CHECK YOUR TAX CODES

Date Added: 01 February 2010

HMRC has introduced a new computer system for issuing PAYE tax codes.

As you may be aware from recent media reports, it appears that there have been some teething problems with this new system, with some individuals receiving an incorrect coding notice. This could result in the wrong amount of tax being collected.

HMRC has identified three key situations where this may occur:

1. a previous employment has stopped but HMRC's system has not picked this up, with a coding notice being sent out for this former employment;

2. two notices have been sent out for the same employments;

3. the basic rate (BR) or higher rate (D0) tax code being given out for a first time.

HMRC is looking into these discrepancies, but best practice should be that anyone under PAYE should make sure that they understand their tax code and ensure that it is correct.

Employers also should make their employees aware of this problem or they may find a lot of staff questioning their pay packet in April.

For further help or guidance on this matter please Jane Hamilton on 01242 252555 or e-mail This e-mail address is being protected from spambots, you need JavaScript enabled to view it

NEW YEAR, NEW TAX HEALTH PLAN

Date Added: 20 January 2010

HMRC is offering medical professionals the chance to put their tax affairs on a healthy footing in 2010 with the offer of a fixed penalty on the settlement of undisclosed liabilities.

Medical professionals may have to manage complex tax issues as a result of a mixture of income sources and status, with often substantial amounts involved. As a result the potential for errors, and therefore liabilities, can be significant.

HMRC is gathering information from various sources including NHS trusts, private hospitals and medical insurers and will pursue those who decide not to make a disclosure. In such cases penalties could be up to 100% of the tax due and, in exceptional circumstances, criminal investigation may be considered.

Individuals must notify their intention to make a disclosure by 31 March 2010 and further information, including a list of frequently asked questions, is available at www.hmrc.gov.uk/tax-health-plan

CONCESSION ON PLANS TO SCRAP TAX RELIEF ON CHILDCARE VOUCHERS

Date Added: 21 December 2009

Gordon Brown gave in to pressure earlier this month and announced he was ditching his plan to scrap the tax relief on childcare vouchers.

All those who are currently in receipt of childcare vouchers will remain unaffected. However, for all new entrants to the scheme after April 2011, relief will be applied at the standard income tax rate of 20%, resulting in the vouchers being less effective for higher rate taxpayers. Relief is currently available from National Insurance Contributions, but the Government has yet to confirm exactly how this will work in the long run.

Over 93,000 people signed a petition on the 10 Downing Street website urging Mr Brown not to scrap the relief.

9 November 2009 - Pre-Budget Report

Date Added: 09 December 2009

A Pre-Budget Report (PBR) that contained little more than the odd stealth grab here and there with the freezing of various allowances and the continued upward march of National Insurance Contributions.

Rumours circulating that Capital and Income Tax rates could be aligned, or that forestalling provisions would be used to attack acceleration of income, proved unfounded.

There seems little doubt that the measures announced on bank bonuses were designed to provide the necessary distraction to prevent the media from focusing on the underlying problems of the public finances.

We must all hope that we will soon be through this silly season where political dividing lines and staying in a job seem to take precedence over establishing a coherent plan to tackle the underlying problems that so many owner managed businesses are having to deal with day in day out.

The key tax issues in the PBR 2009 include:

• Return to 17.5% standard rate of VAT from 1 January confirmed, without the threatened increase in the rate.

• Maintenance of the Small Companies Tax Rate at 21% for a further year, when it was due to rise to 22% from 1 April 2010.

• Another 0.5 % on all National Insurance contribution rates from 2011-12, over and above the 0.5% increase already announced, with minor increases in the thresholds to compensate lower earners.

• No increase in the starting level for 40% income tax in April 2012.

• Inheritance Tax nil rate band to remain at £325,000 for 2010/11.

• Further improvements to the tax attractiveness of electric cars and vans used for businesses, whilst continuing to make most other business cars more expensive, particularly if fuel is provided.

• Furnished holiday letting businesses to be brought in line with other property businesses (as previously announced), from 6 April 2010, with consequent loss of some tax relief.

• Time to pay scheme to be extended for as long as needed to assist those firms who have been allowed to spread their tax payments.

• Other points that may be of interest are:

• Relaxation of the requirement for businesses claiming R & D tax relief to own the IP derived from the work. • A new "Bank Payroll Tax" of 50% on institutions in respect of bankers' bonuses in excess of £25,000.

• Tightening of several anti-avoidance measures (including, SDLT avoidance schemes; tax-motivated use of capital allowances on plant; salary sacrifice arrangements relating to the provision of free meals.).