ADVISORY FUEL & ELECTRIC RATES – 1 MARCH 2020

The Advisory Fuel Rates (AFR) as of 1 March,

Engine size                                         Petrol – amount per mile                             LPG – amount per mile

1400cc or less                                     12 pence                                                          8 pence

1401cc to 2000cc                                14 pence                                                        10 pence

Over 2000cc                                        20 pence                                                        14 pence

Engine size                                         Diesel – amount per mile

1600cc or less                                      9 pence

1601cc to 2000cc                               11 pence

Over 2000cc                                       13 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The Advisory Electric Rate (AER) which was introduced in September for 100% electric cars will remain the same at 4p per mile.  Electricity is not a fuel for car fuel benefit purposes.

The AFR and AER are deemed to be tax and National Insurance free.

Both rates can be applied for fuel per mile,

• to reimburse employees for business travel in their company cars.
• when you require employees to repay the cost of fuel used for private travel.

If your employee does not repay the private fuel used during the tax year then you will need to,

• report on their P11D
• pay Class 1A National Insurance on the value of the fuel benefit

If you travel as a result of running your business (other than home to work) and

• are unsure on what you can claim
• are considering your options regarding the company purchasing a vehicle
• want to understand the rules around company car benefits in kind
• or anything else associated with business travel

Please contact us so that we can ensure the advice you are given is specific to your circumstances on 0113 2864486

Source: HMRC

Photo: Photo by Juan Fernandez on Unsplash

A sensitive subject but one that has been looked at by the Government and is due to come in from April 2020.

The Parental Bereavement (Leave and Pay) Act 2018 requires Regulations to be put in place so that parents who suffer the death of a child, will have a day one right to request leave.

Parental Bereavement Leave (PBL)

PBL will come in line with other statutory family leave; a day one right for qualifying employees if they experience the death of a child, or children, from 24 weeks gestation to 18 years.  There will be a maximum of 2 weeks that can be taken either in one go or 2 separate periods of a week.

Statutory Parental Bereavement Pay (SPBP)

The statutory pay jargon:

• “Relevant Week” – the week that ends on a Saturday, before the week in which the child dies.
• “Relevant Period” – a period of 8 weeks ending with the relevant week.

SPBP can be claimed for a death that occurs after 6 April 2020.

Leave with payment of SPBP must be taken with 56 weeks of the date of death and it is entirely up to the employee if they take some, all or none of the leave allowed.  56 weeks is to take into consideration that parents may wish time away from work both near the time of the death but also the time around the anniversary of the death.

If any employee changes employment within the 56 weeks they will still be entitled to receive SPBP in their new employment if they met all conditions at the relevant week.

If an employee is entitled to SPBP due to the death of more than one child, then the leave entitlement is 2 weeks for each child.

There are conditions that do apply if the employee is receiving Statutory Sick Pay (SSP) during any part of the week when SPBP is payable and Statutory Maternity Leave (SMP), Statutory Adoption Pay (SAP) etc.

There are qualifying conditions to receive SPBP being,

• Length of service and earnings
• Employee’s relationship with the child

For further details on this can be found by clicking the link or if you require any assistance with your payroll in this matter then please get in touch on 0113 286 4486.

Source: Accounting Web

Photo by Roman Kraft on Unsplash

With the deadline for completing your Self Assessment having passed, not everyone filed on time. If you are one of these then you will have incurred an immediate fine of £100.

HMRC have revealed that 958,296 taxpayers (8.18% of the returns due) who were due to file their tax return have not done so.  A slightly better figure than 2019 which just topped 1 million.

702,171 left it until the last day, with the peak time when people were submitting was between 4pm and 4.59pm when 56,969 returns were submitted.  26,562 were filed between 11pm and 11.59pm, leaving it rather late but still on time.

At the beginning of the year HMRC stated that 5 million need to be submitted with 3 million still needing submission in the last week.

HMRC were pleased that more than 10.4 million taxpayers chose to file online, which accounted for 93.95% of the total filed.

If you still need to submit your Self-Assessment, plus need to pay any taxes due, then it is important that you do so as soon as possible so that £100 fine mentioned above does to increase further.  You have 3 months i.e 1^st May before additional charges are incurred but after this date it is a daily charge and these increase with time.  Our blog of last year highlights in more detail what these charges are.

You can appeal against some penalties, but you need to have a reasonable excuse such as,

• partner or close relative passed away shortly before the tax return or payment deadline
• no payments were required
• an unexpected stay in hospital
• delays related to a disability you have etc.

Excuses that have not been accepted over the previous decade are,

• my hamster ate my post
• a DJ was too busy with a party lifestyle – spinning the decks….in a bowls club
• my mother in law was a witch and put a curse on me
• I was up a mountain in Wales, and couldn’t find a post box or get an internet signal

If you need help with still submitting your Self Assessment then contact us on 0113 286 4486.

Source: Accounting Web, GOV.UK & GOV.UK

Recent news articles have reported that the government is to increase the national living wage from April 2020. Rises are set to be between 4.9% and 6.5%.

For those over 25 it will be a rise of more than four times the rate of inflation, taking the hourly rate to £8.72.

However, businesses have warned that such increases will put pressure on company costs.  Hannah Essex, co-executive director of the British Chamber of Commerce has said many companies “have struggled with increased costs in a time of great economic uncertainty.  Raising wage floors……will pile further pressure on cash flow and eat into training and investment budgets.  For this policy to be sustainable, government must offset these costs by reducing others.”

The new National Living Wage rates from April 2020 are:

• for ages 25 and above – up 6.2% to £8.72
• for ages 21 to 24 years old – up 6.5% to £8.20
• for those 18 to 20 years old – up 4.9% to £6.45
• for those under 18’s – up 4.6% to £4.55
• for apprentices – up 6.4% to £4.15

The Federation of Small Business (FSB) has stated that “an increase of this magnitude” could lead to reduced recruitment, cancelled investment plans or even redundancies.  Craig Beaumont, FSB director of external affairs and advocacy has said that, with the increase in business rates of 1.7% in April, small businesses will need support.

An independent report has noted that there is little, or no evidence of jobs been lost due to the minimum wages rises over the years.   Professor Arindrajit Dube, a US academic and expert on this subject said there was “room for exploring a more ambitious national living wage” in the UK over the coming years.

He did also state that there is relatively little evidence available and that the Low Pay Commission would be able to review the effect on jobs as wages increased.

The government announced in September of last year, that it will go ahead with the Low Pay Commission’s recommendations that by 2024 the over 21’s will receive the higher national living wage rate.  It is set to be £10.50 by this date.

If you need help with payroll then call us on 0113 2864486

Source: BBC News

Photo by Fabian Blank on Unsplash

The Self-Assessment deadline is just a few weeks away and you need to know what expenses are allowable so that you can deduct them from your turnover to calculate out your taxable profit.

HMRC have guidelines and rules about what an “allowable” expense is as you cannot deduct all your self-employed expenses.  The latter must relate strictly to your business so you can calculate your profit accurately and thereby pay the correct tax.  You should retain any receipts or other proof of purchase in case you are subject to a tax investigation.

What are “allowable” expenses?

Office expenses – Business stationery, printing costs (including printer ink) and postage.  Business equipment e.g. computer, printers and computer software may be allowable if using cash basis accounting.

Business premises – rent, maintenance & repair, utility bills, property maintenance and security are an expense but buying or building your business premises is not.  If you run your business from home, you need to calculate the proportion of the bills that are related to your business.  If you work at least 25 hours a month you can use simplified expenses which is based on a flat monthly rate which the government calculate.

Travel – business related car or van costs, including insurance, fuel, hire charges, repairs, servicing and breakdown cover are included.  You can use a flat monthly rate given by the government to make things easier through simplified vehicle expenses.  Business travel by train, bus, plane or taxi and hotel rooms and meals for an overnight stay are allowable expenses.  You cannot claim for commuting from home to your business premises. If a journey is for both personal & business reasons you must separate out the business costs. You cannot claim for entertaining clients, suppliers and customers or event hospitality.

Stock and materials – Cost of stocks, raw materials and any direct costs that come from producing the goods.

Legal and Financial costs – if you have an accountant, solicitor or other professional for business reasons you can include the cost in your calculations. Bank, overdraft and credit card charges, interest on any bank and business loans, hire purchase interest and leasing payments can also be included. If you use cash basis accounting, then the maximum you can claim is £500 in interest and bank charges.

Business insurance – The cost of business insurance e.g. public liability insurance and professional indemnity insurance.

Marketing – newspaper advertising, directory listings, mailshots, free samples and website costs

Clothing – cost of uniform, protective clothing etc but not everyday clothing for work.

Staff costs – employee and staff salaries, bonuses, pension contributions, benefits, agency fees and employer National Insurance contributions.

Subscriptions – cost of membership to trade bodies or professional membership organisations if relevant to your business.  Subscriptions to trade or professional journals.

There is further information on the Simply Business website if you require more detail and links to HMRC.

If you need help then call us now on 0113 2864486.

Source: Simply Business

Are you a landlord?  If so then you are self-employed or a small business owner in the eyes of HMRC as you are making money from renting a property.  Therefore, you need to complete a Self-Assessment tax return.

Legislation around this area and what tax needs to be paid is forever changing but the main ones are:

• Income Tax
• National Insurance Contributions (NICs)
• Stamp Duty Land Tax
• Capital Gains Tax (CGT)

Stamp Duty Land Tax and CGT only need be of concern if a property has been bought and sold.

Income Tax and NICs are paid annually and based on the income from renting out any properties.  To pay these you need to complete a Self-Assessment tax return.  This is broadly speaking the same if you are a landlord, small business owner or sole trader.

The first thing you need to do is register for Self-Assessment and once done you can file your tax return.

If you have started a limited company for the purposes of your rental properties, then you will need to register for Corporation Tax and follow the process for this type of taxation.

To complete your Self-Assessment, you need to keep records of all your income and expenses.  As a landlord the following can be deducted from your rental income:

• Property repair and maintenance costs
• Replacement of domestic items (from April 2016)
• Accounting fees
• Insurance
• Running costs

Depending on the cost the tenants pay themselves you can also claim for:

• Letting agent fees
• Light and heating costs
• Service charges
• Ground rent
• Cleaning costs
• Advertising costs

Taxation around rental properties does change often so you do need to be aware of any changes, plus your own personal circumstances will depend on what you will need to pay.  To read further about this then Simply Business have further links that are useful to read around this area.

If you need our assistance around this area, then please call us on 0113 2864486.

Source: Simply Business

Photo: Photo by Toa Heftiba on Unsplash

The Advisory Fuel Rates (AFR) as of 1 December,

Engine size                                         Petrol – amount per mile                             LPG – amount per mile

1400cc or less                                    12 pence                                                               8 pence

1401cc to 2000cc                               14 pence                                                               9 pence

Over 2000cc                                       21 pence                                                             14 pence

Engine size                                         Diesel – amount per mile

1600cc or less                                     9 pence

1601cc to 2000cc                              11 pence

Over 2000cc                                      14 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

The Advisory Electric Rate (AER) which was introduced in September for 100% electric cars will remain the same at 4p per mile.  Electricity is not a fuel for car fuel benefit purposes.

The AFR and AER are deemed to be tax and National Insurance free.

Both rates can be applied for fuel per mile,

• to reimburse employees for business travel in their company cars.
• when you require employees to repay the cost of fuel used for private travel.

If your employee does not repay the private fuel used during the tax year then you will need to,

• report on their P11D
• pay Class 1A National Insurance on the value of the fuel benefit

If you travel as a result of running your business (other than home to work) and

• are unsure on what you can claim
• are considering your options regarding the company purchasing a vehicle
• want to understand the rules around company car benefits in kind
• or anything else associated with business travel

Please contact us so that we can ensure the advice you are given is specific to your circumstances on 0113 2864486

Source: HMRC

Photo: Photo by chuttersnap on Unsplash

HMRC are warning millions of customers about potential fraudsters.  Last year, out of nearly 900,000 reports of suspicious HMRC contact more than 100,000 were phone scams and over 260,000 were about bogus tax rebates.

The most common techniques are phoning regarding fake tax refunds or sending a link via text or e-mail to a false page where bank details and money will be stolen.  Some customers have also been threatened with arrest or imprisonment if a bogus tax bill is not paid.

These are the things HMRC will never ask for.

E-mail – Notification of a tax rebate or refund via e-mail from HMRC.  Fraudsters can spoof a genuine e-mail address or change the “display name” so it looks genuine.

Text messages – HMRC will never request personal or financial information via a text message.

Tax rebate scams containing PDF attachments – they will never send you a PDF attachment to download!

Bogus phone calls – HMRC will never call you saying you owe money and that they are taking you to court.  Neither will they offer a tax refund and request your bank or credit card information.

If you are unsure if genuine verify the identity of the caller e.g. ask them what your UTR is or ask them for their number and name to call them back.  If at all unsure do not speak to them.

There are various numbers that fraudsters use and to help HMRC it is useful to let them know the details of the scam,

• Date of the call
• Phone number used
• Content of the call

WhatsApp & Social media scams – HMRC will never send details of a tax refund or request personal or financial information via WhatsApp message or direct message you through social media.

Refund companies – these companies are not connected to HMRC and you should read the small print/disclaimer before using such a service or providing them personal or business information.

Export clearance process (delivery stop order) e-mails – they will never send e-mails claiming that goods are been withheld by customs and payment required before their release.  The “419 scams.”

In all the above cases

• Organisations such as HMRC and banks will never ask for PIN, password or bank details
• Never reply to any communications or open any links or attachments
• Never provide personal & financial information
• Forward the scam information to phishing@hmrc.gov.uk or text messages can be sent to 60599 (network charges apply).
• Delete the communication or end the call.

To read further and see examples of what such communications look like go to GOV.UK if at all unsure about any communications then give us a call on 0113 286 4486

Source: GOV.UK

Photo: Photo by Hal Gatewood on Unsplash

In the Budget of 2018, the government planned to cap R&D tax credits.  There were fears that this would prevent legitimate start-ups and small businesses from receiving such benefits.  However, a recent consultation may have put forward a possible solution.

The R&D tax credit is very popular, providing £3.5bn of relief in 2016/17 increasing from £350m in 2010.  However, HMRC stated that this increase had also led to an increase in fraudulent claims to the tune of £300m by “artificial corporate structures.”  The government solution to this was announcing that a cap would be introduced in April 2020.

The cap is stated “the amount that a loss-making company can receive in R&D tax credits will be capped at three times it’s total PAYE and National Insurance contribution liability.”  Many quickly stated that start-ups are lossmakers, having low or nil salary costs as they rely on subcontractors and/or many directors taking no remuneration when starting up a business.  The result of this would be that these new businesses could not claim R&D tax credit as “if you pay nil PAYE or NICs liability, then obviously three times nil is nil.”

Though HMRC need to reduce fraudulent claims, it needs to ensure that genuine research businesses are not penalised by the Finance Bill 2019-2020.

The consultation document states that it is aware of this situation and does wish “to keep any impact on SME’s to a minimum and committed to consult on the cap before it is implemented.”  HMRC have put forward a compromise in the consultation that there would be a minimum level they would pay up to before the cap applies.  Since publishing the initial blog, this has been set at £10,000.  There are fears that some businesses will still be unfairly caught out.

If you need help with any R&D claims, then please contact us on 0113 286 4486

Source: Accounting Web

Photo: Photo by timJ on Unsplash

IR35 has been in place since 2000 with the rules aimed at “disguised employment.”  (See previous blog).  Though the Government has sort to rectify this over the years it claims that too many limited company owners are still illegitimately working outside of the rules.

Therefore the “off-payroll” rules are to be applied to the private sector from April 2020, the only exception to this is “small businesses.”  The end-client must meet two or more to of the following criteria to be deemed a small business,

• Annual turnover is no more that £10.2 million
• Balance sheet total is no more than £5.1 million
• No more than 50 employees.

It is said that the implementation will net £1.3bn per year to the Treasury by 2023.

The Government published draft legislation in July 2019 with the following new points,

• A “Status Determination Statement” will be required. The end-client needs to confirm the IR35 status of a contract, which needs to be provided to the contractor and the party hiring the contractor (usually the agent).  Without this then the end-client will be liable for the collection of income tax and NICs
• If the above is not agreed, then you will need to go through the client-led disagreement process. The end-client needs to review a decision and provide a reasonable response within 45 days.  If this does not take place then the client, and not the agent, will be liable for IR35.

It is predicted that most private sector contractors will be impacted with this new legislation as most work for large clients rather than small businesses.

If you should need any help regarding IR35 then get in touch on 0113 286 4486

Sources: itcontracting &Crunch

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