Newsletter – March 2019
In this month’s news we report on the ongoing Brexit uncertainties and latest HMRC advice. We also consider National Minimum Wage, National Living Wage and pension contribution increases and the latest guidance for employers.
With confirmed income tax bands for Scottish taxpayers, year end planning, a landline scam warning and new advisory fuel rates there are lots of areas to update you on.
- HMRC advice – prepare for no deal
- Start date looming for Making Tax Digital for VAT
- Advisory fuel rates for company cars
- Scottish income tax bands confirmed for 2019/20
- Minimum Wage increases
- Pensions auto enrolment contributions to rise
- Tax efficient investments ahead of the tax year end
- Latest update for employers
- Households with landlines should be vigilant
HMRC advice – prepare for no deal
HMRC is urging business owners to make sure they are ready for a potential no deal Brexit.
Business owners are being urged to prepare now and take steps to ensure their businesses can continue to trade with the EU if the UK leaves the EU without a deal.
- Businesses should register for an Economic Operator and Registration Identification (EORI) number. UK businesses that have only ever traded inside the EU will not have an EORI number. HMRC are advising that in the event of a no deal exit, businesses will be unable to continue trading with the EU without an EORI number. HMRC figures show that only 17% of potentially affected businesses have registered so far.
- Businesses also need to decide how they intend to make the required customs declarations. HMRC advise that most businesses with customs obligations choose to use a customs agent to do this for them.
- Businesses that import goods into the UK from the EU using roll on, roll off locations, may also wish to register for new Transitional Simplified Procedures (TSP). HMRC advise that ‘TSP will allow businesses to import without having to make a full customs declaration at the border, and postpone paying any import duties. For imports using other locations, and for exports, standard customs declarations will apply.’
Financial Secretary to the Treasury Mel Stride MP said:
‘We want businesses to be able to continue trading with minimal disruption in any scenario but we also know that people tend to leave things until the last minute and we would urge against that.’
Contact us for help in this area.
Source: HMRC news
Start date looming for Making Tax Digital for VAT
The Financial Secretary to the Treasury, Mel Stride, has made a statement to the House of Commons setting out HMRC’s progress on delivery of Making Tax Digital (MTD). He confirmed there would be no further delays in implementation.
For most businesses, compliance with the regulations is mandated for VAT return periods beginning on or after 1 April 2019. However, MTD for VAT for some ‘more complex’ businesses has been deferred until 1 October 2019. This deferral applies to trusts; not for profit organisations not set up as companies; VAT divisions; VAT groups; public sector entities such as government departments and NHS Trusts, which have to provide additional information on their VAT return; local authorities; public corporations; traders based overseas; those required to make payments on account; annual accounting scheme users.
Contact us for help and advice on MTD for VAT.
Source: Hansard debate MTD
Advisory fuel rates for company cars
New company car advisory fuel rates have been published which take effect from 1 March 2019. The guidance states: ‘You can use the previous rates for up to one month from the date the new rates apply’. The rates only apply to employees using a company car.
The advisory fuel rates for journeys undertaken on or after 1 March 2019 are:
|1400cc or less||11p|
|1401cc – 2000cc||14p|
|1400cc or less||7p|
|1401cc – 2000cc||8p|
|1600cc or less||10p|
|1601cc – 2000cc||11p|
HMRC guidance states that the rates only apply when you either:
- reimburse employees for business travel in their company cars or
- require employees to repay the cost of fuel used for private travel.
You must not use these rates in any other circumstances.
If you would like to discuss your car policy, please contact us.
Source: GOV.UK AFR
Scottish income tax bands confirmed for 2019/20
The Scottish Parliament has confirmed the income tax bands that will apply to Scottish taxpayers for 2019/20. The bands confirm the announcement made in the Draft Scottish Budget last December.
The 2019/20 income tax rates and bands for Scottish taxpayers on income (other than savings and dividend income) are as follows:
|Scottish Bands £||Band name||Scottish Rate|
|0 – 2,049||Starter||19%|
|2,050 – 12,444||Basic||20%|
|12,445 – 30,930||Intermediate||21%|
|30,931 – 150,000||Higher||41%|
Scottish taxpayers are entitled to the same personal allowance as individuals in the rest of the UK which for 2019/20 is £12,500. The allowance is reduced by £1 for every £2 of adjusted net income in excess of £100,000.
The UK higher rate tax point for 2019/20 is set at £37,500 and the tax rates for non-savings and non-dividend income are 20%, 40% and 45% respectively. The additional rate of 45% is payable on income over £150,000.
Source: GOV.SCOT income tax
Minimum Wage increases
The National Minimum Wage (NMW) and National Living Wage (NLW) are the legal minimum wage rates that must be paid to employees. Employers are liable to be penalised for not complying with the NMW and NLW rules.
There are different levels of NMW and NLW, depending on age and whether the employee is an apprentice. The rates are due to increase from 1 April 2019 as shown in the following table:
|Rate from 1 April 2018||Rate from 1 April 2019|
|NLW for workers aged 25 and over||£7.83||£8.21|
|NMW main rate for workers aged 21-24||£7.38||£7.70|
|NMW 18-20 rate||£5.90||£6.15|
|NMW 16-17 rate for workers above school leaving age but under 18||£4.20||£4.35|
|NMW apprentice rate *||£3.70||£3.90|
*for apprentices under 19 or 19 or over and in the first year of their apprenticeship
There are no exemptions from paying the NMW on the grounds of the size of the business.
If you would like help with payroll matters please get in touch.
Source: GOV.UK NMW
Pensions auto enrolment contributions to rise
Minimum pension contributions are set to increase from 6 April 2019:
|Duration||Employer minimum||Total minimum contribution|
|6 April 2019 onwards||3%||8%|
The Pensions Regulator has produced guidance for employers on dealing with the increase including a letter template to advise employees of the change.
Source: TPR increases
Tax efficient investments ahead of the tax year end
With the end of the tax year looming there is still time to save tax for 2018/19.
- Make full use of your ISA allowance – ISAs can offer a useful tax free way to save, whether this is for your children’s future, a first home or another purpose. Individuals may invest up to a limit of £20,000 for the 2018/19 tax year. Savers have until 5 April 2019 to make their 2018/19 ISA investment.
- Pensions provide significant planning opportunities. The annual allowance (AA) which is the maximum you can contribute to a pension and still get tax relief, is generally £40,000. Exceeding this can result in an AA clawback charge. However, in many circumstances you may have unused AA from the three previous tax years which can be used in 2018/19, providing the means of making a significant contribution without incurring a charge. Please contact us for advice specific to your circumstances.
These are only a couple of options that you may wish to consider as part of your tax planning strategy. Contact us for more information.
Latest update for employers
HMRC has issued Employer Bulletin (February 2019) which includes a number of interesting articles on:
- End of year reporting
- Reporting expenses and benefits
- Student Loan notices and a new type of Student Loan repayment that employers will need to be able to process via payroll (Post Graduate Loans)
- Updates to the Starter checklist – used for new employees
- Reporting the Disguised Remuneration Loan Charge
- Updates to P9 Notices of Coding
- Payrolling benefits in kind
- Scottish Income Tax and
- the Welsh Rate of Income Tax and new codes for Welsh taxpayers.
For help and advice with payroll matters please contact us.
Source: Employer Bulletin
Households with landlines should be vigilant
Over recent years HMRC has increasingly cracked down on email and SMS phishing, and a number of criminals are turning to cold-calling publicly available phone numbers to steal money from taxpayers. These calls are often made to landline numbers. According to Ofcom, nearly 26 million homes have a landline, many of which could be at risk from scams, especially if they are not ex-directory.
Fraudsters often target the elderly and vulnerable using HMRC name as it is well known and adds credibility to a call. HMRC received more than 60,000 reports of phone scams in the six months up to January 2019 (an increase of 360% when compared with the previous six months).
Financial Secretary to the Treasury, Mel Stride MP, said:
‘We have taken major steps to crack down on text and email phishing scams leaving fraudsters no choice but to try and con taxpayers over the phone.’
‘If you receive a suspicious call to your landline from someone purporting to be from HMRC which threatens legal action, to put you in jail, or payment using vouchers: hang up and report it to HMRC who can work to take them off the network.’
Head of Action Fraud, Pauline Smith, said:
‘Fraudsters will call your landline claiming to be from reputable organisations such as HMRC. Contact like this is designed to convince you to hand over valuable personal details or your money.’
‘Don’t assume anyone who calls you is who they say they are. If a person calls and asks you to make a payment, log in to an online account or offers you a deal, be cautious and seek advice.’
‘The tax authority will only ever call you asking for payment on a debt that you are already aware of, either having received a letter about it, or after you’ve told us you owe some tax, for example through a Self Assessment return.’
During the last 12 months, HMRC has worked with the phone networks and Ofcom to close nearly 450 lines being used by fraudsters.