HMRC set up new forum for Small Businesses

The HMRC have launched a new online forum and dedicated webchat service for small businesses and the self employed.

The forum is designed to give users quick answers to tax questions as well as help with issues that may arise when starting a business, taking on new employees and completing tax returns.

The Financial Secretary to the Treasury and Paymaster General, Mel Stride, explained that HMRC has launched the service to help businesses “get off the ground and support them as they grow”

If you would like to visit the new forum to see how it can help you have a look here

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All Things Business

An extract of the article about Wallis Payroll in this months All Things Business magazine.

All Things Business spoke with Andi Herrington, Director of Payroll Services at Wallis Payroll about the beginnings of Wallis Payroll, what they provide and why businesses should choose Wallis Payroll for their payroll requirements…

Tell us where Wallis Payroll came from and what services you offer?

Having spent 15 years working as both an employee of a payroll provider and on the other side of the table as a customer, I felt I had experienced both the highs and lows of working with an outsourced payroll partner. With this experience, I felt that I could do a MUCH better job. I set up Wallis Payroll three years ago to provide the same level of payroll expertise to Micro and SME employers as that afforded to large organisations who have an in-house team or use one of the large payroll bureaus who cater for high volume employers.

Along with my business partner, we wanted to do something different, something more personal yet professional where it would feel that we are part of a customer’s team providing payroll processing solutions, giving customers the confidence to manage the growth and development of their business while we manage their payroll.

To read more visit All Things Business

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Advisory Fuel Rates

The HMRC review (and change) the advisory fuel rates every 3 months, these rates apply to vehicles running on Petrol, LPG and Diesel and are to be used for company cars only. Where a car is hybrid it is treated as either petrol or dieselFor ease we have placed the rates for the 2016-17 tax year to date in one place.

You will see that the rates start from March 2016 this is because the rates are not reviewed in line with the tax year or tax periods.

Petrol Advisory Fuel Rates 2016-17 onwards

Dates Covered1400cc or less1401cc to 2000ccOver 2000cc
December 17 - February 1811 pence14 pence21 pence
September - November 1711 pence13 pence21 pence
June - August 1711 pence14 pence21 pence
March - May 1711 pence14 pence22 pence
December 16 - February 1711 pence14 pence21 pence
September - November 1611 pence13 pence20 pence
June - August 1610 pence13 pence20 pence
March - May 1610 pence12 pence19 pence

LPG Advisory Fuel Rates 2016-17 onwards

Dates Covered1400cc or less1401cc to 2000ccOver 2000cc
December 17 - February 187 pence9 pence14 pence
September - November 177 pence8 pence13 pence
June - August 177 pence9 pence14 pence
March - May 177 pence9 pence14 pence
December 16 - February 177 pence9 pence13 pence
September - November 167 pence9 pence13 pence
June - August 167 pence9 pence13 pence
March - May 167 pence8 pence13 pence

Diesel Advisory Fuel Rates 2016-17 onwards

Dates Covered1600cc or less1601cc to 2000ccOver 2000cc
December 17 - February 189 pence11 pence13 pence
September - November 179 pence11 pence12 pence
June - August 179 pence11 pence13 pence
March - May 179 pence11 pence13 pence
December 16 - February 179 pence11 pence13 pence
September - November 169 pence11 pence13 pence
June - August 169 pence10 pence12 pence
March - May 168 pence10 pence11 pence
Posted by AndiH in Benefits & Expenses, 0 comments

Most Optimistic Self Assessment Expense Claims

In advance of next weeks 31st January the HMRC has released a list of the latest extravagant items which have been claimed as expenses on self assessment tax returns. These examples are all from the 2014-15 returns, we will have to see if those of the 2015-16 tax year can compete.

1. Holiday flights to the Caribbean
2. Luxury watches as Christmas gifts for staff – from a company with no employees
3. International flights for dental treatment ahead of business meetings
4. Pet food for a Shih Tzu ‘guard dog’
5. Armani jeans as protective clothing for a painter and decorator
6. Cost of regular Friday night ‘bonding sessions’ – running into thousands of pounds
7. Underwear – for personal use
8. A garden shed for private use – plus the cost of the space it takes up in the garden
9. Betting slips
10. Caravan rental for the Easter weekend

Needless to say none of these ‘expenses’ were allowable.

The Self Assessment tax return deadline is in just 7 days, there are penalties for not submitting your tax return on time even if there is no tax due.

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Personal Allowance

The personal tax allowance for 2017-18 will be £11,500, for individuals with this tax allowance the code will show as 1150L. Although this is due to be the standard tax code for 2017-18 some individuals will be on a different code depending on their circumstances, have a look at our tax codes article for more information.

For the 2017-18 tax year individuals on the standard tax code will not start paying tax at 40% unless their earnings exceed £45,000, this is the greatest amount someone can earn before paying 40% tax since 2010-11, the last 7 years have seen a decrease in the higher rate threshold in both real and actual terms.

The below table shows the rate bandings from 2010-11 to those for 2017-18, the bandings for future years will be confirmed closer to the time.

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Tax Rate
Personal Allowance £6,475 £7,475 £8,105 £9,440 £10,000 £10,600 £11,000 £11,500 0%
Basic Rate Threshold £37,400 £35,000 £34,370 £32,010 £31,865 £31,785 £32,000 £33,500 20%
Higher Rate Threshold £43,875 £42,475 £42,475 £41,450 £41,865 £42,385 £43,000 £45,000 40%
Additional Rate Threshold £150,000 £150,000 £150,000 £150,000 £150,000 £150,000 £150,000 £150,000 45%
Posted by AndiH in Tax and NIC, 0 comments

It’s our Birthday – PROMOTION

We are very pleased to be able to celebrate our 2nd Birthday this September, over the last two years we have grown steadily, welcoming new clients to both our payroll processing and consultancy service.

HappyBirthday

We would like to share our birthday celebrations and are offering two FREE months processing to all new customers who sign up in September and October 2016.  To qualify for this offer please email us at info@wallispayroll.co.uk or complete your details in the contact us form, quoting WPL2.

Posted by AndiH in General, 0 comments

Tax Codes – what do all those letters and numbers mean?

Have you ever wondered what your tax code means, and why you may have a different code to your friends or colleagues, as if you have nothing else to talk about in the canteen.

Some parts of the tax code are more obvious than others but we hope that this article helps explain things so that you can understand why you are being taxed at a certain rate.  Should you believe that your tax code is incorrect then you will need to contact HMRC directly as unfortunately even if your employer believes the code to be wrong they can not change it for you.

1100L

1100L is the standard tax code for most people (born after 5 April 1938) for the current (2016-17) tax year.  If this is your tax code then it means that you do not pay any PAYE (tax) on the first £11,000 you earn during the year, unfortunately this allowance isn’t given all in one go, you get 1/12th of the annual allowance (approximately £916) per month tax free.

Your personal tax code could be higher or lower than 1100L dependent on your circumstances, i.e. whether you have unpaid tax from a prior year or you have tax relief due on charitable contributions.

Tax Code Letters

The letters in your tax code can mean a number of different things.

LetterWhat it means
LIndicates that the value preceding is your tax free personal allowance
MIndicates that you have received a transfer of 10% of your partners personal allowance (Marriage Allowance)
NIndicates that you have transferred 10% of your personal allowance to your partner (Marriage Allowance)
SThe S would precede the numeric value of your tax code and indicates that tax is paid inline with the Scottish Rate of Income Tax, for the current tax year this is the same as the rest of the UK but may change in future years
TThis typically indicates a temporary tax code or a code that has other amounts factored into it. Also used for individuals who earn over £100k at which point you start to lose your personal allowance.
KThis is used when the level of your untaxed income/benefits exceed your personal allowance
0TYou do not have any personal allowance remaining and do not have any tax free pay. This code would typically be used if your earnings were in excess of £122k or if you did not provide your new employer with a P45 or starter declaration
BRAll of your income from this employment/pension is taxed at the basic rate, currently 20%
D0All of your income from this employment/pension is taxed at the higher rate, currently 40%
D1All of your income from this employment/pension is taxed at the additional rate, currently 45%
NTYou do not have to pay any tax on this income

Tax Basis M1/W1

Many individuals do not have either a M1/W1 marker against their tax code, when this is the case your taxable pay for the current year is completely recalculated each month and the amount of tax you have paid so far for the year is deducted from the total amount now due, this is known as a cumulative tax code and you receive an additional 1/12th of all allowances and bandings each month.

If you are on a M1/W1 tax code it means that only your income for that pay period is looked at in calculating the tax due on your pay, the HMRC sometimes refer to codes that are M1/W1 as being emergency tax codes.

50% threshold

Should you have underpaid tax earlier in the tax year or be on a K code which adds a high level of additional liability to your earnings you are protected by an automatic 50% threshold to prevent employers and pension providers from taking more than half of your pre-tax wages as tax.

Changes to tax codes

Typically tax codes only change at the beginning of a new tax year (6th April) as normally the government increases the personal allowance at this time (set to become £11,500 from 6th April 2017).  However there are occasions when HMRC changes codes during the tax year, either on receipt of new information from your employer (P11D) or from yourself.  If you believe that your tax code is incorrect then you need to contact HMRC directly to arrange for them to amend this.  Once HMRC have amended your tax code they will usually send this directly to your payroll provider to allow your pay record to be updated.  At this point dependent on the tax code and tax basis you may be lucky enough to receive a tax refund.

Posted by AndiH in Tax and NIC, 0 comments

Employing staff for the first time

It is very exciting to employ your first member of staff, and in addition to the equipment needed there are a few legal requirements that need to be met when employing staff for the first time.

  • Decided how much to pay them, this must be at least the national minimum wage or the national living wage if over 25.
  • Do they have the right to work in the UK?
  • Do they need a DBS check?
  • Get employment insurance as you need to have employers’ liability insurance.
  • Provide your new employee with details of the job in writing, this is required for any individual you employ for more than 1 months.
  • Register with HMRC as a new employer, this can be done up to 4 weeks before you pay your new staff.
  • From October 2017 all new employers will need to enrol their staff into a workplace pension.

Should you need any support with becoming an employer please give us a call as we can help with all of the processes from start to finish.

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Changes to Employment Allowance

In the 2015 Autumn Statement it was announced that there would be changes to the Employment Allowance from the 2016-17 tax year.  On the most part these changes are good for small businesses though single director businesses will lose out.

The Good News

The Employment Allowance is rising from £2,000 to £3,000 per tax year from April 2016.  If as a small business you employed two people on an annual salary of £20,000 each you would only pay £281 in employers Class 1 National Insurance for the whole year instead of £3,281 as would be the case if the Employment Allowance did not exist.

The Bad News

The number of employers that are eligible for Employment Allowance will reduce, at least 150,000 single director companies will no longer be able to claim this allowance.  However if you are a business with multiple directors or other employees on your payroll you will still be able to claim the allowance.

Are you eligible?

The Employment Allowance is open to most business and charities who pay employers Class 1 National Insurance.  Though there are some employers who are not eligible for the scheme, including:

  • domestic employers
  • public bodies or businesses who work mainly or wholly of a public nature, except charities
  • service companies
  • those who are part of a group that has already claimed the Employment Allowance
  • single director companies

For more details on eligibility please look at the guidance note provided by HMRC.

How to claim?

Claiming your Employment Allowance should be a simple process through your payroll software or alternatively through HMRC Basic Tools.

You only need to claim Employment Allowance once, this automatically roles over to future tax years.  If you become no longer eligible then you will need to mark this as such in your payroll records.

Posted by AndiH in Tax and NIC, 0 comments

Self Assessment – Tax doesn’t have to be taxing

Or that is what the adverts say.

Unfortunately this is not always the case but as an employer you can help by ensuring you have provided your employees with all of the required information.  All employers are legal obliged to provide any individuals in their employment on the 5th April each year with a P60 by the 31st of May that year, in addition should you provide your employee with any taxable benefits you need to issue them with a P11D (Expenses and Benefits Statement) by the 6th July following the end of the tax year.  Not everyone keeps these documents in a secure (and memorable) place so you may be asked for copies.

Employees require both their P60 and P11D, in addition to information from any other income source, in order to complete their self assessment tax return.

We are swiftly approaching the online tax return deadline of 31st January, it is already too late to complete a paper return as the deadline for this was 31st October 2015.  All individuals who are required to complete a tax return for the 2014-2015 tax year must have submitted this and paid any outstanding tax by the 31st January to avoid having to pay a penalty.

You may find that after your employees have submitted their self assessment tax returns you receive an amended tax code to apply to their earnings.  You must apply this even if you or the employee believe the code to be incorrect.  Any queries regarding the accuracy of the code must be taken up directly with HMRC by the employee.

For more information and to complete a self assessment tax return visit HMRC

Posted by AndiH in Tax and NIC, 0 comments