PAYE Exemptions & Dispensations

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Under the current system, Employers have been able to apply to HMRC for a dispensation to be granted in respect of certain expenditure, for example business entertainment, travel and subsistence. Once such a dispensation is in place, the expenses no longer have to be declared on the annual return of expenses payments and benefits (form P11D). This drastically reduces the Employer’s time in collecting the information each year to complete the form. Unfortunately dispensations are being abolished with effect from 6 April 2016 and any dispensations in place at that time will no longer apply.

The new system introduces a statutory exemption for qualifying business expenses and benefits that are matched by a deduction which would otherwise be available to the employee. However, the Employer will need to have a system in place to check that only the actual expense incurred is reimbursed and that the employee would be entitled to a deduction as a business expense.  This system will be monitored by HMRC.

The new exemption can cover flat-rate payments provided these have been agreed in advance with HMRC. Any employers paying such expenses for hotel accommodation, travel and subsistence etc., should take steps to agree the flat rate paid and thus remove the necessity to report it on future P11Ds.

There is no change for non-allowable expenses – they should still be reported on the P11D and will be subject to tax and national insurance.

Should you require any further information please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Happy Holidays From Green & Co

20151218_133025232_iOSAs we take our Christmas break at the end of another productive year, we would like to take this opportunity to thank you, our loyal blog readers! Whether you are already a client, a prospective client, or just like to read our informative articles each week, it is you who keeps this blog going.

Working with our clients in 2015, has also helped to grow Green & Co’s services, allowing us to assist our clients in both setting and achieving their goals. Our services span from general accounts to business goal setting and much more…

  • Year-end and management accounts
  • Tax returns and tax planning
  • Auditing
  • VAT and bookkeeping
  • Payroll (Including Auto Enrolment)
  • Construction Industry Scheme (CIS)
  • Sage Training
  • Business forecasting and goal setting
  • Exit strategies
  • Profit improvement
  • Profit extraction
  • Corporate re-structuring
  • Inheritance tax review and estate planning
  • Virtual office services

Green & Co also specialise in accounting for a number of fields:

  • Doctors
  • Property developers
  • Independent financial advisors
  • Solicitors
  • Insurance brokers
  • And of course, farming!

If you would like to know any more about any of the above, please give our friendly team a call on 01633 871122 once we are back from our Christmas break – refuelled and recharged to combat another year together!

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Shared Parental Leave: The Generation Game

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Under plans announced by George Osbourne, working grandparents could soon be given the legal right to take time off to help care for their grandchildren.

The current system of shared parental leave, incorporated in April, looks to be extended to include grandparents as well as the child’s mother and father.

While the leave of up to 50 weeks and up to 37 weeks of parental leave pay (currently £139.58 a week or 90% of average earnings , whichever is lower) will not be extended, the plan is to help with flexibility in the first year of a child’s life. It looks most set to benefit single mothers who until now could not share their leave entitlement with a partner, but can now do so with a parent.

The Chancellor said that grandparents play a central role in caring for younger generations. He hopes that it will allow working parents to return to work more quickly if they want to, now that they have the option of sharing their entitlement with one of their parents.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of imagerymajestic at FreeDigitalPhotos.net

Benefits To Payrolling Benefits In Kind

ID-100105797From April 2016, the government is allowing employers to payroll employee benefits in kind. Payrolling is where the employer includes a notional value for benefits in kind as taxable pay in the payroll cycle, meaning that the income tax is collected in real time.

Currently, tax for employee benefits in kind is collected through a tax code adjustment meaning that it is always reliant on HMRC being informed promptly and can result in an under or overpayment of tax.

One of the biggest benefits of the new system is that there will no longer be a need to submit forms P11D or P46 (Car) after the end of the tax year. The exceptions to this are for living accommodation, beneficial loans and credit vouchers and tokens.

A big benefit for the employee is that any changes can be reported in real time, meaning they should not ordinarily over or under pay tax on their benefits in kind.

Employers seeking to register for the service must do so online with the payroll registration service, which is accessed through the government gateway and can be found HERE.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

New Tax Allowance for Savings Income

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From 6 April 2016 a 0% rate will apply to savings income of up to £1,000 and, in line with this, from the same date, banks and building societies will no longer deduct tax from the interest they pay to depositors who hold Non-ISA accounts.

The introduction of the new Personal Savings Allowance (PSA) will mean that basic rate taxpayers can receive up to £1,000 interest on their savings before tax is due, and higher rate tax payers can receive up to £500. The new rate will not apply to additional rate taxpayers.

For savings income received in excess of the PSA, HMRC will include taxable savings income in the PAYE code and collect the tax through either the PAYE system or self-assessment.

HMRC have also published a consultation document which invites discussion on the deduction of income tax from other savings income. This consultation closes 18 September 2015.

For more information please contact Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Reclaiming Your Statutory Payments

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As an employer, you may already know that you can reclaim 92% of your statutory payments such as Maternity, Paternity and  Adoption Pay. However, you may not be aware that you can actually claim 103%!

Yes, you heard correctly. If the total of your employees and employers Class 1 National Insurance in the previous year is less than £45,000, you can actually claim an additional 3% on top of the statutory payments you have to make.

Known as Small Employer’s Relief, it is a welcome relief to many employers. And if you know you will struggle to make statutory payments, you can even claim in advance for funding of the whole amount.

To find out more visit gov.uk here  or contact us at Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of duron123 at FreeDigitalPhotos.net

Sharing The Responsibilty with Shared Parental Pay

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With more and more ‘hands on’ fathers across the country, the introduction of Shared Parental Leave and Shared Parental Pay has been seen as a welcome addition.  However, many employers are still coming to terms with the complexities of the process.

Here is a brief overview of what it may mean for you:

When does it apply from? For couples whose baby was due on or after 5 April 2015, or adopters of children placed for adoption on or after the same date, it gives much greater flexibility.

How does it work? Birth Shared Parental Leave can take affect after the mother has taken at least two weeks maternity leave and pay, meaning that up to the remaining 50 weeks leave and up to 37 weeks’ pay can be split between the parents. The flexibility is in that the leave must be taken in weekly blocks and must all be taken by the child’s 1st birthday. It can be stopped and started, and you can take up to three separate blocks each. Employees are still required to give their employers a notice period of at least 8 weeks, although there are special rules for an early birth.

Who is eligible? As with maternity and paternity pay, there are several conditions that must be met in order to qualify. For instance, the mother must qualify for maternity pay or maternity allowance. The other parent must have the joint main responsibility of caring for the child, have worked for their employer for at least 26 weeks at the ‘qualifying week’, and earned enough over a given period.

How does it work for adopters? The same principles and conditions apply as above, although rather than the mother, the adopter must take the first 2 weeks before the remaining allowance of the adoption statutory pay and leave can be split between the two partners.

Where can I go for more information? There is a wealth of information on the subject on the GOV.UK website which can be found here – or contact us at Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of David Castillo Dominici at FreeDigitalPhotos.net

Changes To Rules For Collecting Tax Debts Through PAYE

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From 5 April 2015 the limit of tax debt that can be collected via PAYE rose from £3,000 to £17,000, but the amount which can be collected through your code will now depend on the amount of income you receive during the year.

For people earning less than £30,000 the maximum which can be collected will remain at £3,000, but if an individual receives £90,000 or more in earnings, then a maximum of £17,000 can be collected through their PAYE code. Between these limits there is a graduated scale. This method is called “coding out”.

It is important to note that HMRC will only use this method where the tax due has not been paid voluntarily. They will firstly write to an individual explaining their intention to use this method, giving them the opportunity to pay the debt another way. If coding out would cause you financial difficulty, HMRC should be contacted as soon as possible, in order to make an affordable arrangement.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of Sira Anamwong at FreeDigitalPhotos.net