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January 2015

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January’s Tax Tips & MYOB News
Welcome to our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

Have a look at our January Key Tax Dates –
don’t forget to pay any balancing payment for self assessment tax due at the end of the month. And quarterly PAYE is due by 22nd January. This month we have included details of how to pay HMRC this month.

Please contact us for advice.
We’re here to help!
January 2015
· Pension Schemes – ‘Auto Enrolment’
· Incorporation of a business
· Shared parental leave and pay
· Credit Card Processing Services
· January Questions and Answers
· January Key Tax Dates & paying HMRC
Pension Schemes – ‘Auto Enrolment’
‘Auto Enrolment’  is a requirement to get employees into a pension scheme.  From January 2016 to 2017 small employers will have to start auto-enrolling their employees into their employer pension scheme.

8% of the earnings which are liable to National Insurance (NI), will now be deducted, before tax, and diverted into a pension scheme.  8% of NI earnings will have to be contributed by either the employee or the employer (or both) into a pension scheme which is then run for the benefit of the employee, but in the name of the employer. The diverted earnings, and employer contributions, are then held in the scheme until the employee retires or dies whichever is sooner.

The paradox is that there is no real tax saved as a result of this. If the employer contribution is parked in a pension scheme it is free of basic rate tax and both classes of NI. When the pension is eventually paid it is subject to basic rate tax.

The situation is worse with an employee contribution. In this case the employee will save the Employee NI and PAYE. However the contribution will still be subject to Employer NI. The only time when there is a tax saving is when the employee is a higher rate tax payer and will become a standard rate taxpayer after retirement. 

But of course there are also charges.  We estimate between a quarter and a half of what the employees would otherwise receive in interest, will go to the fund managers.  Designing something easy, and ideally free to the recipient, is a challenge.

Putting a Scheme into Place
The main state scheme is called NEST. We understand that they have only five implementation managers.  Not many for the whole of the UK.  This shift in pension arrangements is not going to be something on which the average employer will get a lot of admin support.  Twas ever thus.  Therefore we, at SAL, will have to provide the support. 

Here at SAL we are therefore considering what our employees might do.  Our first registration is in March 2016… over a year away.  Our payroll has been created to allow the deductions including advising each employer how much to pay as their contribution.  However we are yet to decide what we will advise to the actual system.

Luckily there is still lots of time to prepare.  We will be easing our clients into the application of this legislation.  Our first conversion is not until March 2016.  So please do not get alarmed about the adverts.  We are on the case.  Our systems are ready.  We will advise you how we recommend you use them in due course.
Incorporation of a business top
Shared parental leave and pay top
When a business incorporates and transfers its trade and assets to a company controlled by the seller, the assets must be transferred at open market value for tax purposes. The assets may include “goodwill” which is defined as the business reputation or customer relationships, including the value of continuing contracts.

The transfer of the assets may generate a taxable capital gain in the hands of the seller, as the assets will have appreciated in value during the time they were used or created by the first business. Read More
Where a child is due to be born (or adopted) on or after 5 April 2015, its parents will be entitled to share the 52 weeks of maternity leave and 39 weeks of maternity pay or maternity allowance which is currently available only to the mother. This ability to share parental leave and pay will not apply in Northern Ireland until the Northern Ireland Assembly passes the relevant regulations.

As an employer you need to be ready to deal with claims from employees to share leave and pay, and to report details of shared statutory parental pay in your RTI reports. Read More
Credit Card Processing Services
January Questions and Answers top
An article from PaymentSense. –
PaymentSense specialises in providing small and medium businesses with fast, reliable and affordable card processing services. They provide Epos, chip & pin, ecommerce payment gateways and also provide working capital to the SME community.
The market has been dominated by an oligopoly of complacent banks that passively acquire customers through their bank branch network.They expend a disproportionate amount of energy on servicing large corporate clients, leaving SMEs under-served and overcharged.
PaymentSense has set out to disrupt the banks’ traditional grip on the market.  Paymentsense’s three USPs resonate with SMEs whilst capitalising on the banks’ weaknesses:

●        Low capped rates for the duration of the contract
●        The fastest set up times in the UK
●        24/7 UK based support .

Start the year with a FREE no-obligation Health Check on your current situation. Contact Nicholas Rutherford on 07872 308274 or email him on 07872 308274
Q. My company has some surplus cash which I would like to use to support a local charity. Can the company make the donation directly or do I have to make a personal donation so it qualifies for Gift Aid, and the charity can claim the tax back?Answer

Q. I recently turned 60 and I have an idea for a new business venture. I want to take £20,000 from my personal pension scheme to invest in my new business. Can I do that without paying tax and may I continue to make pension contributions after I extract that lump sum? Answer

Q. I love knitting, and I sell the occasional knitting pattern I have designed through my website. Do I have to charge VAT when I sell to overseas customers? This is a tiny part of my income and I am not registered for VAT in the UK.Answer
January Key Tax Dates & paying HMRC
1 – Due date for payment of Corporation Tax for the year ended 31 March 2014

14 – Return and payment of CT61 tax due for quarter to 31 December 2014

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/1/2015 or quarter 3 of 2014/15 for small employers

31 – Deadline for filing 2014 Self Assessment personal, partnership and trust Tax Returns – £100 first penalty for late filing even if no tax is due or tax due is paid on time
– Balancing self assessment payment due for 2013/14
– Capital gains tax payment due for 2013/14
– First self assessment payment on account due for 2014/15
– Interest accrues on all late payments
– Half yearly Class 2 NIC payment due
– Further penalty of 5% of tax due or £300, whichever is greater for personal tax returns still not filed for 2012/13
– 5% penalty for late payment of tax unpaid for 2012/13 self assessment

Paying Self Assessment and PAYE/ National Insurance Electronically

To pay
Self Assessment and PAYE/ NI use the same HMRC Bank account details:
Sort Code: 08 32 10
Account number: 12001039
Account Name: HMRC Cumbernauld

So it is important to use the correct Payment Reference to identify what the payment is for.

Self Assessment Payment Reference:
Use your 10 digit Self Assessment number. This is sometimes referred to as a Unique Taxpayer Reference (UTR) for example 1234567890. Quote the reference number with no gaps between the characters.

PAYE/ NIC payment reference:

To make your current monthly or quarterly combined PAYE/NICs payment just use the Accounts Office reference shown on your payslip booklet cover or on the letter HMRC send you in place of the booklet, for example 123PA00012345.

If your payment is not for the current month or quarter you need to tell HMRC the year and month – add this as an extra 4 digits to the reference in the form YYMM eg 1501 for a payment to cover the period up to end of April 2015. Quote the reference number with no gaps between the characters.
Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.
About Us top
Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Solar Accounts, Yodlee, Quickbooks or Clearbooks.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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