June 2017

tax tips & finance e-newsletter

In this issue

In this issue, we look at the IR35 changes for public sector contractors and Auto Enrolment duties for new businesses starting on or after 1st October 2017.

‘Your money’ reviews the upcoming expenses and benefits deadline of 6 July 2017. Finally in our ‘Retirement planning, wills and inheritance tax’ section we take a quick look at how many people fear that they will be working past their 65th birthday.

IR35 changes for public sector contractors

Important changes to public sector contractors working under IR35 legislation have taken effect for 2017/18.

Individuals who work through intermediaries, such as personal service companies, are no longer subject to IR35 rules if they work in the public sector.

Public sector organisations or agencies paying off-payroll workers are now responsible for deciding whether the work falls within IR35. They must deduct income tax and national insurance (NI) if they deem the worker an employee within IR35.

Under previous rules, intermediaries were responsible for calculating and paying the contractor’s income tax and NI owed to HMRC.

The new rules apply to any payments made on or after 6 April 2017, including payments made for contracts entered into before this date.

These changes apply to the following:

  • public authorities hiring off-payroll contractors
  • public sector managers – tax, payroll, human resources and procurement
  • agencies who supply contractors to the public sector
  • contractors providing services to a public authority through an intermediary.

Impact on contractors

Contractors working with any of the following public sector organisations will no longer have their IR35 status determined by their intermediary:

  • government departments
  • the NHS
  • police and fire authorities
  • local authorities
  • educational institutions including universities
  • the BBC and Channel 4.

Auto Enrolment – Duty Start Date

Are you thinking of starting a new business and/or planning to employ staff for the first time?

Not only do you need to consider operating a payroll scheme deducting tax, national insurance, student loan repayments etc. you also need to consider operating a pension scheme.

The following information is relevant for any new employers who employ their first staff member on or after 1st October 2017.

Until recently, most employers have had at least 12 months to plan for auto enrolment (AE) and set up a pension scheme before needing to comply with AE duties at their staging date.

However, all new employers who employ their first staff member on or after 1st October 2017 will need to start complying with auto enrolment duties straight away.

They will not have a set staging date. Their ‘duty start date’ will instead be the day on which the first worker begins to be employed by the employer.

New employers will still be able to utilise the 3 month postponement period, providing postponement letters are sent to the workers within 6 weeks of their start date.

It’s important to note that: The expectation is that complying with AE duties should now be part of the normal process of setting up a business in the same way that new employers are expected to deal with tax and national insurance from the outset. Therefore, new employers will become subject to near immediate AE duties as soon as the first worker is employed.

If you become an employer before 30th September 2017 you will have a pre-determined staging date as follows:

Date first became an employer Pre-determined Staging Date
Between 1 Oct 2016 & 30 June 2017 1 January 2018
Between 1 July 2017 & 30 Sept 2017 1 February 2018

At Humphrey & Co we do provide an all-encompassing payroll service which can alleviate the headache of payroll. Please contact us for further information http://www.humph.co.uk/business#payroll

Your Money
Expenses and benefits deadline looms

Expenses and benefits not payrolled for the 2016/17 tax year will need to be reported to HMRC by 6 July 2017.

Employers can report them by completing specific forms which are available to download on the HMRC website.

 There are 2 forms to complete:

  1. P11D - Download Form
  2. P11D(b) - Download Form

What to do

You need to fill out a P11D form to report any end-of-year expenses and benefits you have given to your employees or directors within your business.

Form P11D(b) is separate and must be completed to report the amount of Class 1A National Insurance Contributions (NIC) due on benefits.

Completing your details

 When completing your forms, use the following format:

  • use Arial font size 11 (when printed)
  • sort by employee, not benefit type
  • include your employer reference
  • include an employee’s name and national insurance number
  • put an employee’s expenses and benefits on the same line
  • include P11D letter codes next to each benefit.

You’re required to fill out a P11D(b) if you’re liable to return any expenses payments or benefits on your P11D form.

Payrolling benefits

You don’t need to submit a P11D when putting benefits and expenses through payroll, although you are still required to complete a P11D(b) on how much class 1A NIC is owed.

If you are intending to payroll only benefits and expenses, you must register with HMRC. This must be done before the start of the tax year: Register Here

JUNE'S MONEY FACTS

Current bank rate: 0.25 per cent

Current inflation: 2.7 per cent

Retirement planning, wills and inheritance tax
Staff fear working beyond 65

The number of employees who think they will work beyond the age of 65 is at a record high, according to research by Canada Life Group.

Out of 1,000 workers surveyed, 73% are expecting to work past the age of 65 – up from 67% in 2016.

37% who intend to work beyond 65 said they could be older than 70 before they retire, while 10% expect to be at least 85 years old when they fully retire.

Almost all younger workers agree they will be working past the age of 65, with 84% of 25 to 34-year-old employees resigned to that prospect.

Further findings:

  • 36% fear their pension will not be sufficient so they need to continue earning
  • 31% said they will work past the age of 65 due to low interest on savings.

Challenges for older workers

When asked about their biggest challenges, 57% said health issues will impact their ability to work beyond the age of 65.

Other challenges include adapting to technology (21%), daily commutes (19%) and being engaged in their job (18%).

Protect Your Business

We are holding a seminar with Barclays in our Boardroom on Tuesday 27th June. The seminar will highlight the importance of protecting your business against Cyber Crime. This session will demonstrate, live, just how the fraudsters start to target an individual or organisation and the potential impact it can have. 

The seminar will also include a section from Craig Manser ACA on HMRC’s new initiative called Making Tax Digital. There will be an opportunity after the session to ask questions and speak to representatives from Barclays and Humphrey & Co on the matters raised. 

To book your place please email cmanser@humph.co.uk with your full contact details and we will add you to the guest list. Please note that spaces are limited and will be allocated on a first come, first served basis.

 We hope you will be able to join us.

Download the Invite