newsletter Archives - Collins Accountancy

RTI, pension auto-enrolment and minimum wage 2012

Posted on 05/10/201210/10/2012 By dc_admin

RTI. Auto-enrolment to pension schemes. An increase to the minimum wage.

There have been a few changes in the news recently. The important ones for employers are the changes to national minimum wage, the introduction of RTI reporting, and the introduction of automatic enrollment of workers to pension schemes.

National Minimum Wage

From 1^st October 2012 the minimum wage rates are:

£6.19 an hour for workers aged 21 and over (an increase of 11p)
£4.98 an hour for workers aged 18-20
£3.68 an hour for workers aged below 18 who are no longer of compulsory school age
£2.65 per hour for apprentices under 19, and 19 or over in their first year of apprenticeship

Payroll changes – RTI

HM Revenue and Customs (HMRC) is changing the way employers report tax and national insurance (NIC) liability. Currently, you (or your payroll provider), calculate tax and NIC on a regular basis. You pay your employees their net wage or salary. You then pay the tax and NIC to HMRC monthly or quarterly. At the end of the tax year, a P35 report is filed with HMRC. The P35 confirms the amounts of tax each employee has paid, and the total tax and NIC deducted and paid to HMRC by the employer.

Under the new system – RTI (real time information) employers send a report to HMRC when every payroll run is completed. Each report will contain employees’ personal and payment details. So there will no longer be a year-end return to file. HMRC will no longer require P46s and P45s to be filed, but you will still need the same information from starters and must give P45 information to leavers.

To prepare for the change you’ll need to make sure your software can file RTI reports, and check that all of your employee details are accurate. If you use a payroll provider, or bureau, they should handle the change for you.

The payroll software that we use is fully compliant with the new regime, so clients can expect to see little difference in the work they need to do.

More information is on HM Revenue and Customs website, or please contact us for help with your payroll.

Pension Auto-enrolment

The introduction of compulsory pension schemes for jobholders has been in the news recently. Currently only large companies must make sure all eligible workers are enrolled onto a qualifying pension scheme. It will be extended to all employers by 2017.

Employers will have to deduct a proportion of the jobholder’s pay, and make an additional employer contribution.

The dates from which employers must start (the staging date), depend on the number of employees you have and your PAYE reference. More information what you need to do, when you’ll need to do it, and what you must not do, can be found on the Pensions Regulator website:

When the time comes to set up your scheme, please talk to an independent financial advisor to find the most cost effective scheme for you and your workers. If you would like help in finding a good financial advisor please contact us.

Budget 2012 Summary

Posted on 28/03/201228/03/2012 By ca_admin

Budget 2012

This is a brief overview of the Budget 2012, concentrating on the points that affect small business owners.

Corporation Tax

The published reduction in corporation tax will not affect companies with profits below £300,000 per year. The rate for small companies will not change from 20%.

From April 2013 there will be a favourable 10% rate of corporation tax on profits earned from patents and other intellectual property. Companies will need to keep clear records of relevant costs and income, separate from any other trading or income streams.

Research and Development Tax Relief

Changes will be made in the Finance Bill 2012, expected to receive royal assent in July 2012. Changes will apply from 1^st April 2012, and are:

the rate of relief will increase from 100% to 125%,
a reduction in the rate of tax credit payable, from 12.5% to 11%, to keep the cash payment on claims the same in relation to the expenditure,
the cap on payable tax credits at the amount of PAYE/NIC paid will be abolished,
the requirement for a minimum spend of £10,000 will also be abolished.

Tax simplification

There are proposals to simplify accounting requirements for small unincorporated businesses, and to simplify expenses for all small businesses. The changes have not yet been confirmed, as they are still in consultation, but they will apply to businesses below the VAT threshold.

Business Rate Relief

The current small business rate relief holiday will be extended for 6 months from 1^st October 2012. The government will also give businesses the opportunity to defer 60 per cent of the increase in their 2012-13 business rate bills as a result of the RPI uprating, to be repaid equally across the following two years.

Personal Tax

Changes to personal tax allowances were announced, as well as the phasing out of the age related allowance.

	2011/2012	2012/2013	2013/2014
Personal allowance	7,475	8,105	9,205
Age related allowance 65-74	9,940	10,500	10,500
Age related allowance 75 +	10,090	10,660	10,660
Income limit for personal allowance	100,000	100,000	100,000
Income limit for age-related allowances	24,000	25,400	25,400
Basic rate band (20%)	35,000	34,370	32,245
Higher rate band (40%)	150,000	150,000	150,000
Additional rate	50%	50%	50%
Dividend additional rate	42.5%	42.5%	37.5%

National Insurance

The following rates and limits for class 1 NIC will apply from 6^th April 2012

Weekly rates	2012/2013	2013/2014
Lower earnings limit	£102	£107
Primary threshold (employee)	£139	£146
Secondary threshold (employer)	£136	£144
Upper earnings limit	£817	£817
Primary main rate	12%	12%
Primary residual rate	2%	2%
Secondary rate	13.8%	13.8%
Class 1A rate on employment benefits	13.8%	13.8%

For self-employed people the rates of NIC are increasing slightly

	2011/2012	2012/2013
Class 2 weekly rate	£2.50	£2.65
Class 2 small earnings exception	£5,315	£5,595
Class 4 lower profits limit	£7,225	£7,605
Class 4 upper profits limit	£42,475	£42,475
Class 4 rate between lower and upper profits limits	9%	9%
Class 4 rate above upper profits limit	2%	2%

Class 2 NIC is payable either monthly by direct debit, or twice yearly in July and January.

Class 4 NIC is calculated on taxable profits, and paid with your income tax.

VAT

With effect from 1^st April 2012 the VAT registration threshold will be £77,000. The deregistration limit will be £75,000.

Further Information

More information can be found at www.hmrc.gov.uk, and on the Treasury website at www.hm-treasury.gov.uk. If you would like advice on how the changes may affect you please contact us.