This month we report on changes to business rates, tougher NMW sanctions and tax guidance for charities. We also include a reminder that the deadline for ‘paper’ self assessment returns is approaching and details of the 5p carrier bag charge.
Please do get in touch if you would like any further guidance on any of the areas covered.
Deadline for ‘paper’ self assessment tax returns
Autumn Statement date announced
5p carrier bag charge comes into force
Making tax simpler for charities
Government toughens National Minimum Wage (NMW) sanctions
Business rates appeal proposals are a ‘barrier to justice’
Deadline for ‘paper’ self assessment tax returns
For those individuals who have previously submitted ‘paper’ self assessment tax returns the deadline for the 2014/15 return is 31 October 2015. Returns submitted after that date must be submitted electronically or they will incur a minimum penalty of £100. The penalty applies even when there is no tax to pay or the tax is paid on time.
If you would like any help with the completion of your return please do get in touch.
Internet link: GOV.UK Self Assessment
Autumn Statement date announced
The government has announced that the date of the Autumn Statement will be 25 November 2015.
The Chancellor of the Exchequer, George Osborne, has announced that there will be an Office for Budget Responsibility forecast alongside the Spending Review on Wednesday 25 November 2015. The government will therefore publish a joint Autumn Statement and Spending Review on this date.
We will keep you informed of key announcements.
Internet link: GOV.UK News
5p carrier bag charge comes into force
Carrier bag charges will begin in England on 5 October 2015. For a large retailer the minimum charge is 5p for single-use plastic carrier bags. For small or medium-sized businesses no charge is required but can be made on a voluntary basis.
A business that employs 250 or more full-time equivalent employees, in all roles not just in retail roles, will be treated as being large and must charge the 5p. The number of employees is calculated at the start of each reporting year. The first reporting year will start on 5 October and run to 6 April 2016. Subsequent reporting years will start on 7 April.
When calculating full-time equivalent employees a business that is operated under a franchise needs to only include employees in that business, not the whole franchise.
The type of bags that will carry the charge will be:
- unused
- plastic
- with handles and
- 70 microns thick or less.
Where deliveries or online sales are made to customers any plastic bags used will also have to be included in the total cost. It may be that the amount of bags to be used is unknown when the order is placed. In this situation an average number of bags can be used in the charge as long as 5p or more is charged per bag overall.
There are a number of specific exemptions on the types of bags which would not be subject to the charge. These include bags for:
- uncooked fish and fish products
- uncooked meat, poultry and their products
- prescription medicine
- free promotional material given away.
Retailers will need to maintain reporting records and also make a report to Defra on or before 31 May following the end of the reporting year. The first report should therefore be sent to Defra by 31 May 2016.
The details to be sent to Defra are as follows:
- number of bags distributed
- the amount of money received from selling the bags
- any VAT paid from the money received from selling bags
- what the business did with the proceeds from the charge
- any reasonable costs (see below) and how they break down.
Reasonable costs include costs to comply with the legislation and do not include the costs of the bags. Examples would be:
- costs of changing till systems
- training staff
- communicating the policy to staff.
Once reasonable costs have been deducted, the remaining proceeds should all be donated to good causes.
The local authority, where the shop is based, is authorised to make inspections to ensure the law is being followed. Where there is non-compliance, they will have the authority to issue a notice to the retailer to correct the non-compliance or issue a fixed fine of up to £200 or a variable penalty of up to £20,000. In additional the local authority can order the retailer to advertise that they have broken the law.
Internet link: GOV.UK Guidance
Making tax simpler for charities
In September HMRC updated their detailed guidance notes which outline how the tax system operates for charities. The notes include how to apply to be recognised as a charity for tax and the operation of gift aid and payroll giving.
Over the last five years the government has brought in a range of changes to the tax system to make it simpler for charities to make the most of tax reliefs, so that more money can go to good causes.
Gift aid small donation scheme
Through the gift aid small donations scheme charities can claim a gift aid-style top-up on small donations eg a donation to a charity vendor in the street, up to a limit of £5,000 per year. This limit will increase to £8,000 per year from April 2016.
Charities online
Charities can submit claims for gift aid tax relief online which speeds up the claims process. 95% of charities now use this online system and the claims are processed within five working days.
HMRC outreach team
To date an HMRC outreach team has delivered face-to-face presentations to over 650 charities to spread awareness and help charities to successfully claim tax relief.
Community amateur sports clubs
The government has amended the law so that local sports clubs registered as community amateur sports clubs can receive corporate gift aid to help these clubs benefit their local communities.
Social investment tax relief
The social investment tax relief scheme has been created to encourage people to invest in social enterprises including charities. Individuals making an eligible investment will be able to deduct 30% of the cost of that investment from their income tax liability.
Lower IHT rate
If people leave at least 10% of the net value of their estate (its worth, minus any debt, other liabilities and reliefs) to charity, then 36% inheritance tax can be paid instead of 40%.
If you want further details on the tax treatment of charities please contact us.
Internet links: GOV.UK news GOV.UK guidance
Government toughens National Minimum Wage (NMW) sanctions
The government has announced a package of measures including tougher NMW penalties to ensure employees receive the pay they are entitled to.
The measures include:
- doubling the penalties for non-payment of the NMWand the new National Living Wage
- increasing the enforcement budget
- setting up a new team in HMRC to take forward criminal prosecutions for those who deliberately do not comply
- ensuring that anyone found guilty will be considered for disqualification from being a company director for up to 15 years
Business Secretary Sajid Javid said:
‘There is no excuse for employers flouting minimum wage rules and these announcements will ensure those who do try and cheat staff out of pay will feel the full force of the law.
This one nation government is committed to making work pay and making sure hardworking people get the salary they are entitled to.’
The government has announced the introduction of a new team of HMRC compliance officers who will investigate the most serious cases of employers not paying the NMW and National Living Wage. The team will have the power to use all available sanctions, including penalties, prosecutions and naming and shaming the most exploitative employers.
Stiffer penalties
Employers who fail to pay employees the minimum wage will have to pay penalties which will be up to twice what they currently are. This reform is intended to increase compliance and make sure those who break the law face tough consequences.
The calculation of penalties on those who do not comply will rise from 100% of arrears to 200%. This will be halved if employers pay within 14 days. The overall maximum penalty of £20,000 per worker remains unchanged.
Other changes
In other related changes a new Director of Labour Market Enforcement and Exploitation will be created to oversee enforcement of the NMW, the Employment Agency Standards Inspectorate and the Gangmasters Licensing Authority. The Director will set priorities for enforcement based on a single view of the intelligence about exploitation and non-compliance.
A consultation will be launched in the autumn on the introduction of a new offence of aggravated breach of labour market legislation. The consultation will also propose giving the Gangmasters Licensing Authority additional investigatory powers and a wider remit to tackle serious labour exploitation more effectively.
The government has also announced they will improve the guidance and support made available to businesses on compliance. They will also work with payroll providers to be sure payroll software contains checks that staff are being paid what they are entitled to.
If you would like help with payroll or employment law please do get in touch.
Internet link: GOV News
Business rates appeal proposals are a ‘barrier to justice’
The Enterprise Bill is currently going through Parliament. Part of the Bill reforms the business rates appeals system. The government’s changes have been criticised by rates experts and business groups, amid concerns that the changes will act as a ‘barrier to justice’.
The Valuation Office Agency (VOA), which is part of HMRC, is responsible for compiling and maintaining non-domestic rating lists. Currently officers of the VOA are prevented from sharing the information they collect about properties and ratepayers with local government. This means that businesses have to provide the same information twice to the VOA and local government. It can also mean that the properties have to be inspected by both the VOA and the local authority.
The Bill therefore allows the VOA to disclose information to a ‘qualifying person for a qualifying purpose’ such as a local authority.
The changes have been criticised by some people. They say the legislation will act as a ‘barrier to justice’ for businesses seeking to appeal.
Transparency around how business rates or tax on commercial property is measured has long been called for by small businesses. Critics of the bill claim that it has failed to address this issue, as it permits the VOA to share rate measurement information with local authorities but not with individual businesses.
Jerry Schurder, former chairman of the Royal Institution of Chartered Surveyors said:
‘In business rates, your own liability depends not on your own property but what’s being paid by lots of other people and you have no right to obtain that information. In any other tax, the taxpayer has the relevant information to make an appeal but not on rates.’
Meanwhile John Allan, national chairman at the Federation of Small Businesses, commented:
‘While we support moves to make it easier to navigate business rates appeals, we have concerns around the proposals in the Bill.
Their primary aim seems to be reducing the number of appeals by making the process more difficult, rather than by addressing the underlying issues, in particular making the appeals system and the VOA more transparent.
If increased transparency is not delivered, then confidence in the business rates system will continue to be undermined.’
Internet links: Link to legislation Telegraph
This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm. Please contact us for further information.