jane heard newsletter 2010

8/8/2019 Jane Heard Newsletter 2010

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NEWSLETTER

A selection of current topical items

December 2010

RULES RELATING TO EMPLOYEES

Minimum Wage From October 2010, the minimum wage increased to 5.93 per

hour for workers aged 21 and over, 4.92 for 18 to 20 year olds inclusive, and 3.64

for 16 and 17 year olds. Please note that the main rate has been extended to include

21 year olds. Holiday pay entitlement is in addition to this.

Holidays The minimum number of statutory paid holidays is 28 days a year for an

employee working 5 days a week. It is at the discretion of the employer whether the

28 days include bank holidays or not. Those working less than 5 days a week are prorated. Employers have a legal obligation to ensure that employees take their statutory

entitlement.Following a European Court ruling, strictly speaking holiday pay should not be paid

within the hourly rate but should be held back by the employer and paid to theemployee as and when holidays are taken.

NationalInsurance National Insurance rates will increase for employees by 1% in

April 2011. Employers national insurance rates which are payable on employees

salaries are also increasing by 1% to 13.8% in April 2011.

Online PAYE Filing From 6th

April 2010 all employers, regardless of their size,

must now not only file P35s online, but also starter and leaver forms P45s and P46s.

FuelRates HMRC publish advisory fuel rates which may be used by an employer

in relation to a company car, to reimburse business mileage where paid for by an

employee, or to recoup the cost of an employees private mileage where paid for by

the employer, or allowable for input VAT as a proportion of business mileage rate

paid for people using their own cars.

Remember that the mileage rate for business miles travelled in own car is still 40p

permile for the first 10,000 miles and 25p thereafter and that mileage records mustbe kept (NB. Mileage records must also be kept by self-employed individuals).

Equality Act 2010 This new act covers all areas of age, disability, gender

reassignment, race, religion or belief, sex, sexual orientation, marriage and civilpartnership and pregnancy and maternity. There are new characteristics not previously

covered by existing legislation, which are encompassed under the new act. It isdesigned to ensure that all employees are not subject to discrimination of any type.

Employers need to ensure that they are up to date with this act as they can potentially

be liable in many areas.


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RegionalNICHoliday for New Businesses New businesses outside of London andthe South East and east of England can start claiming a holiday from NIC

contributions for their first 10 employees starting from 6th

September 2010 until 5th

September 2013. This allows new employers to make a deduction against the amount

of Class 1 NICs they pay each month or quarter. The holiday applies to the first 10

qualifying employees taken on by companies that started after the 22nd

June 2010.

Pension Schemes HMRC has agreed that all UK businesses, regardless of size,

should offer a company pension scheme or enrol their staff into the new National

Employment Savings Trust (Nest). Nest is due to start next year, with all businesses

having to join by September 2016.

Sick Leave Following European Court of Justice rulings, the following guidance on

regulations for employers is as follows:

y A worker continues to accrue their statutory annual leave as normal whileabsent from work due to sickness, however long the period of sickness lasts.

y A worker on sick leave is entitled to take statutory annual leave at the sametime and if they do, they must be paid their normal holiday pay rather thancompany sick pay for the days taken as annual leave but, if the company sick

pay period has ended, they must be paid normal holiday pay rather than nopay.

y If the worker qualifies for SSP this will continue to be paid during the annualleave but would count towards any holiday pay that is paid.

y A worker can choose to have annual leave changed into sick leave if theybecome sick while on annual leave or just before they are due to take annual

leave and can arrange to take the annual leave at another time.

VAT

Change in VAT Rate With effect from 4thJanuary 2011, the rate of VAT is

increasing from 17.5% to 20%. In order to calculate the amount of VAT included in a

gross figure, the fraction 1/6 should be applied. All standard rated taxable supplies are

subject to VAT at 20% from 4th January 2011.

If you have a software package that automatically calculates the VAT, you will need

to ensure that the VAT rate is changed from 17.5% to 20%.

The Cash Accounting and Annual Accounting schemes remain unchanged. However,

the Flat Rate scheme percentages are changing to reflect the new rate of VAT, and

can be found on HMRCs website.

Registration and Deregistration Limits With effect from 1st

April 2010, the

registration threshold was raised to 70,000, the deregistration threshold 68,000.

Deposits Received VAT must be accounted for when deposits are received from

customers, not when a final invoice is raised and service supplied.

Payment Received From 1st

April 2010, all VAT cheques payments posted to

HMRC are treated as being received on the date that cleared funds reach HMRCs

bank account. Businesses must allow enough time for payment to reach HMRC and

clear into their bank account on or before the due date of the relevant VAT return. If a


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cheque payment does not clear by the due date, the business may be liable to asurcharge for late payment.

FuelScale Charges These are also changing due to the increase in rate of VAT and

should be used from the first VAT return starting on or after 4th

January 2011.

New Penalties A new concept of reasonable care has been introduced to theimposition of penalties and if it is considered that the taxpayer has taken reasonable

care, then taxpayers will not be penalised, even if a mistake is made.

From 1st

April 2010, there is a new penalty to be raised where someone has issued an

invoice that includes VAT which they are not entitled to charge.

There will also be a new failure to notify penalty which will apply to late VAT

registration applications. The amount will depend on the individual circumstances.

Penalties will also apply where HMRC has issued an understated assessment and a

person fails to take reasonable steps within 30 days of the assessments date to advise

it is less than what is actually due.

SELF-EMPLOYEDCapitalAllowances The 100% Annual Investment Allowance available to

businesses is to be reduced to a maximum of 25,000 for investment in Plant and

Machinery (except cars) from 2012. Written Down Allowances continue to be

available on plant and machinery, however these will also be reduced from 20% to

18% per year from 2012 for the main rate pool, and from 10% to 8% per year for

longer-term special rate pool assets. Agricultural Buildings Allowance and Industrial

Buildings Allowance are being abolished in 2011 and are reducing on a sliding scale

every year until then.

Holiday Lets It was intended that from April 2010, Self-Catering holiday lets would

no longer be classified as a trade and would be treated as income from Land andProperty. However, these plans were abandoned as parliamentary time was running

short prior to this years election and the coalition government did not re-introducethem. Following consultation with various groups this summer, the current

government has issued the following decision:

y To proceed with proposals for restriction of loss relief (from April 2011).y To proceed with proposals for an availability threshold of 210 days and an

occupancy threshold of 105 days.

y To retain the current treatment of capital allowances and capital gains taxreliefs.

y To highlight that all properties within a business can qualify where on averagethey meet the occupancy threshold.

y To delay the introduction of the revised thresholds until April 2012.y To reduce uncertainty and complexity by allowing businesses which meet the

revised occupancy threshold in one year to elect to be treated as having met it

in the two following years, providing certain criteria are met.

CapitalGains Tax Due to the emergency budget in June, the following changes

have taken place:


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y Higher rate taxpayers will pay 28% capital gains tax from midnight on the22nd June 2010. This replaces the previous rate of 18%.

y Low and mid-income savers will continue to pay at 18%.y CGT for entrepreneurs has been extended to the first 5 million of lifetime

gains, and will be charged at 10%.

y The annual exempt amount for capital gains tax remains at 10,100 for2010/11.

LIMITED COMPANIES

Corporation Tax Rate As of 22nd

June 2010, the main rate of Corporation tax is to

be reduced from 28% to 24% over four years, while the small companies rate is cutfrom 21% to 20% from April 2011.

Dividends If a company gets into financial difficulties and goes into liquidation, it is

very likely that dividends withdrawn by directors would have to be repaid. This is due

to the fact that dividends may only be paid out of distributable reserves (accumulated

profits). The payment of a dividend not out of reserves is illegal and a breach of theCompanies Act and there is no time limit on the Liquidator clawing this money back.

Directors need to be aware of the potential risks of taking dividends when their

company is having financial problems and ensure that they keep up to date with their

annual accounts and management accounts, where appropriate.

WrongfulTrading Where a company is insolvent and the directors should have

done something about it (usually stopped trading) but have ignored the problem,

carried on trading and the situation has got worse, this is known as wrongful trading.If the directors are held liable for wrongful trading then they may have to pay funds

back into the company to compensate creditors.Fraudulent trading occurs where directors have run up debts or taken credit in the

company name knowing there is no reasonable prospect of paying it back. Thepenalties for fraudulent trading are a financial fine and possible imprisonment.

MISCELLANEOUS

IR35 The government will be carrying out a review of IR35 and small business tax

as promised. As yet details are unknown so watch this space.

Wills and Trusts If any clients are interested in preparing wills, powers of attorney,

conveyance services or family trusts as an individual or as a way for an organisationto offer their employees the opportunity of guidance on how they should establish

their affairs, we have details of a local company who can assist in this area.

Tax Credits If you are completing a tax credit form, please contact us regarding the

self-employed figure for the form.

If you have any queries regarding any of the above topics, please give us a ringon

01239 820808 or email [email protected], Jane Heard Associates,

Tregynon, Gwaun Valley, Fishguard, Pembrokeshire, SA65 9TU.

jane heard newsletter 2010

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