fpdteam, Author at Bennetts Accountancy

Withholding tips from staff now unlawful

11th May 2023 by fpdteam

A new law that stops employers from withholding tips from people working in the hospitality, leisure and services sectors has come into force. The Employment (Allocation of Tips) Act 2023 received Royal Assent on 2 May 2023.

The Bill makes it unlawful for businesses to hold back service charges from their employees, ensuring staff receive the tips they have earned. The measures are expected to come into force in about a year, following a consultation and secondary legislation.

This means that more than 2 million workers will have their tips protected. HMRC has estimated that this new law will mean an estimated £200 million a year will go back into the pockets of hard-working staff by retaining tips that would otherwise have been deducted.

A new statutory Code of Practice will also be developed in order to provide businesses with advice on how tips should be distributed among staff. This Code is being developed and will be subject to formal consultation later this year.

Workers will also be given a new right to request more information relating to their employer’s tipping record, which will help them to bring forward a credible claim to an employment tribunal.

The Business and Trade Minister said:

'As people face rising living costs, it is not right for employers to withhold tips from their hard-working employees. Whether you are pulling pints or delivering a pizza, this new law will ensure that staff receive a fair day’s pay for a fair day’s work – and it means customers can be confident their money is going to those who deserve it.'

Source:Department for Business, Energy & Industrial Strategy| 08-05-2023

Cost of living payments 2023-24

11th May 2023 by fpdteam

The Cost of Living support package has been designed to help over 8 million households in receipt of mean tested benefits. The details for Cost of Living Payments due in the 2023-24 tax year have been published.

Eligible recipients will receive up to 3 Cost of Living Payments of £301, £300 and £299. This includes those receiving pension credit. These payments will be made separately from other benefit payments.

The total payments expected are as follows:

£301 paid between 25 April 2023 and 17 May 2023 for most people on DWP benefits
£301 paid between 2 and 9 May 2023 for most people on tax credits and no other low income benefits
£300 to be paid during autumn 2023 for most people
£299 to be paid during spring 2024 for most people

There are also additional payments that may be made such as a Disability Cost of Living Payment of £150 that is expected to be paid to qualifying individuals during the summer.

An additional one-off payment of £150 or £300 will be paid to pensioners during winter 2023-24. The Winter Fuel Payment is provided by the government to help older people keep warm during winter. The amount a pensioner will receive depends on a number of factors including their age and the age of other people living with them.

HMRC’s guidance on the payments has been updated to clarify that claimants will not get a Cost of Living Payment for a low income benefit if their benefit is reduced to £0 because they received a ‘sanction’. They may still receive a Cost of Living Payment if they had a 'hardship payment' because they received a 'sanction'.

Source:Department for Work & Pensions| 08-05-2023

Monthly chores for CIS contractors

11th May 2023 by fpdteam

The Construction Industry Scheme (CIS) is a set of special rules covering tax and national insurance for those working in the construction industry. Businesses in the construction industry are known as 'contractors' and 'subcontractors' and should be aware of the tax implications of the scheme.

Under the scheme, contractors are required to deduct money from payments to subcontractors and pass it to HMRC. The deductions count as advance payments towards the subcontractor’s tax and National Insurance.

Monthly returns must be submitted online. The monthly return relates to each tax month (i.e., running from the 6th of one month to the 5th of the next). The deadline for submission is 14 days after the end of the tax month. Even if no subcontractors have been paid during a month, contractors still have to make a nil return. All contractors are obliged to file monthly returns even if they are entitled to pay their PAYE quarterly. The returns can be filed using the HMRC CIS online service or commercial CIS software. There are penalties for late returns.

Contractors who have not paid subcontractors in a particular month are required to submit a 'CIS nil return' or notify HMRC that no return is due. If this is likely to be a longer term ‘nil return’, then the contractor can contact HMRC to make an inactivity request stating they have temporarily stopped using subcontractors. This request lasts for 6 months. You must notify HMRC if you start using subcontractors again during this period.

Contractors are defined as those who pay subcontractors for construction work or who spent more than £3m on construction a year in the 12 months since they made their first payment.

Source:HM Revenue & Customs| 08-05-2023

The winds of change

9th May 2023 by fpdteam

A new King, the possibility of a change of government next year, and signs that we may, at last, be emerging from the disruptions created by Brexit and COVID.

Meanwhile, back at helms of our small business sector firms, entrepreneurs are obliged to deal with the challenges that have arisen in recent years. Including:

Inflation
Crippling energy cost rises
Supply chain difficulties, and
The lack of qualified staff – affecting service industries, farming and manufacturing.

It’s as if the UK economy is becalmed, in the doldrums, waiting for the winds of change.

What do we need?

Price stability, inflation reduced to 2% not 10%.
A reduction in the cost of energy.
Less red tape when trading (importing and exporting) in the EU post Brexit.
Access to European and other global labour markets.

Readers who are suffering from these and other issues would do well to keep revisiting their business plans for the coming year to head-off cash-flow and solvency concerns. Please call if you would like to discuss your options.

Source:Other| 08-05-2023

Your tasks if a VAT-registered business

4th May 2023 by fpdteam

The taxable turnover threshold that determines whether businesses should be registered for VAT is currently £85,000. Businesses with turnover below this level can also apply for a voluntary VAT registration.

Businesses charge VAT on their sales. This is known as output VAT and the sales are referred to as outputs. Similarly, VAT will be payable on most goods and services purchased by the business. This is known as input VAT.

The output VAT is collected from the customer by the business on behalf of HMRC and must be regularly paid over to HMRC. However, the input VAT suffered on most (but not all) goods and services purchased for the business can be deducted from the amount of output tax owed to HMRC.

If your input tax is greater than your output tax, HMRC will owe you a refund.

As a VAT-registered business you must:

include VAT in the price of all goods and services at the correct rate;
keep records of how much VAT you pay for things you buy for your business;
account for VAT on any goods you import into the UK; 
report the amount of VAT you charged your customers and the amount of VAT you paid to other businesses by sending a VAT return to HM Revenue and Customs (HMRC) – usually every 3 months; and
pay any VAT you owe to HMRC.

Source:HM Revenue & Customs| 01-05-2023

Company cars – working out taxable value

4th May 2023 by fpdteam

Where an employee with a company car is provided with fuel for their own private use by their employers, the default position is that the employee is required to pay the car fuel benefit charge. The charge is determined by reference to the CO2 rating of the car, applied to a fixed amount, currently £27,800. For example, a CO2 rating of 150g/km would create a taxable benefit of £9,730.

The car fuel benefit charge is not applicable when the employee pays for all their private fuel, this includes commuting to and from work. Employees should keep a log of private mileage, which they can then apply to the published advisory fuel rates to repay the cost of fuel used for private travel. In this case, HMRC will accept that there is no car fuel benefit charge, and the employee will save the Income Tax charge on the private car fuel. It will usually be much cheaper to repay your employer for private fuel rather than pay the Income Tax charge, especially if private mileage is relatively low.

The advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. However, the use of the advisory fuel rates is not binding if the employer can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile. There is also a lower advisory rate if the company car is fully electric.

Source:HM Revenue & Customs| 01-05-2023

Landlord responsibilities

4th May 2023 by fpdteam

There are a number of responsibilities that fall on a landlord that is renting out a property.

These include the requirements to:

keep rented properties safe and free from health hazards;
make sure all gas equipment and electrical equipment is safely installed and maintained;
provide an Energy Performance Certificate for the property;
protect their tenant’s deposit in a government-approved scheme;
check their tenant has the right to rent your property if it’s in England; and
give their tenant a copy of the How to rent checklist when they start renting from you (you can email it to them).

There are different rules for landlords in Scotland and landlords in Northern Ireland.

There are also requirements relating to fire safety, health and safety inspections, financial responsibilities and special rules for regulated tenancies (usually private tenancies starting before 15 January 1989).

Source:HM Revenue & Customs| 01-05-2023

Reminder to look out for tax credit renewal packs

4th May 2023 by fpdteam

HMRC is currently sending the annual tax credit renewal packs to some 1.5 million tax credit claimants and is encouraging recipients to renew their tax credits claim online. HMRC started writing to taxpayers on 2 May and expects all packs to be with recipients by the 15 June 2023.

A renewal is required if the pack has a red line across the first page and it says, 'reply now'. Families and individuals that receive tax credits should ensure that they renew their tax credit claims by 31 July 2023. Claimants who do not renew on-time may have their payments stopped. Around 500,000 taxpayers are expected to receive these packs and can renew their tax credits via GOV.UK or on HMRC’s app.

If the renewal pack has a black line across the front page and says ‘check now’, then you will need to check your details are correct. Taxpayers need to notify HMRC where there have been changes to the family size, childcare costs, number of hours worked and salary. Details of previous year's income also need to be completed on the form to allow HMRC to check if the correct tax credits have been paid. Claimants must also inform HMRC of any changes in circumstances not already reported during the year such as new working hours, different childcare costs or changes in pay.

Universal Credit is expected to fully replace tax credits, and other legacy benefits (including Income-Related Employment and Support Allowance, Income-Based Jobseeker’s Allowance) by the end of 2024. This means that claimants who receive tax credits will receive a letter from the Department for Work and Pensions (DWP) telling them when to claim Universal Credit.

Source:HM Revenue & Customs| 01-05-2023

New Bill to crack down on online fraud

4th May 2023 by fpdteam

New legislation aimed at cracking down on rip-offs, protecting consumer cash online and boosting competition in digital markets has been published.

The new far-reaching Bill will have the following headline benefits:

New powers aimed at boosting competition in digital markets currently dominated by a small number of firms.
Clamping down on subscription traps that cost consumers £1.6bn a year, making it easier for consumers to opt out when a free trial or introductory offer is ending.
Tackling fake reviews so customers aren’t cheated by bogus ratings.

As part of these measures, the Competition and Markets Authority (CMA) will be given new powers to tackle businesses that breach consumer rights law. The Bill will provide the CMA with stronger tools to investigate competition problems and take faster, more effective action, including where companies collude to bump-up prices at the expense of UK consumers.

The CMA will be able to directly enforce consumer law rather than go through lengthy court processes. Both the CMA and the courts will have the power to impose penalties on businesses of up to 10% of global turnover for breaching consumer law or up to £300,000 in the case of an individual.

The new measures will come into effect as soon as possible following parliamentary approval, subject to secondary legislation and the publication of guidance.

Source:Department for Business, Energy & Industrial Strategy| 01-05-2023

Simplified tax system for savers

4th May 2023 by fpdteam

The government has announced a number of new measures to help millions of people boost their future savings. One of these measures is a simplification of the Help to Save scheme.

The Help to Save scheme was launched by the government in September 2018 to help those on low incomes to boost their savings. Under the scheme, those eligible could save between £1 and £50 every calendar month and receive a 50% government bonus. The 50% bonus is payable at the end of the second and fourth years and is based on how much account holders have saved. The bonus is paid directly into the account holder’s chosen bank account.

It was announced as part of the Spring Budget measures that the government will extend the Help to Save scheme by 18 months, on its current terms, until April 2025. The government will examine how the scheme can be made simpler by reforms to how its bonus is calculated, the length of time an account can be open for and eligibility requirements, all with the aim of enhancing long-term savings habits.

The government also wants to address the fact that parents who have not claimed Child Benefit could miss out on building their state pension. Those affected will in future be able to claim National Insurance credit retrospectively. Further details will be published in due course.

Source:HM Government| 01-05-2023