Newsletter - October 2018


In this month’s news we report that the government has announced the UK Budget date and that Class 2 National Insurance Contributions will no longer be scrapped. The government has also published lots of guidance on a ‘no deal Brexit’. With information on deliberate tax defaulters and the latest minimum wage statistics, there is lots to update you on.

  • UK Budget date announced: Monday 29 October
  • Self-employed Class 2 National Insurance will not be scrapped
  • ‘No deal’ Brexit guidance and small business survey
  • Deadline for ‘paper’ self assessment tax returns
  • HMRC has published an updated list of deliberate tax defaulters
  • Genuine HMRC contact and recognising phishing emails and texts
  • HMRC identify record £15.6 million minimum wage underpayments

UK Budget date announced: Monday 29 October

The Chancellor of the Exchequer, Philip Hammond, has announced that the Budget will take place on Monday 29 October.

Breaking with the tradition of a Wednesday in November, perhaps in a bid to avoid the ongoing Brexit negotiations, the government is expected to set out its plans ‘to build a stronger, more prosperous economy, building on the recent Spring Statement and last year’s Budget’.

The government announcements are expected to include updates on draft legislation and consultations, and proposed tax rates and reliefs.

Source: https://www.gov.uk/government/news/autumn-budget-2018-date-confirmed

Self-employed Class 2 National Insurance will not be scrapped

The government has decided not to proceed with plans to abolish Class 2 National Insurance Contributions (NICs) from April 2019.

Class 2 NICs are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year. The government had planned to scrap the Class 2 contribution and had been investigating ways in which self-employed individuals with low profits, could maintain their State Pension entitlement if this inexpensive contribution had been abolished.

In a written statement to MPs, Robert Jenrick, Exchequer Secretary to the Treasury, stated that:

‘This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue and further options for addressing any unintended consequences.’

‘A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.’

Source: https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Lords/2018-09-06/HLWS915/

‘No deal’ Brexit guidance and small business survey

Following the issue of some ‘no deal’ Brexit technical notices, in August, the government has issued further notices with the aim of helping both businesses and individuals to prepare in the event of a UK-EU agreement not being realised.

The second and third batches of notices cover topics such as passports, driving licences together with data protection and mobile phone roaming charges amongst other topics. The full list and access to the collection of technical notices can be viewed by visiting the link at the end of this article. The government has confirmed they plan to issue further technical notices.

Although reaching a deal remains the ‘overriding priority’ unless a Withdrawal Agreement is ratified by the UK and European Parliaments, the possibility of the UK leaving the EU without a deal on 29 March 2019 remains.

Meanwhile, a survey by the Federation of Small Businesses (FSB) has revealed that:

  • Only 14% of small businesses have started planning for a no deal Brexit.
  • A further 41% believe that a no deal Brexit will have an impact on their business but have not yet started planning for the possibility.
  • 10% believe that a no deal Brexit will have a positive impact on their ability to do business whilst 48% believe that a no deal Brexit will have a negative effect on their ability to do business. This figure rises sharply to 66% for those small firms that trade with the EU and to 61% for those that employ a staff member from the EU.

FSB National Chairman, Mike Cherry, said:

‘Looking at this research it is obvious that our small firms are not prepared or ready for a chaotic no deal Brexit and the impact that it will have on their businesses. If you sell your products to the EU, buy goods from the EU or if your business relies on staff from the EU, you now see this outcome as a clear and present threat to your business.’

We will keep you informed of developments.

Source: https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal and https://www.fsb.org.uk/media-centre/press-releases/small-businesses-entirely-unprepared-for-chaotic-no-deal-brexit

Deadline for ‘paper’ self assessment tax returns

For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2017/18 return is 31 October 2018. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.

If you would like any help with the completion of your return, please do get in touch.

Source: https://www.gov.uk/self-assessment-tax-returns/deadlines

HMRC has published an updated list of deliberate tax defaulters

HMRC has published an updated list of deliberate tax defaulters. The list includes details of taxpayers who have incurred a penalty because they have either:

  • deliberately provided one or more inaccurate documents to HMRC
  • deliberately failed to comply with an HMRC obligation
  • committed a VAT or excise wrongdoing.

HMRC’s criteria for publishing this information also states that ‘These deliberate acts have resulted in HMRC establishing an additional amount of tax of more than £25,000. HMRC only publish the details where the taxpayer has not made a full and immediate disclosure when HMRC started to investigate or prior to any investigation.’

Source: https://www.gov.uk/government/publications/publishing-details-of-deliberate-tax-defaulters-pddd/current-list-of-deliberate-tax-defaulters

Genuine HMRC contact and recognising phishing emails and texts

HMRC has updated their guidance on how to recognise when contact from HMRC is genuine and how to recognise phishing or bogus emails and text messages.

Source: https://www.gov.uk/government/publications/genuine-hmrc-contact-and-recognising-phishing-emails

HMRC identify record £15.6 million minimum wage underpayments

HMRC has announced that they achieved record enforcement results this year, identifying £15.6million of minimum wage underpayments.

The number of workers identified as underpaid was double that in 2016/17 and the highest number since the National Minimum Wage came into force.

The figures reveal:

  • a record £15.6 million of underpayment identified for more than 200,000 workers
  • employers fined £14 million for not meeting legal obligations
  • more than 600 employers named in 2017/18 as part of ‘naming’ rounds.

Business Minister Kelly Tolhurst, said:

‘We are dedicated to stopping underpayment of the minimum wage. Employers must recognise their responsibilities and pay their workers the money they are entitled to.’

‘The UK’s lowest paid workers have had the fastest wage growth in 20 years thanks to the National Living Wage and today’s figures serve as a reminder to all employers to check they are getting their workers’ pay right.’

HMRC has prioritised the social care, retail, commercial warehousing and gig economy sectors for enforcement of the minimum wage. This is alongside employment agencies, apprentices and migrant workers. These are the sectors where HMRC believes non-compliance with National Minimum Wage is more widespread.

For advice on payroll please contact us.

Source: https://www.gov.uk/government/news/record-156-million-underpayment-identified-for-workers-on-the-minimum-wage and https://www.gov.uk/government/news/17m-back-pay-identified-for-a-record-16000-workers-as-260-employers-are-named-and-shamed-for-underpaying-minimum-wage-rates

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