As ever we’ve got plenty of things to bring to your attention in this months e-news including various employment issues and changes for businesses in relation to the way those registered for VAT will have to file their returns, and new business rates, set to form the basis for bills for the next five years.

We’re also inviting you to join Prime in supporting the ‘Help for Heroes’ charity, through a calendar now on sale raising money to help wounded soldiers.

If you would like to discuss any of the articles included or have any general accounting or business issues, please do not hesitate to contact us.

Laurence Moore, Chairman, Prime Group

National Minimum Wage increases

The adult rate of the National Minimum Wage (NMW) increased to £5.80 (£5.73) an hour from 1 October 2009. This is payable to those age 22 and over.

The hourly development rate increased to £4.83 (£4.77) and for 16 and 17 year olds to £3.57 (£3.53) an hour.

HMRC are able to charge penalties to those employers found to be in breach of the NMW rules.

If you have any queries on the NMW please do contact us. To view some frequently asked questions, click here.

Internet links: NMW rates | HMRC guidance on penalties

Additional Paternity Leave and Pay

The government has announced its intention to introduce Additional Paternity Leave and Pay for fathers of children due on or after 3 April 2011.

The government will consult shortly on new regulations that will give families greater flexibility in how they choose to look after their children.

Families will have the choice to transfer up to six months leave to the father should they want to, which can be taken by the father once the mother has returned to work.
This new provision will be available during the second six months of the child’s life, giving parents the option of dividing a period of paid leave entitlement between them.
Some of the leave may be paid if taken during the mother’s 39 week maternity pay period. This would be paid at the same rate as Statutory Maternity Pay (generally £123.06 per week).
Parents will be required to ‘self certify’ by providing details of their eligibility to their employer. Employers and HMRC will both be able to carry out further checks of entitlement if necessary.

Internet links: HMRC guidance | Press release

Travelling from home to work

If you are employed

There are numerous legal cases establishing the principle that employees cannot claim the cost of travel between home and their normal place of work. H M Revenue & Customs consider this cost merely puts the employee in a position to perform their duties. The definition of employee in the examples that follow includes salaried directors of private limited companies.

Exceptions to this general principle, that home to work travel costs cannot be claimed, are outlined below:

Travel costs from home to a temporary workplace can be claimed - a temporary workplace can be a place of continuous work for up to 24 months, if this period is likely to be exceeded from the start, then the workplace would be considered permanent from the start and no relief would be due. (Note: If it isn't known that the contract will exceed 24 months, then relief will be due up to the 24 month point, or up to the point when it is known that the 24 months will be exceeded if earlier.) A temporary workplace is one where more than 40% of working time is spent; if this is the case, the 24 month rule doesn't apply and relief will be available in full.
Travel between two places of work required by the same employer.
Travel to attend an appointment required by an employer. This cost is allowed even if the journey starts at home.
Travel between home and work where home is a workplace and the location of home is dictated by the requirements of the job.

If you are self-employed

Many self-employed business people have set up their businesses to run from their home address. If you are self-employed you can claim for any travel expense which is required by your trade as long as the business element can be separated from any private element. For instance you may use your car for a trip into town to bank your business cheques and call at the supermarket on the way home.

To meet the HM Revenue & Custom's requirement of reasonable care in apportioning such costs, you must keep appropriate records. For car users this would normally be a written log of business miles and a record of the vehicles recorded mileage at the beginning and end of each trading year. In this way an accurate assessment of average business use can be calculated and applied to total running costs.

And don't forget, if you run your business through a limited company you are not self-employed. The comments in the first section of this article would apply to your business.

Please contact us if you would like to discuss this further.

Business rates: make sure you are paying the right amount

This October all businesses will receive their new business rates valuation, together with a breakdown of how it’s been calculated.

Please make sure you thoroughly check the information sent to you. Any inaccuracies identified should be notified to the Valuation Office Agency (VOA) by 30 November 2009.

These new valuations will form the basis of business rates bills for the next five years so it’s worth checking them – factual errors may even end up saving you money.

Internet Link: Valuation Office Agency guidance

Online filing of VAT returns

HMRC are advising businesses that new rules on how VAT returns are submitted and payments are made will come into force next year. Paper VAT returns will be phased out from 1 April 2010.

As a start of this phasing out process, businesses with VAT (exclusive) annual turnover of £100,000 or more, and all newly registered VAT businesses will need to submit their VAT returns online and make payments electronically from April 2010. Those businesses that are already VAT registered, with a turnover below the threshold, will have the choice to use paper returns but this will be reviewed by 2012.

Please do contact us if you would like any further advice in this area.

Internet link: HMRC VAT

Tax planning for company owners

The new 50% income tax rate will be charged from 6 April 2010 on taxable income above £150,000. The top rate of tax on dividends will correspondingly increase from 32.5% to 42.5%.

The personal allowance will also be clawed back for people whose income exceeds £100,000. The amount of the allowance will be reduced by £1 for every £2 above the £100,000 limit. The effective marginal rate on income that falls in the band between £100,000 and £113,600 will be 60% (higher rate of 40% plus an additional 20% from losing the personal allowance). The rate for dividend income will be 48.75%. Some straightforward tax planning may save you tax in the run-up to these changes.

Paying dividends now or later?

If your company has surplus cash, it could make sense to pay an interim dividend before the new top rate is introduced. Cash can always be lent back to the company afterwards.

Companies can only pay dividends out of accumulated profits. Therefore if your company is currently making losses it will only be able to pay dividends if it has accumulated reserves which cover the losses.

Pensions

Tax relief on pension contributions has effectively been restricted to basic rate for those with high incomes. People with incomes under £150,000 are not currently affected and should consider making the most of the opportunities to benefit from full tax relief while it is still available. If you are near this threshold, it may be worth trying to stay below it in some circumstances.

For advice on any of the issues raised in this article please contact our Coventry office Tax Manager Sarah Nickols on 024 7622 0208 or our Solihull office Tax Manager Ian Frost on 0121 711 2468.

HMRC warn of more scam emails

HMRC have updated their guidance on scam emails as they are aware that a large number of individuals are receiving emails offering tax rebates. HMRC have also confirmed that they would not inform taxpayers of a tax rebate via email, or request that they complete an online form to receive a rebate of tax.

HMRC are stressing that individuals should not visit the website contained within the email or disclose any personal or payment information.

For more information on this and other scams together with a copy of the latest example visit the links below.

Internet links: HMRC guidance | Latest example

Online accounting

We have recently been looking at the various options available for online accounting. They seem reasonably priced and offer good functionality. If you would like to investigate whether one would be appropriate for your business, please contact Laurence Moore or call 024 7622 0208 to discuss what’s involved.

Payment of our fees

We will soon introduce the option of paying our fees by credit card as several clients have told us that they would like this to do this. As soon as it is introduced we will include a note to that effect on our fee notes and statements.

Help for Heroes Charity calendar

Local wives, girlfriends and relatives of those serving in the army in Afghanistan, have joined together to produce a calendar in order to raise funds for the Help for Heroes Charity, a charity set up to help wounded soldiers.

The calendar is now on sale for £7.99 plus postage and packing and can be purchased from http://www.pinupforheroes.co.uk with all the proceeds going to the charity.

They need all the support they can get so please join Prime in supporting our troops and buy a calendar.

Disclaimer
This newsletter is published for the information of clients and other recipients of our email newsletters. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this newsletter can be accepted by the firm.

Prime Coventry
29 Warwick Road, Coventry, CV1 2ES
T: 024 7622 0208 E: coventry@primeaccountants.co.uk

Prime Solihull
Marlborough House, Warwick Road, Solihull, West Midlands, B91 3DA
T: 0121 711 2468 E: solihull@primeaccountants.co.uk