Quids and Quills

accountancy for authors

New rates for National Minimum Wage

National Minimum Wage and National Living Wage rates

The hourly rate for the minimum wage depends on your age and whether you’re an apprentice.

You must be at least:

  • school leaving age to get the National Minimum Wage
  • aged 25 to get the National Living Wage – the minimum wage will still apply for workers aged 24 and under

Current rates

These rates are for the National Living Wage and the National Minimum Wage. The rates change every April.

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice
April 2017 (current) £7.50 £7.05 £5.60 £4.05 £3.50
April 2018 £7.83 £7.38 £5.90 £4.20 £3.70

Apprentices

Apprentices are entitled to the apprentice rate if they’re either:

  • aged under 19
  • aged 19 or over and in the first year of their apprenticeship

Example
An apprentice aged 22 in the first year of their apprenticeship is entitled to a minimum hourly rate of £3.50
Apprentices are entitled to the minimum wage for their age if they both:

  • are aged 19 or over
  • have completed the first year of their apprenticeship

Example
An apprentice aged 22 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £7.05

Who gets the minimum wage

Read the information on who is entitled to the minimum wage.

You can use the minimum wage calculator to check whether the National Minimum Wage or National Living Wage is being paid.

Contact Acas if you’re not getting the National Minimum Wage and think you should be.

 

From: HMRC website: https://www.gov.uk/national-minimum-wage-rates

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Were you one of the 10.7 million?

From the Institute of Chartered Accountants in England and Wales (ICAEW) – Tax News (my highlights) :

The number of self assessment (SA) tax returns filed by the 31 January 2018 deadline for 2017 returns has once again reached a new high. 10.7 million taxpayers submitted their return on time and 9.9 million of these were filed online. For those interested in statistics, this means that more than 92.5% of total returns were completed online. And of course it does also mean that over half a million tax returns remain unfiled.

‘Angela MacDonald, Director General for Customer Services, thanked customers for meeting the deadline and said:

It’s really fantastic to see that each year, more and more self assessment customers are getting ahead of the game and submitting their tax return before the 31 January deadline. But we’re not complacent, we want the number missing the deadline to be zero, and we’ll continue to adapt the process to make it easier and simpler for all our customers until every return is in on time and without avoidable errors.

If you’re one of the small number that missed the deadline, please submit your return now to avoid further penalties. We really don’t want penalties, we just want tax returns.’

ICAEW supports the ongoing drive to digitalise tax and tax returns. We note that the success of e-filing for SA has been achieved without mandation. There is instead an incentive in the form of a three month longer deadline for filing online, so carrot and not stick. In our view, Making Tax Digital (MTD) should be adopting the same approach and should be non mandatory until it has been shown to work.’

£1,000 tax-free trading allowance

Question: You do a little bit of buying and selling on ebay (or other sundry sales/income earned) and make a few hundred pounds per year profit on this. Do I need to declare this on my tax return?
I’m often asked this question by clients – although most of them hope dearly to make more than a few hundred pounds with their writing! – but in some cases it doesn’t go that way. HMRC recently brought in a new allowance to cover these sundry sales. There’s more detail on the HMRC website, and I’ve also excerpted a good summary below from JF Financial, an online accountancy practice. One important thing I’d ask you to bear in mind – this allowance applies to your PROCEEDS, not the profit you make.

£1,000 tax-free trading allowance

Provided the income from your hobby trading doesn’t exceed £1,000 in the tax year, you won’t pay any tax on your profit – however if you are already registered for self-assessment you will still need to include the income on your tax return.

Let’s look at the basics of what HMRC calls “tax-free allowance on trading income”.

This is a new allowance that came in on 6th April 2017.

So, if your eBay trading started before this, you will only be able to take advantage of the new allowance from 6th April 2017. For the tax year ended 5th April 2017, you will be taxed in the normal way. Let’s assume this was not the case and concentrate on the rules for 2017-18 tax year.

The £1,000 applies to your income, not your profit. So, add up the total value of your sales during the year (before any fees and charges are taken off). If this figure is less than £1,000, you will not pay any tax on your profit.

On your tax return, select the self employment pages, enter the total value of your sales as your income and then enter the same amount in the expenses section as “trading allowance”.

Should your sales exceed £1,000, you can either deduct your actual expenses (e.g. the cost of the items you bought for resale) or deduct the £1,000 allowance.

You don’t set a precedent if you decide to deduct the allowance this tax year – the next year you can choose to deduct your actual costs instead, if that gives a better result.

If you weren’t already registered for self assessment you would not have to declare your eBay trading income at all, unless your sales exceeded £1,000.

In this case, you would simply add up the value of your sales income each year, to check that it was below £1,000. Only if it exceeded this, would you need to register for self-assessment and complete a tax return (following the same rules as above). Otherwise, you would just need to keep a record of your trading income.

Of course, HMRC like to include a few quirks to catch people out, so you should be aware of the pitfalls.

Check with your accountant or directly with the HMRC Helpline 0300 200 3300.

 

Excerpt taken with thanks and full credit from https://jf-financial.co.uk/2018/01/01/1000-tax-free-trading-allowance/
JF Financial – online accountants / free weekly tax tips newsletter

HMRC hiccups

Spare a thought for accountants and their clients this weekend, and anyone who’s wrapping up personal tax returns in the final month before the deadline of 31 January – the HMRC online access has been “down” since at least Thursday, and submissions are waiting in a draft limbo. Here’s hoping it’ll be up and running again soon, HMRC are diligently working on it. Maybe we’ve broken  the system, leaving too many submissions to the last minute! 🙂

*makes note to chase clients for details even earlier next year*

Paying your Income Tax Bill

HMRC will no longer accept payments by personal credit card after 12 January 2018.

The reason of the change is that from 13 January, the EU Payment Services Directive 2 prohibits merchants (including HMRC) from recharging associated fees back to customers. HMRC will not absorb the cost of credit card fees as this would be a cost to the public purse.

Payments by debit card or corporate credit card will continue to be accepted.

The timing means that taxpayers who wish to pay their 31 January 2018 self assessment liabilities by personal credit card will need to make the payment by 12 January or use an alternative payment method.

Do you need more details on how to pay your tax bill, due by 31 January 2018?

There’s information on the HMRC website, or contact me if you need help.

Budget Nov 2017 summary

Autumn Budget 2017: What measures did the chancellor announce?

Philip Hammond promised “a balanced Budget”, one that would maintain fiscal responsibility but help families cope with the cost of living. What measures did he announce to achieve his Budget aim?

Philip Hammond promised “a balanced Budget”, one that would maintain fiscal responsibility but help families cope with the cost of living. What measures did he announce to achieve his Budget aim?

Economic forecasts of the OBR

Hammond shared the OBR’s forecasts for GDP growth over the coming years following slower growth than expected in 2017 so far. The OBR has revised down its forecast to 1.5% in 2017; 1.4% in 2018; 1.3% in 2019 and 2020; 1.5% in 2021; and 1.6% in 2022, leading the chancellor to state that productivity performance “continues to disappoint”, and has remained “stubbornly flat”.

Nevertheless, Hammond championed the 3m jobs created since 2010 and the shrinking deficit, although he warned that it “still remains too high”.

Technology and innovation

It was a Budget recognising the rapid pace of change led by technology and acceptance that a “dynamic and innovative economy” must be “at the heart of global Britain”.

To leverage innovation and support tech start-ups, Hammond promised £3.2bn investment in research and development, including an increase in the main R&D tax credit to 12%, and £500m on a range of initiatives to help businesses, including artificial intelligence and full-fibre broadband.

He also set aside £20bn of patient capital investment over the next 10 years to fund innovative growth by doubling the annual allowance for investment in knowledge-intensive companies through the Enterprise Investment Scheme (EIS), while highlighting that EIS schemes would not be used as “shelter for low-risk capital preservation schemes”.

Levies and duties

From April 2018, the VED rate on new diesel cars will go up by one band, and the current diesel supplement in company car tax will rise by 1%. The diesel levy will fund a new £220m clean air fund, which the chancellor said would “support the implementation of local air quality plans”.

High strength and low-value alcohol will also be hit, with duty on white cider products scheduled to increase by 2019. Other products will be subject to a duty freeze – including beer, wines, spirits and other ciders.

The chancellor has also frozen short-haul air passenger duty rates and long-haul economy rates.

Personal allowance and national living wage

To support individuals with rising prices, the chancellor has increased the personal allowance from April 2018 to £11,450, asserting that the basic rate taxpayer would be £1,075 a year better off as a result.

The national living wage will also rise to £7.50, up from £7.38 from April 2018.

Tax system

The chancellor vowed to crack down on tax avoidance and tax evasion schemes, yet failed to reveal details of these measures in the Budget speech. The government would continue its work, he said, collecting £4.8bn in revenue by 2022-23 with the new measures.

With regard to corporate tax, Hammond reiterated the government’s commitment to maintaining low corporate tax rates, but announced a measure to freeze corporate indexation allowance from 1 January 2018 to broaden the tax base and bring the system in line with personal capital gains tax.

The chancellor also said that more had to be done to reform the system to cope with the digital economy. From April 2019, income tax will be applied to royalties relating to UK sales in cases where the royalties are paid to a low-tax jurisdiction, “even if they do not fall to be taxed in the UK under our current rules”. The measure would raise £200m annually, indicating that more had to be done to tackle multinational tax avoidance.

Hammond also took aim at VAT fraud, by ensuring that all online marketplaces are jointly liable with sellers for VAT, addressing fraud that costs the taxpayer £1.2bn each year.

Elsewhere on VAT, the chancellor said that he was “not minded” to reduce the VAT registration threshold, as had been recommended by the Office of Tax Simplification, but would consult on the “design” of the system to incentivise growth. Yet, he committed to the threshold remaining at £85,000 for the next two years.

Business rates

On business rates, Hammond said he would bring forward the planned switch from RPI to CPI to April 2018, rather than in 2020 as originally planned. He also extended by one year the £1,000 discount for pubs with a rateable value of less than £100,000. The discount will now apply until March 2019.

Much concern has been raised about the revaluation system – in response, the chancellor announced that revaluations will take place every three years, rather than every five years – taking effect after the next revaluation.

Housing and stamp duty

The big news from the Budget was that Hammond will abolish stamp duty for first-time buyers purchasing properties up to £300,000. In addition, to help with high property costs in certain areas, stamp duty will be waived on the first £300,000 on properties with a value up to £500,000.

In other measures to address the housing challenge, Hammond committed to £44bn of capital funding, loans and guarantees over five years in a package to unlock new sites, and boost supply of skills and resources. The chancellor also said he would implement an urgent review of the gap between planning permissions and housing starts to address the high number of residential planning permissions that are currently unbuilt.

Reaction

As many suspected, it was Budget without surprise, as Hammond sought to avoid the furore that followed the national insurance contributions changes in March. Housing was the hot topic, yet the chancellor’s focus on technology and innovation showed that the government is planning to leverage digital transformation to boost productivity and drive growth.

Government Gateway – why you need one and how to get it

Hello taxpayers!

This is the face of your future communication with HMRC on any kind of tax. They would like us all to communicate online, via a GOVERNMENT GATEWAY NUMBER.

From there you can set up an online account called a Personal Tax Account, so you can access at any time your tax position.

You can also use it to register for self-employment, including the range of taxes that may then be applicable. You can monitor these taxes through your Business Tax Account, including making your regular payments.

You can apply for a GG number HERE.
You’ll need personal details – your NIC number, your passport.
You must take note of the number when they tell you to 🙂 because there’s no way to access it again after that.
HOWEVER you can set up another GG number if you lose, or can’t remember your first one.

Q&Q comments: your important reference is your NIC number, or your UTR (Unique Tax Reference) number if you’ve registered for self-employment. You’ll keep these numbers all your life, and they’ll never change.

If you have an accountant, you can authorise them to handle this online access on an ongoing basis, which is what I do for most of my clients.
You can still have access to your records, of course, but your accountant can also monitor what’s due / paid / upcoming for you.

Self Employed National Insurance – info for 2019/2020

NEWS on the application of National Insurance rates from Accounting Web:

Classes 2 and 4 NIC were to be merged from 6 April 2018, with class 2 NIC abolished from that date. This merger will now take place from 6 April 2019.

Delay

In a written statement to the House of Commons released late yesterday, it was announced that the abolition of class 2 national insurance contributions (NIC) would be delayed by one year to 6 April 2019. This delay was justified by a need to consult more fully with interested parties in respect of the effect of the abolition of class 2 NIC on lower earners.

It’s true that self-employed individuals with profits below the small profits threshold (£6,025 for 2017/18) can currently protect their rights to the state pension and certain other state benefits by paying voluntary class 2 contributions. According to the Office of National Statistics 967,000 people had an annual income from self-employment below the small profits threshold in 2015/16, so it is a significant problem.

Individuals with profits between the class 2 and class 4 threshold (£8,164) pay class 2 NIC at the modest level of £148.20 per year to gain a full year’s NI credit. Paying class 4 NIC currently provides the taxpayer with no NI credits, as it is a pure tax on profits.

Earlier consultation

The proposals to abolish class 2 NIC, and to reform class 4 NIC so it carries all the contributory benefits currently attained with paying class 2, were put forward in the 2015 Budget, and fully consulted on in early 2016.

The Low Incomes Tax Reform Group (LITRG) pointed out in their response to that consultation, that low earning taxpayers would have to pay the more expensive class 3 NIC (£714 for 2017/18), to retain entitlement to the same state benefits. Although there would be a system of NI credits provided for no payment where the individual has profits between the current class 2 threshold and the higher class 4 threshold.

The ATT suggested in its response to the consultation that the need to make a separate class 3 NIC payment would raise barriers for lower earners and discourage them from protecting their state benefit entitlements.

It appears that these questions will now be examined in greater detail by the government, which is a welcome development, but why wait until this late hour? The policy had apparently been decided and all we were waiting for was an announcement of the new (probably higher) rate of class 4 NIC, as part of the Budget on 22 November.

No NIC rises?

Perhaps Philip Hammond got cold feet. After all the last time he announced an increase in class 4 NIC in his Spring 2017 Budget, he had to backtrack as it was perceived as undermining the Conservative manifesto promise not to raise the rates of income tax, national insurance or VAT. Since then we have had another general election during which no similar manifesto promises of freezing tax rates were made, so Hammond should be free to raise the rates of NIC as he wishes.

Of course the retention of class 2 NIC does not mean that the rate of class 4 NIC will not be increased from 9% to 11% or 12%, but it would be a very brave of the chancellor to try.

 

From Accounting Web / Rebecca Cave
Consulting tax editor for Accountingweb.co.uk. I also co-author several annual tax books for Bloomsbury Professional and write newsletters for other publishers.
3rd Nov 2017

 

 

National Insurance – check your state pension

NATIONAL INSURANCE PAYMENTS are part of all taxpayers’ lives. As they’re currently under governmental review in some areas, let’s look at some of the overall information from the HMRC website.

Use this service to find out:

  • how much State Pension you could get (this amount is also known as your State Pension forecast)
  • when you can get it
  • how to increase it, if you can

The State Pension age is under review and may change in the future.

You can’t use this service if you’re already getting your State Pension or if you’ve delayed (‘deferred’) claiming it.

Q&Q comment: THIS IS AN INTERACTIVE REQUEST SO FIRST CHECK CAREFULLY YOU HAVE EVERYTHING YOU NEED.

Other ways to apply

If you’ll reach your State Pension age in more than 30 days, call the Future Pension Centre and ask for a statement.

You can also fill in the BR19 application form and send it in the post.

You’ll get your statement within 10 working days.

If you’re already getting your State Pension or have delayed claiming it

To get information about your State Pension, contact the Pension Service if you’re in the UK or the International Pension Centre if you live abroad.

If you’ve worked and paid National Insurance in the Isle of Man

Contact the Future Pension Centre to get information about your State Pension.

 

From HMRC website: https://www.gov.uk/check-national-insurance-record

 

 

National Insurance – check your NIC record

NATIONAL INSURANCE PAYMENTS are part of all taxpayers’ lives. As they’re currently under governmental review in some areas, let’s look at some of the overall information from the HMRC website.

Check your National Insurance record

You can check your National Insurance record online to see:

  • what you’ve paid, up to the start of the current tax year (6 April 2017)
  • any National Insurance credits you’ve received
  • if gaps in contributions or credits mean some years don’t count towards your State Pension (they aren’t ‘qualifying years’)
  • if you can pay voluntary contributions to fill any gaps and how much this will cost

Your online record doesn’t cover how much State Pension you’re likely to get.

Q&Q comment: THIS IS AN INTERACTIVE REQUEST, SO FIRST CHECK CAREFULLY YOU HAVE EVERYTHING TO HAND.

Before you start

You’ll need a Government Gateway account to check your National Insurance record online – you’ll be able to set one up if you don’t have one.

Personal tax account

Signing in to the ‘Check your National Insurance record’ service activates your personal tax account. You can use this to check your HMRC records and manage your other details.

If you’ve paid National Insurance in the Isle of Man

Your record won’t show National Insurance contributions from the Isle of Man if you reach State Pension age after 5 April 2016.

Email the National Insurance office in the Isle of Man to find out how much you’ve paid.

Isle of Man National Insurance office
nationalinsurance.itd@gov.im

You can also write to the office.

National Insurance contributions
Income Tax Division
Government Office
Bucks Road
Douglas
Isle of Man
IM1 3TX

Other ways to apply

You can request a printed National Insurance statement:

  • online
  • by phone

You’ll need to say which years you want your statement to cover. You can’t request statements for the current or previous tax year.

You can also write to HM Revenue and Customs (HMRC).

National Insurance contributions and Employers Office
HM Revenue and Customs
BX9 1AN

 

From HMRC website: https://www.gov.uk/check-national-insurance-record

 

 

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