1. We would like to take our staff out for a Christmas lunch. How much can I spend without incurring any tax problems?
With Christmas fast approaching (to the dismay of many!), here’s a reminder of the tax treatment of benefits and gifts to staff over the festive period:-
• A tax exemption is available for expenditure of up to £150 inclusive of VAT for each member of staff. Any more than this and the entire amount is treated as a taxable benefit on the employee.
• Christmas gifts of cash or vouchers will always be taxable on the employee. However HMRC will not seek to tax a seasonal gift generally up to the value of £50 per member of staff.\
Remember this £150 tax exemption applies to “annual parties” so if a Christmas party isn’t possible, the same rules would apply to say a summer BBQ or staff outing.
2. One of my employees has mentioned that his pay should have been increased from the 1st October. Is this correct?
Your employee is correct in the fact that the National Minimum Wages has increased as of 1st October 2014. The main rate for 21yrs and over is £6.50 whilst 18-20’s is £5.13, under 18’s is £3.79 and there are different rates for apprentices.
With the recent announcement in the pre-budget report, they mentioned that capital allowances will be increasing in January 2013. I am looking to buy a tractor shortly so should I wait until then?
The Chancellor announced an increase in the Annual Investment Allowance (AIA’s) to £250,000 from the 1st January 2013. AIA’s are the 100% tax reliefs you can claim on plant & machinery (equipment) and this had previously been set at £25,000. The timing of your purchase will depend on your financial year end. As most farms have a 31st March / 5th April year end then your AIA claim will be split as follows: April 12 to Dec 12 - £18,750, Jan 13 to Mar 13 - £62,500. Therefore you’ll need to ask yourself 3 questions, firstly how much have I spent so far this year on machinery, what is the cost of the tractor and what are your likely profits for the year. Your accountant or advisor should be able to assist you further with this so that you make the right decision.
I’ve read that as an employer HMRC are introducing a new way of reporting PAYE – called Real Time Information RTI. What will I need to do?
From April 2013, employers will be legally required to report PAYE in real time. This means that information about all PAYE payments needs to be submitted to HMRC online each time a payment is made as part of the payroll process, rather than at the end of the year as they are now. This will unfortunately create more work for you through the year, but it allows HMRC to keep more accurate records when they deduct tax from your salary.
I am a local farmer and would like to know about grants that are available to help us with pollution control. Is there any help to be had?
Currently if you apply for the ‘Glastir’ scheme there are different grants available depending on your circumstances. The grants are for slurry and manure efficiency, energy efficient and water efficiency of up to an upper limit of £50,000. There are also YESS grants available for young farmers of up to £15,000. In addition you may be eligible for enhanced capital allowances which could reduce your tax bill as well.
We have been asked by our employees about the ‘cycle to work’ scheme. We haven’t heard of it but they seem to be keen on getting fit. What does it involve?
Several years ago the Government announced the ‘Cycle to Work’ scheme to encourage more people to cycle, which would reduce car usage and get people exercising. To qualify for the scheme, all employees must be eligible and the bicycles need to be used mainly for work journeys. In practice the employer will buy the bicycle and loan it to the employee for a set amount which is taken as a salary sacrifice from their pay. As this is a tax free benefit, the employee saves PAYE and National Insurance, while the employer will also save National insurance and will be able to claim capital allowances on the bike. At the end of the loan period the employee may be offered to purchase the bike from the employer at its market value, with no additional tax consequences.
I have recently received details about RTI (Real Time Information) for my PAYE scheme for the employees I have. What do I need to do?
In their drive to obtain up to date information on employees, HMRC will be introducing a system known as RTI which in its simpliest form will force employers to inform them on a regular basis what their Tax and National Insurance contributions should be. You will need to send that information to HMRC electronically on or before you make any payments to your employees. This will mean that year end forms P35 and P14’s will not be needed and if any employees move jobs or have more than one, they will get taxed the right amount. It has also been introduced to help with the new Universal Tax Credit which is set to be introduced in the future.
We have an innovative idea but it is going to take a while to develop. How can you help us with the tax side of things?
The Government is very keen to help companies who invest in research and development (R&D). Subject to certain criteria, companies can obtain tax relief on the costs they incur on their R&D. In fact you can obtain tax relief of 225% of the costs you incur, so for example if you spend £10,000 on development then you can actually have relief on £22,500. In addition, if you have not started to trade or are not yet making a profit, you can claim a cash payment instead. There is also a new initiative called the ‘Patent Box’ which again subject to certain rules, may reduce your rate of corporation tax from 20% to 10%. These reliefs are really exciting but they can come with complex rules and I would suggest you get specific tax advice on your particular idea.
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