NI purposes when it might not otherwise do so.

31 July

• If you still have not sent HMRC your self assessment tax return that was due on 31 January, you will be charged a further penalty of £300 or 5% of the tax due, whichever is the highest.
• You will be charged a second automatic 5% penalty if you have failed to provide the balancing payment in the first income tax instalment that was due on 31 January.
• The second payment on account of your current year’s income tax is due by this date. Check that it corresponds with your expected final liability for the year ending 5 April 2013.

5 October

• If you haven’t been sent a self assessment tax return by this date, you must notify HMRC about any income you have received that has not been taxed, or any capital gains tax liabilities you may have had in the year ending 5 April 2013. HMRC will then request further details or send you a tax self assessment form if it considers it necessary.

31 October

• You must submit your paper self assessment tax return for the tax year 2012/13 by this date to avoid an automatic penalty of £100 and to have HMRC calculate your tax for you.
• If you are submitting a paper tax return by this date, HMRC will collect any outstanding amounts of less than £3,000 via your PAYE tax code (if you have one), which spreads the payments over a year – or you can choose to pay in one lump sum if preferred.

30 December

• If you complete your self assessment tax return online, or your tax agent uses the Electronic Lodgement Service, this is the day when your online self-assessment form for 2012/13 must be submitted so that unpaid tax under £3,000 can be collected via your PAYE tax code, if you have one and want this to happen.

The Government accepted the independent Low Pay Commission’s (LPC’s) recommendations to increase this year’s adult and youth wage rates.

However, recommendations to freeze the apprentice rate were rejected because of compliance concerns. It will also increase closer in line with the youth rates.

From the 1 October 2013:

• The adult rate (20 years plus) will increase by 12p to £6.31 an hour
• The 18-20 year old rate will increase by 5p to £5.03 an hour
• The 16-17 year old rate will increase by 4p to £3.72 an hour
• The apprentice rate will increase by 3p to £2.68 an hour.

A strong Leader

I was genuinely sad to hear of Margaret Thatcher’s death, that surprised me a little and I began to wonder why. I guess that she was very misunderstood by many and still is today. I have no doubt people will post vitriolic blogs and messages about her based on ignorance and wanting to look trendy. She took over a country widely recognised as the basket case of Europe and fought tooth and nail at great personal cost to turn this nation around. The UK in 1979 was beset with high inflation, low productivity and rampant and belligerent unions. She made deeply unpopular decisions that she knew would make her hugely unpopular, nevertheless she did them anyway, selflessly sacrificing her own public image for the good of the country. Could you see Tony Blair or even David Cameron doing that? She took on the crippling power of the unions notably during the miner’s strike. She stood firm against the IRA during the hunger strike. That must have taken a huge personal toll on her. Thankfully the silent majority of the nation stood behind her and understood why she had to show such grittiness. She demonstrated her determination again by standing up to General Galtieri of Argentina during the Falklands war of 1982. Buoyed by this success she was re-elected again and her economic reforms began to turn the economic tide for Britain. Re- elected for a final time in 1987 she was eventually deposed and replaced by John Major as Prime minister. Yes I am sad that there are still people blinkered by political belief that cannot see what she did for Britain. I for one, am grateful. By Philip Rackstraw

A strong Leader

Not too many surprises in the budget of 2013, but one or two interesting aspects that briefly caught my eye.

I have been banging on and on and on about employers NI to anybody who would listen for a little while now. So it was good to see a gesture made by George Osborne in this area. The employment allowance that will effectively take off £2000 from every employers NI bill will be useful, especially to small employers. However, I would very much have preferred an across the board cut to the rate of 13.8%. A £2000 saving would mean very little to larger companies and would do nothing to encourage employment or outside investment in the UK economy. An opportunity missed I feel but perhaps George Osborne will revisit this issue in the future.

The VAT registration threshold, another of my hobby horses is to increase from £77,000 to 79,000 a miserly increase. I would have liked to see a bolder rise to £100,000 that would take a lot of small businesses such as plumbers and electricians out of the threat of VAT registration. Vat status damages these trades and makes them uncompetitive leaving them with a quandary over registration and de registration for VAT. 

Overall, the chance to make a positive impact for growth missed I feel for the chancellor, he must aspire to do better

2)      Are you planning to retire soon? Avoid Inheritance Tax on the proceeds of your company sale with Business Property Relief, even if you retired within the last few years this may still apply.

3)      Dividends v Salary v Bonus – Let us do the calculations!

4)      Are you affected by the proposed reduction in Annual Pension Allowance this coming tax year. Contact us before the end of the tax year and let us show you a way to maximise this benefit while you can.

5)      Child Benefit Protection – why you need to consider your spouse.

6)      IHT Annual Gift Exemption – Are you making the most of this tax break?

7)      Lifetime gifting – IHT  planning for your beneficiaries with illiquid assets.

8)      ISA Allowance 12/13. Use it or lose it.

9)      Review your pension planning – when did you last check on your future income planning?

10)  Workplace Pensions are just around the corner. What will your Employer duties mean for your bottom line.

We managed to raise £102 for the Red Nose Day 2013 by dressing up in our best . You can imagine the reaction of many of our clients as they got into our offices, with all the brightness and all! Many thanx to all those who donated on this day!

Comic Relief Support 2013 – Red Nose Day

You may have heard of auto enrolment, you may even be vaguely aware of what it is. However, if you are an employer you need to seriously start planning how you will comply with your duties under this new legislation.

I won’t go into too much detail here because the detail is frankly mind-blowing. Basically auto enrolment is legislation that will force employers to pay at least 3% of an employees pay into a pension scheme. Employees will also have to pay into their own scheme.

If you have over 50 employees this legislation applies from April 2014 and you need to act now in order to get everything in place to comply.

If you have between 30 and 49 employees you now need to seriously start putting things in place.

For all other employers and this can mean just one employee, you have until January 2016. That seems a long way off but it will soon come around.

Don’t leave it too late to do something about this; it is not going to go away. There is a lot of work to be done in consulting with employees, setting up a scheme and finally implementing it. START PLANNING NOW!!!!. Contact us at Dashwoods and we will put you in contact with a Financial Advisor who will help you to comply.

Getting Growth Back in the UK Economy  14/02/2013

Every so often I am asked what I would do to bring growth back into the UK economy. Current forecasts for 2013 predict anaemic growth of around 1 to 1.3% so this is a very pertinent question. With low growth in the economy the government is hit by higher welfare costs for the unemployed and a reduced tax take. The government’s knee jerk reaction to the inevitable funding gap is to further increase the tax burden on business. This in turn leads to business failure, more unemployment and lower investment. So, what’s my solution?

As a small businessmen myself and a practising accountant, I have seen first- hand the damage employers national insurance has had on businesses and the economy. Presently for all employees earning over £7488 the employer pays an eye watering 13.8% in employers NIC. What a massive disincentive to take on new employees!  More than that, what more motivation do employers need to feed the black market by paying cash or employing under a self – employed status? In both circumstances the government is missing out on tax and NIC.

It is my belief, and I don’t care if it may be politically difficult would be to halve employers NIC. This would mean that employer’s staff costs would reduce and inevitably employment will rise. This in turn will mean a reduction in welfare payments as unemployment falls and subsequently an increase in the government’s tax take. I also believe that this measure would also make the UK more competitive and increase investment from overseas.

Secondly, I have observed through my clients the damage the 20% VAT rate has on small business, particularly small tradesman. For builders, electricians and plumbers etc, the VAT threshold of £77000 falls at about the level a modest trader in those sectors would achieve. The result is that the threshold is approached and vat registration becomes necessary. VAT is then charged on to customers who go elsewhere or attempt to pay cash. Again the black economy is fed and HMRC miss out on tax, VAT and NIC.

My solution would be to increase the VAT registration threshold to £100,000 at least, taking the vast majority of these small traders out of VAT entirely. The small trader would then be able to declare all income without fear of breaching the VAT threshold.

Both of these solutions seem simple, logical and easy to implement, so why haven’t they been done? I believe it is because the parliamentary opposition would exploit the current government’s vulnerability to accusations of being too pro – business and giving tax cuts to the wealthy. A shame really as it is business that creates jobs and wealth and unfortunately governments that undermine it.

Article by Philip Rackstraw

George Osborne is coming under all sorts of pressure from within his own party and from the opposition with regards to his upcoming budget. We already know a lot of what’s coming up thanks to the autumn statement. It’s what he does to stimulate growth that interests me. So far we have had austerity in the form of public spending cuts and tax rises and that has not delivered growth or and significant reductions in the deficit. The opposition including many liberals would like to see further borrowing and public spending. His own party would like to see tax cuts. An increase in public spending would please many in the left leaning media but would only deepen the countries problems and further weaken the UK’s credit status. Tax cuts, particularly for business would likely be portrayed as the Tories helping out their own. This is why George must be brave and ignore how the budget will be received and do what’s best for the country as a whole.

My suggestion, slash employers NIC. Currently this is 13.8% and this is a tax employers pay on top of gross pay paid to employees. Even as I write this I can’t believe this was ever conceived. It is a tax on jobs, a disincentive to employ and an encouragement to the black economy. So come on George, be brave do the right thing!

By Philip Rackstraw FCCA