Posts Tagged ‘national insurance’

Improving PAYE – is it time for a spring clean?

Posted on: January 10th, 2012 by MarkJones No Comments

A move that will radically change the way that employers and HMRC handle payslips will come into effect from April 2013. From this date all employers must use the new system which will see all payslip deductions transmitted to HRMC when employees are paid, rather than once a year.

Real Time Information (RTI) will enable employers and pension providers to tell HMRC about tax, NICs and other deductions when or before the payments are made.

It is hoped that the changes will drastically simplify the 1940s PAYE model, by removing P45s and other such complicated forms.

Instead of submitting PAYE information annually after the end of the tax year, all employers will have to submit payroll data online every time that payroll is run. The details of employees pay will be passed to the Department for Work & Pensions to allow ‘real time’ monthly adjustments to be made to the amount of Universal Credits (which will replace Tax Credits from October 2013).

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NIC Series #2 – Savings available for businesses in Wales

Posted on: October 14th, 2010 by LeightonReed

 

Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

 

In the second of a series of articles, Leighton Reed, Director, MHA Broomfield Alexander focuses on the potential for savings of National Insurance Contributions (NICs) for employers. For more specific advice and information please contact Leighton on [email protected]

Employer’s NIC holiday

What is the benefit?

Only new businesses set up can qualify.  The NICs holiday is available to new businesses that start up during the period from 22 June 2010 to 5 September 2013.

If your business is eligible, the National Insurance contributions (NICs) holiday will run for 12 months after the date your business started.  During this time, the first 10 employees you hire are potentially ‘qualifying employees’ for the purposes of this scheme. This means that your business does not have to pay Employer’s NICs on the 12 months of salary paid to the first 10 people taken on in the first year of business.  There is a NIC holiday cap of £5,000 per employee and so potentially a business can save up to £50,000 in NICs.

What is a new business?

The test of a new business is based on the activities of the business. For the purpose of the holiday, the test requires you to look at the activities of the new business and to consider whether all, or most of them, have previously been carried on in another business during the six months leading up to the start of this new business.

Also you need to decide if the new business consists of activities, or mostly of activities, resulting from the transfer of most of the activities of another business.

In considering those activities, you will need to consider whether there are similarities that may exist between the products or services, the customers, suppliers and the employees of any previous or ongoing business and the new business.

Your business will not be considered to be new and therefore won’t qualify for the NICs holiday if any of the following apply:

  • at any time in the 6 months leading up to the start of this business, you carried on another business and the new business consists (or mostly consists) of activities that were undertaken in the other business.
  • you begin to carry on a business as a result of a transfer of another business and the activities of the new business (or most of them) were previously carried on in the other business
  • you begin to carry on a business and before the business starts you enter into an arrangement to take on an existing business or part of an existing business at some point during the period of the NICs holiday

If you are expanding your business or setting up a new business alongside an existing one, you will not qualify for the holiday unless the expanded or new business is wholly or mainly different from the existing business. Similarly if a company establishes a subsidiary it will not qualify for the holiday unless its business is significantly different from its parent.

How to apply.

Most businesses will need to apply themselves online but only after the business has been registered as an employer with HMRC and has the PAYE reference numbers.

 

For more information or advice on NIC holidays please contact Leighton Reed or Nathalie Waterfield on [email protected] or on 02920 549939

Are you an employer paying lump car allowances to employees?

Posted on: October 5th, 2010 by LeightonReed

Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

…If so, you may be entitled to a refund of national insurance contributions

Following a recent Tax Tribunal ruling, there is a potential opportunity for employers to benefit from a repayment of National Insurance Contributions (NIC) on cash lump sump amounts paid to employees as reimbursement for motor travel expenses and also potentially on cash allowances given instead of company cars.

In a nutshell, this particular case involved an employer paying monthly lump sums to employees for using their own cars for business travel and reimbursing them a business mileage rate less than the HMRC authorised rates (that being for income tax purposes, 40p per mile for first 10,000 business miles, then 25p per mile thereafter).   Usually, an employer would reimburse at the full 40p/25p rate but may instead have reimbursed at a lower rate per mile plus a lump sum paid in instalments.  Very briefly, the case was found in favour of the taxpayer on the basis that the lump sum payments were motoring expenditure rather than a salary top up, which meant they were not earnings.

Are you potentially due a refund of NIC?

If the following circumstances apply, then you may be eligible for significant refund of NIC as it is possible to look back 6 years:

  • the lump sum is intended as an alternative to a full reimbursement per month per mile and does not have a direct link to salary;
  • A cash allowance is paid as an alternative to a company car and the allowance does not have a direct link to salary;
  • there are a reasonable number of employees taking such alternatives; and
  • business mileage payments have been reimbursed by the employer at less than HMRC’s authorised rates and you have records to verify business mileage.

Illustration of opportunity

The exact level of repayment opportunity will vary depending on the number of relevant employees, the amount of business mileage travelled by those employees and the business mileage rates reimbursed.

However, by way of illustration, an employer providing cash allowances and then reimbursing on average 5,000 business miles per annum to 50 employees at say 15p per mile may be eligible for a NIC refund of around £48,000.

In addition, the employees may also qualify for a personal repayment of NIC.

Contact us on a “free no obligation” basis

Should you wish to discuss this opportunity further on a free no obligation basis or register your interest, then please contact us on [email protected] or speak to Gavin Oliver or Nathalie Waterfield on 02920 549939.

You have considered setting up in business for a number of years, but now you want to take the plunge. What do you need to do?

Posted on: September 29th, 2010 by MarkJones

Broomfield & Alexander publishes a series of articles focusing on business advice and information. This article appeared in the Business Advice column, Western Mail, 29 September 2010

With so many jobs being lost at the moment, people are increasingly looking at self-employment – and, in fact, this may be a good time to set up in business.

The first Coalition Government is certainly encouraging – and incentivising – it. Since the last budget, new businesses starting up outside London and the South East will not have to pay national insurance contributions for their first 10 employees, subject to certain conditions.

But beware, setting up your own business may not be as easy as you imagine. To begin with, it’s important that you have done your homework to ensure that your business idea is a sound one. You should prepare a written business plan and financial projections to show you can make a profit, and will have enough cash to make your business work.

This leads neatly into the funding of your business. Perhaps you have had savings which you are going to use to purchase the necessary assets, and to provide the initial cash flow. Or you might need to approach a bank for a loan or to finance assets on leases or hire purchase, or raise equity or share capital for your business, through friends, family or third party “business angels”.

Before reaching this point, you should appoint an accountant, an expert in new business starts, who can advise on the most suitable business vehicle to trade under, all of which have differing tax treatments and varying levels of exposure to risk. You can trade as yourself, in partnership with others, form limited liability partnership or most commonly, form a company limited by share capital.

Next, you need a bank account and to consider registering for VAT. The current turnover threshold at which you must register is £70,000 pa, but you may choose to register before reaching this limit. Once registered, you can account either on a “cash received and paid” or “invoice” basis and taking advice on this point would certainly be wise.

You have to register with HM Revenue & Customs within three months of starting to trade, or face an automatic penalty. The accounting function of your business is a vital one, and it is important to choose the correct accounting software for the scale of your business. You should be producing regular monthly accounts to monitor performance, and you may need the assistance of an accountant to produce them or to provide external comment. If you have borrowed money from the bank, they may well make it a condition that you provide such information monthly or quarterly.

If your business involves employing people, seek advice. Employment law is extremely technical and it’s easy to make mistakes which can be extremely costly in the long run.

Finally, you should take out an appropriate level of insurance cover for the type of business and, again, you would be well advised to consult a qualified insurance broker.

There is a lot involved in starting a new business, and sometimes the sheer the weight of dealing with compliance matters and regulations can make people feel very weary. It’s therefore vital that you have a great passion for the business you want to start – only that will create a commitment to see it through any difficult times.

For more information on setting up a new business in Wales, please contact Mark Jones

NIC Series #1 – Potential £50,000 savings for new business in Wales

Posted on: September 27th, 2010 by LeightonReed
Leighton Reed, Director, MHA Broomfield Alexander

Leighton Reed, Director, MHA Broomfield Alexander

In a series of articles, Leighton Reed, Director, MHA Broomfield Alexander will focus on the potential for savings of National Insurance Contributions (NICs) to employers. For more specific advice and information please contact Leighton on [email protected]

Providing certain qualifying conditions are met (see below) new businesses can qualify for a deduction of up to £5,000 from the employer National Insurance Contributions (NIC) that would normally be due – for each of the first ten employees they take on, giving a potential tax saving of £50,000 to a new business.

Qualifying Conditions….

  • Must be a new business started between 22 June 2010 and 5 September 2013
  • Must be in a qualifying region (Wales is a qualifying region)
  • Sole trade, partnerships, companies, property and investment business all qualify, Managed Service Companies do not.
  • Some businesses do not qualify and so cannot apply for the holiday. They are:

* businesses in the coal sector

* businesses in the road freight transport sector – where the aid is to be used to acquire road freight transport vehicles

* businesses involved in export-related activities

How to Apply…

You must apply via the online application form (see link below).  Before completing the online form you need to have the following information:-

  • Your PAYE and Accounts Office references – you will find these in the New Employer Pack sent to you when you registered as an employer with HM Revenue & Customs
  • Your business name
  • The date your business started
  • Your business address and post code
  • The region or country your principal business address falls within

 

For more information or advice on this, or any other tax issues, please contact [email protected]