National Minimum Wage rates on 1 Ap‌r‌il 2018

February 16th, 2018  |  Published in Uncategorized

April Fool’s day increase, the HMRC press release says:

The government is increasing the National Minimum and National Living Wage rates on 1 Ap‌r‌il 2018.

This includes the largest increases in a decade for the rates that apply to 18-20 and 21-24 year olds.

As the minimum wage increases more employers than ever will be directly affected, including those who currently pay above the minimum.

Lets hope these young people spend their extra 30p wisely.

The hourly rate for the minimum wage depends on your age and whether you’re an apprentice.

You must be at least:

  • school leaving age to get the National Minimum Wage
  • aged 25 to get the National Living Wage – the minimum wage will still apply for workers aged 24 and under

Current rates

These rates are for the National Living Wage and the National Minimum Wage. The rates change every April.

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2017 (current) £7.50 £7.05 £5.60 £4.05 £3.50
April 2018 £7.83 £7.38 £5.90 £4.20 £3.70

VAT Flat Rate Scheme Changes

April 10th, 2017  |  Published in Uncategorized

Well that was too easy, wasnt it?

From 1st April 2017, the government introduced a new definition of a ‘limited cost trader” (see definition below) to the flat rate VAT scheme. The result is that affected contractors must use a new percentage of 16.5%. The introduction of this new rate means the flat rate scheme is no longer suitable for the vast majority of contractors, who will now generally be better suited to the standard rate VAT scheme, where they can at least offset some of the VAT paid on purchases against what they have to pay HMRC.

 

The definition of the newly introduced category of a “limited cost trader” is one whose VAT inclusive expenditure on “goods” is either; less than 2% of their VAT inclusive turnover, or less than £1,000 in total, per year. Note that “goods” does not include the following:

  • Services (such as telephone, internet, accountancy fees, insurance, rent)
  • Travel, subsistence or mileage
  • Gifts or donations
  • Training
  • Capital items (items with a useful life of more than one year)
  • Pension contributions

Budget Update – NIC rise scrapped

March 15th, 2017  |  Published in Uncategorized

The Chancellor obviously reads my posts on here, (although he says he actually found out from the BBC’s Laura Kuenssberg) as he has now reconsidered and scrapped the planned rises to Self Employed Class 4 NIC, realising that they were in direct contravention of the manifesto pledge not to increase tax or NIC. Did noone think to tell him beforehand?

At the end of the current tax year’s self assessment you will still pay the £145.60 class 2 NIC that you paid this year, but it will be the last time, as they are scrapping it for future tax years . This is the old ‘stamp’ NIC, that you used to pay monthly. Class 4 NIC will remain as it is now, 9% on profits between £8,060 and £43,000 plus 2% on profits over £43,000.

 

Budget 2017

March 10th, 2017  |  Published in Uncategorized

You really believed them when they said Tax and NIC wouldn’t go up in this government? Ha! But then they didn’t think they’d get in either, which is why we now get an NIC rise for the self employed, to 9% in 2017/18 and 10% the year after. After a fuss was made, they have temporarily kicked the legislation into the long grass, hoping we will forget about it when we vote in May’s local elections.

Of course we still don’t get sick pay, holiday pay etc, and try and claim Jobseekers’ Allowance when you have no work, they’ll laugh at you! That’s why we pay less NI than PAYE workers do.

For the Limited Companies, you will get 1% off the small companies Corporation Tax rate in 2018, but will get hit with personal tax on all but £2,000 on your dividends, up from £5,000 tax free this year. This is paid from money that you have already paid Corporation Tax on, of course.

You may have heard stories about Make Tax Digital – apparently you will wave your smartphone at your receipts and it will produce figures for HMRC  4 times a year using new magic software that doesn’t exist yet. I’m sure they want to eventually have you pay them 4 times a year too, otherwise what would be the point?

No surprise to find its been put back another year, unless you are over the VAT threshold when it will start in 2018. Or not.

 

 

Hola! Spanish Job Offers

December 2nd, 2016  |  Published in Uncategorized

Scammers have been spoofing this web adress to send out emails offering jobs, in Spanish.

I have no idea how the scam works, but THERE IS NO JOB.

Los estafadores han estado spoofing esta dirección web para enviar correos electrónicos que ofrecen puestos de trabajo, en español.No tengo ni idea de cómo funciona esta estafa, pero NO HAY TRABAJO.

Thanks to Google translate, apologies to any Spanish speakers if the translation works as well as some I have seen into English.

 

 

1st October 2016 – National Minimum Wage rates are changing

September 22nd, 2016  |  Published in Uncategorized

On 1st October 2016 the National Minimum Wage rates for the different age bands and for apprentices will increase. All employers need to make sure they are ready.

HMRC has investigated more than 70,000 employers and has the right to carry out checks at any time and ask to see payment records.

The minimum wage affecting workers under 25 and apprentices to apply from 1 October 2016 – including:
A new minimum wage for 21-24 year olds,  increasing by 3.7 per cent to £6.95 an hour.
An increase to the Youth Development Rate, affecting 18-20 year olds, of 4.7 per cent to £5.55 an hour.
An increase in the 16-17 Year Old Rate of 3.4 per cent to £4.00 an hour.
An increase in the Apprentice Rate of 3 per cent to £3.40 an hour.

For workers aged 25 and over, the Government is introducing the £7.20 National ‘Living Wage’ – in effect a fifth minimum wage rate – from 1 April 2016.

 

Unlike in previous years, the new rates are set to last for six months only (from 1 October 2016 to 30 March 2017). This reflects a change in the minimum wage calendar. The National Living Wage was introduced on a different cycle to the other rates – changing in April rather than October. Following a review, the Government has concluded that the rates for all workers should be aligned in April next year.

 

HMRC’s new class 2 NIC system goes pear shaped.

June 6th, 2016  |  Published in Uncategorized

Like me, you probably got a letter to explain that for 2015/16, HMRC are no longer taking monthly (or quarterly) Class 2 NIC paymentsd, but are adding it to your Self Assessment.

This has been happening, however due to conflicting computer systems at HMRC they have also been paying this extra back to some people, leaving you with no NIC credits for the year, which becomes an issue when you apply for your pension. They do know about it, and will fix it in November, apparently.

If this happens to you, let me know and we’ll poke them with a stick.

It really bodes well for their ‘Make Tax Digital’ strategy, doesn’t it?

 

 

The new Dividend Tax

April 8th, 2016  |  Published in Uncategorized

Clients who are currently being paid through a Limited Company now have to consider the Dividend Tax introduced on 5th April 2016.

The dividend tax comes into effect on 6 April 2016, and applies to all dividends the individual receives in excess of £5,000 per tax year. The average company director who takes a modest salary within his personal allowance, and the rest of his income from the company as dividends, will pay more tax in 2016/17 than he did in 2015/16.

Although the basic rate, 7.5% sounds low, this is tax on money withdrawn from your Limited company, which has already paid 20% Corporation Tax on its profits. Once you have used your £5,000 allowance then, in effect you are paying 27.5%. There is no longer the clear advantage of not having to pay National Insurance on much of the income taken via a company, which I’m sure is the point, although our PR minded Chancellor sold it on the ‘tax free allowance’ angle, fooling probably noone.

Under Self Assessment this additional tax would be payable by 31 January 2018, as the balancing payment for that tax year. However, HMRC doesn’t want to wait that long for the extra tax, so it has amended the tax codes of many owner/directors to “code out” an estimated amount, which is approximate to the dividend tax due for the year.

The deduction in the PAYE code is labelled ‘dividend tax’, and the notes on the PAYE coding notice say: “this is to collect the basic rate of tax due on your dividend income.” The notes for a higher rate taxpayer refer to higher rate tax.

However, dividends won’t be taxed at the basic rate of tax (20%) in 2016/17. The dividend tax is charged at 7.5% for a basic rate taxpayer, 32.5% for a higher rate taxpayer and at 38.1% for an additional rate taxpayer. You can see how the taxpayer will be confused.

 

 

National Living Wage

March 4th, 2016  |  Published in Uncategorized

In April the Government’s new National Living Wage will become law. Its just a rebranding of the minimum wage for political purposes but if you are an employer you do need to take notice.

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.

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

Employers

From April 2016, all workers aged 25 and over are legally entitled to at least £7.20 per hour.

Take these four steps to be ready for the change:
Check you know who is eligible in your organisation. Find out on GOV. UK’s employment status page.
Take the appropriate payroll action.
Let your staff know about their new pay rate.
Check your staff under 25 are earning at least the right rate of National Minimum Wage.

Any queries or problems, give me a ring.

 

 

Should you rush to take dividends ahead of 2016 tax hike?

March 4th, 2016  |  Published in Uncategorized

This applies to clients with small Limited Companies – if you are self employed it might as well be in Spanish – Hola!

Over a quarter of SME owners plan to take special dividend pay-outs ahead of forthcoming tax rises in April 2016.

A survey by accountancy firm Moore Stephens has found that 28% of small business owners are planning to pay themselves a special dividend before April when new tax rates come in for dividends.

There will be a £5,000 tax-free allowance under the new rules but above this basic rate taxpayers will pay 7.5% on their dividend income. Higher-rate taxpayers will pay 32.5% and top-rate taxpayers will pay 38.1%.

The survey also found that 21% of small business owners plan to reduce their dividend pay-outs once the changes come into force, while 6% expect to increase dividends to maintain their net income.

Mike Cooper, partner at Moore Stephens, said: “Small business owners are moving quickly to take out money from their businesses at a lower tax rate. Providing the accumulated profits are there, it is a perfectly sensible move and undertaken in the right way is something that HMRC has absolutely no issue with. However, SME owners who do not pay a special dividend before April 6 will have missed out.”

Cooper warns that the changes to dividend tax “will hit small business owners very hard” and says SME owners “should be thinking seriously now about how much of the value they have built up in their businesses that could sensibly be extracted before the April 6 deadline.”

Despite the changes, Moore Stephens says that dividends remain the most tax-efficient form of remuneration for many business owners. “While the increased tax on dividends is unwelcome, it is still marginally less than the tax on earnings, even though the difference between the two has been narrowed,” Cooper said.