The Apprenticeship Levy is being introduced from 6 April 2017 and will be payable by large employers. The Levy will be 0.5% of the employer’s pay bill, which is explained later in this article, but there is an annual allowance of £15,000.The allowance will be given on a pro-rata basis throughout the tax year.
The recent HMRC guidance confirms employers will need to report their Apprenticeship Levy liability each month:
An employer’s annual pay bill is all payments to employees that are subject to employer Class 1 secondary NICs. Broadly wages but excluding benefits and expenses. HMRC have confirmed that employers must include payments to employees for whom there are no employer NICs including:
The Apprenticeship Levy will need to be reported each month on the Employer Payment Summary (known as the EPS) and should include the following:
HMRC have confirmed that it is not necessary to report Apprenticeship Levy if the employer has not had to pay it in the current tax year.
If you would like advice on the Apprenticeship Levy or other payroll matters please contact us.
Internet Link: GOV.UK APPRENTICESHIP LEVY
The government are celebrating the ‘first birthday’ of their award winning Personal Tax Account which recently won Digital Project of the Year at the annual UK IT Industry Awards
HMRC have announced that in its first year, the Personal Tax Account has attracted more than seven million users and there have been millions of transactions including:
The press release also states that the Personal Tax Account is designed to be one stop shop for all customer interactions with HMRC and taxpayers using it can:
If you would like advice on your personal tax affairs please contact us.
Internet link: GOV.UK NEWS
Tax campaigners have warned that the abolition of Class 2 National Insurance contributions from April 2018 could result in the lowest earners among the self employed being hardest hit.
Class 2 NICs are flat-rate weekly contributions paid by the self-employed to gain access to contributory benefits. The self-employed also pay Class 4 NICs on profits above the Lower Profits Limit. Class 4 NICs do not currently give access to contributory benefits. At Autumn Statement 2016 the Chancellor confirmed that Class 2 contributions would be abolished from 6 April 2018.
At present, self-employed earners whose profits exceed £5,965 a year, the small profits threshold (SPT), are required to pay Class 2 NI contributions at £2.85 a week. These contributions then count towards their state retirement pension and entitlement to certain other contributory benefits. If their profits fall below the SPT, they have the option to make voluntary Class 2 payments.
When Class 2 is abolished, payment of Class 4 NI contributions will count towards state benefits. In order to protect some people on low incomes, Class 4 contributions will not be payable until annual profits reach £8,060. However, as long as profits exceed the SPT, the self-employed will be given Class 4 credits, so they will be treated as making contributions even though none was actually paid.
A point to note though is that, unlike Class 2, Class 4 NI cannot be paid on a voluntary basis meaning that the only way that self-employed people on profits below the Class 4 threshold will be able to build up a contribution record, if they did not obtain NI credits through receipt of other benefits, eg tax credits, child benefit or Universal Credit, will be by paying Class 3 voluntary contributions at £14.10 a week.
Anthony Thomas, Chairman of the Low Income Tax Reform Group commented:
‘Some parts of these proposals are good news for self-employed workers on low earnings, but by no means all. Those with profits between £5,965 and £8,060 will be better off because they will pay no NI but be credited with contributions. Our concern is for those with lower earnings than £5,965 who would have to pay voluntary Class 3 contributions in the future to protect their benefits entitlement if they did not obtain NI credits through receipt of other benefits, for example tax credits, child benefit or Universal Credit. Class 3 contributions will cost almost five times the amount they are paying now (£14.10 per week compared to £2.85 per week) and may mean the cost is unaffordable, leading them to rely more on means-tested benefits in the future.’
Internet links: GOV.UK POLICY PAPER LOW INCOME TAX GROUP
An investigation by the Information Commissioner’s Office (ICO) has revealed that two national charities, the RSPCA and the British Heart Foundation, secretly screened millions of their donors so they could target them for more money. The ICO said that this practice breached the Data Protection Act as the charities failed to handle donors’ personal data in accordance with the legislation.
The charities also traced and targeted new or lapsed donors by piecing together personal information which was obtained from other sources. In addition, they traded data with other charities to create a pool of donor data which was available for sale. As the donors were not informed of these practices, they could not give their consent or object.
The investigation was one of a number by the ICO into the fundraising activities of charities sparked by media reports about pressure on donors to contribute. The Information Commissioner, Elizabeth Denham, fined the RSPCA £25,000 and the British Heart Foundation £18,000.
The ICO can take action, including penalties of up to £500,000, against organisations and individuals that collect, use and keep personal data. Anyone who processes personal information must comply with the eight principles of the Data Protection Act which make sure personal data is:
Internet link: ICO NEWS
HMRC have introduced an online service to apply for a repayment of the higher rates of Stamp Duty Land Tax (SDLT) for additional properties if the property sold was previously a main home.
From 1 April 2016 higher rates of SDLT are charged on purchases of additional residential properties.
The main target of the higher rates is purchases of buy to let properties or second homes. However, there will be some purchasers who will have to pay the additional charge even though the property purchased will not be a buy to let or a second home. The 36 month rules set out below will help to remove some transactions from the additional rates (or allow a refund).
Care will be needed if an individual already owns, or partly owns, a property and transacts to purchase another property without having disposed of the first property.
The higher rates are three percentage points above the normal SDLT rates. The higher rates potentially apply if, at the end of the day of the purchase transaction, the individual owns two or more residential properties.
Some further detail:
The online refund process will allow those affected to apply for a repayment of the higher rate of SDLT if the property sold was a previous main home.
Internet Link: GOV.UK SDLT REPAYMENT OF HIGHER RATE
The government has announced:
‘labour market has finished a record breaking year with unemployment down by over 100,000 people and the rate running at 4.8%’.
Other statistics include:
Secretary of State for Work and Pensions, Damian Green said:
‘This year will be remembered as one when so many records were made – employment has consistently been running at an all-time high with more women, older workers and ethnic minority groups in work than ever before.
Encouragingly, this good news was extended right across the UK.
But there is more to do to help people of all backgrounds and abilities into work, which will remain a priority as we press ahead with our welfare reforms that are ensuring it always pays to be in work.’
Rachel Smith, CBI Principal Labour Market Adviser, said:
‘We see a mixed picture from the labour market over the last three months, with employment levels remaining more or less the same and unemployment seeing a slight drop.’
‘Although wage growth has gone up somewhat, so has inflation, hitting workers’ pay packets in real terms. Boosting productivity in every region and nation of the UK will be essential if firms are to further raise wages sustainably for their employees.’
Internet links: GOV. UK UNEMPLOYMENT RATE GOV.UK UNIVERSAL CREDIT STATISTICS CBI COMMENT
This information is subject to change and is not professional advice. Refer to our disclaimer for more details.