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Employment allowance and care-workers

People who employ care-workers in their own homes can claim the employment allowance for 2015/16 which is worth up to £2,000 to set against the employer’s national insurance contributions (NIC). The allowance wasn’t available for such employers in 2014/15 due to the general block on using it against class 1 NIC due on the pay of domestic workers, but the law changed in April 2015.

Your parents may also qualify for state support such as the Attendance Allowance and Disability Living Allowance which are not taxable. If your mother is aged under 65 she may qualify for Personal Independent Payment (PIP) contact now for more info

Staff Clothes

If your clients provide clothes for their staff to wear at work they need to be aware of the tax and VAT implications which may vary according to the items provided.

Where the items provided constitute a uniform or protective clothing which is needed to perform the job, the cost is tax deductible for the business and the VAT can be reclaimed. There is no taxable benefit in kind for the employee.
If the clothes are not considered to be a “uniform” and can’t qualify as protective clothing, the tax treatment depends on whether the employees are permitted to keep the items.

Where ownership of the items effectively passes to the employee you should generally treat the provision of the clothes as a sale at cost price, in which case you must account for VAT as if the clothing items had been sold at the cost to you. This can apply when sales staff in a clothing store are given clothes to wear from the store’s range, and are not required to return those clothes if they leave the company’s employment. The value of the clothes provided may also be a taxable benefit for the employee, which needs to be accounted for either on the annual form P11D or as part of a payroll settlement agreement (PSA).

Where the value of the items provided to any one employee is less than £50 in the tax year, the provision can be treated as a business gift by the employer. In this case the employer does not treat the value of the clothes as a sale. The taxman may also agree that the value of the clothes is a trivial benefit which is not taxable on the employee. However, it is best to establish this position with the tax office in advance.

A change to holiday pay

Following an important case at the Employment Appeal Tribunal, the rules that govern the amount of holiday pay that is due to an employee have changed.Under EU Law, workers are entitled to four weeks holiday pay a year but there are no details on how it should be calculated. Up until now, the UK Government has interpreted the EU Working Time Directive as saying that holiday pay should be at an employee’s basic rate of pay, which means any additional payments for regular overtime aren’t included.

As a result, most employers have not included regular overtime in their calculation of holiday pay. Basic pay is taken to be that which is identified in a contract of employment, or in the absence of such a written contract, a period of 38 hours work (there are precedents from three UK employment tribunal cases -Tarmac, Bamsey and Lotus – where the employees’ contracts stipulated that “normal working hours shall be taken to be 38 hours per week).

Historically, for example, if a weekly paid worker was paid for 38 hours at £9.50 per hour then, regardless of any overtime, bonuses or commission earned, the amount of holiday pay would be calculated at 38 x £9.50 = £361.00

However, the Tribunal [2014] UKEAT 0047_13_0411 has made a ruling on three separate cases: Bear Scotland (a road maintenance company) v Fulton, Amec (an engineering firm) v Law, and Hertel (an industrial services group) v Wood. The employees in all three cases originally won their claims for a higher calculation of holiday pay and the tribunal has now rejected appeals from the companies. The Tribunal also ruled that workers can make backdated claims, but only for a limited period.

In coming to a decision, the Tribunal referred back to a number of cases testing Article 7 of the Working Time Directive (2003/88) that made their way to the Court of Justice of the European Union (CJEU). However, a final decision on these matters could be a number of years away if the ruling is referred to the Court of Appeal.

Under the ruling, businesses will have to calculate the amount of holiday pay that is due, not just on the basic wage or salary as outlined above, but on total earnings averaged over a particular period of time. However, having made the decision, the Tribunal did not give any directions on how holiday entitlements relating to periods of overtime were to be calculated or administered through payroll and HR systems.

According to the government one-sixth of the 30.8m people in work, around five million workers, get paid overtime and they have said they would be setting up a task force to look into the impact of the ruling. Further information will be issued as it becomes available.

Non-resident Capital Gains Tax

If your involved with sales of UK residential property where the buyer or seller is tax-resident outside of the UK, you need to be aware of a new tax that came into effect on 6 April 2015: non-resident CGT (NR CGT).

The NR CGT charge is applied at different rates according to whether the seller is a non-resident closely-held company, fund, individual, personal representative or trustee. It applies to gains made in the period from 6 April 2015 to the disposal date of the property, so a small amount of tax likely to be payable on property sales made in 2015/16.

However, when such a sale is made a NR CGT return must be submitted to HMRC within 30 days of the conveyance of the property, and this must be done online. The return must be made whether there is any NR CGT to pay or not, where there is a loss on the disposal, and even where the taxpayer is due to report the disposal on their own personal or corporate self-assessment tax return.

Where the vendor is not registered for UK income tax, corporation tax or the annual tax on enveloped dwellings (ATED), the NRCGT charge must be paid within 30 days of the conveyance date. This payment can only be made once the NRCGT return has been submitted and HMRC have replied with a reference number to use when making the payment. There are penalties for failing to file the NR CGT return on time, and failing to pay the tax on time.

If the taxpayer is registered for UK tax they can opt to pay the NRCGT due at the same time as the tax due for their normal personal or corporate tax.

Conveyancing solicitors need to be aware of the very tight tax reporting and payment deadlines. Property developers need to warn non-resident customers that they will be liable to tax on any gain made when they sell the residential property and that gain includes any discount in the price achieved by buying “off-plan”.

Xero hits top of the forbes list

For the second year running , Forbes have ranked Xero number 1 as the most innovative growth company , well done Xero xero-logo-hires-RGB1

Bookkeepers Network

Cloud Bookkeeper is a member of the Bookkeepers Network which is one of the UKs number 1 portals for reputable bookkeepers. Screen Shot 2015-05-18 at 21.57.31

National Minimum Wages and Birthdays

Do you know when your younger workers will reach their key birthdays: 18 and 21? It is essential to know exactly when these dates fall, as reaching such a milestone will change the level of national minimum wage (NMW) which must be paid to that worker. The current and proposed NMW hourly rates are:

Age or status of employee: From 1 October 2014 From 1 October 2015
21 and over £6.50 £6.70
18 to 20 £5.13 £5.30
Under age 18 £3.79 £3.87
Apprentices under 19 or in 1st year £2.73 £3.30

An employee’s pay must be increased from the beginning of the pay period that starts on or after the date the NMW rate changes, either because all the NMW rates have changed (on 1 October each year), or because the employee has moved into a different rate band due to their age or status (apprentice). A pay period is the normal period for which the employee is paid – be that weekly or monthly.

Failure to pay the NMW is a criminal offence, as is falsifying payment records regarding the NMW. The maximum financial penalty for NMW underpayments is £20,000 per employer, but will soon change to £20,000 per employee. If HMRC find out that your business has not paid the right amount of NMW, it will be publically named, even if the amounts underpaid are very small for each worker.

You need to keep a close eye on when employees turn 21 for NIC purposes. From 6 April 2015 the wages of up to £815 per week paid to workers aged under 21 attract a zero rate of employers’ class 1 NIC. Once the employee reaches 21 the normal NIC rates apply.

Xero @ Accountex 2015

Xero is now one of the leading names in accounting software and they had one of the largest stands at this years Accountex exhibition. Xero Accountex 2015

Sage @ Accountex 2015



Sage take to the major stage once again this year to showcase new cloud software at Accountex in the Excell london. I was welcomed and invited into there VIP area and given a demo into there new Cloud control panel which inter grates more of your day to day office overview into one program. features included email, twitter feed, support and more.

Eight tax and benefit changes coming

he 2015/16 tax year begins on 6th April and that means a raft of changes to both taxes and benefits.

Here’s a round-up of the major changes that will affect our finances.


Income tax

The tax-free personal allowance will increase from £10,000 to £10,600. This will also be the first year people born between 6th April 1938 and 5th April 1948 will have the same allowance as working age people, as their allowance has only risen by £100.

The higher rate (40%) tax threshold is increasing to £42,385.

And the starting rate of income tax on savings will be cut from 10% to 0% on savings income of up to £5,000.

The new couple’s allowance means people who are married or in a civil partnership can transfer up to £1,060 of their tax-free allowance to their partner, but only if both partners don’t pay more than the basic rate of income tax.

And the married couple’s allowance, which is only available if one partner was born before 6th April 1935, is increased to a maximum of £8,355 and a minimum of £3,220.


National Insurance

The Class 2 rate of contributions is increasing from £2.75 a week to £2.80. The Class 3 rate is increasing from £13.90 a week to £14.10.


Tax Credits and Child Benefit

Elements of the Working Tax Credit are increasing, but only by small amounts, in line with Government policy.

Element Annual amount (14/15) Annual amount (15/16)
Basic element £1,940 £1,960
Couple and lone parent element £1,990 £2,010
30 hour element £800 £810
Disabled worker element £2,935 £2,970
Severe disability element £1,255 £1,275

Meanwhile, the childcare element is frozen at £175 per week for one child and £300 per week for two or more children.

In terms of Child Tax Credits, the family element is frozen at £545 a year.

But there are small changes to other elements.

Element Annual amount (14/15) Annual amount (15/16)
Child element £2,750 £2,780
Disabled child element £3,100 £3,140
Severely disabled child element £1,255 £1,275

Child Benefit is increasing by just 20p a week to £20.70 for the first child and by 15p a week to £13.70 for second and subsequent children. Meanwhile, guardian’s allowance is increasing by 20p a week to £16.55.


ISA allowances

The tax-free annual ISA allowance will increase from £15,000 to £15,240. In addition, the Junior ISA annual allowance is increasing from £4,000 to £4,080.

The Child Trust Fund allowance is also increasing to £4,080, although you will be able to switch Child Trust Funds into Junior ISAs from 6th April.


State Pension

The Basic State Pension is increasing by 2.5%, or £2.85 a week, to a maximum of £115.95 a week. The maximum amount pensioners on low incomes can receive with the addition of the standard minimum guarantee of Pension Credit is £151.20 for a single couple or £230.85 for a couple.


Tax on pension lump sums

If you decided to withdraw your pension in one go under new pension freedoms coming into force, from 6th April it will be taxed at your marginal rate of Income Tax (eg 20%, 40% or 45%) rather than at 55% as was the case before.


Tax on inherited pensions

Tax on inherited pensions is being scrapped if the pension holder dies before they reach 75.


Maternity and paternity pay

The statutory rate of maternity and paternity pay is increasing from £138.18 to £139.58 a week.