Payroll Penalties: Beware!

Whilst payroll RTI (real time information) was introduced years ago, as of April 2015, penalties of £100 (minimum) can now be charged if returns are filed late or HMRC does not receive the expected number of returns.

Penalties will not be charged for the first month that the Full Payment Submission (FPS) is submitted late, but in subsequent months, a penalty will be levied. For small employers this is £100, but more for larger employers.

Employers with nine or fewer employees can still take advantage of an exemption for 2015/16, provided they remember to use late reporting code E to claim the exemption.

Employers must also be aware that interest will now be charged on late PAYE payments.

Key Points of the 2015 Budget

In case you missed the news here is a brief summary of the announcements in the recent budget.

Income Tax Personal Allowances
The basic personal allowance for 2015/16 is £10,600. This will increase to £10,800 in 2016/17 and the higher rate threshold will increase to £31,900.

Class 2 National Insurance contributions
Class 2 NI contributions are to be abolished in the next parliament, but no date have been set.

Personal Savings Allowance
From April 2016 the first £1,000 of savings income will be exempt from income tax for basic rate taxpayers. This threshold will be reduced to £500 for higher rate taxpayers.

Help to Buy: ISA
First time buyers who save into a Help to Buy: ISA will receive a £50 bonus for every £200 they save up to a maximum bonus of £3,000.

Lifetime Allowance for Pension Contributions
The lifetime allowance for pension contributions will be reduced to £1 million from April 2016.

Capital Gains Tax Entrepreneurs Relief
Entrepreneurs relief will be denied on the disposal of shares in a company that is not a trading company in its own right.
Individuals will not be able to claim entrepreneurs relief on the disposal of personal assets used in a business unless they are disposed of in connection with the disposal of at least 5% shareholding in the company.
From 3 December 2014 entrepreneurs relief will not be claimable on disposals of goodwill to a related close company.

Corporation Tax
The main rate of corporation tax will be reduced to 20% from 1 April 2016.
From 3 December 2014 corporation tax relief will not be claimable on disposals of goodwill to a related close company.
R&D tax credit rates for SME’s will be increased to 230% from 1 April 2015.

VAT thresholds
The VAT registration threshold will be increased to £82,000 from 1 April 2015 and the deregistration threshold increased to £80,000

Tax Returns
The Chancellor announced his intention to introduce digital tax accounts. This will mean the end of the requirement to submit an annual tax return. Instead the information will be gathered from accounting records.

Holiday pay and overtime – check your calculations

Following a decision by the Employment Appeal Tribunal, your employees may be entitled to have regular overtime included when calculating their holiday pay. This applies to all employees who are obliged to work overtime where requested by their employer and this ‘non-guaranteed’ overtime must be taken into account in holiday pay calculations if there is a settled pattern of work or if there are regular overtime payments, even if the number of hours is variable.

Howell & Co can help employers review their working arrangements to see whether they may be affected by the tribunal decision. If affected, there may be a liability for back-dated payments, although the government has introduced regulations to limit the amount to two years, which takes effect from 1st July 2015. Further guidance is available on the ACAS website.