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National Minimum Wage Increase

From 1st October 2016, the National Minimum Wage (NMW) for 21-24 year-olds is increasing to £6.95 per hour, up from £6.70.

The minimum wage for apprentices will also increase, from £3.30 to £3.40 per hour, and the NMW for 18-20 year-olds will increase to £5.55 per hour, from £5.30.

The National Living Wage (NLW) of £7.20 per hour for workers over 25 is not due to change, as this was introduced in April 2016.

Please note that HMRC have advised that employers who don’t pay the national minimum wage rates are liable to public naming via a Government press release.

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Employing Staff for the First Time

The prospect of taking on new staff for the first time can seem quite daunting as the administrative burden on employers gets ever more complex.

Firstly, you need to ensure that your potential employee has the right to work in the UK or if you need to make any background checks, such as the Disclosure and Barring Service check (formerly the Criminal Records Bureau check).

You then need to ensure that your employees are paid at least the National Minimum Wage (or the National Living Wage for employees aged over 25).

If you are employing someone for more than 1 month, they must be given a written statement of employment.

You will normally need to register as an employer with HMRC, and may also need to enrol your staff into a workplace pension scheme.

Further information on the above can be found here.

If you are unsure about any payroll issues, please get in touch for help and advice – we can offer a complete payroll service if needed.

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Telephone Scams

Many taxpayers have been subject to telephone scams recently, in which the caller is claiming to be from HMRC, either requesting personal information in order to process a tax refund, or leaving a voicemail asking the taxpayer to call back or demanding payment before legal action.

Please be aware that these calls are NOT from HMRC and are scams, dedicated to take personal information, and  money, from unaware taxpayers.

Please ensure that you can verify anyone claiming to be from HMRC before handing over any information, and if you are still unsure, ask them to write to you instead.

HMRC take their security very seriously and are working on cracking down on these scams. If you are subject to this at any point, please contact Action Fraud on 0300 123 2050 and report this, or see HMRC security advice here.

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Tax on Student Jobs

If you are a student working a part or full time job, you may need to pay tax and national insurance depending on your earnings and PAYE tax code.

If you do incur income tax and national insurance charges, but don’t work for the entire tax year, it may be beneficial to complete HMRC form P50, to reclaim any tax owed to you.

For more information, see the HMRC website at https://www.gov.uk/student-jobs-paying-tax or to download HMRC form P50, click here.

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Withdrawal of the Wear and Tear allowance for Landlords

In previous tax years, landlords who rented out ‘fully furnished’ properties were able to reduce the tax they paid by claiming a ‘wear and tear’ allowance equivalent to 10% of the net rents received.  This allowance could be claimed regardless of whether any furnishings in the property were actually replaced.

With effect from April 2016, this allowance has been withdrawn, and has been replaced by a new system which makes relief available only in situations where furniture and furnishings (including white goods and kitchenware) are actually replaced.

The amount of the available deduction is now calculated as follows:

  • The cost of the new replacement item, limited to the cost of an equivalent item if it represents an improvement on the old item (beyond the reasonable modern equivalent) plus –
  • The incidental costs of disposing of the old item or acquiring the replacement, less –
  • Any amounts received on disposal of the old item
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More Professional Bodies Approved for Tax Relief

If you pay membership fees to a professional body, you may be able to claim tax relief on the amount of your subscription (and go back for up to four years if you have not made a claim for earlier periods).

HMRC have now announced the addition of the following to their list of approved professional bodies:

  • Chartered Institute of Educational Assessors;
  • Genetic Counsellor Registration Board;
  • Health Communications Association;
  • National Association of Student Money Advisers;
  • Paediatric Intensive Care Society;
  • Teenagers and Young Adults with Cancer;
  • Cymdeithas Ddysgedig Cymru (The Learned Society of Wales was removed from the list)

For the full list, please see the HMRC website here.

If you do wish to make a claim, you need to complete HMRC form P87.

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Director’s Date of Birth

Companies House will no longer make a director’s full date of birth publicly available, as there has been concern that this is a key piece of information that could potentially be used in identity fraud.

Although Directors will still need to notify Companies House of their date of birth, only the month and year of birth will now show on the public register, and on their data products and filings.

(They are still working on a cost-effective way of redacting the day of birth from paper filings pre October 2015).

A Director’s full date of birth may still be disclosed in exceptional circumstances however, such as for credit references or police inquiries.

For further information regarding how your personal information is held by Companies House, please see their Personal Information Charter.

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Trivial Benefit

HMRC have always agreed that trivial benefits may be exempt from taxation via from P11D, however there has never previously been any guidance on what exactly constitutes a ‘trivial benefit’, until now.

From 6th April 2016, HMRC have changed their guidance to define that a ‘trivial benefit’ is exempt from tax if all of the following conditions are met:

  • the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it is impracticable to work out the exact cost per person)
  • the benefit is not cash or a cash voucher
  • the employee is not entitled to the benefit as part of any contractual obligation (including under salary sacrifice arrangements)
  • the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services)

Please also bear in mind, directors of close companies are capped at a total cost of £300 during the tax year.

For more guidance, please see the HMRC website at https://www.gov.uk/government/publications/tax-exemption-for-trivial-benefits-in-kind-draft-guidance/tax-exemption-for-trivial-benefits-in-kind-draft-guidance

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Why I joined Leighton Buzzard Business Club (LBBC)

There are a lot more benefits in networking than just receiving introductions to potential customers or clients.
LBBC has a membership drawn from a wide number of businesses and professions, most of whom have many years experience of the trials and tribulations of running a small enterprise. I have found it an enormous benefit to be able to have an informal chat regarding an opportunity or issue with a fellow member.

Running any business on your own or with a team can be scary. It’s really helpful to be able to ask for advice or use other members as a sounding board. Other members also look for advice from one and it is through this process, and the feedback from other members, that confidence in each member develops.

People buy from, and recommend, those whom they know and trust, so it can be a slow process. But, business I have found, is a marathon not a sprint and long term associations usually bring the best long term rewards.

One of the powers of any business network is the sum of the networks of all the members. Individual members are understandably cautious and protective of their contacts, but over time will usually make referrals in appropriate cases.

We all make judgements by association so aiming for the highest professional standards in all our members is important to our club. We generally expect to receive high value contacts from high value associates, and of course the converse is true also, so care is taken on who is invited to become a member. Most new members are those who have been invited to a meeting by an existing member, but we do also welcome other visitors from local businesses to come to one of our Wednesday morning breakfast meetings at Leighton Buzzard Golf Club.

Another enormous benefit is access to the products and services of existing members and their networks of suppliers. One should never underestimate the value of a recommendation to a reliable supplier!

I joined LBBC for the above reasons and as a way to enhance the standing of my accountancy practice; Holmes and Company, based in New Road, Linslade.

We are a team of six and although we have been established there for nearly 20 years it is still important to promote our service and not rest on our laurels!

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