Are you paying your employees the National Living Wage?

Written by B20 Ltd on Tuesday, 08 March 2016 09:17.

In just a few weeks, Chancellor George Osborne will begin to phase in the new living wage. The Financial Times describes this as a “bold experiment” to force up the wages of low-paid workers, but what does this really mean and who does it apply to?

National Living Wage

What is the national living wage?

The national living wage is essentially an increase in the minimum wage, and is being phased in over several years. It begins with a 50p rise in the lowest rate to £7.20 an hour, increasing each year with the aim of reaching 60% of median pay across the UK by 2020, when it could be as high as £9.35 an hour.

The first rise will begin on 1st April 2016 and will become law. It applies to anyone who works aged 25 and over, although not in the first year of an apprenticeship.

What does it mean for employers?

If you’re an employer, you’ll need to make sure you’re paying your staff correctly. Now is the time to start taking the appropriate payroll action, let your staff know about their new pay rate and check that staff under 25 are earning the correct rate.

So what’s the verdict?

The response has been quite mixed so far. Some sectors have already implemented the new rise. Retailers have caught the eye of the press with the likes of Aldi increasing its hourly rate to all workers, whatever their age to £8.40 and rival Tesco setting out a rate of £7.62, but other areas have been cut, such as bonuses and anti-social hour pay.

As minimum wages go, it’s been compared by the Financial Times as pretty high, with the eventual rate certain to be “one of the highest” of all the developed economies.

Overall it seems that the increase will be welcomed, should boost spending, and ultimately help the economy.

For further information about the increase and assistance with payroll, contact B20Ltd.

Welcome to New Personal Tax Accounts

Written by B20 Ltd on Tuesday, 02 February 2016 10:06.

Making tax easier...the end of the tax return...whatever HMRC like to call it, it means a change to the current tax system, and a change to how millions of us manage and pay our taxes.

Simply put, tax returns are being replaced by new personal tax accounts. Everyone who pays tax will eventually have a personal tax account, with all of their details in one place, similar to an online bank account. By early 2016, five million small businesses and ten million individuals will have access to their own digital tax account. Millions will no longer have to complete a tax return at all, while those with more complex tax affairs will be able to use their account to declare income and pay tax in year.

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For Individuals

The roll-out for individuals is being phased in for people currently in the self-assessment system. More than a million customers have already been provided with an online Personal Tax Account. All personal taxpayers will have personal accounts by April 2016, as will all of the country’s five million small businesses, of which two million are already using the new system.

If you’re self-employed, a contractor or a higher rate taxpayer, you’ll know how time consuming and tedious filling in your self-assessment tax return can be each year. It should be music to your ears then that this process is set to change.

For Business

As of April 2018, businesses including the self-employed and landlords will have to update HMRC every quarter where this activity is their main source of income. That obligation to report quarterly will also apply where the money is a secondary source of income worth more than £10,000, and the main income is from employment or from a pension.

The new system is also being hailed as a major help for small businesses, which will be able to link their accounting software to their personalised tax account and have the option to pay as they go. This will give more certainty about what they need to pay and when, so they can manage their cashflow better.

For further information or advice on the new personal tax account system, contact B20 Ltd This email address is being protected from spambots. You need JavaScript enabled to view it.

Contractors - this affects you!

Written by B20 Ltd on Monday, 04 January 2016 09:59.

AUTUMN STATEMENT 2015 HIGHLIGHTS

Many of our blogs during 2015 have focussed on such topics as tax relief for travel, serial tax avoiders and RTI. This years’ Autumn Statement encapsulated all of this, and much more, and following are the key highlights affecting Contractors:

Employment Intermediaries and Tax Relief for Travel and Subsistence

As announced earlier in the year, the government will legislate to restrict tax relief for travel and subsistence expenses for workers engaged through an employment intermediary, eg. an umbrella company or personal service company.
The charge will take effect from 6th April, and relief will be restricted for individuals working through personal service companies where the intermediaries legislation applies.

Office of Tax Simplification (OTS)

The government has accepted recommendations made by the OTS in their review of employment status. Details are expected to emerge in 2016, but is expected to give more certainty to contractors on short term assignments, by way of a “set de minimise level for payments to an individual who carries out some activities for a business, which would definitely not be an employment.”

Entrepreneurs’ Relief

In order to support businesses, the government will consider bringing forward legislation to amend the changes made in 2015 to Entrepreneurs Relief. This is good news to companies operating in commercial joint ventures, but it is not thought that the relaxation would be retrospective.

Is this the death of buy-to-let?

Written by B20 Ltd on Thursday, 31 December 2015 10:57.

If you’re a landlord with a portfolio of buy-to-let properties, then changes announced in the summer Budget, will significantly increase your tax bills. We are revisiting this topic today, because the changes were so complex that their true impact has only just been completely understood (see the working example at the end of this article).

Death of buy to let

Some are calling this the death of buy-to-let as landlords have begun off-loading their portfolios already, before the tax increase is phased in from 2017 and fully implemented by 2020.

Understanding what you can claim is key, and will significantly impact landlord’s profits. Get it wrong, and you can say goodbye to any profit altogether. The following guide outlines the expenses you can claim for you buy-to-let property.

Mortgage Fees and Interest

You will no longer be able to deduct the cost of mortgage interest from your rental income. Tax will be applied to the rent received, instead of what is left after paying the mortgage interest. There will be a tax credit equivalent to basic rate tax (20%) on the interest, but this does little to offset the increased cost.

While broker and arrangements fees are currently tax deductible, they are likely to be restricted when the changes are implemented.

Changes to Class 2 National Insurance Contributions

Written by B20 Ltd on Monday, 14 September 2015 16:40.

NI

The Spring Budget 2015 announced plans to abolish Class 2 National Insurance contributions (NICs) next year. In the meantime, the way those contributions are collected is changing and deferment applications are no longer needed for any clients with earnings likely to be below the small earnings threshold or with both self-employed and employed income.

From 2015/16 Class 2 NI, like Class 4, will be payable with income tax through self-assessment. Therefore, the Class 2 NI for the 2015/16 tax year will be due on 31 January 2017. For clients with small earnings, Class 2 NI will only be due on that date if their profits are above the small profits threshold (just a new name for the small earnings limit) which is set at £5,965 for 2015/16.

Payments will be collected through the normal process. If the taxpayer needs to make payments on account an additional 50% of the amount due will also be payable on 31 January 2016 with the remainder on 31 July 2016.

If you have any questions about National Insurance Contributions, please get in touch with Caroline Scull on 01420 88250.

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