In one of my blogs from June 2014, we looked at what Employment allowance was and how employers could claim upto £2,000 a year off their National insurance (NI) bill.

With effect 06/04/2016, the employment allowance has gone up to £3,000. Employers that pay Class 1 NI on their employees' and directors' earnings can claim the enhanced allowance from the current tax year.

This was introduced as an ongoing allowance. This means that once an employer has claimed the allowance, they will continue to enjoy it in future years, without needing to do anything further. However certain new conditions have been imposed this year for claiming the employment allowance and this mainly affects single director/owner limited companies.

A company is no longer eligible for the allowance if:

• only one employee (or director) in the limited company is paid above the secondary Threshold (the secondary threshold is set at £156 a week for the 2016 - 2017 tax year)
• that employee is a director of the limited company

Hence, if you are affected by the above change, at the start of the tax year you should stop your claim for employment allowance. Select ‘no’ in the ‘Employment Allowance claim’ field within your payroll software, and submit an Employment Payment Summary (EPS) to HMRC. The good news is this change doesn't affect the claims made in previous years.

If  however the circumstances of the company changes during the tax year and more than one employee or director earns above the secondary threshold, then you’ll be eligible to claim the employment allowance for the whole tax year.

The National Living Wage and National Minimum Wage are both designed to protect low income workers and provide an incentive to work by ensuring that all workers benefit from as generous a wage as possible.

From 1st April 2016, a new mandatory national living wage (NLW) comes into effect in the UK. This will be £7.20 an hour for workers aged 25 years or older and not in the first year of apprenticeship. The NLW is projected to change every year and is projected to rise to atleast £9 by 2020.

What is happening to the National Minimum Wage (NMW)?

The national minimum wage is the compulsory minimum level of pay set in October every year. It varies by age and the current rates applicable from Oct'15 are as follows: 

• £6.70 per hour for workers aged 21 years old and over
• £5.30 per hour for workers aged 18 to 20 years old
• £3.87 per hour for workers above school leaving age but under 18 years old
• £3.30 for apprentices aged 16 to 18 or aged 19 years old or over and in the first year of their apprenticeship

Once the NLW becomes the law for workers aged 25+ from April 2016,  the national minimum wage will still apply for workers aged 24 and under.

In the previous article from October, we looked at what VAT MOSS was and how the registration process works.

In this blog, we would look at the records HMRC expects to be kept by the business for each VAT MOSS sale. These include :

• the member state where the sales were made - known as the member state of consumption
• the date you supplied a service
• the taxable amount, including the currency used, including any increase or decrease of the taxable amount
• the VAT rate that was applied for the sale
• the amount of VAT due and the currency used

Most of the above information would be covered in the sales invoice and would be readily available. This information is to be reported periodically in the VAT MOSS returns.
Link for the Union VAT MOSS Return template is given herewith.

In addition, the business must also keep a record of :

• payments the business received - the dates and amounts
• any payments on account the business received for services before supply was actually made
• the information shown on any invoices you issued
• customers names - where known
• the information you used to work out where a customer is based

The above information must be kept for 10 years and the business should be able to send it to HMRC electronically if asked.

From 1 January 2015 the VAT rules for place of supply changed in the EU for sales of digital services from businesses to consumers (B2C). 

The rules created a new system called the Mini One-Stop Shop (MOSS) for the declaration of VAT collected on these digital service supplies. This system enables a business to register in one EU Member State for the purpose of declaring all of the VAT collected on their digital service supplies during each quarter. This means you only need to send a single VAT MOSS Return, each calendar quarter. You don’t have to declare the VAT due separately in each EU member state.

There are 2 types of VAT MOSS schemes:

• Union VAT MOSS - for businesses based in the EU, including the UK
• Non-Union VAT MOSS - for businesses based outside of the EU

Union VAT MOSS
To use the Union VAT MOSS scheme in the UK, your business must meet the following criteria : 

• be based in the UK, or be a non-EU business with a fixed establishment in the UK
• be registered for UK VAT
• supply digital services to consumers in the EU

What to do if business turnover is below UK VAT threshold?
If your business turnover is below the UK VAT threshold you still need to register for UK VAT to use the Union VAT MOSS scheme. If you only register for UK VAT so you can use the VAT MOSS scheme, you’ll only need to submit nil UK VAT Returns.
If you need to reclaim VAT paid on business expenses though, these can be claimed only by using the UK VAT Returns (instead of submitting a nil return). You can’t reclaim these on your VAT MOSS Return.

Registration and return submission timelines
You must register for VAT MOSS by the 10th day of the month after your first digital service sale. 

The deadlines for filing the VAT MOSS returns are:

• 20 April - for first quarter ending 31 March
• 20 July - for second quarter ending 30 June
• 20 October - for third quarter ending 30 September
• 20 January - for fourth quarter ending 31 December

In this article, we would look at some of the common questions relating to non resident taxation :

1.       I have left the UK after getting a permanent job abroad? How do I tell the UK I am not   
          resident any more? 

You’re automatically non-resident if either:

• you spent less than 16 days in the UK (or 46 days if you haven’t been classed as UK resident for the 3 previous tax years)
• you work abroad full-time (averaging at least 35 hours a week) and spent less than 91 days in the UK, of which less than 31 days were spent working

The way to tell HMRC that you are not a resident is either fill in form P85 or through the ‘Residence pages’ in Self-assessment return. Form P85 is available at : 
https://www.gov.uk/government/publications/income-tax-leaving-the-uk-getting-your-tax-right-p85

2.       How do I get the forms to fill/claim non-resident tax (if the usual self assessment internet filing will not be allowed to continue)?

Currently, you can’t use HMRC’s online services to tell them about your income if you’re non-resident. Instead, you need to:

• send your tax return by post 
  
• use commercial software
  
• get help from a professional, eg an accountant who has commercial software to file for you
  

You need to complete the ‘residence’ section (form SA109 as above if you’re sending it by post) 

The paper form of self-assessment is available as below: 
https://www.gov.uk/government/publications/self-assessment-tax-return-sa100

The deadline for filing is earlier if you’re sending your return by post (31 October every year).

Until 5th April 2015, Income Tax at 20% was deducted at source on most savings, by banks and building societies. Only specific savings such as Individual Savings Accounts (ISAs) or National Savings & Investments (NS&I) products qualified as tax free savings.

Effective this tax year, this has changed and you may be able to get your savings interest tax-free. To qualify for tax free savings interest, your income for the tax year 2015-16 should be less than £15,600. If this is applicable, contact the bank or building society to tell them you’re eligible. They’ll register you for tax-free savings. 

If your total income for the year is less than £15,600 excluding savings interest, you could still get a refund. To claim this refund, work out  your final figures for the 2015 -2016 tax year, fill
in form R40 and send it to HM Revenue and Customs (HMRC).

Total income for this purpose, include money you earn from employment, profits from self employment, some state benefits, rental income, interest on savings, trust income and dividends 

Announcing the above change during his Commons Budget speech, Chancellor George Osborne said: "People have already paid tax once on their money when they earn it. They shouldn't have to pay tax a second time when they save it."

As the payroll annual reporting deadline is fast approaching, we look at the steps to be taken for the annual filing by employers :

1) Send the final Full Payment Submission (FPS) on or before your employees’ last payday of the tax year (which ends on 5 April). Put ‘Yes’ in the ‘Final submission for year’ field in your payroll software.
If you forgot to select 'Yes' in the final FPS, you should send your final report in an EPS instead of an FPS. An EPS has to be sent also if you didn’t pay anyone in the final pay period of the tax year.

If you’re late sending your final report - Send an FPS if it’s 19 April or before. You would be charged a penalty for late filing.

2) Prepare for the new tax year by updating the new tax codes for all employees in the payroll software. If there are lots of tax code notices, it may be faster to use HMRC’s PAYE Desktop Viewer.

3) Follow instructions from your payroll provider and update the payroll software, so that the new rates and thresholds are automatically captured for use in the new tax year

4) Issue P60 to all employees on your payroll who are working for you on the last day of the tax year (5 April). The P60 summarizes their total pay and deductions for the year. P60s must be issued by 31st May.

As we approach some critical deadlines in the coming months, we look at the key dates and their relevance below.

a) Self Assessment Deadlines

If you need to submit your Self assessment tax return to HMRC, the following are the important dates for the tax year 2013-14 :

• Register for Self Assessment - you should have registered by 5 October 2014
  
• Online tax returns - midnight 31 January 2015
  
• Final payment of any tax due - midnight 31 January 2015
  

For paper tax returns, the filing deadline would have been 31 October 2014

b) Deadlines for private limited companies 

At the end of its financial year, every company must prepare full (‘statutory’) annual accounts.These accounts are to be then sent to Companies House and HMRC and any resulting Corporation tax to be paid.

For example if the financial year end is on 31 March 2014, the deadlines are as follows :

• File annual accounts with Companies House - 9 months after your company’s financial year ends (31 December 2014)
  
• Pay Corporation Tax - 9 months and 1 day after your company’s financial year ends (1 January 2015)
  
• File a Company Tax Return - 12 months after your company’s financial year ends (31 March 2015
  

Inheritance Tax is due when a person’s estate (their property and possessions) is worth more than £325,000 when they die. 

In the 2014/15 tax year, everyone is allowed to leave an estate valued at up to a £325,000 without their beneficiaries paying tax on it. Above that amount, anything you leave behind is subject tax of 40% (or 36% if you leave at least 10% of your assets to a charity).
For example, if you leave behind assets worth £400,000, your estate pays nothing on the first £325,000, and 40% on the remaining £75,000 – a total of £30,000 in tax - if you're not leaving anything to charity.

Inheritance tax for married couples -
There’s usually no Inheritance Tax to pay on anything you leave to your spouse or civil partner (provided they're UK domiciled), even if it’s over the threshold. In addition, your partner’s inheritance tax allowance rises by the amount you didn’t leave to others, meaning together a couple can currently leave £650,000 tax-free.
While transfers of property and other assets between married couples or civil partners don't attract inheritance tax, the rules are different for unmarried couples. 

Annual exemption - 
The first £3,000 given away each tax year is completely ignored as part of your estate and thus not subject to inheritance tax if you die.The £3000 unused in one year can be carried forward to the immediately succeeding year and used then.

Small gift exemption - 
Gifts of no more than £250 to any one recipient per tax year are excluded from inheritance tax (and are not counted toward the annual gift exemption).

Inheritance tax planning is very important to make sure all your hard earned savings don't go to the taxman after you die. It is better to get a WILL done and also seek financial advice, to make sure that you (or your parents) get the financial security at old age.