Xitax Accounting Solutions

Non-compliance with minimum wage regulations
A recent Low Pay Commission (LPC) report sets out its findings on the number of people being paid less than the statutory minimum wage.
The LPC found that, in April 2018, 439,000 workers were paid less than the National Minimum Wage (NMW). Of this amount, 369,000 were employees aged 25 and over, who were paid less than the National Living Wage (NLW), an increase from previous years. On 1 April 2019, the NMW and NLW rates rose to th...e hourly rates detailed below:
Minimum wage rate - hourly rate from 1 April 2019:
National Living Wage (for workers aged 25 and over) £8.21
21-24 year-old rate £7.70
18-20 year-old rate £6.15
16-17 year-old rate £4.35
Apprentice rate £3.90
The LPC also revealed that women are 'more likely' than men to be paid less than the NMW, and that underpayment is common amongst younger and older workers. In addition, underpayment was more common in certain sectors including hospitality, retail, cleaning, maintenance and childcare.
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Consultation on Companies House reforms
The government has launched a consultation on proposed reforms at Companies House, including a 'major upgrade' of its register.
The consultation aims to tackle misuse of the register. It also strives to provide business owners with 'greater protection from fraud'.
... The consultation seeks views on a series of reforms to limit the risk of misuse:
Knowing who is setting up, managing and controlling companies
Improving the accuracy and usability of data on the companies register Protecting personal information on the register
Ensuring compliance, sharing intelligence and other measures to deter abuse of corporate entities
The consultation is open until 5 August 2019.
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Consultation on capital gains reliefs
A capital gains tax (CGT) exemption applies when an individual disposes of a dwelling that has been used as their only or main residence under the Private Residence Relief (PRR) rules. The exemption applies as long as the relevant conditions are met throughout the total period of ownership. This relief is supplemented by ancillary reliefs that aim to deal with other related situations.
The government has previously announced and legislate...d to reform two of the ancillary reliefs to better target PRR at owner-occupiers. The reliefs which are being amended are:
The final period exemption will be reduced from 18 months to nine months, although the special rules that give those with a disability, and those in care, an exemption of 36 months will not change
Lettings relief will be reformed so that it only applies where an owner is in shared occupancy with a tenant.
These changes will take effect from 6 April 2020. The government is now consulting on the changes in more detail and on how they will work in practice. It also invites views on some technical aspects of the PRR rules.
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Forms P11D - reporting employee benefits
The forms P11D which report details of benefits and some expenses provided to employees and directors for the year ended 5 April 2019, are due for submission to HMRC by 6 July 2019. The process of gathering the necessary information and completing the forms can take some time, so it is important that this process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D, generally via a PAYE coding not...ice adjustment or through the self assessment system. Some employers 'payroll' benefits and in this case the benefits do not need to be reported on forms P11D but employers should advise employees of the amount of benefits payrolled.
In addition, regardless of whether the benefits are being reported via P11D or payrolled the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. The deadline for payment of the Class 1A NIC is 19th July 2019 (or 22nd for cleared electronic payment).
HMRC has produced an expenses and benefits toolkit. The toolkit consists of a checklist which may be used by advisers or employers to check they are completing the forms correctly.
If you would like any help with the completion of the forms or the calculation of the associated Class 1A NIC please get in touch.
Sheena Kaur FCCA
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Corporation Tax Rate Change The current corporation tax rate is 19%. This rate will fall to 17% for the year beginning 1 April 2020.

Currently, lettings relief provides up to £40,000 of relief (£80,000 for a couple) to those who let out a property that is, or has been in the past, their main residence.
From April 2020 this relief will change and will only apply where the owner of the property is in shared occupancy with the tenant.
The final period capital gains tax exemption for owner-occupied residential property will also reduce from 18 months to 9 months.
... A gain made on selling a residential property is subject to capital gains tax at 28% (18% for basic-rate taxpayers).
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Consultation on extension of IR35 rules
HMRC has published guidance on the extension of the off-payroll working rules (also known as IR35) to the private sector, a year ahead of its implementation on 6 April 2020.
In the guidance, HMRC state that the responsibility to determine whether the off-payroll working rules apply will fall on the organisation receiving the individual's service. It outlines a four-step process which can be used to prepare for the changes, starting with... identifying any individuals who are supplying their services through PSCs.
The consultation closes on 28 May and asks for responses on several matters, including the scope of the reform and its impact on non-corporate engagers; information requirements for engagers, fee payers and personal service companies (PSCs); and how to address disagreements on an individual's employment status.
The consultation also sets out HMRC's plans to provide education and support for those businesses that are affected.
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'Springtime' tax scams target young people
HMRC has warned young people in the UK to 'stay vigilant' in order to avoid falling victim to 'Springtime' tax refund scams.
Criminals often target young individuals or the elderly as these groups of people are likely to be less familiar with the UK tax system. During the months of April and May, criminals often bombard taxpayers with tax refund scams at the same time as genuine rebates are processed by HMRC.
... In the Spring of 2018, approximately 250,000 reports of tax scams were received by HMRC.
Individuals have been warned to be wary of text messages, calls and voicemails purporting to be from HMRC. These are often designed to extract personal or financial information from the taxpayer.
Angela MacDonald, Head of Customer Services at HMRC, said:
'We are determined to protect honest people from these fraudsters who will stop at nothing to make their phishing scams appear legitimate.
'HMRC is currently shutting down hundreds of phishing sites a month. If you receive one of these emails or texts, don't respond and report it to HMRC so that more online criminals are stopped in their tracks.'
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HMRC will never offer a refund by text or email.

The standard lifetime allowance for pensions has increased by £25,000 in line with CPI inflation to £1,055,000 for the new tax year from 6 April 2019.

Call for tax on social media businesses
A group of MPs has called on the government to tax the profits of social media businesses.
The All Party Parliamentary Group (APPG) on Social Media and Young People's Mental Health and Wellbeing recently published a report which outlined the impact of social media on the health of young people.
... The APPG has suggested creating a Social Media Health Alliance, which would be funded by a 0.5% tax on the profits of social media companies. MPs hope that the money would be used to fund research and help 'draw up clearer guidance' on the impact of social media on health and wellbeing.
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Delay to rise in probate fees
The government has delayed its planned increase in probate fees indefinitely.
The delay has been attributed to 'pressure on Parliamentary time' caused by Brexit debates and votes.
... The increase in fees had been set to take effect from 1 April 2019, but HMRC recently made the decision to postpone the rise. Under government plans, the proposed probate fees are as follows:
Value of estate & proposed fee
Up to £50,000 or exempt from requiring a grant of probate - £0
£50,000 to £300,000 - £250
£300,000 to £500,000 - £750
£500,000 to £1m - £2,500
£1m to £1.6m - £4,000
£1.6m to £2m -£5,000
Above £2m - £6,000
While the changes are pending, a temporary process is in place for applying for probate, and estates will not incur the higher fees if applications are made before the fee changes take effect.
A spokesperson for HMRC said:
'Probate registries will accept applications before processing by us as long as they are assured the inheritance tax (IHT) forms from us will be coming shortly.
'Our processes aren't changing, it's just that probate registries will be willing to accept applications before our processing is done when normally it would need to be after.'
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Reporting Benefits in Kind - Forms P11D
The forms P11D which report details of benefits and some expenses provided to employees and directors for the year ended 5 April 2019, are due for submission to HMRC by 6 July 2019. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.
Employees pay tax on benefits provided as shown on the P11D, generally via a PAYE coding notice adjustment or through ...the self assessment system. Some employers 'payroll' benefits and in this case the benefits do not need to be reported on forms P11D but employers should advise employees of the amount of benefits payrolled.
In addition, regardless of whether the benefits are being reported via P11D or payrolled the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form. The deadline for payment of the Class 1A NIC is 19th July 2019 (or 22nd for cleared electronic payment).
HMRC has produced an expenses and benefits toolkit. The toolkit consists of a checklist which may be used by advisers or employers to check they are completing the forms correctly.
If you would like any help with the completion of the forms or the calculation of the associated Class 1A NIC please get in touch.
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Happy New Tax Year!

Changes to income tax for 2019/20
The new tax year brings changes to income tax bands and allowances.
The personal allowance is £11,850 for 2018/19 and increases to £12,500 for 2019/20. There is a reduction in the personal allowance for those with 'adjusted net income' over £100,000. The reduction is £1 for every £2 of income above £100,000. So for 2018/19 there is no personal allowance where adjusted net income exceeds £123,700. For 2019/20 there is no personal allowance ava...ilable where adjusted net income exceeds £125,000.
The marriage allowance permits certain couples, where neither pays tax at more than the basic rate, to transfer 10% of their personal allowance to their spouse or civil partner.
The basic rate of tax is 20%. In 2018/19 the band of income taxable at this rate is £34,500 so that the threshold at which the 40% band applies is £46,350 for those who are entitled to the full personal allowance. In 2019/20 the basic rate band increases to £37,500 so that the threshold at which the 40% band applies is £50,000 for those who are entitled to the full personal allowance.
Individuals pay tax at 45% on their income over £150,000.
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