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Workplace pension contributions rise takes effect

2019-09-02T11:29:03+01:00July 1st, 2019|Categories: Articles & Guides, Blog|Tags: , |

An increase in the minimum contributions employers and their staff must pay into their automatic enrolment workplace pension scheme took effect from 6 April 2019. From that date, the employer minimum contribution has risen from 2% to 3%, while the staff contribution also increased from 3% to 5%. As part of the ‘phasing’ process, the increases mean that total contributions for employees have gone up from 5% to 8%. It is the employer’s responsibility to ensure that these increases are properly implemented. The increases do not apply to employers using defined benefits pension schemes. The amount that the employer [...]

Voluntary National Insurance contributions – should you pay?

2019-09-02T11:28:55+01:00June 29th, 2019|Categories: Articles & Guides, Blog|Tags: , , , |

The payment of National Insurance contributions provides the mechanism by which an individual builds up their entitlement to the state pension and certain contributory benefits. Different classes of contribution provide different benefit entitlements. Employed earners pay Class 1 contributions where their earnings exceed the lower earnings limit – set at £118 per week (£512 per month, £6,136 per year) for 2019/20. Self-employed earners pay Class 2 and Class 4 contributions, but it is the payment of Class 2 contributions only which provide pension and benefit entitlement. A self-employed earner is liable to pay Class 2 contributions where their earnings [...]

Reporting expenses and benefits for 2018/19

2019-09-02T11:28:50+01:00June 27th, 2019|Categories: Articles & Guides, Blog, PAYE|Tags: , , , , |

Where employees were provided with taxable benefits and expenses in 2018/19, these must be notified to HMRC. The reporting requirements depend on whether the benefits were payrolled or not. Benefits not payrolled Taxable benefits that were not payrolled in 2018/19 must be reported to HMRC on form P11D. There is no need to include benefits covered by an exemption (although take care where provision is made via an optional remuneration arrangement (OpRA)) or those included within a PAYE Settlement Agreement. Paid and reimbursed expenses can be ignored to the extent that they would be deductible if the employee met [...]

Family companies – optimal salary for 2019/20

2019-09-02T11:28:46+01:00June 25th, 2019|Categories: Articles & Guides, Blog, Limited Company, Taxation|Tags: , , , |

For personal and family companies it can be beneficial to extract some profits in the form of a salary. Where the individual does not have the 35 qualifying years necessary to qualify for the full single-tier state pension, paying a salary which is equal to or above the lower earnings limit for National Insurance purposes will ensure that the year is a qualifying year. New tax rates and allowances came into effect from 6 April 2019, applying for the 2019/20 tax year. These have an impact on the optimal salary calculation for family and personal companies. As in previous [...]

Are you paying the minimum wage?

2019-09-02T11:27:54+01:00June 23rd, 2019|Categories: Articles & Guides, Blog, PAYE|Tags: , , , , |

The National Living Wage (NLW) and National Minimum Wage (NMW) increased from 1 April 2019. From that date, the NLW, payable to workers aged 25 and over, is set at £8.21 per hour. Workers under the age of 25 and over school leaving age must be paid the NMW appropriate for their age. From 1 April 2019, this is £7.70 per hour for workers aged 21 to 24, £6.15 per hour for workers aged 18 to 20 and £4.35 for workers above school leaving age and under 18. A separate rate of £3.90 per hour applies to apprentices under [...]

When should a business register for VAT?

2019-09-02T11:27:44+01:00June 22nd, 2019|Categories: Articles & Guides, Blog, VAT|Tags: , , , |

All traders – whether sole traders, partnerships, or limited companies – are obliged to register to charge and pay VAT once annual sales reach a pre-set annual threshold. This threshold remains at £85,000 for the year commencing 1 April 2019. The annual VAT threshold is determined by total sales and is not the same as total profits (which is generally sales minus expenses). A business can make a loss and still need to register for VAT! In summary, a business must register if: its taxable outputs, including zero-rates sales (but not exempt, non-business, or ‘outside the scope’ supplies),have exceeded [...]

PAYE settlement agreements

2019-08-23T16:17:07+01:00June 21st, 2019|Categories: Articles & Guides, Blog, PAYE|Tags: , , , |

A PAYE Settlement Agreement (PSA) enables the employer to pay the tax and National Insurance instead of the employee on those benefits and expenses included within the PSA. This can be useful to preserve the beneficial nature of the benefit, for example in respect of a Christmas or other function falling outside the associated exemption, or where the effort involved in reporting the benefit on individual employees’ P11Ds is disproportionate to the amount involved. What can a PSA be used for? A PSA cannot be used for all benefits – only for those which fall into one of the [...]

Employing family members

2019-09-02T11:27:19+01:00June 17th, 2019|Categories: Articles & Guides, Blog|Tags: , |

It is permissible for a business to claim a tax deduction for the cost of a reasonable wage paid to a family member who helps in the business. Their duties could, for example, include answering the phone, going to the bank, bookkeeping and other administrative tasks. The tax legislation specifies that ‘in calculating the profits of a trade, no deduction is allowed for expenses not incurred wholly and exclusively for the purposes of the trade’, which indicates that as long as the work is undertaken, the payments are realistic and actually made, there should not be a problem with [...]

Tax aspects of using a work’s van

2019-09-02T11:23:17+01:00June 15th, 2019|Categories: Articles & Guides, Blog|Tags: , , |

If an employee is able to use a work’s van for private use, which generally includes home-to-work travel, there will be a taxable benefit and a subsequent tax charge. From 6 April 2019, the flat-rate van benefit charge has risen from £3,350 to £3,430, representing a small increase in real terms to a basic rate taxpayer of £16 a year. If an employer also provides the employee with fuel for private use, then a tax charge on the provision of fuel will also arise based on an annual fixed rate. For 2019/20 the flat-rate van fuel benefit charge has [...]

Is the summer party tax-free?

2019-09-02T11:23:06+01:00June 13th, 2019|Categories: Articles & Guides, Blog|Tags: , , |

A statutory exemption exists, which allows employers to meet the cost of certain social events for staff without triggering a liability to tax or NICs, providing certain conditions are met. The legislation refers to ‘an annual party or similar annual function’. Although HMRC do not seem to interpret this to mean that the same event must be held every year, it may be prudent to check the issue in advance where a one-off event is planned. Conditions A staff event will qualify as a tax-free benefit if the following conditions are satisfied: the total cost must not exceed £150 [...]

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