Monthly Archives: December 2012

Tax Planning pre April 2013

Following the Chancellor’s Autumn Statement some careful tax planning may be useful to help you optimise your tax position.

Personal Tax

Personal Allowance

For those aged under 65 the personal allowance will be  increased from £8,105 to £9,440 from April 2013. This increase in the personal allowance is  greater than expected and is part of the plan of the  Coalition Government to ultimately raise the allowance to £10,000.

The reduction in the personal allowance for those with  ‘adjusted net income’ over £100,000 will continue. The reduction is £1 for  every £2 of income above £100,000.  So, for next tax year the allowance will cease when  net adjusted income exceeds £118,880.

Talk to us about:   Planning before 6 April 2013 where  adjusted net income is expected to exceed £100,000. Broadly speaking, adjusted net  income is taxable income from all sources reduced by specific reliefs such as gift  aid donations and pension contributions. We can advise whether these adjustments could be made to protect some or all of your personal allowance.  Alternatively, if you have your own company, we can help you consider the timing of dividend receipts from the company.

Tax band and rates 2013/14

The basic rate of tax is currently 20%. The band of income  taxable at this rate is being reduced from £34,370 to £32,010 from 6 april 2013 so that the  threshold at which the 40% band applies will fall from £42,475 to £41,450.

The 50% band currently applies where taxable income exceeds  £150,000 but the rate will fall to 45% next tax year.

Dividend income is taxed at 10% where it falls within the  basic rate band and 32.5% where liable at the higher rate of tax. Where income  exceeds £150,000, dividends are taxed at 42.5% this year and 37.5% from next year.

Talk to us about:   Planning before 6 April 2013 where income is expected to exceed £150,000. We can help with decisions such as deferring income until next tax year or considering the use of specific reliefs such as gift aid donations and pension contributions.

A full summary of the Chancellor’s Autumn Statement is available by following this link.

It has been announced that the date of the next Budget will be Wednesday 20th March 2013.

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REAL TIME INFORMATION – are you ready?

As you will probably be aware April 2013 brings an important change to the way in which PAYE is reported to HMRC.  The introduction of Real Time Information (RTI) means that rather than just sending your PAYE information to HMRC after the end of the tax year, you will be required to send an online report every time you make a payment to your employees. 

What are the challenges for me as an employer? 

  • If you are not already registered for PAYE online you will need to do so.
  • If you currently use commercial payroll software you will need to check that it will be RTI compliant, upgrading your software if necessary.
  • If you currently use HMRC’s free Basic PAYE Tools software be aware that when RTI comes in it will only be suitable for employers who have fewer than nine employees during a tax year.  If you are likely to exceed this number you will need to either invest in commercial software or employ the services of a payroll provider.
  • Prior to April 2013 you will need to ensure that your payroll data meets the quality required under RTI, checking that employee details such as date of birth, gender, address and National Insurance number are correct and entered in full.  You will also be required to include new information, such as the number of hours your employees work.
  • It will become compulsory to complete employee information and report payments for temporary / casual workers and employees paid below the National Insurance Lower Earning Limit (LEL).
  • You will need to review certain payroll procedures such as the way starters and leavers are processed.
  • From 2014 it is expected that HMRC will introduce penalties for late and or inaccurate RTI returns and for late payment of PAYE/National Insurance.

 How can Grant and Co help? 

We are able to offer a complete, outsourced payroll solution provided by the experienced staff in our dedicated Payroll Department.  We already look after the payroll function for over 100 clients and having successfully joined HMRC’s voluntary pilot scheme we are ahead of the game when it comes to RTI.  Alternatively, we can provide RTI advice and / or training.

If you would be interested in a cost effective, proven and reliable solution to the challenges of Real Time Information then talk to us about how we can tailor our payroll service to your specific business needs.  Contact Sara or Tamsin on 01242 223160, or payroll@grantandco.co.uk for more information and a no obligation quote.

Link

December 2012 Tax Newsletter

December 2012 Tax Newsletter

Seed Investment Enterprise Scheme (SEIS) developments, Child Benefit changes, the relaunch of Business Records Checks (BRC) and whistle blowing are all topics covered in this month’s edition of our Tax Newsletter.

If you would like further information or advice on any of the above topics, then do please get in touch.