Key Dates
19 March 2011 - PAYE and NIC due for the month ended 5th March 2011 (non-electronic payments). Submit Construction Industry Scheme return for the month ended 5th March 2011.
22 March 2011 - PAYE and NIC due for the month ended 5th March 2011 (online payments).
23 March 2011 - Budget speech to the House of Commons.
14 April 2011 - Deadline for submission of forms CT61 and payment of any associated income tax for the quarter ended 31st March 2011.
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Reminder on Tax Code Notice Change
Taxpayers are reminded that copies of the notices informing them of their tax code for the year 2011-2012, sent out during January, February and March, will no longer go to their tax agent or advisor.
The new tax codes will be used by employers or pension providers from 6 April 2011 to make sure taxpayers pay the right tax and receive the tax allowances and reliefs to which they are entitled. |
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As part of its measures to reduce costs, HM Revenue & Customs is no longer issuing copies of the P2 PAYE Coding Notice to tax agents or advisors, so taxpayers need to share their code with their tax agent or advisor where appropriate.
Not everyone receives a Coding Notice but employers or pension providers will still be able to update tax codes on 6 April, as HMRC will inform them of these separately.
Where people have more than one source of PAYE income or pensions, HMRC will update these code numbers on the same day and they may receive a Coding Notice for each.
LINK: PAYE tax coding information from HMRC |
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Record Numbers File Online
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Record numbers of people completed their self assessment tax returns online this year, HM Revenue & Customs (HMRC) has revealed.
A total of 6,907,410 people filed online by the 31 January deadline, representing 78 per cent of all returns submitted. The figure was just over seven per cent up on the 2010 total, when around 6.4 million people filed online by 31 January.
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On the busiest day for online returns, 31 January, HMRC received a record 572,455 online self assessment returns. The busiest period was between 4- 5pm on 31 January, when 49,367 returns were received.
Online filing continued over the Christmas holidays, with 845 people filing on Christmas Day, 2,408 on Boxing Day and 16,230 on New Year’s Eve, including 96 between 11pm and midnight. There were also 5,130 online filings on New Year’s Day,
LINK: Online filing information |
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Childcare Support Changes
Businesses are reminded that the rules on employer-supported childcare will change for higher and additional rate taxpayers from 6 April 2011.
The new rules will apply to the following types of employer-supported childcare:
- childcare vouchers provided to the employee by their employer for qualifying childcare.
- an arrangement where an employer arranges directly with a registered provider to offer qualifying childcare to employees.
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Both forms of employer-supported childcare are currently free of tax and national insurance contributions on the first £55 per week and, at present, higher rate taxpayers benefit from at least double the amount of income tax relief received by basic rate taxpayers.
The changes HM Revenue & Customs (HMRC) is introducing from 6 April mean that any new entrants to such schemes from this date will receive the same level of tax relief, regardless of earnings.
Employees already in a scheme prior to 6 April will receive their current level of tax savings unless they leave the scheme or are no longer eligible to participate.
From 6 April, employers will need to assess employees’ basic employment earnings for the coming tax year, including pay and taxable benefits but excluding potential bonus and overtime payments. An assessment will also be required when an employee joins the scheme other than at the start of a new tax year.
The basic employment earnings figure, after deducting the employee’s personal allowance, sets the amount of employer-supported childcare on which the employee receives tax relief, with the end result that all employees will receive relief equivalent to basic rate relief at 20 per cent on £55.
The maximum value of exempt income in the form of childcare vouchers or directly contracted childcare from 6 April, for new joiners of such schemes, is set out in the table below.
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Basic rate (20%) |
Higher rate (40%) |
Additional rate (50%) |
Weekly |
£55 |
£28 |
£22 |
Monthly |
£243 |
£124 |
£97 |
Annual |
£2,915 |
£1,484 |
£1,166 |
LINK: More information from HMRC
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Time Running Out on Retirement at 65
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Employers are reminded that they only have a limited time remaining to set in motion procedures to retire staff at the age of 65.
The Default Retirement Age (DRA) is being phased out this year, which means that employers will no longer be able to automatically retire employees because they have reached 65. |
From 6 April, employers will no longer be able to issue notifications of retirement using the DRA procedure.
If notifications are made before 6 April 2011 in accordance with DRA procedures, employers will be able to continue with the retirement process as long as the retirement is due to take place before 1 October 2011 and the employee will be aged 65 by the same date. No retirements using the DRA procedure will be possible from 1 October 2011.
From 1 October 2011, employers will not be able to compulsorily retire their employees, unless the retirement can be objectively justified in their particular circumstances.
LINK: Guidance from Acas
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Time to Pay Rejection Rate Rises
The percentage of Time to Pay requests refused by HM Revenue & Customs (HMRC) in 2010 was more than double the rate in 2009, according to new statistics.
Figures from HMRC show that the percentage of requests refused in 2009 stood at 2.7 per cent. In 2010, the refusal rate had risen to 5.8 per cent. |
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Time to Pay (TTP) was launched as part of HMRC’s Business Payment Support Service (BPSS) in November 2008 to help businesses and individuals seeking extra time to pay tax they owed. Since its launch, a total of 16,100 Time to Pay arrangements, worth £890 million, have been refused.
Despite speculation that HMRC has toughened its criteria for making Time to Pay arrangements, its website says: “There are no plans to close the BPSS or change HMRC’s TTP policy or approach.”
HMRC also says that requests that are initially refused may, after a period of time, be revised and resubmitted and an arrangement granted.
The new figures also revealed that since the launch of BPSS, 395,400 arrangements have been agreed, worth £6.83 billion. Of these, 46 per cent involved VAT, which also accounted for 50 per cent of the value of arrangements.
Other figures in HMRC’s latest BPSS statistical release, published on 28 January, showed that since the launch of the scheme:
- 61 per cent of arrangements were for three months or less
- 61 per cent of arrangements involved sums under £10,000, or 15 per cent of the total value of arrangements
- Demand in 2010 was 60 per cent of the 2009 level for the number of requests and 58 per cent for the value
- £5.87 billion has been paid to HMRC from mature arrangements.
LINK: Business Payment Support Service
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Right to Request Flexible Working Extended
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Workers’ right to request flexible working is to be extended under a change to be introduced from 6 April, businesses are reminded.
Employees are currently eligible to request flexible working to care for a child aged under 17, a disabled child aged under 18 who receives disability living allowance or certain adults who require care. |
From 6 April 2011, the right to request flexible working will be extended to workers where the child involved is under the age of 18, whether the child is disabled or not.
Also from 6 April 2011, employers will be able recruit a job candidate or promote an existing employee who has a protected characteristic if they are of equal merit to another candidate or employee and the employer reasonably thinks that people with that characteristic:
- are underrepresented in their existing workforce or
- suffer a disadvantage connected to that characteristic.
The relevant protected characteristics are:
- age
- disability
- gender reassignment
- marriage and civil partnership
- pregnancy and maternity
- race, ethnic or national origin, colour and nationality
- religion/belief or lack of any religion/belief
- sex
- sexual orientation.
From 3 April 2011, employees will gain the right to additional paternity leave and pay (APL&P) where their partner is due to give birth on or after 3 April or they have been notified on or after 3 April that they have been matched with a child for adoption.
Additional paternity leave (APL) will allow an employee to take up to 26 weeks' leave to care for the child. They will only be able to start APL 20 or more weeks after the child's birth or placement for adoption and/or after their partner has returned to work from statutory maternity or adoption leave or ended their entitlement to statutory maternity or adoption pay, or maternity allowance.
The APL must also end by the end of the 52nd week after the child's actual birth or placement for adoption.
Additional statutory paternity pay (ASPP) will only be paid during the time their partner would have received statutory maternity or adoption pay, or maternity allowance.
LINK: Business Link regulation updates
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Whitehall Rapped on Quality of Case for New Business Regulations
An independent watchdog that reviews government proposals for new regulations affecting businesses says a “worryingly high proportion” fail to make a strong enough case.
The Regulatory Policy Committee (RPC) reviews the evidence supporting new regulation before the proposals go forward to the government’s Reducing Regulation Committee, which has the power to send them back to departments. |
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In its Challenging Regulation report, issued on 28 February, the BPC said it had significant concerns over 44 per cent of the draft impact assessments accompanying draft regulations – designed to identify the costs and benefits of the proposal, including the impact on groups including businesses – examined between September and December last year. The RPC looked at 189 impact assessments in that period.
Sir Don Curry, chair of the Better Regulation Executive, which leads the regulatory reform agenda across government, said: “Independent scrutiny of the impact that new regulations have on business is central to the government’s plans to cut the flow of new red tape.
“With that being the case, it’s disappointing that nearly half of the proposals that the RPC has been asked to give its opinion on are not up to scratch.”
Business Minister Mark Prisk said that impact assessments must be “robust and comprehensive”, adding: “Only when regulation is used as a last resort can we create the right conditions for growth and strengthen the economy.”
LINK: Regulatory Policy Committee
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Time Running Out on State Pension Top-Up Offer
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Around 70,000 people, mainly women, have until 5 April to boost their basic state pension and get backdated payments.
People who have reached, or will reach, state pension age between April 2008 and April 2011 and do not receive a full basic state pension, could increase their pension payments in the future, and receive backdated payments if they buy back national insurance contributions by 5 April 2011. |
The offer from the Department of Work and Pensions allows this group to buy back up to six years of voluntary contributions as far back as 1975.
It follows the reduction in April 2010 of the number of qualifying years of national insurance contributions needed to receive the full basic state pension from 39 to 30 years for women.
Pensions Minister Steve Webb said: "We know that many women didn’t benefit from the reduction in the number of qualifying years of national insurance contributions needed to get a full basic state pension and many have gaps to fill.
"Thousands of people could benefit from receiving back payments on top of a pension boost for life that could cover the upfront costs of buying contributions.
"The chance to take advantage of this offer will end on 5 April of this year, so it’s important that people act quickly."
People will still be able to fill gaps in their national insurance records when the offer expires but the voluntary contributions will not be backdated.
LINK: Pension and retirement planning |
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‘Game Up’ Warning on Offshore Non-Compliance
New penalties of up to 200 per cent could be imposed on anyone hiding money offshore, HM Revenue & Customs (HMRC) has warned.
From 6 April 2011, penalties for offshore non-compliance – for income tax and capital gains tax – will be linked to the tax transparency of the country involved, with higher penalties introduced for under-declared income and gains from territories that do not automatically share tax information with the UK. |
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David Gauke, Exchequer Secretary to the Treasury, said: "The game is up for those going offshore to evade tax. With the risk of a penalty worth up to 200 per cent of the tax evaded, they have a great incentive to get their tax affairs in order.”
Dave Hartnett, Permanent Secretary for Tax at HMRC, said: "These new penalties will increase the deterrent against offshore non-compliance. They build on other activity, including signing tax information exchange agreements, requiring information about offshore bank accounts and disclosure opportunities, including the Liechtenstein Disclosure Facility (LDF)."
The new penalties for income tax and capital gains tax non-compliance classify territories into three groups that determine the level of penalty that applies to non-compliance. These are:
- where the income or gain arises in a territory in category 1, the penalty rate will be the same as under existing legislation
- where the income or gain arises in a territory in category 2, the penalty rate will be 1.5 times that in existing legislation - up to 150 per cent of tax
- where the income or gain arises in a territory in category 3, the penalty rate will be double that in existing legislation - up to 200 per cent of tax
The first self assessment returns to which the penalties would apply are those concerning the 2011-12 tax year (filed by January 2013).
LINK: Details of new penalties
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Deliberate Defaulters Told ‘Taxman Will Be Watching You’
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Tax cheats have been warned they face up to five years of detailed scrutiny by HM Revenue & Customs (HMRC).
Starting in February, letters have been going out to 900 known evaders, warning them they will be subject to increased levels of personal scrutiny as part of the new Managing Deliberate Defaulters (MDD) programme. |
The programme will closely monitor the tax affairs of individuals and businesses who have deliberately evaded tax to ensure that they are complying with tax obligations on an ongoing basis.
HMRC said that anyone tempted to break tax rules could face continued and close scrutiny for five years if they do so.
The level and term of monitoring will depend on the seriousness of the offence but HMRC does not anticipate that anyone will be released from the programme within two years.
HMRC will continue to check that returns are filed on time and that any tax that is due is paid on time, with regular reviews of deliberate defaulters’ tax affairs to check that any errors or failings have been put right.
Safeguards are also being put in place to ensure that deliberate defaulters do not escape scrutiny by simply starting up a new business under a different name or identity. In these instances, HMRC may continue to monitor the new business.
LINK: The Managing Deliberate Defaulters Programme
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Company Car Changes Go Electronic
An important change to the way employers notify HM Revenue & Customs (HMRC) about replacement company cars will take effect from April 2011.
From April, employers will be able to notify HMRC electronically of any replacement car changes and only notifications received in this way will be accepted. |
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Options for electronic filing include HMRC’s free Online Return and Forms – PAYE service, available via its website.
HMRC had previously announced that from April 2009, employers no longer had to submit form P46 (Car) for replacement company car changes and that from April 2010, forms P46 (Car) relating to such changes would no longer be accepted.
The reintroduction of notification of replacement company car changes has followed representations to HMRC about the impact of scrapping the measure, which could potentially affect the tax position of an employee in the tax year the change occurred.
It meant that the employee’s tax code was only changed after the relevant P11D taxable benefits and expenses form was filed in the new tax year.
LINK: Reporting company cars on form P46 (Car)
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SMES Urged To Keep Business Records in Shape
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HM Revenue & Customs (HMRC) has launched new tools to help small businesses, sole traders and the self-employed keep their records in shape.
Four new products were launched in February, ahead of the introduction of HMRC’s new Business Record Checks programme later this year, which will impose penalties for significant record-keeping failures. |
Brian Redford, HMRC’s acting director, Business Customer Unit, said: “It may seem like a challenge, particularly when you’re starting out, but keeping good records will bring real advantages to your business.
“Get a proper system in place and you’ll not only be confident that you are paying the right tax, but you’ll keep up-to-date with how much you owe suppliers and how much you are owed.
“Later this year, HMRC will start a programme of Business Records Checks that will look at the adequacy and accuracy of business records in SMEs to bring about a major improvement in the standard of record-keeping. Now is the time to invest a bit of effort to make sure your business records are perfect.”
LINKS
Keeping records for business - what you need to know: www.hmrc.gov.uk/factsheet/record-keeping.pdf
A general guide to keeping records for your tax return: www.hmrc.gov.uk/sa/rk-bk1.pdf
Set up a basic record-keeping system: www.businesslink.gov.uk/recordkeeping
Find out what records you should be keeping: www.businesslink.gov.uk/recordkeepingcheck |
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