Horwath Clark Whitehill - Employers Briefing - March 2008

May 5, 2009 | Publisher: CroweClarkWhitehill | Category: Business & Jobs |  

www.horwathcw.com New tax year special issue Issue 26 March 2008 In this issue: PAYE rates and thresholds National Insurance thresholds This issue of Employer’s Briefing was originally intended to be a Budget Special. However, there was so little in this year’s Budget of immediate interest to employers that we abandoned the idea! Instead we decided to devote this issue to the New Tax Year. PAYE rates and thresholds Changes to car benefit rules Car fuel multiplier Health screening and medical check-ups P11D workshops Approaching deadlines The basic personal allowance for 2008/09 rises from £5,225 to £5,435. Consequently the PAYE code specified for emergency use goes up from 522L to 543L (on a week 1/month 1 basis). The PAYE threshold rises from £100 to £105 weekly, £435 to £453 monthly. As announced in Gordon Brown’s 2006 Budget, the basic rate of income tax drops on 6 April 2008 from 22% to 20%. At the same time the 10% starting rate is scrapped altogether. The majority of employees will be cushioned against the abolition of the 10% rate of tax by the reduction in the basic rate. The effects will be felt more keenly by part-time employees with annual earnings of between £5,435 and £7,455 because their tax burden will double overnight when the new tax year begins. The increase in the personal allowance and the indexation of the basic rate band means that the higher rate of 40% does not now cut in until the employee’s earnings are in excess of a rate of £41,435. This marks an increase of roughly 4% over the 2007/08 higher rate threshold of £39,825. National Insurance thresholds All NIC rates remain unchanged, but the thresholds have increased. The Earnings Threshold goes up to £105 a week, £453 a month, in line with inflation. However the Upper Earnings Limit has gone up by £100 per week, which amounts to an inflation- busting 15% increase. This is in keeping with the government’s intention of bringing the UEL into line with the threshold for 40% tax by 2009/10. The increase amounts to £100 a week (£433 a year) and increases the band of earnings liable to 11% employee contributions by £4,990. Employees with earnings at or above the UEL will find themselves paying an extra £499 a year in contributions (£469 if they are fortunate enough to be contracted out). Changes to car benefit rules Since April 2002 the car benefit charge has been based on a percentage of the car’s list price which varies between 15% and 35% depending on the car’s CO2 emissions. For 2008/09 the entry level drops from 140 grams per kilometre to 135 g/km. For many cars, this will have the effect of increasing the CO2 percentage by one percentage point, giving the employee a bigger tax liability and the employer a bigger liability to Class 1A NICs. The Budget contained an announcement that the entry level will drop even further, this time to 130g/km, but not until April 2010. From 6 April 2008 there will be a new 10% band for cars with CO2 emissions of not more than 120gms/km. In addition a 2% discount will be applied to cars that have been manufactured to run on E85 fuel, a mixture of 85% bioethanol and 15% petrol. www.horwathcw.com Car fuel multiplier Issue 26 March 2008 As announced in the Pre-Budget Report last October, the car fuel multiplier is being uprated on 6 April 2008 from £14,400 to £16,900. This alone will result in an increase of just over 17% in fuel benefit charges, but the charge will also be affected by the change in CO2 bandings. Employer’s Class 1A NICs will go up by the same amount when they fall due in July 2009. The car fuel benefit is still a worthwhile perk for basic rate taxpayers driving low-carbon cars, but most other employees will end up paying more in tax than they would have paid for their private fuel. Employers should consider replacing fuel benefits with a cash ‘fuel allowance’ (to be paid net of tax and NICs, naturally!) For further information: If you would like any further information on the contents of this newsletter or any other employment related issues, contact David Daly, Brian Robson or a member of our Employers’ Advisory Group in our London office: Horwath Clark Whitehill LLP St Bride’s House 10 Salisbury Square London EC4Y 8EH Tel: 020 7842 7100 Fax: 020 7583 1720 david.daly@horwath.co.uk brian.robson@horwath.co.uk Health screening and medical check-ups From 14 August 2007 a long-standing HMRC concession in respect of these items was replaced by a statutory exemption. The terms are that, if an employer provides an employee with up to one health screening and/or medical check-up per year, the cost of the benefit is exempt from tax as long as ƒ the health screening is generally available to all employees ƒ the medical check-up is generally available to all employees, or to all employees identified in a previous screening as needing a check-up. However, following a number of representations, HMRC was concerned that some existing health schemes could be affected by the new regulations in a way that was not envisaged when the regulations were laid. Consequently on 15 October 2007 it was announced that for 2007/08 HMRC will not seek to collect tax and NICs in respect of health screening and/or medical check-ups, if there would have been no tax or NICs payable on the basis of the non statutory treatment in force before 14 August 2007. P11D workshops We will be holding half-day workshops in our London office on the following dates: ƒ Wednesday 23 April 2008 (charities & schools) ƒ Thursday 01 May 2008 (commercial organisations) ƒ Wednesday 14 May 2008 (charities & schools) ƒ Wednesday 21 May 2008 (commercial organisations) The workshops are inter-active sessions that explain the rules for identifying P11D benefits, calculating their values and avoiding compliance pitfalls along the way. The fee per delegate is £150 plus VAT. This covers the cost of the seminar, copies of all slides and other handouts, plus a hot buffet lunch. To reserve your place, please contact Judy Vincent on 020 7842 7319 or e-mail judy.vincent@horwath.co.uk. Approaching deadlines Date Action Friday 18 April 2008 Deadline for payment of PAYE deductions, National Insurance Contributions, student loan deductions and subcontractor deductions for Month 12 (unless paying electronically) Deadline for submitting paper versions of monthly CIS300 subcontractor returns for Month 12 Tuesday 22 April 2008 Deadline for electronic payments of Month 12 deductions Deadline for electronic submission of form CIS300 for Month 1 Monday 19 May 2008 Deadline for submitting the Employer’s Year End Return, form P35 Monday 26 May 2008 P35s received after this date will attract automatic penalties of £100 per month per 50 employees This information is published without responsibility on our part for loss occasioned to any person acting or refraining from acting as a result of any information published herein. © Horwath Clark Whitehill LLP March 2008.

Horwath Clark Whitehill - Employers Briefing - March 2008.pdf

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