The following notes set out some of the factors you will need to consider if you are considering employing members of your family, younger workers or volunteers in your business.

If you hire family members you must:

• avoid special treatment in terms of pay, promotion and working conditions
• make sure tax and National Insurance contributions are still paid
• follow working time regulations for younger family members
• have employer’s liability insurance that covers any young family members
• check if you need to provide them with a workplace pension scheme

If you have volunteers or voluntary staff working in your business, you will need to consider the following matters:

• you are responsible for their health and safety, and you
• must give inductions and training in the tasks they’re going to do.

You can employ young people if they are 13 years or over but there are special rules about how long they can work and what jobs they can do. Once someone is 18, they are classed as an ‘adult worker’ and different rules apply.

As well as following these rules you must do a risk assessment before taking on young workers.

Young people may also have certain employment rights, for example:

• statutory maternity pay and ordinary statutory paternity pay if they qualify as a result of their continuous employment,
• paid time off for study and training, and
• redundancy pay.

As the employer, you should also be mindful of the National Minimum Wage regulations. Young workers and apprentices have different rates from adult workers for the National Minimum Wage purposes.

If employing your spouse or children, you should be especially careful to observe the above points. In particular, document their duties and make sure that they are paid a commercial rate per hour for the type of work that they undertake.

For most of us in business the recent, and continuing, Brexit fiasco has meant that making meaningful investment decisions has proved to be problematic. What will our future trading relationship with Europe look like and how will that affect our own trading results?

And yet in the UK we have an extremely generous tax allowance, aptly called the Annual Investment Allowance (AIA), that means we can write off the full cost of qualifying assets against our profits for tax purposes.

Although many small businesses are now incorporated those who still trade in partnership or as a sole trader and pay income tax on profits at the 40% or 45% rate, could see a significant tax saving by utilising the AIA.

The current scope of the AIA is set out in a summarised form below:

1. You can claim AIA on most purchases of plant and other equipment, computers or commercial vehicles.
2. You cannot claim AIA for the acquisition of cars, items you owned for another reason before you started using them in your business, or items given to you or your business.
3. From 1 January 2019 to 31 December 2020, the amount you can claim under the AIA is limited to £1m.
4. You can only claim the AIA in the accounting period when you bought the item. The date bought is defined as when you signed the contract to purchase – if payment is due within four months – or when payment is due if it’s more than four months.
5. If your business closes you cannot claim the AIA in the final period of trading.

If you are considering an investment in new plant – and don’t forget that you should have a compelling commercial reason for making the investment – any tax relief is a welcome bonus. Please call so that we can help you quantify how much tax benefit you would be entitled to and also look at the wider commercial rationale for making your investment.

If you personally disposed of an asset that is subject to a capital gains tax (CGT) charge, at any time during the tax year ending 5 April 2019, any CGT due will need to be paid 31 January 2020.

Accordingly, if you know the amount of the taxable gain, and the amount of CGT payable, you still have more than ten months to organise the funds to pay the tax.

Hopefully, when you sold the asset you were advised of the likely tax charge and reserved funds from the sale proceeds to settle the liability; after undertaking the necessary research – or professional advice – to claim any available exemptions or reliefs?

And there is still time to consider CGT planning.

Although the stable door has been closed – the gain has crystallised during the 2018-19 tax year, claims for any reliefs can still be made as part of your self-assessment return for 2018-19.

It is beyond the scope of this article to list all the reliefs that can be claimed to reduce a CGT bill, but we can help you consider your options. Please call for advice. We will need to know the following details to better consider these options:

• A description of the asset(s) sold,
• The disposal proceeds,
• Any costs associated with the sale,
• The date and costs of the purchase of the disposed assets.
• Any costs you have incurred since acquiring the asset that have improved it in some way: for example, an extension to a property.

You have plenty of time to plan for the payment of your CGT liability for 2018-19 – latest date to pay is 31 January 2020 – and we recommend that you fully consider your planning options before submitting your 2018-19 tax return.

If you don’t submit an annual tax return, you will need to submit details to HMRC using the “real time” capital gains tax service. The following instructions on this option are reproduced below. However, even if you use this option, it is still advisable to take professional advice on the computation of the chargeable gain to ensure you only pay what is due and no more.

You can use the ‘real time’ Capital Gains Tax service if you’re a UK resident. You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay. When you use the service, you’ll need to upload PDF or JPG files showing how your capital gains and Capital Gains Tax were calculated.

When to report

You can use this service as soon as you’ve calculated your gains and the tax you owe. You do not need to wait until the end of the tax year. You must report by 31 December after the tax year when you had the gains.

After you’ve reported your gains, HMRC will send you a letter or email giving you a payment reference number and telling you ways to pay. Do not pay your Capital Gains Tax bill until you’ve received your payment reference number.

The first Debt Relief Order (DRO) was approved 10 years ago in April 2009 with the aim of assisting people with small levels of assets and little surplus income deal with their debts*.

Since then, the Insolvency Service has approved more than 254,000 DROs to people with debts worth an average of £9,400.

People apply for a DRO through an authorised debt adviser, from organisations such as Citizens Advice, StepChange and PayPlan, who submit applications on-line to the Official Receiver on their client’s behalf.

Approximately 99% of DROs are approved within 48 hours of the application being received into the team in Plymouth and 2018 saw the Insolvency Service issue approximately £312 million of debt relief – the largest amount for a single year.

A DRO normally runs for 12 months after which the debts are written off and between 2009 and 2017, while 64% of DROs were granted to women, both genders experienced similar levels of average debt – £9,200 for women compared to £9,100 for men.

In the same period, 25% of DROs were granted to people aged between 25 and 34. London experienced the lowest rate of DROs in every year since 2009 – 3 per 10,000 adults – compared to both the North East and South West where the average rate of DROs per 10,000 adults was 7.8.

In October 2015, the upper limit for qualifying debt was raised from £15,000 to £20,000, and the asset limit was raised from £300 to £1,000.

There are 12 competent authorities: Angel Advance, Advice UK, Christian Against Poverty, Citizens Advice, CMAS, Debt Advisory Centre, Insolvency Practitioners Association, Institute of Money Advisors, Money Advice Trust, PayPlan, Shelter and Step Change.

Readers of this post who feel that their management of personal debt is running away from them, should contact one of the above support organisations to see if a DRO would be available.

The government has given the green light to allow pension providers to create user-friendly services that display pension information for individuals on-line.

Savers will be in the driving seat with all the facts and figures about their pensions and potential retirement income at their fingertips in one place for the first time – on smartphones, tablets and computers.

Work and Pensions Secretary Amber Rudd said:

With record numbers saving for retirement as a result of our revolutionary reforms, it’s more important than ever that people understand their pensions and prepare for financial security in later life.

Dashboards have the potential to transform the way we all think about and plan for retirement, providing clear and simple information regarding pension savings in one place online. I’m looking forward to seeing the first industry dashboards later this year.

Key details of the government’s plans, published today in its response to a consultation on dashboards, include:

• a commitment to bring forward legislation at the earliest opportunity to compel all pension providers to make consumers’ data available to them through a dashboard,
• an expectation that the majority of schemes will be ready to ‘go live’ with their data within a 3 to 4 year window,
• confirmation that State Pension information will be included as soon as possible,
• dashboards will help to reconnect people with ‘lost’ pension pots, benefitting savers and providers.

Ministers support the development of multiple industry-led dashboards displaying the same basic information. Industry have told government that initial models will be developed and tested from this year. A non-commercial dashboard will be delivered and overseen by the new Single Financial Guidance Body (SFGB).

An industry delivery group will be brought together by the SFGB which will set out a clear timetable and roadmap to drive progress towards fully operational dashboards, setting standards and ensuring security to protect users and their information.

A reminder that HMRC may consider extended options for settling your outstanding tax bill. The key is to contact HMRC, explain why you can’t pay on time, and discuss how you can settle any outstanding liabilities.

If you can’t pay before the deadline, call the Business Payment Support Service. Anyone can use this service, not just businesses.

Business Payment Support Service

Telephone: 0300 200 3835
Monday to Friday, 8am to 8pm
Saturday and Sunday, 8am to 4pm
 

Nominated partners in business partnerships can negotiate time to pay with HMRC on behalf of the partnership or individual partners.

If you’ve missed your payment date

If you’ve received a payment demand, like a tax bill or a letter threatening you with legal action, call the HMRC office that sent you the letter.

Call the Business Payment Support Service if you haven’t received a bill or letter about payment yet.

Self-Assessment

Call the Self-Assessment helpline if you’ve missed your payment date.

Telephone: 0300 200 3822
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm

Since April 2017, you can earn £1,000 from a trading activity and £1,000 of property related income, without being liable to income tax.

These tax-free allowances on property and trading income are useful as families can generate an extra £2,000 a year of income without increasing their tax bills.

Obviously, these small amounts will not be a replacement for your day-job, but they do contribute to financing your monthly bills.

What property income could this cover?

You could rent out:

• your drive as a parking space if you live in an area where parking spaces are at a premium,
• a part of your garden as a paddock or allotments if you have the space.

One interesting aspect of this relief is that if you own property jointly, both parties are eligible for the £1,000 property allowance to set off against their share of the gross rental income.

What trading income could this cover?

The scope for using the £1,000 trading allowance are perhaps easier to exploit. Any hobby where you have an opportunity to sell goods produced, for example:

• internet sales
• craft products
• hiring power tools
• or any service related activity, mobile hairdressing, gardening support, babysitting.

If you do claim either of the above allowances, you cannot claim any expenses related to the activity.

Also, you cannot claim the allowances if the property or trading income is linked to a company, partnership to which you are connected, or your employer or the employer of your spouse or civil partner.

Record keeping

Even though there may be no tax consequence, you are still required to keep a record of your income covered by these allowances.

And one final note, these miscellaneous income sources may also affect your eligibility for benefits and tax credits.

There are three things that you can count on that HMRC will do:

1. Calculate the amount of tax you owe based on the information they have gathered.
2. Chase you for payment of this tax if not recovered by PAYE.
3. Pursue you if they believe you have under-declared your taxable income or made excessive claims to reduce your tax.

What they will not do is advise you to maximise the benefit of reliefs and allowances to which you are entitled to claim.

HMRC rely to some extent on the age-old principal that ignorance of the law is not, in most cases, a valid excuse for not obeying that law.

Stretching that principal to an extreme, if we want to make sure that we are complying with tax law, we should read it before earning profits or income. As most students of tax law will confirm, this is a full-time endeavour, and not one you can effectively undertake as well as your day job.

It is possible for any taxpayer to call HMRC, or to visit their website to check out responsibilities, but it’s difficult to do this if you have no idea what questions to ask.

The grey areas, the tax reduction strategies that the law allows, you will have to discover for yourself. Which is fine if you know what you can claim, but what if you don’t know?

HMRC will merely apply the facts as they are presented. In some respects, the tax profession intervenes to ensure that their clients make the most of the tax allowance and reliefs available, thus relieving HMRC of the responsibility to ensure that you only pay the minimum tax demanded by legislation.

If you are concerned that you may be overpaying tax, please call so that we can discuss your options.

THURSDAY 21 MARCH 9:00AM

We would like to invite you to our latest  “MAKING TAX DIGITAL” event on 21st March. 

Join us to get the big picture before it becomes mandatory on 1 April 2019.  This is a great chance to find out what it means for your business, how easy it is to make the switch to cloud software and meet like- minded business owners.

As well as Warren McCleary, we are delighted to welcome Diane Holden from XERO as our speakers for the event.

They will cover:

What MAKING TAX DIGITAL (MTD) means.

Submitting VAT returns with XERO online accounting software.

How Xero and connected Apps can; save you time, help you get paid and provide you with better information.

Questions and feedback.

We begin with breakfast and registration from 9:00am for a 9:30am start and you’re welcome to bring a friend or colleagues along just let us know when you register.

We will also provide the opportunity to have one to one sessions on the xero platform with one of our team.

If you would like to attend, please click on the registration link below:

REGISTRATION LINK

A reminder that HMRC may consider extended options for settling your outstanding tax bill. The key is to contact HMRC, explain why you can’t pay on time, and discuss how you can settle any outstanding liabilities.

If you can’t pay before the deadline, call the Business Payment Support Service. Anyone can use this service, not just businesses.

Business Payment Support Service

Telephone: 0300 200 3835
Monday to Friday, 8am to 8pm
Saturday and Sunday, 8am to 4pm
 

Nominated partners in business partnerships can negotiate time to pay with HMRC on behalf of the partnership or individual partners.

If you’ve missed your payment date

If you’ve received a payment demand, like a tax bill or a letter threatening you with legal action, call the HMRC office that sent you the letter.

Call the Business Payment Support Service if you haven’t received a bill or letter about payment yet.

Self-Assessment

Call the Self-Assessment helpline if you’ve missed your payment date.

Telephone: 0300 200 3822
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm