2013 Budget Summary

The Chancellor of the Exchequer, George Osborne, delivered his 2013 budget on 20 March.  There was lots of talk about deficit and debt, growth and GDP, but what I’m sure you want to know is…..how does it affect me?

One of the headline-grabbing announcements was the acceleration of the increase in personal allowance (tax free income allowance we all get) to £10,000 – this was originally planned to come in from April 2015 but it will now come in from April 2014 instead.  The new allowance from next month is £9,440, up from £8,105 in the current year.

April 2014 also sees an introduction of an allowance of £2,000 for all businesses to use against their Employer’s National Insurance liability, which for small business will make a real difference.

The main rate of corporation tax has been falling since 2011 at 1-2% per year and from April 2015 it will be 20% – the same rate that small companies pay.  We are hoping this means that the cumbersome “associated company” rules will therefore be scrapped as we will effectively have a flat rate of tax for companies.

Part of this year’s budget that was announced early was the increase in the Annual Investment Allowance from £25,000 to £250,000 for 2 years from January 2013 – this is the amount businesses can spend on plant & machinery (not cars) each year and get a deduction for the whole cost, in full, against their profit for the year.  BE CAREFUL though if you are planning on investing in significant plant & machinery as the transitional rules are particularly complex!  Please call us (0116 2423400) and we can advise you on the most tax efficient timing for your expenditure.

Our full overview of the budget can be found on our website click here.

Training Walk – Three Peaks Challenge

The Three Peaks 24hr hike starts 29th June and Saturday saw the first training session take place in anticipation of the challenge.  Mike Waterfield arranged a walk which he regularly takes around the Narborough/Littlethorpe area. It’s a circular walk that lasted around 2.5 hours mainly due to the muddy/wet conditions as you can see in the pictures.

Abbie Henshaw one of TorrWaterfield’s semi-senior accountants took part in the walk on Saturday. At 19 Abbie is our youngest member taking part in the challenge, here are some reasons why she decided to take on The Three Peaks.

“I decided to take part in the challenge as I have never taken part in anything like this before.  I have recently joined a gym and have really enjoyed it and when this opportunity arose I decided it was something I wanted to do. I have the least amount of experience with long distance walking but I’m really looking forward to the challenge. I plan to train a lot between now and the challenge. I have been walking with another Torrwaterfield colleague, Rebecca Edwards who is more experienced so she is putting me through my paces and I plan on attending all of the organised training walks.”

The donation page is now all up and running so why not take a look and if you’re feeling generous why not make a donation. Click here to be taken to Bamboozle’s donation page.

This slideshow requires JavaScript.

 

Payroll – Are you RTI ready?

What is RTI?

RTI,or Real Time Information, is a new system that HMRC are introducing to improve the operation of Pay as you Earn (PAYE). This new legislation is being introduced by HMRC from 6 April 2013.

So as this new legislation is fast approaching it’s important to start preparing your business now.

 The employer will need to send details to HMRC every time they pay an employee, on or before the date of payment. When the employee’s PAYE data is submitted each payday, it will be checked against the PAYE data that HMRC holds on that employee.

 Under RTI you will still continue to deduct tax and national insurance as you do today. You will also continue to make the payment of any outstanding PAYE & NIC liability to HMRC by the 19th of the next calendar month (22nd if you pay electronically).

                               

Why are HMRC introducing RTI?

HMRC are introducing this new legislation for a number of reasons:

–       To enable HMRC to have a more efficient response to PAYE errors.

–       To support the introduction of Universal Credits, this will streamline benefits into one payment.

–       To ensure that people receive the benefits they’re entitled to, to reduce fraud.

–       To provide the Department for Work and Pensions with up-to-date information about each claimant’s employment income more efficiently.

Step by step guidance to ensure that you are ready.

Step 1

To be ready to report your payroll information each payday you must do one of the following:

  • Purchase payroll software if you don’t already have any (some packages are free)
  • Update your existing payroll software to a version with this functionality (your provider can advise on this)
  • Use your accountant to do the reporting for you

Here is a list of some of Sage’s prices.

Who for? Which software is suitable for you? Price’s from… £ per month
For businesses with up to 10 employees. Sage instant payroll

£9.17

For businesses with up to 25 employees. Sage 50 payroll

£17.50

For businesses with more than 25 employees. Sage 50 payroll & their very best support package

£50.00

Online payroll for managing up to 15 employees. Sage one payroll

£5.00                     

 

Step 2

Check that you are registered for PAYE online.

 You will most likely already be registered for PAYE online. However if you are not registered yet, and you are responsible for your own payroll reporting, then you will need to register for PAYE Online. This is vital for sending payroll reports to HMRC and being advised of employee tax code changes.

Step 3

Any inaccurate data may lead to an incorrect submission; therefore you should be checking that the following information you hold for your employees is up to date:

–       Name

–       Address

–       Date of birth

–       National Insurance Number

–       Gender.

Please note that every employee will need to go on your payroll including students and casual workers.

 

Penalties for incorrect & late submission for 2013-14

Penalties for late returns

–       There will be no change to the penalties for late filing of returns for the tax year 2013-14. The current penalty regime will continue to apply at the tax year end. There will be no penalties if in-year Full Payment Submissions are submitted late.

Penalties for inaccurate returns

–       Penalties for inaccuracies may apply to in-year returns from the 2013-14 tax year.

Late payment penalties 2013-14

–       For the tax year 2013-14, HMRC will continue to use a risk-based approach to identify employers who are not complying with their payment obligations and who therefore might be liable to late payment penalties. Where employers who are not complying with their obligations are identified, late payment penalties may be charged.

–       HMRC will notify employers who may have defaulted on either a filing or payment obligation as soon as possible to enable them to get back to compliance quickly and avoid any further penalties for future failures.

 

How to deal with corrections?

If you were to make an error on your payroll there is no need to make another submission as HMRC will be made aware of this when you make your next submission. This is done by reviewing the “year to date” figures. However you will need to ensure that any errors are rectified under your own payroll system. 

Thank You,

Lucy Durham 

Lucy Durham April 2012