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Implementing a Cycle to Work Scheme

28 Jun, 2017

The Cycle to Work scheme was introduced in 1999 to help promote a healthy commute to work.

The scheme allows employers to provide (technically loan) bicycles and cyclists’ safety equipment to employees as a tax-free benefit. Where the scheme conditions are satisfied, employees can benefit from a tax and National Insurance Contributions (NICs) reduction of between 32% and 42% through a salary sacrifice arrangement; there are also possible employer NIC savings.

Swapping salary for pension benefits

28 Jun, 2017

Employers and employees may have noticed that HMRC has clamped down on the tax and NIC benefits of some aspects of salary sacrifice schemes. The changes are being rolled out gradually from April 2017, and will affect a number of employees who have sacrificed part of their salary for benefits and are currently paying less tax and NIC as a result.

For the time being, all arrangements in place before April 2017 will be protected for up to a year, and arrangements in place before April 2017 for cars, accommodation and school fees will be protected for up to 4 years.

Are pension benefits received taxable?

28 Jun, 2017

As our readers are most likely aware, there are special rules which allow individuals who set up private pension scheme(s) to benefit from significant tax reliefs when saving for their retirement. There is no overall limit to the amount of employer or employee contributions and no upper limit to the total amount of pension saving that can be built up. However, there are important limits that affect the tax reliefs available.

What is the best way to extract funds from your company?

28 Jun, 2017

Director shareholders are wont to ensure that they pay the lowest amount of tax and NIC consistent with their obligations under the relevant legislation. For many years, director shareholders have followed a high dividend, low salary extraction strategy. This tended to reduce Income Tax and NIC contributions. The dividend changes that came into effect in April 2016, took some of the shine off this strategy, but taking dividends in preference to salary is still effective.

Tax Diary July/August 2017

27 Jun, 2017

1 July 2017 - Due date for Corporation Tax due for the year ended 30 September 2016.

6 July 2017 - Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2017 - Pay Class 1A NICs (by the 22 July 2017 if paid electronically).

19 July 2017 - PAYE and NIC deductions due for month ended 5 July 2017. (If you pay your tax electronically the due date is 22 July 2017)

19 July 2017 - Filing deadline for the CIS300 monthly return for the month ended 5 July 2017.

What does the Queen’s Speech mean for employment law?

27 Jun, 2017

With the General Election having returned a minority government and with the government’s priority being to legislate for Brexit, a rather more modest agenda for employment law reform was outlined in the Queen’s Speech 2017 than originally may have been envisaged. Parliament will also sit for two years instead of the ordinary one year, to give MPs sufficient time to consider the laws required to prepare the UK for Brexit. This means there will not be a Queen’s Speech in 2018.

Are we seeing the end of tax-free benefits?

22 Jun, 2017

There have been changes to the tax rules for certain Benefits in Kind which are provided as part of salary sacrifice schemes. These changes, which started coming into effect in April of this year, are beginning to have an impact on certain tax-free benefits provided to employees. The new rules effectively remove any Income Tax and NIC advantages and treat continued use of the benefits provided as if they were part of salary. 

There are transitional rules, they are:

DVLA car scam

22 Jun, 2017

The Driver & Vehicle Licensing Agency (DVLA) is warning the public of what appears to be a number of widespread scams targeting members of the public using emails, texts and telephone calls. These communications are supposedly sent from the DVLA and in some cases, include links to a lookalike DVLA online website.

The BBC’s Watchdog programme has also tweeted a link to a fake email which looked like it was from the DVLA.

The email states:

Are you claiming the NIC employment allowance?

22 Jun, 2017

For some time now, employers have been able to reduce their Class 1 NI contributions that relate to their employment of staff. The relevant relief, the employment allowance, is worth up to £3,000 per year and is available to most businesses and charities to be offset against their employer's Class 1 NIC bill.

Claiming the allowance is fairly straight forward, all that is required is a tick in the relevant box in your payroll software.

How will your business be affected by Making Tax Digital?

22 Jun, 2017

The introduction of Making Tax Digital (MTD) will fundamentally change the way companies, the self-employed and landlords interact with HMRC. The new regime will require businesses and individuals to register, file, pay and update their information using a new online tax account.

Should you be using the VAT Cash Accounting Scheme?

22 Jun, 2017

The VAT Cash Accounting Scheme (CAS) can offer important benefits to certain small businesses. Under the standard VAT accounting scheme, VAT is payable on sales whether or not the customer has paid and can lead to claims for Bad Debt Relief. With the CAS no VAT needs to be paid over to HMRC until the customer has paid for his goods / services. Using the CAS will help protect your cash flow if the amounts owed to your business by customers consistently exceeds the amounts owed to your suppliers.

Using your own car for business purposes

22 Jun, 2017

Employees who use their own car at work for business purposes can, under certain circumstances, be paid a tax-free allowance by their employers. This includes the use of their own van, motorcycle or bike. It is important to note that this tax-free allowance does not include journeys to and from work but for other business related mileage.

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