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In the UK, we are in the fortunate position where most people earning a PAYE salary or wage or receiving a pension do not need to complete a tax return.
However each year, as working and lifestyle patterns change, the number of tax returns increases. More than 10,000,000 were filed for the 2013-14 tax year.
For the 2014-15 tax year, if any of the following apply to you, a tax return is required:
In some circumstances, you would need to submit a tax return to claim a tax rebate from HMRC. For instance on:
For all except sole traders and partnerships, if you have not submitted a tax return before, you need to register online with HMRC here.
HMRC target to post your Unique Taxpayer Reference that enables you submit a tax return within two weeks of registration.
For a new sole trader, to register with HMRC click here.
For a new partner, to register with HMRC click here.
If you are the ‘nominated partner’, you need to register both yourself and the business partnership here.
Once you have your Unique Tax Reference you can either prepare and file a paper tax return before the deadline of 31st October 2015, enrol for the HMRC online service that grants a longer deadline of 31st January 2016 or appoint a tax advisor to act as your Agent.
If you would like our assistance with your tax return, we would need is your Unique Tax Reference, National Insurance Number and Post Code to act on your behalf.
If you would like to arrange an initial free consultation to discuss your tax affairs or would like any further information, please email us at welcome@cooperfaure.co.uk
We are delighted to announce that Freddie Faure has been awarded a Fellowship by the ACCA in recognition of her continuous commitment to professional development in the five years since qualifying with the Association of Chartered Certified Accountants.
In addition, we are pleased to welcome Lindsay Kantorowicz to the team as an Accounts Administration Assistant.
Lindsay reports to Martina Kovacova who has accepted the role of managing the London office.
A Limited Company is a company that is registered at Companies House and governed by its own Articles of Association (these set out the rules company officers must follow when running their companies). In addition a Limited Company must observe and operate within the Companies Act 2006.
Upon registration, a Limited Company acquires its own corporate personality, hence it becomes a legal entity/person with its own legal rights and obligations. This separates the Limited Company from its officers and members. As a result, the company can acquire assets and properties of its own, become an employer, engage in contracts with others, be considered a criminal and has the ability to sue or be sued.
Limited Companies are considered Limited either by Shares or by Guarantee, which essentially means that the liability of the members is limited to their investment or guarantee to the company.
A company Limited by Guarantee does not have share capital, but rather the members have agreed to pay a fixed amount should the company go into liquidation. Companies often set up in this manner include Charitable Organisations and Financial Conduct Authorities.
On the other hand, a company limited by Shares is a company whose members’ liability is limited to the value initially invested in the shares or to a minimum of £100.00.
Most companies set up in the UK and those who are our clients are companies Limited by Shares and, as a result, we will focus on this particular set up throughout this guide.
A Limited Company must be made up of both Shareholders (members) and Directors (officers). These can be the same person or people. The company may also choose to have a Company Secretary (officer) though this is no longer a mandatory requirement.
Directors
The Directors have a great burden of responsibilities on their shoulders as they must at all times operate both within the law as well as in the best interests of the company and shareholders. Some of the main responsibilities of the Directors are as follows but the list is by no means exhaustive:-
It is normal that Directors hire other people to manage some of the day-to-day activities on behalf of themselves and the company, such as an accountant. However, the Directors are ultimately legally responsible for their company’s records, accounts and performance.
Shareholders
Shareholders can be one or more person, company or other institution that owns at least one share of the company’s shareholding. The shareholders are considered the company’s owners since they have the potential to profit (in the forms of Dividends) if the company performs well and, likewise, lose if the company performs poorly.
Limited Company Taxation Overview
Once a company has been incorporated at Companies House, HM Revenue and Customs (HMRC) is instantly notified and, in turn, sends the company by post a 10-digit Unique Tax Reference Number (aka UTR). This identifies the company to on their systems for communication and tax purposes.
The main forms of company tax that a Limited Company could come across and be responsible for are as follows:-
The tax rates and allowances for the 2015-16 tax year are available here.
Of the above taxes the only one that the company is mandated to register, submit returns and pay is the Corporation Tax. VAT is required when the company’s sales are over the VAT Registration threshold (currently £82,000 per year) although the company can register voluntarily at any time. Employment taxes come into effect when the company has staff with employment contracts in place.
Limited Company Responsibilities to Companies House
Aside from its tax submission and payment obligations to the HMRC, the company must also fulfil its responsibilities to Companies House in the form of an Annual Return and the annual preparation and submission of statutory accounts.
At CooperFaure, we have helped our clients achieve their ambitions by making this process as painless as possible. If you would like to discuss your circumstances or have any questions, please contact welcome@cooperfaure.co.uk to arrange an initial free consultation.
As part of the government’s ongoing commitment to make the United Kingdom a centre for advancement, there are attractive tax relief schemes available for Research and Development.
R&D Relief has the impact of reducing the Corporation Tax liability for your business. For companies that qualify for the Small or Medium-sized Enterprise Scheme, you may be entitled to receive at tax credit payment from HM Revenue and Customs.
There are two schemes, the Small or Medium-sized Enterprise (SME) Scheme and the Large Company Scheme.
For the purposes of determining which scheme is applicable, an SME is defined as a company or organisation with fewer than 500 employees and either of the following:
It is important to consider these limits in relation to the total organisation. For instance, a company that met these conditions would not qualify if it is owned in full or in part by a larger business that fails these tests.
The SME scheme is not available if you have received subsidy or grant that is recognised as ‘state aid’ by the European Commission. In this case, the Large Company Scheme would apply.
Finally, there is an upper limit of €7.5 million on the total amount of relief available on any one R&D project.
Do not be deterred by the enormity of these numbers. R&D Relief is designed to help the entrepreneur working on their own to achieve an advance in overall knowledge or capability in a field of science or technology as much as a corporation. There is no minimum amount that you need to have spent to qualify. According to official statistics, the average relief is £46,000.
The Small and Medium-sized Enterprise Scheme offers a higher rate of relief. Currently, this is set at 225%. In other words every £100.00 of expenditure on qualifying costs has the impact of reducing the taxable profit of the business by £225.00. If the overall impact results in there being a loss, this can either be converted to a tax credit or carried forward to the following year.
Under the Large Company Scheme, the tax relief on allowable R&D costs is 130%. However, unlike the SME scheme, if the business makes a loss in the period, it can only be carried backwards or forwards in the normal manner.
In determining that your R&D project qualifies for either of these schemes, you would need to be satisfied you could demonstrate that it involved a scientific or technological advance.
The key in this evaluation is the advance rather than the product or the process. It is not sufficient for the product is commercially innovative if there is no advance that was not readily available or deducible by a competent professional working in the field.
On the other hand, these schemes are not just for new products. Developing an existing product or process to resolve technological uncertainty or to make a substantive improvement could also qualify for R&D relief.
Moreover, the R&D project does not have to have been a success to qualify so long as it can be established that the goal was to achieve a scientific or technological advance.
If you are content your R&D project qualifies, then you can claim tax relief on revenue expenditure in the areas outlined below:
In addition, under certain circumstances, a proportion of subcontracted R&D expenditure would qualify for R&D Relief.
Although capital expenditure is outside the scope of these R&D Relief schemes, there are other incentives available.
There are specific R&D capital allowances and mechanisms for claiming tax relief on R&D revenue expenditure that has been capitalised in your accounts.
For more general capital spend, the Annual Investment Allowance limit for plant and machinery expenditure has been temporarily increased to £500,000 until 31st December 2015. Thereafter, it will return to £25,000 per annum. This allowance enables qualifying capital costs to be fully expensed in the year of acquisition rather than being depreciated over time.
At CooperFaure, we are working with clients to ascertain when their projects qualify for R&D Relief and, if so, to ensure that all the qualifying costs are being claimed. More importantly, we liaise directly with HMRC to secure the tax relief.
If you would like to arrange an initial consultation that is free and without obligation to discuss your circumstances, please email us at welcome@cooperfaure.co.uk.
For a growing number of people, working for themselves would be their ideal career path but the paperwork and administration seems daunting.
This guide aims to take you through the process in a straightforward manner.
The first step is often to run your own business as an individual before considering becoming a Limited Company. This is referred to as either being a Sole Trader or Self-Employed, the two terms mean the same.
One misconception is that being a Sole Trader means that you have to work alone. There is nothing to prevent you from taking on staff but, as a Sole Trader, you are responsible for the business.
As soon as is possible after starting your business, you need to register with HMRC to complete a Self-Assessment Tax Return.
If you are a new Sole Trader who has not registered before, you need to complete the form at https://online.hmrc.gov.uk/registration/newbusiness.
In a change for the 2015-16 tax year, the Class 2 National Insurance contributions of £2.80 a week will now be collected as part of the Self-Assessment Tax Return. This is topped up by Class 4 National Insurance that is based on the profits of the business.
For historic reasons, the tax year runs from 6th April to 5th April and the deadline for submitting the Tax Return for that period and paying the tax due is 31st January in the following year.
If the total amount due in the first year is over £1,000.00, the HMRC will require an additional advance payment for the second year of 50% of the total on 31st January and a further 50% on 31st July.
Taking the example of a business that makes a £20,000 profit in the 2015-16 tax year and where the Sole Trader has no other sources of income, the Income Tax and National Insurance payments would be as follows:
| 2015-16 Tax Year | Income Tax | Class 4 National Insurance |
| Business Profit |
£20,000.00 |
£20,000.00 |
| Personal Allowance |
£10,600.00 |
£8,060.00 |
| Taxable Profit |
£9,400.00 |
£11,940.00 |
| Tax / NI Rate |
20% |
9% |
| Tax / NI Due |
£1,880.00 |
£1,074.60 |
| Class 2 National Insurance @ £2.80 per week |
£145.60 |
|
| Total 2015-16 due on 31/01/17 |
£3,100.20 |
|
| 1st Payment for 2016-17 due on 31/01/2017 |
£1,550.10 |
|
| Payment Due on 31/01/2017 |
£4,650.30 |
|
| 2nd Payment for 2016-17 due on 31/07/2017 |
£1,550.10 |
|
The Advance Payments for the 2016-17 tax year would be offset against the actual amount Income Tax and National Insurance due in that year.
Our first Top Tip is to prepare and submit your Tax Return as soon after the 5th April as possible. The Income Tax and National Insurance will still be due on 31st January, so the earlier the Tax Return is submitted, the more time there is to set money aside for the payment.
The Income Tax and Class 4 National Insurance due in the year is calculated on the profit of the business and, for this, it is vital that you keep full details of the income that you make and the expenditure that you incur.
If the thought of keeping track of all your receipts through the year seems daunting, our second Top Tip is to use HMRC flat rates for the business costs of vehicles and working from home. Details are at https://cooperfaure.co.uk/simplified-expenses/
Our third Top Tip is that you set up a new bank account for the monies that you receive and the payments that you make for the business.
The final tax consideration is VAT. Currently, the income threshold over which VAT registration is compulsory is £82,000 in a twelve month period. However, a business can register for VAT on a voluntary basis at any time.
Our fourth Top Tip is that if you are providing business-to-business goods or services where your customers can reclaim the VAT on the invoices you issue, register for VAT from the start and to be able to keep some of the VAT charged.
As a Sole Trader, you can use your own name or trade under a business name. However, you must include your own name together with the business name, if you opt to have one, on any official paperwork such as invoices and letters.
If you want to start slowly before fully committing to working as a Sole Trader, you can be both employed and self-employed at the same time. For instance, you could continue to work for someone else during the day whilst building your own business in the evenings and weekends.
At CooperFaure, we have helped our clients follow their dreams by making this process as painless as possible. If you would like to discuss your circumstances or have any questions, please contact welcome@cooperfaure.co.uk to arrange an initial free consultation.
In order to make the administration easier if you are self-employed, the HMRC are permitting you to use an allowance for the business costs of vehicles and for working from home.
This is an option and, if it is more beneficial to use the actual costs, this is still fine.
For all other business expenses, the actual costs incurred still need to be recorded.
For the business costs of vehicles allowance, record the business miles driven in your vehicle during the tax year. A vehicle can be a can, van or motorcycle. Then at the end of the year apply the applicable rate below:
| Vehicle Type |
Rate pence per business mile |
|
| First 10,000 miles | Over 10,000 miles | |
| Cars | 45p | 25p |
| Goods Vehicles | 45p | 25p |
| Motorbike | 24p | 24p |
For example, you have used your car for 12,500 business miles in the year. You would claim:
| Business Miles | Rate | Total |
| 10,000 | £0.45 | £4,500.00 |
| 2,500 | £0.25 | £625.00 |
| Total | £5,125.00 |
This flat rate allowance is instead of all the actual costs of buying and running your vehicle including insurance, repairs, servicing and fuel.
As a result, you are unable to use the flat rate if you have already claimed capital allowances the vehicle.
If you have more than one vehicle, you can choose whether to use the flat rate allowance on a case-by-case basis. However, once you use the flat rate for a vehicle, you must continue to do so for as long as the vehicle is used in the business.
The actual costs of all other business travel expenses, such as train and air fares, and parking costs should still be claimed.
For the working from home allowance, record the number of hours you work at home each month. If these total 25 hours or more, then at the end of the year apply the applicable rate below:
| Rate per month | |
| 25 to 50 hours | £10.00 |
| 50 to 100 hours | £18.00 |
| 101 or more hours | £26.00 |
For example, you worked from home for over 100 hours in most months but only 60 in two particular months. As a result, you would claim:
| No. of Months | Rate | Total |
| 10 | £26.00 | £260.00 |
| 2 | £18.00 | £36.00 |
| Total | £296.00 |
This flat rate allowance is instead of calculating the proportion of personal and business use of your home and applying this to the actual costs.
However, the allowance does not include telephone or internet expenses that still need to be based on the actual costs incurred.
If you would like any further information, please contact us at welcome@cooperfaure.co.uk.
The law on the provision of Workplace Pensions has been applied in phases since 2012. Eventually, virtually all UK employers will be legally required to automatically enrol most staff into a pension scheme and to make direct contributions.
As per our previous newsletter, all employers with fewer than thirty employees that do not qualify for an exemption will have a legal duty to have an operational Workplace Pension scheme in place. The earliest date for this could be 1st January 2016 and the latest 1st August 2017.
The Workplace Pension scheme applies to all staff who are:
Their entitlement is dependent on their age and salary. For the 2014-15 tax year the details are as follows:
| Monthly gross earnings | Age | |||
| From 16 to 21 | 22 to State Pension | State Pension to 74 | ||
|
£481 and below |
Has a right to join a pension scheme |
|||
|
Over £481 up to £833 |
Has a right to opt in |
|||
|
Over £833 |
Has a right to opt in |
Automatically enrol |
Has a right to opt in |
|
These different rights impact your responsibilities as an employer:
Although staff have the right to opt out of your pension scheme, it is against the law to attempt to influence or coerce their decision.
It is a duty of the employer to pay regular contributions to pension scheme based on the total pay of each member of staff. The minimum amounts are:
| Date | Employer contribution |
Total contribution |
| Before 30/09/17 | 1% | 2% (including 1% staff contribution) |
| 01/10/17 — 30/09/18 | 2% | 5% (including 3% staff contribution) |
| 01/10/18 onwards | 3% | 8% (including 5% staff contribution) |
As well as the contributions, there will be other costs that you will have to bear for:
There will also need to be an investment of time to find the best solution to suit your business.
To ensure that you are compliant, it is critical to ensure your staff records are accurate and up-to-date with their date of birth, pay, National Insurance number and contact details.
In order to administer this process, to manage your ongoing duties and to provide information to the pension provider, it is worth investing in payroll software that is auto-enrolment enabled.
Whatever you decide, remember to ensure that the payroll software or process will work with the pension scheme you choose as there will be a need to transfer data between the two.
If you already have a staff pension scheme, there is no guarantee that this will work for automatic enrolment. If this does not, you will be required to acquire a new scheme that meets the requirements of automatic enrolment.
National Employment Savings Trust (NEST) has been created by the government as an option that all employers can use for automatic enrolment. There are also a wide range of commercial alternatives.
It is important that the scheme you choose is well run, offers good value for both you and your staff and that it will work with the payroll process or software you are using. As a result, plenty of time needs to be given to make sure you make the right choice.
Your staff may well be aware of automatic enrolment. The point where you decide on the pension provider would be a good time to provide them with information.
These tasks need to be completed in advance of your Staging Date.
At this point, you must carry out a formal assessment of your staff to ascertain your duties to each of them. There is a six week limit by which time the pension provider must have all the information needed to make your staff active members of your scheme. For this, you will need to make sure that:
To achieve this, you are required to write to each staff member after your Staging Date to inform them how automatic enrolment applies to them and to explain their rights. In addition, you must notify them that contributions will be deducted from their pay and that they have a right to opt out of your pension scheme if they wish to do so.
On the right of the staff to opt out, there are key points to be aware of:
Once the Workplace Pension has been successfully implemented, you will have ongoing automatic enrolment duties:
Most of these records must be kept for six years except for opt-out notices that need to be kept for four years.
If you fail to complete your ongoing automatic enrolment duties, you could be fined.
Finally, you are required to complete a Declaration of Compliance within five months of your Staging Date. The Pension Regulator indicates that this step should take ‘a day or so’ to complete.
Again, completing your declaration is a legal duty and, if this is not done before the deadline, you could be fined.
We have posted the Pensions Regulator’s guide to the completion of the Declaration of Compliance on our website at the following link:
https://cooperfaure.co.uk/wp-content/uploads/2015/04/Declaration-of-Compliance-Guide.pdf
Although this newsletter is designed to outline the process rather than to provide editorial comment, we must say that Workplace Pension Auto-Enrolment has placed a huge burden on small businesses in terms of time, resources and money.
As a result, we would urge any employer that has the right to an exemption to strongly consider exercising it. If you meet one of the conditions and would like us to obtain an exemption for your company, please complete the form on the link below and email it back to us at admin@cooperfaure.co.uk.
https://cooperfaure.co.uk/wp-content/uploads/2015/03/AE-Exemption-Letter.doc
For those employers who are obliged to operate a pension scheme, we are in discussions with a number of providers with a view to packaging the most cost-effective solution for this.
We hope to have this in place before the summer and we will be contacting our clients on an individual basis.
In the meantime, if you would like any further information or clarification, please email us at welcome@cooperfaure.co.uk.
A raft of tax changes have come into effect today. The main changes that affect individuals and businesses are:
Our detailed 2015-16 UK Tax Rates and Allowances Guide is available here.
If you would like any further information or clarification on these or the other tax changes that come into effect, please email us at welcome@cooperfaure.co.uk.
As the dust settles from the 2014 en primeur campaign in Bordeaux last week, it is time to take stock.
Based on the barrel tastings, the consensus view is that 2014 is shaping up to be an excellent year. Whilst maybe not a blockbuster that compares to 2005, 2009 or 2010, definitely a significant improvement over the last three years.
It is now down to the chateaux to set their prices in the coming few weeks.
There has been a considerable clamour, particularly from the UK wine trade, for meaningful reductions in en primeur prices. It look certain that these calls will be rejected by the chateaux who point to the weakening of the Euro against Sterling and the US Dollar over the last year that has effectively built a discount into the market.
In 2009 and 2010, the combination of exceptional reviews for the quality of the wine and extraordinary demand from new markets sent the en primeur prices spiralling.
The 2011, 2012 and 2013 vintages have all been of a lesser quality but the en primeur prices were not sufficiently rebalanced to reflect this. This, together with an unprecedented level of early sales of the 2009 and 2010 vintages, has caused considerable unease in the market and has left much wine unsold.
Does the step up in the quality in 2014 make Bordeaux en primeur a good investment opportunity?
To make this decision, it is important to understand what you would be buying, when you would receive the wine and the additional costs.
En primeur is buying a wine that is still maturing in barrel. This enables chateaux to generate cashflow by offering some of their production at what is expected to be a lower price than that for the final bottled product.
For some of the small chateaux, this is often the only opportunity to buy their wine directly.
In the world of wine investment, provenance is key. Buying en primeur, either directly from a négociant in Bordeaux or a reputable wine merchant in the UK, means that you are buying a wine from it’s genesis.
As the wine is in barrel, there is also the opportunity to choose the bottle size you desire. Many collectors prefer a magnum over a standard bottle due to the reduced proportion of the wine that is contact with the cork.
The anticipated delivery date for 2014 wine is between autumn 2016 and spring 2017.
It is also important to remember that en primeur purchases will be subject to UK Duty and VAT when these are shipped to you.
The current Duty on a case of six bottles is £12.30 and VAT is 20%. Therefore, a case of six bottles costing £500.00 en primeur would ultimately cost £614.76 on delivery at today’s rates.
Many wine merchants provide the option to store the wine ‘in bond’. By storing wine in a bonded warehouse, you defer the triggering of the UK VAT and Duty. However, there is a cost for this storage.
If the en primeur process sounds daunting, where could there be value in the Bordeaux market?
For many connoisseurs, the 2005 vintage is the best of the millennium to date, outstripping 2009 and 2010. Yet, the price point is relatively appealing.
At the eye-watering end of the market, at one négociant, a case of six bottles of Château Mouton Rothschild 2005 would cost £3,860 compared to £5,460 for 2009 and £5,220 for 2010.
At a more modest level, a case of twelve bottles of Château Lynch-Bages 2005 would cost £1,680 compared to £1,850 for 2009 and £1,820 for 2010.
It is important to bear in mind that these are the prices for the wine to be delivered to your door.
Robert Parker, the pre-eminent wine critic of his generation, is set to present a ten-year retrospective on the 2005 vintage this summer. Given that he has already indicated that he probably initially under-scored the wines, the likely impact will be to see prices rise.
In the United Kingdom, the 2015-16 ISA rates for cash deposits are derisory and, whilst shares may offer a better return, there is no guarantee.
Similarly, there is no guarantee that an investment in 2005 Bordeaux, or any other region or year, will make a financial return. However, you would be buying one of the great vintages that is in the cusp being ready to drink. Ultimately, a great wine should be savoured in the company of good friends.
If you would like advice on any aspect of the world of wine, please email me at jon.cooper@spearheadit.co.uk
If your baby is due or you adopt a child on or after 5th April 2015, you could qualify for Shared Parental Leave and Statutory Shared Parental Pay.
To qualify, you must share responsibility for the child with one of the following:
Shared Parental Leave must be taken between the baby’s birth and first birthday or within one year of an adoption. The system is designed to give parents flexibility in how to share the care of their child in this first year.
Eligible parents have a pot of 52 weeks leave and 39 weeks of pay. It is compulsory for the mother to take the first two weeks of these. After which, parents can share the rest either to be off work at the same time or took take turns to look after the child.
To qualify, the mother or adopter must be entitled to:
You must:
and you partner must at least:
It is important to point out that this is just an option. The mother or adopter can decide to continue with their existing maternity or adoption entitlement. However, if the choice is to use Shared Parental Leave, they can end their current entitlement or give advance notice to curtail it.
An employee is allowed to submit up to three requests to schedule leave which must be in complete weeks. If the request is for one continuous leave period, the employer must grant this. However, if the request is for multiple leave periods, the employer can refuse this but must still allow one continuous leave period.
There is a minimum of eight weeks’ notice required before the start of the first period of Shared Parental Leave.
For instance, the mother opts to take the first 32 weeks of her Maternity Leave and Pay. This would leave 20 weeks of Shared Parental Leave and 7 weeks of Shared Parental Pay available for either parent to take. By the end of the week 24, the mother would need to serve a curtailment notice to her employer discontinuing her Maternity Leave and Pay. At the same time, the other parent could present a notice of to take some or all of the remaining Shared Parental Leave and Pay.
The weekly amount of Statutory Shared Parental Pay has been set at the lower of 90% of your average weekly earnings or £139.58.
These changes certainly give working parents greater care choices in the all-important first year with their child.
However, as with many recent reforms, there is an additional administrative burden on the employer together with the introduction on an element of uncertainty to business. The overall impact will be dependent in large part on how popular the Shared Parental Leave scheme turns out to be.
If you would like any further information or would like advice on any issue relating to employment and pay, please contact us at payroll@cooperfaure.co.uk for an initial consultation.
From 6th April 2015, new rules come into force to give people more freedom over their pension savings.
Once you reach the age of fifty-five, there will now be three primarily options available which can either be used exclusively or in combination:
Whichever route that you choose, the pension commencement lump sum (PCLS) of 25% of the pension pot remains free of tax.
It is worth bearing in mind that a pension scheme does not have to offer all these options and some may choose not to. However, you have the right to transfer your pension savings to a pension provider that offers the option that you want to use.
Whilst this gives much greater freedom, there is a sting in the tail! Payments from an annuity, a drawdown or a UFPLS (after the 25% PCLS) are taxable as income.
If you have a pension fund of £90,000 with no other income and you opt to take your pension savings in one lump sum, you will have a tax bill of £16,400.
Moreover, to protect tax revenues, pension providers are deducting tax on an emergency code basis and leaving the pension recipient to recover any overpayment of tax. As a result, in our £90,000 scenario, the amount of tax deducted is likely to be in the region of £28,800.
Although HMRC has accelerated the process to claim the tax rebate, the onus is still on the individual to recover any overpayment of tax.
By taking the UFPLS in stages, you can dramatically reduce the amount of tax due. On our £90,000 example and based on 2015-16 tax rates, if you withdrew this over three years in equal amounts, the total tax bill would reduce to £7,140. Over four years, this would reduce further to £5,020.
Measures have been put in place to prevent large amounts being taken from a pension pot to fund further pension savings. This is to stop the fashioning an artificial tax saving. If you take an income under these new flexible access arrangements, this will activate a restriction to cap your money purchase annual allowance (MPAA) to £10,000.
If you have any concerns or questions on accessing your pension savings or would like a detailed tax evaluation, please contact us at welcome@cooperfaure.co.uk for an initial consultation that is free and without obligation.
From 6th April 2015, if a business has an employee or subsequently recruits an employee aged under 21, Employer’s Class 1 National Insurance contributions will be zero on their pay up to £815 a week or £3,532 per month. If their pay exceeds this, the additional amount would be subject to Employer’s National Insurance at 13.8%.
For an employee with an annual salary of £15,000, this change will generate a saving to the business of £957.72 in the 2015-16 tax year. If the salary was £25,000, the saving would be £2,337.72.
However, this zero rate does not apply to Class 1A or Class 1B National Insurance due on benefits. Typically, this would be either the provision a company car or of private medical insurance where the Employer’s National Insurance rate remains at 13.8%.
It is important to be mindful that, under employment law, a candidate’s age is a ‘protected characteristic’ that must not influence the recruitment process. If another candidate can demonstrate that they have been unfairly overlooked in favour of a less expensive applicant aged under 21, they could take legal action to claim age discrimination.
The Employment Allowance is not affected. For the 2015-16 tax year, this remains up to the first £2,000 of Employer’s National Insurance contributions for most businesses.
To activate this change, you would need to use one of the new National Insurance category letters on your payroll. Although there are seven new category letters, in the vast majority of cases category M would apply.
Payroll software may not automatically make this amendment, so it is advisable to identify the staff affected and review this before the first payroll of the 2015-16 tax year is run.
The level of Employee’s National Insurance contributions is not impacted. Therefore, if the employee turns 21 during the 2015-16 tax year, their net pay would remain the same but Employer’s National Insurance contributions would commence.
If you would like any further information or would like advice on any issue relating to employment and pay, please contact us at payroll@cooperfaure.co.uk for an initial consultation.
Although most tax changes are applied at the start of the new tax year on 6th April, some changes have come into force on 1st April 2015. The main changes that affect businesses are:
If you would like any further information or clarification on these or the other tax changes that have come into effect, please email us at welcome@cooperfaure.co.uk.
The law on the provision of Workplace Pensions has been implemented in phases since 2012. Eventually, virtually all UK employers will be legally required to automatically enrol most staff into a pension scheme and to make direct contributions.
This programme began in October 2012 for the largest employers. Now, the Staging Dates for small businesses are in the process of being issued by the Pension Regulator:
The Staging Date is the date by which the employer has a legal duty to have an operational Workplace Pension scheme in place.
This presents an onerous additional cost on small businesses. Not only will the employer be required to contribute up to 3% of qualifying earnings into the scheme, but also there will be additional payroll costs and the cost of implementing and running the pension scheme.
However, in the following instances, we can obtain an exemption from the Automatic Enrolment programme:
– there is only one Director and there are no other staff working for the Company;
– the only people working for the Company are Directors and none of them has an employment contract;
– the only people working for the Company are Directors and only one of them has an employment contract;
– the Company has ceased trading.
If you meet one of these conditions and would like us to obtain an exemption for your Company, please could you complete the form on the link below and email it back to us at admin@cooperfaure.co.uk.
https://cooperfaure.co.uk/wp-content/uploads/2015/03/AE-Exemption-Letter.doc
For our clients, as this work is outside the scope of our Letter of Engagement, there will be a fee of £90.00 plus VAT for this service.
Please note that a Company having an existing pension scheme in itself does not make it exempt from the legislation.
In addition, if a Company that currently qualifies for an exemption employs a worker in the future, then the Automatic Enrolment duties would commence. If this is after the Staging Date, there is six week deadline from the date of this employment to set up a Workplace Pension scheme.
For our clients who will not be exempt from the provision of a Workplace Pension or who decide not to apply for the exemption, we are currently evaluating a number of solutions that have been tailored to small businesses.
As a result, we will soon be publishing newsletter on the operation of a Workplace Pension scheme.
In the meantime, if you would like any further information or clarification, please email us at welcome@cooperfaure.co.uk.
The Chancellor of the Exchequer used the final Budget before the General Election in the UK to unveil some significant tax changes. However, most of these are promises for the future:
There are some measures that have come into immediate effect such as the cut in the duty on beer and spirits.
In addition, a number of measures from previous Budgets come into effect from April 2015 the most noteworthy being:
If you would like to discuss how the Budget 2015 or the new measures that come into effect from April 2015 affect you, please email us at welcome@cooperfaure.co.uk for an initial consultation that is free and without obligation.