HMRC is cracking down on tax avoidance – and they can help you spot the signs of avoidance and advice you on the risks involved in using tax avoidance schemes.

These risks have increased greatly in the last two years, with the introduction of new legislation to combat avoidance.

We are seeing a number of avoidance schemes and arrangements being marketed to individuals and businesses as legitimate tax planning.  This can give potential users the false reassurance that HMRC will not challenge their use of the scheme. Such schemes are often marketed as wealth management products, or dressed up as exciting investment opportunities.

If you have recently been tempted by tax avoidance scheme, please look at the following pages of Gov.uk which contain HMRC’s latest information on tax avoidance, set out in simple and straightforward terms.

• Ten things about tax avoidance series gives customers the plain facts about specific areas of tax avoidance in simple terms – see their recently published Ten Things about contractor loan schemes
• Tax avoidance schemes currently in the spotlight gives the latest information on schemes that HMRC believes are being widely offered to help those using them to avoid tax – see their recently published Spotlight 29: don’t fall for it – misleading claims by tax avoidance scheme promoters
• Tempted by tax avoidance gives advice on how to spot a tax avoidance scheme .

There is a new obligation on employers to report to HMRC information about employees where the employers has implemented a DOTAS disclosed tax avoidance scheme which benefits either their employees or themselves and is related to the employment of those employees. The employer must submit details about each employee in relation to whose employment the scheme operates by 19 April following the end of the tax year. The new requirement relates to tax year 2015/16 onwards irrespective of when the scheme was first entered into. Further information is available here.

Budget 2016: everything you need to know

Last week George Osborne, the Chancellor of the Exchequer, delivered a Budget that delivered tax cuts for businesses and individuals. Here are the key points:

Personal tax – As expected, Osborne raised the lower threshold for income tax to £11,500 and the higher threshold to £45,000 – a larger increase than expected. These new thresholds will come into effect in April next year.

More surprising was the cut in Capital Gains Tax. The basic rate CGT was cut from 18% to 10%, with the higher rate cut from 28% to 20%.

Osborne also announced that Class 2 National Insurance contributions will be abolished, with will give self-employed workers a tax cut of more than £130 when it comes into force in 2018.

It wasn’t all cuts, however. Insurance premium tax was increased from 9.5% to 10%. This increase will be used to fund improvements in flood defences.

Business tax – Some good news for small businesses: the annual threshold for 100% small business rate relief increased from £6,000 to £12,000. The higher rate threshold will rise from £18,000 to £51,000. The headline rate of Corporation Tax is also being cut to 17%.

He also snuck in a rise in tax on loans to participate, up from 25% to 32.5%, which follows on from the Dividend Tax and will inevitably hit small businesses harder.

Pensions and savings – The biggest announcements were around ISAs: the annual ISA limit will increase from £15,240 to £20,000. A new ‘lifetime ISA’ for the under 40s will be introduced from April next year, with the government putting in £1 for every £4 saved. The Chancellor said that this is an alternative to a pension fund for the young, who find pensions “confusing.”

Over 85% of contractors are already sending HMRC their CIS returns online, but from April 2016 everyone will have to use the online service.  HMRC will no longer be accepting any paper forms from that date.

To increase filing accuracy, this change will see the introduction of online amendments, online messaging and alerts.

HMRC are also improving the online verification service for contractors, as from April 2017 everyone will also have to use the online service, HMRC will no longer accept telephone verifications from that date.

For contractors currently sending paper returns, you’ll need to register for HMRC’s online services as an ‘Organisation’ ahead of the April 2016 deadline.  To register online you’ll need your HMRC employer reference and Accounts Office (AO) reference.

 Alternatively, Jet Accountancy can submit your CIS return online on your behalf, contact us for more information.

In April 2016 the Government’s new National Living Wage will become law.

If you’re working and aged 25 or over and not in the first year of an apprenticeship, you’ll be legally entitled to at least £7.20 per hour. That’s an extra fifty pence per hour in your pocket. The Government is committed to increasing this every year.

If you’re an employer, you’ll need to make sure you’re paying your staff correctly from 1^st April 2016, as the National Living Wage will be enforced as strongly as the current National Minimum Wage.

Or remember, remember the 31^st of January!

31 January 2016 is the date by which you not only have to complete your self assessment tax return, if you are self-employed or have other income to declare, but it is also the date by which you have to pay any outstanding tax.

Don’t be burnt by penalties and let Jet Accountancy complete and file the return on your behalf, relieving you of this burden!

Contact us today on 07806 792211 or email us info@jetaccountancy.co.uk for a free no obligation quotation.

 

From 2015-16 onwards, the collection of Class 2 contributions will be through the self-assessment system. This means that Class 2 NICs can now be paid together with income tax and Class 4 NICs in one chunk on the 31 January following the end of the relevant tax year. In the past, most people have paid Class 2 contributions monthly by direct debit. Following the final payment in July 2015, HMRC have cancelled such direct debit payments, ready for the switch over to the new system of payment under self-assessment. However, those who wish to continue paying their contributions more regularly can set up a Budget Payment Plan (assuming they are up to date with their self-assessment payments) and make payments weekly or monthly by direct debit in advance of the payment deadlines.   For those who do not opt to use a Budget Payment Plan, the payment date for the 2015-16 liability (£145.60) will be due on 31 January 2017. Self-employed traders will need to budget for this lump sum payment accordingly.

 

New National Minimum Wage Rates

• 21 and over – increase of 20 pence to £6.70 per hour
• 18 to 20 year olds – increase of 17 pence to £5.30 per hour
• Under 18 year olds- increase of 8 pence to £3.87 per hour
• Apprentice rate – increase by 57 pence to £3.30 per hour

This latest increase to the National Minimum Wage is the largest increase since 2007, and is set to benefit more than 1.4 million of Britain’s lowest paid workers.

Introduction of National Living Wage

The new National Minimum Wage (NMW) rates come into effect ahead of the planned introduction of a new National Living Wage (NLW) of £7.20 an hour for over 25 year olds from April 2016. The NMW rates will still apply for workers aged 24 and under. The NLW will be raised incrementally and is expected to reach £9 an hour by 2020.

If you have any questions about National Minimum Wage, or any of the changes which are due to come into effect next April then please get in touch with us at Jet Accountancy.

We would like to say a huge thank you to all our clients who helped us raise money for Race for Life’s Cancer Research UK.  A very hot but enjoyable 5K endured on 21 July 2015!  If you wish to sponsor next year’s event please visit http://www.justgiving.com/louisescott76

Have you received a letter from The Pension Regulator (TPR) telling you to “ACT NOW” to prepare for auto-enrolment? The letter gives you just a few weeks to nominate a contact to receive communications about auto-enrolment, with the threat of fines or prosecution if you don’t take action. The “staging date” for your business will be stated in the letter. This is the date by which you must have a pension scheme ready for your employees to join, if you do indeed need one. A large number of small companies will be exempt from auto-enrolment, if they don’t technically have any “workers” at their staging date. A company director is not a “worker” if he or she does not have a contract of employment with the company. A company with no staff other than directors has no obligations under auto-enrolment if any of the following apply:

– It has only one director; or

– It has a number of directors, but none of those have an employment contract; or

– It has a number of directors, only one of whom has an employment contract.

TPR doesn’t know which directors in which small companies have employment contracts. If you receive a TPR letter asking for a contact to be established for auto-enrolment, you can get TPR off your back with one email to: customersupport@autoenrol.tpr.gov.uk . This should open a structured email in which you need to insert your: PAYE reference, Companies House reference and the letter code from the TPR letter. If your company does have staff other than its directors, contact us at Jet Accountancy so we can discuss what preparations you need to make to get ready for auto-enrolment.

HMRC have announced new rates which apply from 1 March 2015: 

Engine size	Petrol	LPG
1400cc or less	11p	8p
1401cc to 2000cc	13p	10p
Over 2000cc	20p	14p

Engine size	Diesel
1600cc or less	9p
1601cc to 2000cc	11p
Over 2000cc	14p

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