Anna’s Accountancy Alerts – January 2018
The Correct Way To Report an Error to HMRC
It’s O.K. to send a letter to report a mistake made in your tax return, but you can also use HMRC’s digital disclosure service. This can help with communication and ensure tax payments are allocated correctly.
Note: If the mistake was in a tax return for 15/16 or 16/17 you can just amend the return and pay any additional tax.
Landlords can claim mileage allowances
From 6/4/17 landlords can work out the tax deductible amount for journeys made in managing their businesses using HMRC’s approved mileage rates.
Extra National Insurance (NI) on termination deferred
Employers Class 1 contributions won’t become payable on termination payments until 6/4/19.
Class 2 NI not scrapped yet
Class 2 NI was supposed to be stopped at the end of 17/18 but it will now continue to be payable in 18/19. If your profits are low you may not be liable to pay, but it can be to your advantage to pay as contributions count towards your state pension.
HMRC interest rate rises
From 21/11/17 HMRC has increased its interest on late paid tax to 3% per annum; an increase of 0.25%. The rate of interest on overpaid tax remains at 0.5% per annum.
Tax-free childcare – directors could lose out
Directors who are paid annually won’t meet the earnings conditions. To qualify, your PAYE records must show you’ve earned an average of £120 per week over the previous three months (£126 from 6/4/18). The easiest way is to take a salary of at least £1,560 per quarter.
If you or your employees travel by train for business frequently it might be worth setting up a free trainline for business account. It will mean you can book cheaper tickets and also have a record of all this expenditure in one place.
Minimum wage changes
From 1/4/18 the National Minimum Wage (NMW) and National Living Wage (NLW) will rise. NLW will be £7.83 p/h, adult rate £7.38 p/h, the development rate £5.90 p/h, young workers rate £4.20 p/h and the apprentice rate £3.70 p/h. These rates are mandatory.
HMRC has recently updated its policy on enforcing the NMW legislation. The policy provides full details of a special arrangement for employers in the care industry.
Free General Data Protection Regulation (GDPR) helpline
On 25/5/18 GDPR comes into force and is mandatory. On 1/11/17 the Information Commissioner’s Office (ICO) launched a free advice line – telephone no 0303 123 1113 and select option 4.
Tax-free childcare scheme delayed
The scheme offers 30 hours free childcare a week and a tax-free childcare option. The full roll out has been delayed to March 18 due to IT problems with HMRC’s online registration system.
Parents can apply online at www.childcarechoices.gov.uk
Scotland introduces two new tax bands
The old basic rate band has been split into starter, basic and intermediate tax bands
- Starter – 19% (previously 20%) on earnings between £11,850 and £13,850
- Basic – 20% on earnings between £13,850 and £24,000
- Intermediate – 21% (previously 20%) on earnings between £24,000 and £44,273
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