Newsletter 3: March 2014
This newsletter covers the following subjects :
- Employment issues
- Self employment issues
- Taxation of Partnerships
- Changes to VAT
- Other points
National Minimum Wage (NMW) – Current hourly rates for the NMW are – £6.31 for over 21 years old, 18-20 £5.03 , under 18 £3.72 & apprentices £2.68 .
National insurance – from 6 April 2014 employers will have a £2,000 allowance to offset against their Class 1 (secondary) National Insurance Employers contributions. There is only one allowance available to connected employers (associated companies and groups)
Sick Pay – from 6 April 2014 there will no longer be any right of recovery of sick pay from HMRC.
Auto enrolment of Pensions
It may seem that the date for your business to comply with Auto enrolment is a long way off but there is a substantial amount of administration to get through beforehand. It is recommended that the project itself may take 6 months to implement.
Even if you believe that your business will be able to “opt out” or use an existing pension scheme the rules to follow are clearly set out and if not followed can result in civil action being taken. It is important now to get assistance from a registered pension provider to assess your workforce and determine what needs to be put in place to fulfil the ongoing requirements of this legislation.
For more information and to obtain your staging date see website
For 2013/14 new rules have been issued by HMRC in an attempt to simplify accounting for small business which are under the VAT threshold, to allow the use of cash accounting and flat rate expenses. This does not apply to limited companies or LLPs. However on further investigation the transitional rules are overly complicated, restrictions apply to claiming a number of expenses eg car hire and there is a restriction on claiming capital allowances. It has also been suggested that banks will require accounts on the existing basis to be prepared to support any loan applications.
Further information is available on the link below :
Changes to the taxation of Limited Liability Partnerships come into effect from 1 April 2014.
Under the draft proposals, partners must satisfy one of three tests in order to maintain their status. The first option is ensuring at least a quarter of their pay is profit-dependent; the second would see them contribute at least 25% of their ‘fixed pay’ to the firm’s capital; or the third option is to prove they have significant influence on the overall partnership.
If partners are deemed to be employees, then employer’s national insurance contributions at 13.8% will be due and other employment-related tax rules, such as benefits in kind and share scheme rules, will apply to them.
HMRC are also reviewing all partnerships where there is a mixture of individual and company members as these are perceived as schemes to reduce tax.
From 1 January 2015 new rules come into effect regarding electronic, telecom and broadcasting services.
If you supply broadcasting, telecommunications and e-services (BTE) services to businesses only (including those who are self employed) then these changes do not affect you.
If you are a business supplying BTE to consumers, these changes will affect you, so you need to start planning for them now. If you supply BTE services to a mix of businesses and consumers, then these changes affect you as far as the supplies to consumers are concerned.
If your customer does not provide you with a VAT Registration Number (VRN), and you have no other information that suggests that your customer is in business and VAT registered, you can treat this as a B2C supply.
Currently, the place of taxation for BTE supplies is determined by your location as the supplier of the services. However, from 1 January 2015, the place of taxation will be determined by the location of the consumer.
This is a significant change and in order to work out the country in which VAT due must be paid, you will need to keep additional information that was not required before and will need to ensure your accounting system can collect this information.
Further information is available at : http://www.hmrc.gov.uk/posmoss/index.htm?WT.ac=VAT_POSjan
Income tax bands
The new income tax bands for 2014/15 are:
|Higher Rate||31,866 – 150,000||40%||28%|
|Additional Rate||income greater than 150,000||45%||28%|
If you are a small business and have been affected by recent flooding the following assistance has been made available :
- £10million hardship fund for businesses
- £5000 repair and renew grant to assist the ability to withstand future flooding
- Extra time to file accounts at Companies House
- 100% business rate relief for 3 months
- Financial support from the major banks for those affected by flooding
Community Infrastructure Levy (CIL)
Legislation has been put in place for local authorities to charge an additional planning tax. If a project increases the floor space of a home by more than 100 square metres CIL will be charged at a set amount per square metre. This could substantially increase the cost of developments and extensions.
“Spring cleaning” or other actions that might save you money
Have you used your ISA allowance yet this year
Review your utility costs
Make a will
Set up a savings scheme
Review your pension provision
Review all your insurances each time they come up for renewal