The details that are currently submitted on P35/P14 forms at the payroll end of year will be submitted every pay period whether [...]]]> HMRC are changing the way Pay As You Earn (PAYE) is reported to them, replacing the Employers Annual Return with the submission of Real Time Information every time a payment is made to employees.

The details that are currently submitted on P35/P14 forms at the payroll end of year will be submitted every pay period whether it be weekly, fortnightly, four weekly or monthly with up to 100 other items.

This information includes, employee name, NI Number, Date of Birth, Employee Address, Gross Pay, PAYE, NIC and the number of hours worked (in bands) to name just a few.
The information will be submitted using the government gateway. Your payroll department, accountant or bureau should be currently preparing for this change.

PAYEpeople will be opting into the trial to ensure that clients are ready for mandatory submission so as to avoid any penalties that the HMRC will issue for incorrect data.
Allan Pearson, Director of Payroll and HR at PAYEpeople says, “This is possibly the largest change to payroll in recent memory, and unlike the change to electronic submission of end of year returns, it has had less press, and less time to prepare. I think it is important to be involved in the trial to ensure that the payroll information you hold is correct, I can see a lot companies falling foul of the HMRC Penalties for incorrect information”

The timeline for RTI is shown below

With the change of tax year comes a wealth of changes to legislation. Please see below for some helpful facts and quick pointers to ensure your year end runs smoothly.

The standard tax code for a normal employee is rising from 810L . This means that the weekly tax allowance rises [...]]]> Year End Deadlines and New Legislation.

With the change of tax year comes a wealth of changes to legislation. Please see below for some helpful facts and quick pointers to ensure your year end runs smoothly.

The standard tax code for a normal employee is rising from 810L . This means that the weekly tax allowance rises from £144.00 to £156.00

From this year employees standard rate N.I. is 12% and employers is 13.8%
Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay are all to rise to £135.45 per week.

Statutory Sick Pay rises to £85.85 per week.

All the above statutory benefits are subject to the increased earnings threshold of £107.00; employees only qualify for statutory payments if their average weekly earnings are equal to or are over the earnings threshold.

If you use a payroll bureau then they will ensure all your year end is submitted in the correct way and on time. If you are filing your payroll year end yourself, please remember that your P35 AND your P14s have to have been submitted electronically by 19th May 2012. HMRC are likely to impose a fine if either are late or inaccurate.

Also remember to issue P60s to all your employees as soon as possible after 6th April. It is a legal requirement that employees receive their P60s before the 31st May, so the earlier they receive them the better.

Remember to continue to action tax forms such as P46s, P45s and P6s as soon as they arrive, however ONLY action P9s on the first pay date AFTER 6th April 2012. The form P9 is an instruction of which tax code to operate during the tax year 2012-2013, so actioning it on a pay date before the 6th April may issue an incorrect tax calculation and possible incorrect rebate.

At the change of tax year, remember to also remove Week1 / Month 1 flags from employees tax codes, ensuring they are changed to a cumulative code on the first pay date after 6th April.

Take the headache out of all the complex payroll legislation by outsourcing your payroll to us.

PAYEpeople – ‘Helping you pay your people’

This means that, for both employees and employers, these additional extra bank holidays could greatly reduce your [...]]]> In recognition of the Queens 60th Diamond Jubilee, this year the traditional late May bank holiday is being moved to Monday 4th June. There is also a special Bank Holiday directly following this, on Tuesday 5th June.

This means that, for both employees and employers, these additional extra bank holidays could greatly reduce your normal working week.

2012 Bank Holidays
• Monday 2nd January – New Years Day
• Friday 6th April – Good Friday
• Monday 9th April – Easter Monday
• Monday 7th May – Mayday
• Monday 4th June – Spring Bank Holiday
• Tuesday 5th June – Diamond Jubilee
• Monday 27th August – Summer Bank Holiday
• Tuesday 25th December – Christmas Day
• Wednesday 26th December – Boxing Day

Employers do not necessarily have to give additional time off for extra public holidays. Employers whose businesses run 7 days a week, for example, will have no option other than to maintain their usual staffing levels for their business.

Employees are entitled to a minimum of 5.6 weeks paid annual leave – 28 days for someone working five days a week (capped at a statutory maximum of 28 days for all working patterns). One thing to remember is that bank and public holidays can be included in your minimum entitlement

If the employee’s Contract of Employment names specific public holidays, then employees have the right to take these specific days off. Additional time off for extra public holidays, in this case, is entirely at the discretion of the company. If the Contract of Employment does not name specific public holidays, then the decision is based more on usual practice – are extra public holidays normally recognised?

Of course you have the option to voluntarily give an extra paid day of holiday to your staff, or even ask that those who wish to have the day off deduct it from their normal holiday allowance, but this may not be a viable option. Giving all your staff an additional paid day off may mean the difference, if you are a small business, between breaking even or making a loss. Plus, employers should still follow usual procedure of “first come, first served” when receiving holiday requests for this time, meaning that not all staff requests can be accepted.

If you feel you need to close your business on the additional public holiday, but will not be paying bank holiday pay to your staff, you should write to all employees at the earliest opportunity informing them that you will deduct one days holiday from their annual entitlement to cover for this time. This is ideally done as soon as possible, giving at least two clear days notice of your intention before the Bank Holiday.

Bear in mind that however you decided to treat the bank holiday for the Royal Wedding in 2011, (paid time off, use holiday allowance or requiring them to work,) you set the precedent for how your employees will expect you to treat the upcoming Jubilee Bank holidays.

A final thing to remember is that if you are processing payroll for your staff, and send payment via BACS, their payments will have to be sent a few days early to allow for bank transfers.

The purpose of this brief guide is to highlight the important considerations in buying a franchise.

If you want to go into business but do not have a specific business idea of your own, or would prefer someone to have done most of the groundwork for you, you [...]]]> Buying a franchise

The purpose of this brief guide is to highlight the important considerations in buying a franchise.

If you want to go into business but do not have a specific business idea of your own, or would prefer someone to have done most of the groundwork for you, you might find a franchise is just what you are looking for.

Franchising has grown steadily in the UK and at the last count there were 842 different franchise systems operating nationwide contributing £11.8 billion to the country’s GDP (see table).

In the broadest sense, a franchise is an authorisation to sell another company’s goods or services in a particular place.

The term ‘franchising’ can be used to describe a number of business relationships including licensee, agency, and distributor arrangements, but for the purposes of this guide it will be used to refer to what is known as ‘business format franchising’.

A business format franchise is one in which the franchisor grants a license to a franchisee allowing them to use their business idea, usually in a specified geographic area.

The arrangement allows the franchisee to trade under the franchisor’s trade mark or trade name using an established and proven business model while benefiting from various forms of support (see below).

In exchange, the franchisee pays the franchisor an initial fee as well as ongoing management service fees – usually based on a percentage of annual turnover or mark-ups on supplies – and agrees to certain restrictions in their business activities.

ADVANTAGES AND DISADVANTAGES

In some ways a franchise offers the best of both worlds – an individually owned, locally based business with the benefits of an established brand and the economies of scale of a large, national or even international network.

Moreover, because both sides invest in the venture and both stand to profit from it there is a shared motivation to make the franchise as successful and as profitable as possible.

If you buy a franchise you specifically benefit from:

· An established brand that the franchisor is committed to protecting and developing
· A business model that has proven itself in the marketplace
· A franchise package that usually includes operations manuals, bookkeeping and accounting systems, training assistance, and marketing guidance
· Assistance with setting up and ongoing support
· A reliable source of supply
· Any advertising and promotion conducted by the franchisor

Possible disadvantages might be

· Restrictions on how you can run your business with a potential inflexibility in adapting to local conditions
· The possibility of actions by other franchisees or even the franchisor damaging the brand
· Costs higher than you wish to commit to over the long term
· Difficulty in selling the business further down the road because the franchisor will need to approve any future buyer

GETTING STARTED

Buying a franchise is a long-term commitment and you should not rush into it. Careful thought and due diligence are essential at every stage.

If you think the basic model is right for you, the first step is to identify a specific franchise system to buy into. A good starting point is the British Franchise Association, which provides useful information on their website at thebfa.org. They also organise regular franchise exhibitions where you can meet various franchisors and see for yourself what is involved. Other websites you might visit are whichfranchise.com and franchiseinfo.co.uk. You can also consult magazines such as Franchise World, Dalton’s Weekly, and Business Franchise Magazine.

A word of warning: Unfortunately, there are many disreputable schemes masquerading as legitimate franchises so be sure to check the credentials of the franchisor carefully and make sure they are a member of a professional body with an established code of ethics such as the British Franchise Association.

RESEARCH

Once you have identified a franchise system that suits your needs, you will need to research it thoroughly.

Ask to see information on how long it has been running, how many franchisees there are, how successful they have been, etc.

Obtain a copy of the operations manual and the franchise agreement (see below) and check them carefully.

Do not rely only on the information provided by the franchisor but try wherever possible to refer to independent, verifiable sources.

In particular, try to obtain reliable information on the general market for the product or service the franchise provides, the strength of any competitors, and the reputation the franchise has among customers, suppliers, and other businesses.

The franchisor should also provide you with a list of current and past franchisees and you would be well advised to visit as many as you can – failures as well as successes – and see for yourself what is involved.

We cannot over emphasise the importance of due diligence at this stage or the need to take appropriate professional advice.

THE FRANCHISE AGREEMENT

If you are satisfied with the results of your investigation, ask to see a copy of the franchise agreement and read it carefully. Be warned, these agreements can be weighty documents – often thirty pages or more and sometimes as long as eighty pages!

The agreement is a legal contract that sets out the obligations of both the franchisee and the franchisor. Among other things, you will need to pay particular attention to:

· How long the agreement is for
· What the initial and ongoing fees will be
· What territorial rights you will have and whether they will be exclusive
· What restrictions will be placed on the way you run the business
· What support you will be provided with at the outset and on an ongoing basis
· What legal and other compliance issues will be involved in running the business
· How you can terminate the agreement prematurely if needs be, or how you might sell on the franchise in the future

You should have the agreement checked by a solicitor who has experience in dealing with franchises. You can obtain a list from the BFA. We strongly advise against signing or paying anything until the agreement has been checked and approved by a qualified solicitor.

Note that franchise agreements are usually standard contracts that apply uniformly to all franchisees, so don’t expect to be able to make changes to suit you. In the rare event that a modification is agreed this will usually be contained in a binding side letter that is signed at the same time as the agreement and attached to it.

THE BUSINESS PLAN

Once you are clear about the franchise you want to buy the next step is to put together a business plan drawing on the results of your research.
This will include among other things:

· The proposed structure of the business – sole trader, partnership or limited company.
· The premises from which you will run the business and how you intend to acquire them – should you purchase or lease?
· The number of employees needed whether full or part time – how they will be trained and supervised, remuneration and tax arrangements, etc
· How the venture will be financed – how much capital you will provide from your side, how much you will need to borrow, how any loans would be secured, etc
· Realistic cash flow projections for the first three years
· How any legal and compliance issues will be addressed

RAISING FINANCE

On the basis of your business plan you can then draw up a proposal to submit to a lending source such as a bank.

Notwithstanding the present lending conditions, most major banks and other lending sources will tend to give serious consideration to a well thought out proposal for buying a franchise.

As a general rule, you can expect a bank to loan up to 70 percent of start up costs for an established franchise system and 50-60 percent for a new system.

HOW WE CAN HELP

We can help at every stage of the process, from choosing an appropriate franchise through research and due diligence to preparing a business plan, setting up the business structure and approaching lending sources.

If you think franchising might be right for you, contact us and arrange a preliminary discussion to see how we can help.

UK Economy

As we all knew at the time, the March 2010 Budget was likely to be out of date before the ink on it was properly dry, with the general election due just six weeks later. Now after the protracted political horse-trading following the most unusual election [...]]]> All change as new government arrives?

As we all knew at the time, the March 2010 Budget was likely to be out of date before the ink on it was properly dry, with the general election due just six weeks later. Now after the protracted political horse-trading following the most unusual election in nearly forty years, we face a new Budget in the near future – and apart from ‘general misery’ it’s hard to know what to expect over the coming months. However, while it means that potentially anything that Alistair Darling announced in March might soon be ripped-up by George Osborne & Co., on a day to day basis the machine grinds slowly, and many of the detailed changes announced in March will continue to fall into place. This is particularly true of the low-key, non-headline changes to tax rules and thresholds; however unpopular they might have seemed ‘then’, and however much the then-opposition may have condemned them at the time, the political price will have been paid already – and incoming politicians often find that the benefits [to the Treasury] are such that there’s really no point in reversing what’s already in place.

It’s a World Cup: think Penalties!

One such area that no incoming Chancellor will rush to undo concerns various Penalties that HMRC have available against taxpayers who don’t quite follow the rules [as it were..]. A new, streamlined penalty regime came into effect from 1st April 2010; it didn’t really make headlines then, and although many individuals and businesses might think the changes were unnecessary or just another sign of the power of Government versus the individual taxpayer, they are unlikely to be suddenly cancelled by the new government.

Inaccuracy penalty

From 1 April 2009 there was a penalty for inaccurate tax documents and returns. This penalty is being extended to almost all taxes for return periods starting on or after 1 April 2009, for documents that are due to be filed on or after 1st April 2010. Apart from the ‘big ones’ [e.g. PAYE/VAT/Corporation Tax – for which these penalties already applied last year] the new rules cover virtually every other tax you can think of, such as Excise Duty, Tobacco Products Duty, etc.

Under the new system HMRC “will not penalise you if you take reasonable care to get your tax right”. Taking ‘reasonable care’ includes:

· keeping accurate records to make sure your tax returns are correct
· checking what the correct position is when you don’t understand something
· telling HM Revenue & Customs (HMRC) promptly about any error you discover in a tax return or document after you’ve sent it.

This clearly puts the onus onto every business operator to maintain an accurate accounting system, and to be open and honest when providing their accountant or tax advisor with information that will be used for preparing returns to HMRC.

Failure to notify penalty

From 1 April 2010 HMRC can apply a penalty if people don’t tell them about a tax obligation at the correct time. Again the penalties relate to almost every tax that you can think of, as well as quite a few that you’ve probably never heard of.

The failure to notify penalty will most commonly apply where you don’t tell them at the right time that:

· you are liable to tax because your new business has made a profit
· your business’s turnover has reached the VAT registration threshold
· you sell an asset and make a capital gain on which tax should be paid
· you start a type of business that is required to register with HMRC – for example for Excise
· your circumstances change in another way that affects your tax position [which is a classic ‘catch-all’ provision if ever we’ve seen one].

VAT and Excise wrongdoing penalties

From 1 April 2010 HMRC will apply wrongdoing penalties where a person:

· issues an invoice that includes VAT which they are not entitled to charge
· handles goods on which Excise Duty has not been paid or deferred
· uses a product in a way that means more Excise Duty should have been paid
· supplies a product at a lower rate of Excise Duty knowing that it will be used in a way that means a higher rate of Excise Duty should be paid
-the latter clause should be noted in particular by those fuel retailers selling products such as “Agricultural Diesel”! This penalty applies to anyone registered for VAT or Excise, anyone who should be registered to pay VAT or Excise duties and to other members of the general public.

Name & Shame

If those are the ‘penalties’ – what are the actual sanctions? What will HMRC do to you if you get caught? Simple: first the actual amount of tax that’s been underdecalared, plus an additional amount calculated as a percentage of that tax; exactly how hard they hit you comes down to how much you cooperate with them – and that includes just how good [or otherwise] your basic accounting records are. That’s been HMRC practice for a long time, what’s new is the ‘name & shame’ part: from April of this year if a taxpayer is found to have evaded over £25,000 in tax, HMRC can publish the names, business details and amount involved on their website, together with a press release to the media. Apart from any personal embarrasment, that’s not something that will do you a lot of favours if you’re trying to raise funds or get anyone interested in investing in your business in future.

Given that there’s going to be another Budget in the next few weeks, it’d take a brave or foolish soul to try and predict what will be in it; as we go to press there are persistent rumours of another hike in VAT rates, and possibly an extension to the scope of VAT to include things like newspapers and maybe even more categories of groceries. As a retailer, one can only hope that if any of these changes are being considered, they’ll be kept relatively simple and that we are all given sufficient notice [say six months..] to implement them smoothly, unlike the ‘overnight’ VAT changes back in December 2008.

EKW Group – ‘UK Franchise Accountants’ – recently exhibited at ‘The Franchise Supplier Showcase’ that was held at the end of last month.

The event that took place on the 28th April brought together the UK’s leading franchise suppliers to showcase their expertise to franchisors. [...]]]> EKW Group enjoys another successful exhibition…

EKW Group – ‘UK Franchise Accountants’ – recently exhibited at ‘The Franchise Supplier Showcase’ that was held at the end of last month.

The event that took place on the 28th April brought together the UK’s leading franchise suppliers to showcase their expertise to franchisors. The purpose of ‘The Franchise Supplier Showcase’ is to bring together franchisors and specialist suppliers to “showcase” exciting new products and services to add value to the franchise offer.

Neil Foster, Director of Sales and Marketing at the Group said, ‘The Franchisor Supplier Showcase is a great way to speak to franchisors directly. It presents a perfect opportunity to demonstrate how we, as a business, can drive their franchised network performance up. Ultimately, the exhibition enables us to build our profile within the industry and generate new leads.’

The exhibition included a series of speakers who presented new ideas that could benefit franchisors, including a very interesting speech on Digital PR.

Mr Foster continues by saying, ‘I found this showcase to be of great value to EKW Group, not only did we meet some key individuals, but I now have a better understanding of Search Engine Optimisation, or should I say SMO (Social Media Optimisation).’

For more information about The Franchise Supplier Showcase, visit www.franchisesuppliers.co.uk/

To find out how EKW Group can drive your franchise forward, visit www.ukfranchiseaccountants.co.uk or alternatively contact us for a free consultation on 0800 3898271.

The UK franchise industry contributed £11.8 billion to the country’s GPD last year, despite robust economic conditions. According to the bfa franchise survey, this figure represents an increase of £400 million from the previous year.

Key Stats

· 94% optimistic about future business [...]]]> Franchising contributes £11.8bn to the UK economy

The UK franchise industry contributed £11.8 billion to the country’s GPD last year, despite robust economic conditions. According to the bfa franchise survey, this figure represents an increase of £400 million from the previous year.

Key Stats

· 94% optimistic about future business
· 9/10 businesses are profitable
· 86% increase in the number of women in franchising

The bfa survey revealed fewer franchise businesses are trading at a loss compared to the 90’s recession. In 1990 only 70% of all franchise businesses were profitable compared to 89% in 2009. The average turnover of franchised businesses rose by just under 3% against last year’s figure of £335,000.

The number franchise systems operating in the UK increased from 835 to 842, signalling modest growth from the previous year. Franchisors confidence in business conditions rose to 94% compared to 82% last year.

Graeme Jones, head of NatWest’s franchise team, comments, “It’s encouraging to see continued growth in specific sectors, such as personal services, where franchise systems have grown by 38 per cent in five years. We look after more franchises than any other bank and have seen far more optimism from our customers about the coming year in comparison to twelve months ago when confidence levels were low.”

Brian Smart, director general of the bfa, says, “Franchised businesses have weathered the recession extremely well, which we should not be surprised about if we look at how franchising has proven itself over the years. The combination of the wider business support, training and economies of scale, with the determination, enterprising nature and local business focus makes franchise businesses a very robust offering. This year has highlighted this particularly well with success rates of franchise businesses not dropping even in the recent recessionary environment”.

The survey revealed how franchised businesses coped with the recession by focusing on growing existing customer bases and increasing spend on marketing. One notable indication of how franchised businesses dealt with the poor economic conditions was to employ part-time staff and to cutback full-time employees (from 239 to 219).

An increasing number of women are getting involved in franchising, with 39% of new franchisees being women, a large increase when compared to 23% in 2003.

Estimated start-up costs have declined slightly, and new franchisees can expect to pay £46,700 in franchise fees and other associated costs, down from £50,000 last year. Mr Jones added: “The main indicator at the end of 2008 was that the outlook for franchise owners and franchisors’ own businesses and for the economy as a whole, was grim. Those questioned in 2009 though were a good deal more optimistic than they were 12 months ago, with fewer mentions of redundancy or shorter working hours.”

Mr Smart continues, “It’s been a tough time for businesses across the UK but franchised businesses have clearly shown a high level of stability and robustness and made a valuable contribution to the UK’s economy last year. The survey paints a very positive picture of future realistic success for the industry in the coming year.”

Franchisees and Franchisors are hopeful about the potential for growth, with franchisors planning, on average, for an additional 8.8 franchisee outlets.

For more information on franchising visit the British Franchise Association

You will have no doubt seen in the news that over 400 bosses of SMEs have signed a new letter to stop next year’s planned National Insurance rise. The general feeling is that the proposal to increase the tax “threatens to derail the economic recovery.”

TAX – YOUR GOVERNMENT NEEDS YOU!

You will have no doubt seen in the news that over 400 bosses of SMEs have signed a new letter to stop next year’s planned National Insurance rise. The general feeling is that the proposal to increase the tax “threatens to derail the economic recovery.”

The latest letter points out “Between us we run hundreds of small and medium enterprises across the country. Our businesses are at the heart of the economy and the centre of our local communities. For the last two years we have worked hard to protect our staff and businesses through the recession.

“We believe that the Government’s proposal to increase National Insurance, placing an additional tax on jobs, comes at exactly the wrong time in the economic cycle.” Well, your businesses are at the heart of the economy and the centre of our local communities and the proposal will cost you.

Great! More Tax! Do you ever feel the Government doesn’t listen to you as proprietors of the afore-mentioned SMEs? Well, contrary to the handling of the National Insurance issue, it seems it does want to adopt a consultative approach which is surely great news for us all. It appears the Government wants to understand and respond to the views of business on the tax system. It says, “A stable, sustainable and competitive business tax system is critical to ensure businesses can start up, grow and invest. The Government recognises the importance of the views of business when reviewing, revising and developing business tax policy.” As a result of this (did they seek your opinion I wonder?) the Treasury has just published a paper entitled “Tax Framework for Business”.

In a seven page thrilling read it outlines the policy principles: “The UK needs a sustainable tax base from which to raise sufficient revenue to support the public finances and to provide investment for public services. In its approach to making tax policy for business, both domestically and internationally, the Government will consider any changes against the following principles:

Competitiveness – The tax system plays an important role in assessments of the UK’s overall competitiveness. The Government is committed to maintaining the UK’s competitiveness and will ensure that the UK remains an attractive location in which and from which to do business.

Fairness – The Government will seek to ensure fairness within and across the tax system, and that businesses pay their fair share of tax.

Minimising distortions – The Government will seek to maintain a tax system that minimises distortions to commercial decisions, while recognising that the tax system can have a role in supporting the UK’s competitive strengths and addressing market failures.

Simplicity – When developing and reviewing business tax policy, the Government will consider simplicity alongside other policy objectives, and will seek to avoid unnecessary complexity when designing and developing new business tax legislation.

Stability and certainty – The Government recognises the value of stability and certainty to business. It seeks therefore to avoid unnecessary changes to tax legislation. Where the Government proposes to amend legislation, it will set out the policy reasons for doing so and explain how the amended legislation will deliver these policy objectives.

A REAL SICKENER!

New sick leave rules affect you. The European Court of Justice has decided that statutory entitlement to paid annual leave will continue during long-term sick leave.

A Federation of Small Businesses (FSM) poll indicated that only 19% of businesses say this will make no difference to the way they employ staff whereas 38% of businesses like yours will be more cautious about taking on new staff with health problems, 21% will be less likely to take on new staff, 19% will consider removing their company sick pay policy and just pay the statutory minimum and 17% will be more likely to dismiss staff on long-term sick leave, but even there the ruling provides that payments in lieu of leave upon termination of employment must include any untaken statutory annual leave even if the employee has been on sick leave for the whole of the leave year.

The same ruling states that workers can now choose to take any missed annual leave at a later date if they were sick during a period of annual leave. That will clearly have a negative affect on your business as well.

“It is well known that small firms are the country’s key employers and have done all they can to retain their employees and take on new staff throughout the recession,” said John Walker, the Federation of Small Businesses National Chairman.
“However, measures put in place by the European Court of Justice on sick leave are hampering small businesses’ ability to do the job at hand and help tackle unemployment – which is at its highest for 17 years.

“Small businesses understand the need for good health in the workplace and are like a family, knowing and understanding the needs of their staff.

“But these FSB-ICM figures show that the changes in the law on sick leave are hampering employment opportunities to get long-term unemployed back into work.

“The European Commission must look at the measures on sick leave while reviewing the Working Time Directive and ensure these are rewritten so that sick leave is actually classed as sick leave so that small firms have the best conditions to take on more staff and help pull the economy back onto the road to recovery”

CHECK YOUR PAYSLIPS!

In order to ensure employees pay the right amount of tax and National Insurance, at the right time, HMRC introduced the biggest change to PAYE processing in 25 years with the introduction of a new system for processing PAYE, the National Insurance and PAYE Service (NPS), which has one single record for each individual customer containing all their PAYE details. It’s all to do with employees only having to make a single phone call for any queries they may have. The system implementation started in June last year with planned upgrades in November and, now, April this year.

HMRC have issued advice of various problems in tax code migrations, including such areas as allowances or underpayments carried forward from previous years but have now warned of some employees being on the wrong tax code.

Employees are advised to check their April payslips because it’s possible that they may have been advised of a different tax code to the (supposedly duplicate) one sent to their employer for the “correct” deduction of tax at source!

Employees are warned to look out for any unexpected a changes to the amount they are paid and to phone HMRC is they believe there is a problem.

Alistair Darling’s Budget on Wednesday 24th March may well have been his last such presentation [regardless of which party actually wins the forthcoming general election] – and is just as likely to be merely the first ‘Budget’ this year: whoever is in power after May [...]]]> Budget 2010 [- Well, the first one..]

Alistair Darling’s Budget on Wednesday 24th March may well have been his last such presentation [regardless of which party actually wins the forthcoming general election] – and is just as likely to be merely the first ‘Budget’ this year: whoever is in power after May or June will almost certainly have another go at raising taxes and cutting state spending. With that in mind, these were the highlights from March:

VAT and Income Tax rates unchanged.

It was never very likely that the Chancellor would have stood up and announced any increases in ‘universal’ taxes at this time, and there were no surprises that both VAT and Income Tax rates have been left alone. This of course means that the 50p rate of tax announced last year comes into effect from April 2010, for taxable earnings of £150,000 and over. Other than this ‘additional rate’ all personal tax rates, bands and allowances remain unchanged for 2010/11; for those fortunate individuals who still look forward to pay rises, the absence of any ‘index-link’ between RPI and tax bands/allowances does mean that they’ll effectively be losing a little more of any increased pay than they might realise from the bland headline ‘tax rate unchanged’!

But VAT Registration thresholds amended.

The taxable turnover threshold, which determines whether a person must be registered for VAT, will increase from £68,000 to £70,000, from 1 April 2010. The taxable turnover threshold which determines whether a person may apply for deregistration will be increased from £66,000 to £68,000.

National Insurance Rates unchanged.

No changes announced to any NIC rates for 2010/11 – all classes [employed, self-employed, employer’s and employee’s] remain as for 2009/10.

Corporation Tax Rates unchanged, but capital allowances are:

While the main rates of Corporation tax remain unchanged, there was a slight change to capital allowances. The Annual Investment Allowance (AIA) allows businesses, regardless of size, to reduce their taxable profits by the full amount of their annual capital expenditure on most plant and machinery (apart from cars), up to a maximum amount of £50,000 each year. The maximum amount of the AIA will increase to £100,000 from 1 April 2010 (for corporation tax) or 6 April 2010 (for income tax). Capital expenditure above this threshold will continue to be eligible for standard capital allowances against taxable profits. However, the “Temporary first year allowance” rate of 40% that was available in 2009/10 is removed for 2010/11.

Fuel duty – and politicians don’t think they’re ‘out of touch’!

Last year’s Budget announced that the main rate of fuel duty would increase by 1pence per litre in ‘real terms’ on 1 April 2010. In reality that would have been 2.76 pence per litre increase. In the 2010 Budget it was announced that this increase would be implemented in three stages: 1 penny per litre on 1 April 2010, 1 penny per litre on 1 October 2010, and 0.76 pence per litre on 1 January 2011. With the inevitable ‘add on’ from the oil majors, we’re expecting pump prices to be back to the disastrous levels of over £1.25/litre by the end of this year; it probably doesn’t even register with ministers chauffeured around in state limousines just how much that affects the public in general – or the impact on the forecourt trade in particular.

Drink anyone?

Maybe not, but an awful lot of forecourt shops now rely on the off-licence trade to make a contribution to keeping the site profitable. However no Chancellor would pass on an opportunity to raise duty on booze [social and medical reasons, you understand..] and this time it is Cider that takes the biggest hit. Duty rates for all still ciders, and sparkling cider exceeding 1.2 per cent alcohol by volume (abv) but not exceeding 5.5 per cent abv, were increased by 10 per cent above inflation. Duty rates for all other alcoholic drinks will increase by 2 per cent above inflation – every year until 2013.

How about a smoke then:

No, he couldn’t resist those either. The rates of Tobacco Products Duty (that is the duty on cigarettes, cigars, hand rolling tobacco, other smoking tobacco and chewing tobacco) were increased by 1% in ‘real terms’ [or around 9p a packet in really- ‘real terms’] with effect from 6pm on Budget day. The intention is to raise tobacco duty by 2% per year ‘in real terms’ every year until 2014.

Some relief – Business Rates:

Updated property values for business rates take effect from 1 April 2010 the ‘multiplier’ for 2010-11 is being reduced to compensate, so that total revenue from business rates remains the same in real terms. The 2010 Budget announced a temporary increase in the level of small business rate relief for one year, from 1 October 2010 –

Need help with paying the government?

The Business Payment Support Service (BPSS) – giving people streamlined access to request Time to Pay their tax – introduced at the 2008 Pre-Budget Report to support viable businesses experiencing temporary financial difficulty, is to continue. The service is available for all HMRC taxes, including VAT, Corporation Tax, Income Tax and NICs and PAYE. HMRC will require businesses seeking Time To Pay (TTP) arrangements for arrears of £1million or more, to provide an Independent Business Review (IBR) in support of their request. There will be no change for all other businesses. HMRC will continue through The Business Payment Support Service (BPSS) to provide help and support on the same principles as before. And those same principles will continue to apply to businesses with large debts.

Relief if you’re selling the business.

Entrepreneurs’ Relief was originally introduced on 6 April 2008. It allowed individuals in business [sole traders or partnerships] to claim relief on the first £1 million of gains made on the disposal of any of the following:

• all or part of a business
• the assets of a business after it has ceased
• shares in a company

Entrepreneurs’ Relief reduces the amount of gains liable to Capital Gains Tax by four-ninths o Entrepreneurs’ Relief reduces the amount of gains liable to Capital Gains Tax by four-ninths on all qualifying gains up to £1 million. You can make claims on more than one occasion as long as the total of all your claims doesn’t exceed £1 million of qualifying gains.

If you’ve really had enough, the good news is that from April 2010 the limit for relief has doubled to £2 million.