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GDPR Compliancy and Payslips

Depending on where you work and who you work for, you should receive your earnings either weekly, fortnightly or monthly and accompanying them should be some paperwork, commonly called a payslip. This payslip outlines the payment and contains some personal information specific to you.

Under the new rules of the GDPR (General Data Protection Regulation), many companies may need to look at how the information contained on these payslips are kept secure, and all UK induviduals and organisations need to ensure that these rules are being followed. Many have expressed confusion about the distribution of payslips under GDPR, so in what format should payslips be distributed?

The three most common ways that payslips are distributed are:

– Paper
– Email
– ‘Portal’

Paper payslips

One of the ways that many recieve their payslips, is that they are posted to either the business or to the employee’s home address, for many this is how payslips have always been distributed and is the most familiar. The new GDPR legislations do not state that this is no longer an option, but it is recommended that for those that use this method to consider using envelopes that are marked as private and confidential, and even possibly using more secure delivery methods e.g. registered post.

Email Paylips

An upcoming distribution method for payslips is via email, many business have begun to use this method in attempts to save on paper waste, time and money, as this method is certainly quicker than the paper method. Though in this age of the Internet, employers must be vigilant about protecting this information, one such way to do so leads on to the next method to be discussed.

‘Portal’ Payslips

A relatively new form of distribution in this regard, many businesses have begun to use portals to allow employees access to their payslips. Portals are online systems that allow employees to login, and stored within this system are the employees payslips. This method is likely the most secure as the systems will only allow users to see the content in which they are authorised, as well as still having the benefits of this being cheaper and quicker that the postal method.

However the payslips are distributed, the most important thing to keep in mind is that your employees data is kept safe and secure, and for further information on that be sure to browse some of the other articles on the Cloud Bookkeeper website.

‘Unfair’ HMRC interest rate change?

The ACCA accountancy body has said that the recent interest change is “simply unfair” because of the growing divide between interest rate for repayments to taxpayer and late payment fees.

Simply put the interest charged for those that pay their tax late has increased by 0.25% to 3.25%, supposedly inline with the rise in the Bank rate, whereas the repayment interest has remained at 0.5% and is frozen at this rate, this has been true since 2009.

ACCA have said that they believe there should be a level playing field but HMRC have replied saying the repayment rate has never fallen below its current rate of 0.5% despite the Bank rate.

The reasoning behind this is that HMRC is attempting to prevent overpayment of tax as a way of recieving a higher interest rate than possible on some savings accounts. Therefore based on the current formula used to determine this amount the Bank rate would have to rise higher than 1.5% for this to change.

This is currently a controversial decision as Chas Roy-Chowdhury, head of taxation at ACCA, has said there should be a ‘level playing field’ and that HMRC changes should simliarly apply to both how much they charge and to how much they pay.

Making Tax Digital, Costs not Savings

It has been estimated that the new MTD inititaive will cost firms £37 million a year and will have no cost saving effect, reveals HMRC.

MTD is the digital redesign of the tax system, which means that most VAT-Registered companies will need to keep digital records of VAT and submit their returns digitally also. This programme was proposed by former Chancellor George Osborne and was suggested to ‘modernise’ tax returns. But it has been revealed that it may end up costing more than it saves.

The original proposal was estimated to save businesses £100 million a year from 2021. But HMRC’s latest estimation is that there will be no savings but instead will cost firms £37 million per annum, they predict that transition will cost less, but the ongoing costs will outweigh the ongoing savings, these new estimations come from the changes made to the programme last year which include a slower rollout.

One major change is that now only business with a turnover of £85,000 have to file digitally, and those business lower than that are excempt.

Though a spokesperson from HMRC have said that the costs incurred by businesses are likely to qualify for full tax relief, which is not reflected in these estimates. This is yet to be definitively announced and therefore we cannot be sure if this will come into effect.

Honours ‘Blacklist’ for Celebrity Tax Avoidance

HMRC policy of advising against honours for tax-avoiding celebrities, has been backed by Sir Vince Cable.

What this means is that celebrities who use legal but possibly controversial schemes of tax avoidance are being ‘blacklisted’ from receiving honours in order to protect the reputation of those holding these honours and the honours themselves. A FOI (Freedom of Information) request revealed that those proposed for this list are graded on a traffic light system to gauge the induviduals suitability.

Green for Low Risk, Amber for Medium Risk and Red for High Risk.

This initiative has been backed by Liberal Democrat leader Sir Vince Cable, saying “The Principle is right, I think the public is fed up with abusive tax avoidance by induviduals and companies,” and “It seems perfectly reasonable to me that the Inland Revenue should be taking a tough line on tax avoidance.”

Sir Cable, who is a former business secretary, added that some celebrities may be confused as to why they are being investigated and analysed for this list, because many could be unaware of their involvement in tax avoidance due to their finances being handled by accountants.

This list will be given to the Cabinet Office honours committee and the prime minister and decisions with be made from there.

Last year, retired football player, David Beckham had an email leak that seemed to depict his frustration at not receiving a knighthood in 2013, it has also been noted that he was on a list of celebrities who invested in a tax avoidance schemes, which was successfully challenged by HMRC.

At this time it is not known whether this had an impact on him not receiving said knighthood.

For more information on how the Honour system works, click the following link. Guide to the Honours.

Inheritance Tax; Avoiding the Tax Bill

The vast majority of people want to be able to leave this world with the comfort of knowing that our loved ones will be prosperous and happy, and one of the most common ways that people do that is by leaving all that we own to those loved ones.

The problem comes when not all that we leave is going to them a steadily increasing amount of that inheritance is being taxed away, in this last tax year of 2017/18, HMRC made £5.2bn through Inheritance Tax (IHT) alone. This is an 8% rise based on 2016/17 and close to double the earnings of 2010/11.

Why is this? You may ask, this is largely because of the surge of house prices in this time period, and the fact that the IHT tax free threshold has remained the same. Which for those unaware is £325,000 for an induvidual and £650,000 for a married couple/civil partners. This causes more people to be above that threshold and then liable to as much as 40% on the excess.
Especially when considering that the average house price (according to Rightmove.co.uk) is £623,855, if this were left in inheritance nearly the whole sum would be used by the real estate value alone.

Another reason that this tax is such an issue is due to the many changes to the rules that dictate IHT since its creation in 1796, and again these are under review and with no guarantee on how beneficial it will be for those looking to ensure as much goes to thier loved ones as possible. But as IHT currently stands there may be some ways to reduce how much will be taken by the tax man.

Gifts

The easiest strategy is to begin the inheritance early, if you are set already on who is set to inherit from you, an easy way to ensure as much as you can reaches them would be to begin giving it to them before the taxman gets to see it.

You can gift up to £3,000 a year without it being noted against the value of your estate, this yearly allowance can also be carried over to the following year, there are also a few excemptions to this rule as well, examples being; you can gift up to £250 per person per year for marriages. Another for those most humanitarian for us, you could give some to one of the many great charities out there to better the world before you leave it.

A less commonly known, or utilised option is to help with the current living costs of those loved ones, things like paying rent or bills, though these options are only really suitable and advised for those among us lucky enough to be able to provide this and still be able support themselves and lead the lives they want to, enjoying the money that they earned.

Trusts

Many have heard of trust funds, the most common use is to provide a boost to the younger generation by having a sum of money given to them, that unlocks once they become of age to give them a head start on stepping out into the world on their own two feet.

This can also be a good way to handle an inheritance, as it would also give a degree of control over how the money is spent, this means you could ensure that this in heritance could only be used for a down payment on a property or other major expenditure to that effect. This commonly sits better with most, as it avoid this sum being “wasted” on unintended things.

Trusts however can be complex and difficult, so for those seeking this path it is advised to seek help from a financial advisor, like us here at Cloud Bookkeeper.

Proposed tax changes for 2019 Finance Bill

 

Possible changes that may come into law as soon as 1st of April 2019, are currently under consultation, some of these proposals include:

MTD penalties

  • A point system is being implemented, to encourage taxpayers to submit thier MTD reports on time.
    • Points will be given for each late report.
    • Once the amount breaches a certain point, (which will vary), a financial penalty will be charged for any further failures.
    • These points will expire after a set period of time, provided no more are earned.
    • HMRC will hold control over when these points will be given, in the case of software error.
    • The taxpayer will also be able to appeal these points and penalties via the digital account.
    • Current plans indicate that the aim is to spread this ‘point’ system to other duties and taxes.

Rent-a-room relief

  • A new condition is being added to the relief that requires the taxpayer must be present in the property for ‘all or part’ for the time the which the room is let.

Benefits in kind

  • Employees who charge their Electric or Hybrid car within or nearby their work environment will no longer be subject to a benefit in kind.
    • This will not apply if the employer reimburses the employee for the cost of charging elsewhere.
  • From the 6th of April 2017 use of assets will no longer apply to emergency vehicles.
    • the employees will not be taxed on the benefit of fuel used in the vehicle when ‘on call’.

Capital gains

  • Entrepreneurs’ relief
    • Additional equity funds are raised by the company on or after 6 April 2019, to allow the company founders to continue to qualify for the relief even if their shareholding has fallen below 5%.

 

Self Assessment 2016/17

As the deadline gets nearer to the 31st January 2018, many of us have still not completed our tax returns.  If your tax return is not filed on time your liable for a £100 fine, and if later than 3 months the penalty increases.

For more information  on Self assessment , don’t hesitate to contact us at info@cloudbookkeeper.co.uk

 

 

2017 Budget – Phillip Hammond – Update VAT 22/11/2017

Some of the high;rights from todays Budget.

  1. Vat Threshold to remain at £85,000 the lowest in europe
  2. Extra 2.8 Billion NHS
  3. Personal Allowance £11,850 from 2018
  4. Business rates revaluations every 3 years not 5 years
  5. Online marketplaces having to comply with VAT rules
  6. 100% tax premium on council tax for empty properties.

 

HMRC to disallow input tax on purchase invoices over 6 months

HMRC to disallow input tax on purchase invoices over 6 months if no proof can be provided.

Current VAT regulations state that if a payment to a supplier is overdue by more than 6 months then any input tax claimed on an earlier VAT return must be repaid to HMRC.  In a recent case with Capital SMA, HMRC disallowed some input tax claimed by the company on its April 2015 return under the six- month rule. The taxpayer’s appeal was based on the argument that it had paid for the invoices by cash, highlighting cash withdrawals in the company’s bank statements to support its argument.

However, the tribunal agreed with HMRC that payment had not been made and dismissed the appeal. The company provided no evidence from suppliers confirming payment had been made, such as a payment receipt or correspondence. The amounts for cash withdrawals did not reconcile with any particular invoices.

Lessons to take away from this case include;

  • using electronic payment methods to ensure there is some evidence of payment for VAT purposes.
  • ask suppliers to confirm cash payments using a stamp ensuring all relevant information is on the invoice.
  • Where an invoice is in dispute, then no input tax adjustment is needed if the supplier has agreed to extend the payment deadline while the problem is being resolved.

From 1 August eBay to charge 20% VAT on all fees for Business Sellers:

Following a recent legal restructuring eBay business sellers are now liable to pay 20% standard rate VAT on fees to eBay UK rather than eBay Europe S.à r.l, their Luxembourg arm.  Those business sellers that are already VAT registered won’t have to worry as they will be able to reclaim this additional cost by using a tax credit.  However, it’s those business sellers that aren’t voluntarily VAT registered and fall short of the taxable turnover threshold (currently £85k) that will suffer as a result of this news.  Private and individual eBay sellers already incur 20% VAT on fees so this news won’t impact them.