Earlier this year, the rules around child benefit changed. Did you opt out?
On 6 January this year, changes were brought into effect impacting high earners claiming child benefit. Instead of a universal benefit for all families, individuals would be means-tested, making it their responsibility to choose whether to opt out or remain in.
The changes impact those earning £50K and over. If you earn between £50,000 and £60,000, and haven’t opted out, then you’ll be required to repay some or all of your child benefit. If you earn over £60,000 you’ll be required to repay the entire amount. The process for paying it back will be through a self-assessment tax form. If you don’t currently complete a self-assessment tax form, then this introduction is becoming a hassle for some, so many parents will want to opt out instead of going through this process.
There is also a certain amount of scepticism around this new process itself. If you have recently received an increase in salary or are on the cusp of the £60,000 threshold, then you may be best served remaining in, as you won’t be able to apply for the money in arrears.
Whatever the size of your business, from 6th April 2013, you will be required to change the way you report PAYE.
Whether you manage this yourself as a business owner, use an accountant, bookkeeper or payroll bureau, you will be required to report to the HMRC in real time, every time you pay an employee, using payroll software which sends this information electronically.
This is one of the biggest clean ups by HMRC ever seen, and is driven by the on-going campaign to combat benefit fraud.
Find out if you’re ready with our handy checklist:
- Is your payroll software ready for RTI? (this will either mean you have purchased commercial RTI software, you use a payroll service provider, or you employ less than nine people so can download free software packages).
- You have registered for PAYE Online (if sending returns yourself)?
- Do you hold accurate information about all your employees (name, DOB, gender, address and National Insurance number)?
- You will also need to know information such as hours worked
It’s been two weeks now since HMRC launched their ad campaign warning tax cheats to declare all their income “before it is too late”. The outdoor campaign is part of the HMRC’s continued efforts to tackle crime and to claw back what is owed.
The campaign formed part of the Government’s spending review to tackle tax evasion, avoidance and fraud. According to The Independent, the HMRC recovered an extra £21bn from tax compliance activity in the last year in 31 March.
The HMRC director general, enforcement and compliance Jennie Granger said: “Most people pay the right tax. Our campaign is aimed at those who do not. Our message to the small percentage who do not is a simple one – the net is closing in. We will detect you if you have not put a job through the books, if you have not declared investment income, if you have hidden assets offshore or if you have not registered for VAT.
If you employ staff through a PAYE scheme, you will soon be required to submit Real Time Information (RTI) to HMRC.
RTI is a new payroll reporting system that an employer will be required to do each time they pay an employee through PAYE. Using RTI, employers and pension providers will tell HMRC about tax, NICs and other deductions when or before the payments are made, instead of waiting until after the end of the tax year. This method will replace the P35, the current year end return.
According to HMRC, RTI will:
- Make the PAYE process simpler and less burdensome for employers and HMRC for example by removing the need for the end of year return (forms P35 and P14) and simplifying the employee starting and leaving processes
- Make PAYE more accurate for individuals, over time reducing the number of bills and repayments sent after the end of the tax year
- Enable HMRC to pursue late payments more effectively
- Support the payment of Universal Credits
- Reduce Tax Credits error and fraud
RTI is currently being piloted, to get views on how best to help employers comply with the new requirements. Over 1.7m individual records from 338 PAYE schemes have joined the pilot.
Last year the taxman announced an increase in the penalty for filing late tax returns from £100 to £1,300. They felt that their time was better spent ‘Catching criminals’ than chasing late payments.
The new penalties for filing a late tax return and for making a late payment kicked in at the beginning of the new tax year in April 2012.
The dates for filing tax returns remain the same. Paper tax returns must be filed before 31st October, and online tax returns must be submitted by 31st January. If you owe any tax, payments must be made by the end of January.
The new late penalties are far less forgiving than before. If you file your return late you will be charged £100 on the first day, and then a penalty of £10 per day after three months. If you have still not filed your return at six months, further penalties will be incurred, with a maximum penalty of up to £1,300. If it’s 12 months late, there is another final penalty – together these could add up to £1,600 or more.