- Advisory fuel rates for company cars
- HMRC warn of e-mail scam
- HMRC’s Basic PAYE Tools update
- Enterprise research centre
- Tax credits renewal deadline
- P11D Errors
- HMRC Bereavement Service
- Small donations to charities
- HMRC issue guidance on IR35
There seems to be the usual illnesses and infections doing the rounds at this time of the year. ACAS have an excellent section on their website dealing with sickness leave etc.
Internet link: Sickness Leave
New company car advisory fuel rates have been published to take effect from 1 June 2012. HMRC’s website states:
‘These rates apply to all journeys on or after 1 June 2012 until further notice. For one month from the date of change, employers may use either the previous or new current rates, as they choose. Employers may therefore make or require supplementary payments if they so wish, but are under no obligation to do either.’
The advisory fuel rates for journeys undertaken on or after 1 June 2012 are:
|1400cc or less||15p||11p|
|1401cc – 2000cc||18p||13p|
|1600cc or less||12p|
|1601cc – 2000cc||15p|
Please note that not all of the rates have been increased, so care must be taken to apply the correct rate.
Other points to be aware of about the advisory fuel rates:
- Employers do not need a dispensation to use these rates.
- Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
- The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC under a dispensation.
If you would like to discuss your car policy, please contact us.
Internet link: HMRC advisory fuel rates
HMRC have issued a warning about possible fake or ‘phishing’ e-mails sent out by fraudsters. The period in the run-up to the tax credits renewal deadline often sees an increase in such attacks. Taxpayers have to renew their claims by 31 July 2012 or their payments may stop.
The format of the e-mails is that they often promise a rebate. If taxpayers click on the link within the e-mail, they are taken to a replica of the HMRC website where they are then asked to provide credit or debit card details or other sensitive information. Fraudsters then try to take money from the account.
Victims are at risk from having money stolen from their bank accounts or their personal details being sold for identify fraud.
According to the HMRC press release:
‘During last year’s tax credits renewals period, from April to July, nearly 94,000 phishing e-mails were reported by customers. Even though HMRC helped shut down more than 360 scam websites during the period, others continue to be created.’
Steve Lamey, Director General for Benefits and Credits, said:
‘We only ever contact customers who are due a tax refund in writing by post. We don’t use telephone calls, e-mails or external companies in these circumstances. Anyone who receives an e-mail claiming to be from HMRC should send it to email@example.com before deleting it permanently.’
Internet link: Press release
HMRC have released a new version of the Basic PAYE Tools which reflect the Budget 2012 changes. The May 2012 version allows employers access to the recent HMRC PAYE guidance. The latest version is 220.127.116.1148.
This new update is available to reflect the 2012 Budget changes and contains ‘a few small fixes and…… improvements’.
HMRC guidance states:
‘New users – should download the latest version 18.104.22.16848 by following the link in the section ‘Downloading Basic PAYE Tools’.
‘Existing users – If you already have the February 2012 version of Basic PAYE Tools installed, the May update will be available by automatic update. To check the version you are using, open the tools, select the ‘options’ icon and then the ‘Application Settings’ tab and see the section of this guide on ‘Using Basic PAYE Tools Automatic updates’ for advice on switching them on.’
Internet link: HMRC guidance and links
ENTERPRISE RESEARCH CENTRE
The government has announced proposals to introduce a new independent £2.9 million Enterprise Research Centre which will look at investment strategy for SMEs.
The Enterprise Research Centre will help develop a greater understanding of the factors affecting business investment, performance and growth.
It is a joint collaboration between the Department for Business, Innovation and Skills, the British Bankers Association, the Economic and Social Research Council and the Technology Strategy Board.
Business and Enterprise Minister Mark Prisk, said:
‘The Government is committed to boosting enterprise and giving entrepreneurs the right environment to be successful and grow. We are creating a network of thousands of business mentors and providing quality coaching to a range of high growth potential businesses. We are also launching a £10 million startup loan scheme to provide young people with a range of business support and access to a small amount of capital to start their business.’
‘Research is vital to ensure that Government makes evidence based decisions about how to develop these schemes and improve the business environment in the UK. By collaborating with partners and bringing together leading academics we will be able formulate long term policy that will help to stimulate economic growth in the UK.’
Internet link: Press release
Tax credits are state benefits which are generally available to lower income families. However, entitlement to the credits is significantly increased where individuals pay for childcare or suffer a drop in normal levels of income perhaps due to incurring trading losses or redundancy.
Individuals who have already claimed tax credits for 2011/12 have to finalise their provisional award, which would have originally been based on their 2010/11 income, and advise HMRC of any changes in their circumstances for 2012/13. This procedure is known as the renewals process. The deadline for the submission of tax credit renewals is generally 31 July 2012.
Claimants need to be aware that the payment of tax credits will stop at the end of July if they have not renewed their applications by that date. There are significant changes to the income limits and claw back of entitlements for 2012/13 so you may wish to review the HMRC guidance. If you need any advice on tax credits please do get in touch.
Internet link: HMRC tax credit deadlines
The forms P11D, and where appropriate P9D, which report benefits and expenses for both employees and directors for the year ended 5 April 2012, are due for submission to HMRC by 6 July 2012.
Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, 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 following is taken from an article on expenses and benefits contained in the recent Employer Bulletin. The article includes a list of common mistakes which include:
‘The following is a list of common errors which are easily avoidable but delay processing and cause problems with employees tax codes each year:
- Submitting duplicate P11D information on paper where P11D information has already been filed online to ensure ‘HMRC have received it’. This causes processing problems
- Using a paper form that relates to the wrong tax year – check the top right hand corner of the first page
- Not ticking the ‘director’ box if the employee is a director
- Not including some form of description or abbreviation, where amounts are included in sections A, B, L, M or N of the form
- Leaving the ‘cash equivalent’ box empty where you’ve entered a figure in the corresponding ‘cost to you’ box of a section
- Sending P11Ds when you’ve also ticked the box in Part 5 of form P35 (in your Employer Annual Return) to indicate that P11Ds are not due
- Where a benefit has been provided for mixed business and private use, entering only the value of the private-use portion – you must report the full gross value of the benefit. Not completing the fuel benefit where this applies. This means an amended P11D has to be sent in
- Completing the ‘from’ and ‘to’ dates incorrectly in the ‘Dates car was available’ boxes by showing the whole tax year. For example entering 06/04/2011 to 05/04/2012 to indicate the car was available throughout that year. If the car had been available in the previous tax year, the ‘from’ box should not be completed and if the car is to be available in the next tax year, the ‘to’ box should not be completed.’
If you would like any help with the forms P11D or the calculation of the Class 1A liability please get in touch.
HMRC have created a new dedicated telephone helpline and address for individuals who have suffered a bereavement and who need to contact them about PAYE and self assessment matters relating to bereavement.
Family members or personal representatives of the deceased who phone HMRC about tax and bereavement will also have access to a dedicated team of advisors.
HMRC have also simplified their guidance and letters to taxpayers and redesigned the form R27 (Reclaiming tax or paying tax when someone dies). This form is used to finalise the deceased’s affairs to make it more straightforward.
Stephen Banyard, Acting Director General of Personal Tax, said:
‘We know that bereavement can be a very stressful and difficult time for family members. We want to settle the estates of customers who have died as easily and sensitively as possible. HMRC has been working closely with the voluntary sector and customers to improve the experience when dealing with the department after someone has died.’
‘It is vital that we communicate sensitively with people who have suffered bereavement. Our helpline, as well as the other changes that we will introduce over the next two years, will help us to do that.’
It has been confirmed in the Queen’s Speech that charities will be able to claim top-up payments on up to £5,000 of small donations without needing to obtain Gift Aid declarations.
The Scheme, called the Gift Aid Small Donations Scheme, should boost charities income and also reduce their administrative burden.
From April 2013 charities will be able to claim the Gift Aid-style top-up payments from HMRC without needing to get a Gift Aid declaration from donors.
The top-up payment will be 25p for every pound collected in the UK. The maximum amount of donations on which the top up can apply will be £5,000, where the individual amounts of donations are £20 or less.
Chloe Smith, Economic Secretary to the Treasury, said:
‘This scheme will be particularly helpful for small charities that rely on bucket collections, which can find it impractical to get the necessary paperwork that Gift Aid requires. Charities and Community Amateur Sports Clubs will now be able to claim a Gift Aid-style payment on small donations without the need to collect donors’ details.’
Internet link: Press releases
HMRC have released guidance setting out their risk-based approach to checking compliance with IR35.
The ‘IR35’ rules are designed to prevent the avoidance of tax and national insurance contributions through the use of personal service companies and partnerships.
The rules do not stop individuals selling their services through either their own personal companies or a partnership. However, they do seek to remove any possible tax advantages from doing so.
The tax advantages mainly arise by extracting the profits of the company by way of dividend. This avoids any national insurance contributions which would generally have been due if that profit had been extracted by way of remuneration.
The intention of the rules is to tax most of the income of the company as if it were salary of the person doing the work.
Broadly the rules apply if, had the individual sold their services directly rather than through a company (or partnership), they would have been classed (by HMRC) as employed rather than self-employed.
For example, an individual operating through a personal service company but with only one customer that they effectively work full-time for is likely to be caught by the rules. On the other hand, an individual providing similar services to many customers is far less likely to be affected.
HMRC have released new guidance setting out their risk-based approach to checking compliance with IR35. It lays out the approach to compliance and how to work out which ‘risk band’ a business may be in. It also gives example scenarios to illustrate when and why IR35 will apply to an engagement. Interestingly, the guidance is aimed primarily at businesses rather than at their advisors.
If you have any concerns in this area please do get in touch.
Internet link: HMRC guidance