With the Budget just a matter of days away, accountants, employers, and the self-employed will be watching the Chancellor eagerly.
George Osborne will announce what changes he intends to introduce in the run-up to the 2015 election. But what about the changes the chancellor has already introduced in the 2013 Budget and Autumn Statement? How are they affecting your business?
Do you know what they all are?
Well, Steven Glicher accountants thought it worthwhile to quickly run through some of the key changes that have already been introduced, and highlight some of the areas where we are likely to see further changes in the coming year.
Most businesses and charities will be entitled to a £2,000 Employment Allowance per year towards their employer National Insurance contributions bill from April 2014. This allowance should prove to be particularly helpful for small businesses wanting to hire their ﬁrst employee or expand their existing workforce.
Employees and Employers National Insurance.
From 2014/2015 the point at which employees and employers start paying National Insurance will once again be aligned at £153 per week.
Changes to Statutory Sick Pay (SSP) Recovery.
Historically, Employers have historically been able to recover Statutory Sick Pay where it exceeded 13 per cent of their total employee/ employer Class 1 NICs liability for any particular month. Unfortunately the recovery of SSP will be abolished from 6 April, 2014.
Tax exemption for employer-funded medical treatment.
To compensate for the withdrawal of SSP recovery, the Government are introducing a new tax exemption for employers who have paid for medical treatments on behalf of employees. The tax exemption will apply to amounts of up to £500.
Personal Allowance and Tax Code 2014/15.
The personal allowance for 2014/15 rises to £10,000 from £9,440 in 2013/14. This should mean most employees have a tax code of 1000L unless they have multiple jobs/ pensions.
Are you ‘in’? Well, the likelihood is that whether to choose to or not you will have to enrol employees in a workplace pension from now on, as the Government has introduced a new law which means that every employer must automatically enrol workers into a workplace pension. Who must be enrolled?
- Anyone between the ages of 22 and pensionable age are aged between 22 and State Pension age, who
- earns more than £9,440 a year, and
- works in the UK.
The scheme is called Automatic Enrolment. A percentage of the employee’s pay is put into the pension scheme automatically every payday. In most cases, the employer and the government also add money into the pension scheme too.
The impact on both employees’ and employers’ income alike is likely to be considerable, so the government has decided to phase in auto enrolment; with the largest employers going first. From April 2014, it will be the turn of employers with fewer than 250 employees to comply with the new rules. From April 2015, the scheme will be extended to employers with fewer than 50 employees will start their responsibilities, though the phasing in for smaller employers will be done much more gradually.
Beneficial Loans arise when an employer provides their staff with cheap or interest-free loans. Any difference between commercial rates set by HM Revenue & Customs and those actually charged are deemed to be a taxable benefit where the loan balance exceeds £5,000 at any point in the tax year.
Under current plans, legislation will be introduced to increase the exemption threshold for employer-related loans to be treated as earnings, from £5,000 to £10,000. These changes will take effect from 6th April 2014 and will cut down on the National Insurance bill and administrative burden for employers, and the tax bill of employees.
RTI Reporting Concession for Small Employers.
Since April 2013, employers have been reporting PAYE information to HM Revenue & Customs in real time. Employers or their accountants therefore are obliged to send details to HM Revenue & Customs every time they pay an employee, at the time they pay them use payroll software.
HMRC has announced that existing employers with nine or fewer employees, who need more time to adapt, can report PAYE information on or before the last payday in the month until April 2016.
HM Revenue & Customs had given small employers with fewer than 50 employees a similar concession, but this is due to come to an end on 5th April 2014. This new relaxation is much narrower and will only apply to existing employers with nine or fewer employees. All new employers, as well as existing employers with 10 or more employees, will need to report PAYE information in real time from 6 April 2014.
Employee Shareholder Status.
The government has introduced 3 new tax reliefs to encourage and promote indirect employee ownership:
- From April 2014, disposals of shares that result in a controlling interest in a company being held by an employee ownership trust will be relieved from Capital Gains Tax.
- Transfers of shares and other assets to employee ownership trusts will also be exempt from inheritance tax providing certain conditions are met.
- From October 2014, bonus payments made to employees of indirectly employee-owned companies which are controlled by an employee ownership trust will be exempt from income tax up to a cap of £3,600 per annum.
If you would like more information on any of these changes, then please call Steven Glicher accountants on 0161 485 8007