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As an employer you may have received an RTI penalty warning letter accusing you of not submitting all of the RTI returns required for 2013/14. However, that letter may be incorrect.

HMRC has admitted that its computer has churned out inappropriate penalty warning letters to employers who have submitted employer payment summaries (EPS) during 2013/14. If you have submitted all the required RTI returns for the tax year you can ignore the warning letter, as a penalty will not be charged.

This “cry wolf” by HMRC sets a dangerous precedent, as you may be inclined to ignore further RTI penalty warning letters that could be issued later this year.

From October 2014 new penalties come into effect where the monthly full payment submission (FPS) is submitted late, or an EPS is not submitted where a FPS is not required as no payments are made. If or when those new penalties arrive you will be able to appeal against the penalty online. Note this online appeal system is not up and running yet.

From October 2014 the FPS will contain a new box that allows you to tell HMRC why the FPS is apparently late, perhaps because you are taking advantage of the concession for payrolls with nine or fewer employees.

The EPS will also be changed in October so it will relate to a particular tax month. This will avoid the need to file the EPS in the window of 20th of the current month to 19th of the following month to ensure it is applied by HMRC to the appropriate tax month.

Do you sell digital services such as: music or software downloads, e-books or online videos? If so, do you know where your customers are, and whether they are businesses or individuals?

From 1st January 2015, when you sell digital services across international borders you will have to collect information about your customers to determine if they are businesses or not, and where they are based. Where your international sale is to a non-business customer, from 2015 you will have to charge that customer VAT of the country where he or she is located (if that’s in the EU). You will also have to register for VAT in your customer’s country. This is because the VAT threshold for traders selling into other EU countries is zero.

Many music and software creators are suspicious of the large online stores such as iTunes, and want to sell their tunes or games directly to their customers. If you sell through a large online store, that store sorts out the VAT so you don’t have to worry about it. However, if you sell your digital product directly to non-business customers who are located in other EU countries from 1st January 2015, you must deal with the VAT consequences.

The easiest way to do this will be through the HMRC website under a system called VAT-MOSS. This system goes live from October 2014, and it will allow you to account for VAT in all the EU countries you sell services to.

However, in order to use VAT-MOSS you must first be registered for VAT in the UK. If you are not already VAT registered, perhaps because your turnover does not exceed the UK VAT threshold of £81,000, you need to pick one of these options:

1. register for VAT in the UK;
2. stop selling digital services to non-business customers outside the UK; or
3. sell only through online stores or other businesses.

Companies House has announced it will make all of its digital data available free of charge. This will make the UK the first country to establish a truly open register of business information.

As a director and shareholder of your own company you can decide how much salary to pay yourself each month in order to use your tax-free personal allowance in the most tax efficient way. Any further funds you need can be extracted as a dividend if the company is making a profit.

If you are a director of your company and you don’t have a contract that sets out terms of employment with the company, you don’t have to pay yourself the national minimum wage. So how much should you pay yourself?

For 2014/15 if you were born after 5 April 1948 you have a tax free personal allowance of £833 per month (£10,000 per year). You could take a salary at that level and pay no income tax, assuming you have no other taxable benefits from the company such as a car.

However, you will pay national insurance (NICs) on that salary as the NICs threshold is only £663 per month. From a gross salary of £833 the company must deduct NI of £20.40 and set-aside employer’s NI of £23.46 on top. The company will have an employment allowance of £2,000 for the year to set against its employer’s NI due on all its employees, so it won’t have to pay over employer’s NI until that £2000 is used up.

If you take a salary of just above the NI lower earnings threshold of £481 per month, you will get an NI credit towards your state pension, but you don’t pay any tax or NI. However, at that annual salary level (£5,772) you will be “wasting” £4,228 of your tax free personal allowance, unless you have other income to cover it.

You  can calculate their business-related motoring costs by either:
a) Take the proportion of business miles to total mileage driven in their vehicle in the year and apply that proportion to their total motoring costs for the year; or
b) Use the fixed expense of 45p per business mile for the first 10,000 miles driven in the year and 25p per mile for additional business miles in the year.

If your client uses method a) they can also claim capital allowances on the cost of your vehicle, restricted for the private use of that vehicle. However, if they use method b) they can’t claim capital allowances for their vehicle but they can claim the interest amount of any finance lease used to purchase the vehicle.

In the tax year beginning April 6th 2014.  HMRC are giving UK employers a help.  This is in the form of an Employers NI.  In that tax year the first £2000 of Employers NI will be waived.

For those of you that use Sturgess and Co for payroll this will be automatically calculated and reflected in the quarterly P30.

Do bear in mind that employees NI is not waived, so before you get carried away and put a higher amount through PAYE!

However you should be paying employees the minumum wage which equates roughly to £13,500 a year.  On this example a saving of £765.12 Employers NI will be made each employee.  Total tax and NI due £1363.28 per employee if standard tax code.

please refer to:

https://www.gov.uk/employment-allowance

There are a number of capital allowance claims firms targeting businesses which have recently bought or sold commercial property. These ‘experts’ suggest the business needs to pay for a special survey to claim all the capital allowances they are entitled to, and this must be done quickly in order to claim all the allowances due.

In most cases a special survey is not needed. However, it is true that for commercial building sales made since 1 April 2012 the vendor and purchaser must take formal steps (usually an election) to agree the value of fixtures included in that building. This value must be agreed within two years of the transfer of ownership. If agreement cannot be reached the two parties can go to the tax tribunal where the judge will make a decision.

The agreed value for fixtures is brought into the capital allowance pool as the disposal value for the vendor and is added to the capital allowance pool for the purchaser.

There is another change on its way for transfers of commercial buildings from April 2014. The value of fixtures and fittings must be claimed as part of a capital allowances pool by the vendor in an accounting period prior to the sale of the building. If the vendor does not make this claim, the purchaser is barred from claiming any capital allowances for the fixtures it acquires.

Plans are underway to allow bank customers to pay cheques into their account by taking photos on their smartphones. Rather than going to the bank in person, customers will be able to photograph the cheque and then send it electronically. Currently, the law states that a bank must demand to physically see the cheque before they honour it.

Compared to many other European countries, the UK has a sluggish cheque clearing process. At the moment, it can take up to six days, whereas on the Continent, it normally takes two. This new system will bring us in line with our cousins across the Channel.

Businesses accounted for more than 370m cheque transactions in 2012. A total of 25 per cent of payments made by small businesses in 2012 were made by cheque.

John Allan, chairman of the Federation of Small Businesses, said: “Many of our members, and their customers, still rely on cheques so will be pleased with the investment and innovation to ensure their continued use. Speeding up cheque payments into business accounts is to be welcomed as many find the current process frustratingly slow. Using smartphones is an interesting idea which should allow some firms in areas, particularly where bank branches are closing, to be able to accept cheques as a method of payment.”