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Posted on 24 March, 2015 at 0:15 Comments comments (4)

Basic Personal Allowance and Transferable Allowance for 2015/16


The personal allowance for those born after 5 April 1938 will be £10,600 for 2015/16. As a corollary, the transferable allowance for married couples and civil partners (10% of the personal allowance) will be £1,060. The higher rate threshold (i.e. the aggregate of the personal allowance and the basic rate limit) will be £42,385.

Abolition of the £8,500 Threshold for Benefits in Kind


The £8,500 earnings threshold that determines whether employees pay income tax on all of their benefits in kind and expenses, and whether employers pay Class 1A National Insurance contributions (NICs), is to be abolished for 2016/17 onwards.


Currently, an employee in so-called lower-paid employment (i.e. whose earnings for the tax year are less than £8,500) pays tax only on certain employee benefits, e.g. living accommodation, vouchers and credit-tokens. The abolition of the threshold will mean all employees will be taxed on their benefits and expenses in the same way. The employer’s NICs treatment will follow the income tax treatment.


New exemptions will be introduced to cover benefits for ministers of religion earning less than £8,500 and for employees who are carers; the latter will cover board and lodging on a reasonable scale that is provided in the home of the person being cared for.

Van Benefit Charge for Zero Emission Vans


The van benefit charge for zero emission vans will increase from £nil, beginning in 2015/16. The van benefit charge for such vans will be 20% of the van benefit charge for vans which emit CO2 in 2015/16, 40% in 2016/17, 60% in 2017/18, 80% in 2018/19 and 90% in 2019/20. From 2020/21, the van benefit charge for zero emission vans will be the same as the van benefit charge for vans which emit CO2.

Company Car Tax Rates and Bands for 2017/18 and 2018/19

NICs for the Self-Employed


Class 2 contributions will be abolished in the next Parliament. Class 4 contributions will be reformed to introduce a new contributory benefit test. The Government intends to consult on the proposals later in 2015.

Bank Levy Rate Increase


Legislation in Finance Bill 2015 will increase the rate of the bank levy to 0.21% from 1 April 2015. A proportionate increase to 0.105% will be made to the half rate from the same date.

Personal Savings Allowance


It is proposed that a new Personal Savings Allowance be introduced from 6 April 2016. For a basic rate taxpayer, this will exempt from income tax the first £1,000 of savings income, such as bank and building society interest. For a higher rate taxpayer, only the first £500 will be exempted. The Personal Savings Allowance will not be available to additional rate taxpayers. At the same time, the deduction of basic rate tax at source from interest paid by banks and building societies will be abolished for all savers.


Individual Savings Accounts (ISAs)


It is announced that regulations will be introduced in Autumn 2015 to enable a cash ISA investor to withdraw money from his ISA and pay it back in again during the same tax year without the second transaction counting towards his ISA subscription limit for that year. Regulations will also be introduced to extend the list of qualifying investments for ISAs and Child Trust Funds.

Reduction in Lifetime Allowance - Pension


It is intended to introduce legislation in the next Parliament to reduce the pension lifetime allowance from 6 April 2016 from £1.25m to £1m, accompanied by fixed and individual protection arrangements. From 2018 the allowance will rise in line with the consumer prices index.

VAT Registration Thresholds


With effect from 1 April 2015, the VAT registration threshold will be increased from £81,000 to £82,000. The deregistration threshold will be increased from £79,000 to £80,000. The registration and deregistration thresholds for acquisitions from other EU member states will be increased from £81,000 to £82,000.







Payroll - RTI

Posted on 16 May, 2014 at 11:20 Comments comments (1)

Preparing to operate PAYE in real time

From 6 April 2013 employers started reporting PAYE information to HM Revenue & Customs (HMRC) in real time. You may see this referred to as Real Time Information - or RTI.

This means that employers (or their accountant, bookkeeper or payroll bureau) have to:

• send details to HMRC every time they pay an employee, at the time they pay them

• use payroll software to send this information electronically as part of their routine payroll process

You need to take several actions to prepare for operating PAYE in real time, which are set out below.

Get/update your software or use a payroll provider

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

• get 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 a payroll provider (such as an accountant or payroll bureau) to do the reporting for you


Check employee data is complete

Before you start reporting PAYE in real time it's important that the data you hold in your payroll records is complete and accurate. You must check and, if necessary, update the data for all your employees or pensioners - certain details are essential such as name, date of birth and National Insurance number, and must be in full and be correct.


Check you are registered for PAYE Online

You are probably already registered for PAYE Online and have a user ID and password for PAYE Online - if so, you can skip this step. But if you're not registered yet, and you're responsible for your own payroll reporting, then you will need to register for PAYE Online because:

• PAYE Online is how you may still send certain forms to HMRC

• if an employee tax code changes, PAYE Online is one of the ways HMRC will tell you

• to send your payroll reports to HMRC, your software will need your PAYE login details


Include new information in your payroll records

When you report your payroll information in real time, you will need to send certain information that you may not already keep on your payroll system. So you'll need to inform your staff and change your processes to collect this new information - although you may not be able to include it in your payroll records until your payroll software is compatible.

Hours worked

Information will be needed about approximately how many hours your employees normally work in a week.

Lower paid, temporary, irregular and casual staff

You'll need to report payments to all staff no matter how much you pay them, even those earning below the Lower Earnings Limit or those paid just once a year. So you'll have to enter details of these employees onto your payroll system. Be sure to get their employment status right.

If appropriate, set the irregular payment pattern indicator so HMRC doesn't assume that they've left your employment just because they haven't worked for a while.

Recording changes to employee working patterns

As well as recording additional information when you first take a new employee on, you may need to make changes to an employee's payroll record in certain circumstances.

For example, if an employee takes unpaid leave you need to set an irregular payment indicator when you make their final payment for that period or HMRC will assume that they've left your employment.

New starters

You won't report new starters to HMRC separately any more. Their information will be automatically sent when you report your payroll information. So you'll need to have processes ready to collect and record the correct personal information from new starters. This information can be gathered and stored however you prefer - letter, email or a form. HMRC has a Starter Checklist you can use but this form, or any other records you keep, must not be sent to HMRC. You must keep your records for the current year and the three previous tax years


You won't report leavers separately any more. You must continue to provide a form P45 to employees who leave - but don't report the P45 part 1 information to HMRC using PAYE Online for employers any more. Instead, set their leaving date on their payroll record so it will be automatically reported next time you send your payroll information.


Be ready to update HMRC with your latest payroll data

When: At or before the time you send your first report to HMRC.

To make your first PAYE real time payroll report successful, the data that HMRC holds on your employees must match your payroll data. When you operate PAYE in real time you'll need to send HMRC information about every employee who's worked for you in the current tax year, even if they've already left your employment. So when you start reporting payroll information in real time you should have new software and procedures in place before you pay anyone - so that all the necessary information is stored in your payroll system ready to be reported.


Reporting your payroll information

You'll need to report your payroll information electronically, on or before any day when you pay someone. This will normally be carried out by your payroll software (or your payroll provider) at the same time that the payments are calculated, or just afterwards.

So you'll have to review the processes throughout your organisation, to check that you'll have the information you need to record and report it, on time - whether weekly or monthly.

It's important that the information you provide on these reports is right - if it's wrong it will cause you and HMRC problems, and your employees might be affected too.