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expertise in specialist areas George Osborne presented his first Budget on Tuesday 22 June 2010.
We have added a full analysis of the Budget to our website and it is available here:
http://www.humph-net.co.uk/general/budget2010/index.htm
A summary of the tax rates which will apply as a result of the Emergency Budget, please also take a look at:
We advised you that HMRC recently introduced a new National Insurance and PAYE system and that we are using it to issue tax coding notices for the first time.
The transition to the new system has brought to light some discrepancies in our existing records and this is resulting in a number of incorrect coding notices being issued.
We have been working hard to identify situations where customers could receive an incorrect coding notice and have identified three key situations where this may occur. These are:
We are looking to correct as many of these discrepancies as possible well in advance of the new tax year and we are doing all we can to ensure no one pays too much tax from April.
If you are concerned about your tax code and you think it is wrong, particularly if it falls into one of these three categories, then check it using the guidance included with the coding notice and the income tax area of our website. If you cannot resolve your query using this please contact us on 0845 3000 627 so we can make sure you have the right tax code applied in time for the start of the new tax year on 6 April 2010.
We have recently become aware that a number of Hospital Consultants are being targeted by HMRC in respect of their Motor Expense claims. In each case, HMRC reviewed the motor and travel expense claims and refused to accept the home as a “base of operations”, even when a consulting room is at the home and regularly used to see patients.
As a consequence, HMRC are seeking to disallow any journeys from or returning to the home. In the cases that we are aware of, the Inspectors are suggesting token business use adjustments and we understand 15 enquiry cases have already been selected to go through the Tribunal system, in order to secure a precedent in HMRC’s favour. Clearly, if HMRC win any of these cases, this may well impact upon other professions where business/private mileage is incurred.
We understand the majority of cases have been investigated from a “pilot” team in Scotland, but the initial yield projections have encouraged HMRC to roll out the “pilot” into Hospital Consultants nationwide.
Please contact either Greg Penfold or Andrew Fenton if you have any concerns or wish to discuss any of these matters further.
As the spread of the swine flu virus (officially known as influenza A H1N1) accelerates, business readiness is growing in importance. To keep updated on what your business can do to help your employees get treatment and to prevent further spread of swine flu, we have put together some useful links which may aid you in planning over the coming months.
Furthermore, it may be important that your business puts in place a contingency plan if key members of your team fall ill, or if a large proportion of your workforce fall ill at the same time. For helpful advice on your options, and ideas for support arrangements which can be put in place, please visit the Business Link Website. A link is at the bottom of this page.
As an employer, your employees may want to know what arrangements you have put in place if a manager or workmate falls ill, or what the procedures are for reporting you of their illness. Again, the Business Link website has a host of links to helpful resources for putting together this kind of plan.
Useful links:
A number of errors have been detected on the updated employer CD-ROM recently issued by HMRC.
HMRC hope to correct these issues by 24 July 2009 via a downloadable file – and the department is offering regular online updates on the matter.
The 2009 Budget included a measure designed to stop people earning £150,000 or more from “increasing” their pension contributions in the tax years 2009/10 and 2010/11 in advance of the new 20% cap on tax relief coming in from April 2011.
Unfortunately, the self employed and owners of small companies who have traditionally waited until the end of the tax year when they can assess their cash position and take advice about pension savings will be the hardest hit. The annual or sporadic contributions that are generally made are not regarded as “regular” contributions and thus are not protected under the new rules.
Broadly, you will not be affected by the new rules:
• if your total annual income is less than £150,000 in any of the tax years from 2007/08 onwards
• even if your total annual income was £150,000 or more if you continue as normal with your existing “regular” pension savings (including any employer contributions) and do not increase your pension savings after 22 April 2009. (see example below)
• If your total annual income was £150,000 or more and you increase your pension savings provided your overall annual pension contributions are less than £20,000.
Pension Contributions in excess of £20,000 (that are not part of ongoing regular pension contributions) will be subject to an additional tax charge which will be collected through the self assessment tax return (to restrict the tax relief to 20%).
Annual pension contributions are limited to 100% of a person’s gross UK earnings, subject to a maximum of £245,000 (2009/10) tax year) and £255,000 (2010/11 tax year).
Example:
A has income of £170,000 in 2009/10 and makes total pension contributions of £50,000 to his personal pension scheme. The contributions reflect a regular monthly contribution of £2,000 (as for previous years) and a single payment of 26,000.
• A’s income exceeds the £150,000 income threshold and his pension contributions are more than the £20,000 special annual allowance.
• However, his normal regular contributions of £24,000 are not subject to the special annual allowance charge.
• The additional single contribution of £26,000 will be subject to the special annual allowance tax charge.
There are special transitional rules if you made a payment into your pension between 6th April and 22nd April 2009
Example:
B made a “one off” contribution of £30,000 on 17 April 2009.
• The Special annual allowance is reduced to nil, leaving no special annual allowance for 2009/10.
• Although her total contributions are greater than £20,000, she is not liable to the special annual tax charge on the £10,000 excess.
• However, as she has used up all her special annual allowance of £20,000, if she makes any more new pension savings in the remainder of 2009/10, the new savings will be subject to the special allowance tax charge and she will only receive tax relief at 20% on these subsequent payments.
The new pension rules are complex and specialist advice should always be sought. Please do contact Humphrey & Co for further advice.
