Monthly Archives: June 2014

Employee Share Scheme? HMRC Need to Know…

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Employers operating employee share schemes or those who have issued, sold of gifted shares to employees need to take immediate action to meet the HMRC deadline for filing a Form 42 by 6th July 2014.

Tax Manager at PM+M Chartered Accountats, Julie Walsh, warns “If you have issued shares to employees, in any format, in the last year you need to ensure you complete and submit a Form 42, you must file the return by that date, even if you have nothing to report”.

Julie continues “The form must also be used to report non-tax advantaged or unapproved share plan schemes for employees or directors and any other reportable event. It is the employer’s responsibility to decide whether it has reportable transactions.

“HMRC can be harsh with penalties and could issue a substantial fine for inaccurate or late forms, or for failling to submit at all” says Julie.

2013-14 is the last year for which paper Forms 42 will have to be submitted to HMRC. There is now a new employment related security online service which requires all forms of share transactions, scheme or arrangements, whether approved or unapproved to be registered with HMRC. The deadline for 2014-15 is 6th July 2015, but employers are generally advised to act sooner to avoid any late filing penalties.

The link to access HMRC services can be found at: http://www.hmrc.gov.uk/shareschemes/annualreturns.htm#3

If you need any further guidence please contact Julie Walsh at PM+M on 01254 679131 or email julie.walsh@pmm.co.uk.

HMRC starts the 2013/14 PAYE reconciliations – Are you a winner or a loser?

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HMRC has started the 2013/14 reconciliation process for individuals who are in employment or have a pension. They compare the tax paid with the tax which they calculate is due, according to the information on HMRC’s records. The process will continue until mid-September 2014. Where there is an under or overpayment taxpayers are issued with a tax calculation form P800. It is very important to check the calculation.

Taxpayers who complete tax returns are unlikely to be affected, if they do receive a P800 they should let their accountant know immediately.

If you have paid too much tax, in most cases HMRC will send a cheque for the overpayment within 14 days of issuing the P800 tax calculation.

If you have paid too little tax, in most cases, the underpayment will be collected automatically through the 2015/16 tax code. Where this is not possible or it would cause real hardship write to HMRC and they will let you know what options are available to pay back the tax.

However, you should take care.

HMRC may have decided that you are a winner or a loser but you need to check the P800 to make sure that it is correct.

HMRC is not always right!

For many individuals in the same job or pension, year after year, PAYE does collect the right amount of tax. For people with changed circumstances the tax deducted will almost certainly be incorrect.

Take care if:

  1. You have changed jobs
  2. Received or had changes to benefits in kind such as a company car, medical insurance etc.
  3. Have just started work or been out of work for a period during the year
  4. Have retired in the year and started to take a pension or have started to receive State Pension whether you have retired or not

The calculations do not take into account investment income such as bank and building society interest or dividends. You may be entitled to tax back or need to pay higher rate tax on investment income.

Finally P800 calculations do not deal with high income child benefit charges. If you think you owe tax to HMRC in respect of your child benefit you should have completed a tax return!

If in doubt speak to us.

Cathryn Higham – Personal Tax Adviser

A new inheritance tax cloud – with maybe a silver lining

Inheritance tax is a complex tax and there has been consultation by the Government for some time on how to simplify it, particularly in relation to trusts.

Inheritance tax actually represents a tiny proportion of the country’s overall tax receipts – less than 1% (around £3.5 billion per year).  Only around 26,000 deaths each year result in the tax being payable.

One of the reasons for this is that people with a lot of surplus wealth have been able to use trusts to move value out of their taxable estates.  There are various ways to do this, many of them based on the fact that, whilst a transfer to trust triggers an inheritance tax charge, everyone has an inheritance tax nil rate band of £325,000.  This can be used on transfers to trust and/or on death and, in the case of lifetime transfers to trust, once used, it is renewed after 7 years.

The Government would like to stop this planning being available to the small minority of people who can afford to do it and new proposals were issued last week to change the rules.

The proposed change is that rather than one nil rate band of £325,000 that you can use every 7 years, everyone will have one normal nil rate band to use on death and one settlement nil rate band to use for transfers to trust throughout their lifetime or on death.  If more than one trust is created, you will be able to choose how to split the settlement nil rate band between them.

Note: this only applies to property added to trusts after 6 June 2014.

For people with a lot of wealth who were planning to use their nil rate band every 7 years by transferring another £325,000 to trust, this is bad news.

For more ordinary folk, however, who don’t have sufficient surplus wealth to be able to plan to give it away over long periods as above, this may actually represent an opportunity to get more inheritance tax exemption than they have previously been able to access.  The details in the consultation document are sketchy on this aspect but it may perhaps present some interesting planning possibilities.  We will be keeping a close eye on developments as more detail unfolds.

These are only proposals and there is a consultation process to be undertaken.  It is unlikely that we will hear the final rules until the Autumn Statement.  There may then be some planning to be done and wills to be amended – indeed many wills that have been tax effective up to now may need re-writing.  Planning in the meantime will inevitably carry some uncertainty.

If you have any questions about how the new proposals might affect you, please email me on jane.parry@pmm.co.uk.

Jane Parry - Head of Tax

6 Key Tips to Reduce your Business Growing Pains

On 15th May PM+M hosted a joint seminar with the East Lancs Chamber of Commerce and Taylors Solicitors entitled ‘Growing Pains’.  The seminar was held at the Chamber premises at Red Rose Court in Accrington.

With 6 speakers in total there was a lot to get through in the allotted time and it was a great turnout with over 35 attendees.

The team - Growing Pains

The presenting team L-R Emma Swan, Darren Grantham, Helen Binns, Colin Emmett, Julie Mason, Antony Keen, Jackie Fisher

Darren Grantham from the Chamber started the proceedings with a quick summary of the work that the Chamber do and played a brief video.

I then took to the floor to talk through the journey of Spencer and Mark who own a growing business.  The story highlighted the dangers of insufficient planning and it gave some indicators of the best way to move forward and succeed with a growing business.  The importance of producing management information was emphasised and Helen Binns demonstrated some practical examples of financial ratios.

Spencer and Mark’s journey was then picked up by my colleague, Colin Emmett, PM+M’s director of IT who gave a detailed critique on choosing the best IT system and whether or not the Cloud is the way forward vs the traditional desktop approach to IT.

After a quick coffee break Julie Mason, PM+M’s payroll bureau manager gave an update as to all matters payroll.  Julie discussed the new RTI system and how firms who have been using the system for some time have been affected.  It sounds like HMRC have been experiencing some teething problems as well!

Following on from Julie, Antony Keen from PM+M Wealth Management highlighted recent developments in auto enrolment including some horror stories of the fines already being levied for non compliance.

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PM+M’s Antony Keen covers auto enrolment

Last but certainly not least was Emma Swan, employment partner at Taylors Solicitors who gave a very engaging insight into the many pitfalls of HR.  Concentrating on contracts of employment and the dangers of not having the correct procedures in place, Emma expanded onto the consequences of this, outlining the potential costs involved with an employment tribunal.

6 Key things to take away from the seminar were:

  • It’s never too early to plan
  • Speak to the experts
  • Find an IT system that suits your requirements
  • Make sure everything is in place for RTI
  • Planning for auto enrolment should commence 12 months before your staging date
  • Contracts, contracts, contracts!

Hope you find these tips helpful and if you want any further advice drop me an email Jackie.fisher@pmm.co.uk or call me on 01254 604359.

Jackie Fisher – Run My Business Partner

Visualise, Communicate, Engage – How we aim to realise our ambitions

At PM+M, we have a vision about what our business will look like in 4 or 5 years’ time.  It includes some pretty big and audacious targets and one or two challenges to address if we are to achieve it.  Having a vision is important to any business but the key to realising it must be that the vision is understood and shared by most of the people in the business.  Without this, such a vision becomes something thought up by senior management and completely meaningless to everyone else.  The key challenge for me, as a leader of this business, is communicating the vision and what it means for everyone.

In April, the whole of the PM+M team got together for our annual ‘Whole Firm Meeting’, or WFM for short.  This is where everyone in the firm gets the opportunity to think about the four year vision and strategy for the business so that we all engage with it and understand our part in making it happen.  The major need is for us all to appreciate how we need to change ourselves and the way that we behave in response to the challenges that the vision presents.

WFM

The PM+M ‘Whole Firm Meeting’

To help in the communication process, I’ve spent time with a specialist consultant who helped me appreciate the need for communication to be a structured two way thing.  There are some real gems that our team have contributed in developing the PM+M strategic plan and these have been uncovered because we use fun workshops and other exercises to consult with everyone and to ask them what ideas they have about the things that we should be doing, what contribution they should like to make, how they want to be involved, how they feel about what we are saying, what anxieties they have about change, what support they need and what success looks like and means for them.

As a member of a peer support group called MD2MD, a group of business leaders in the North West, I have had the opportunity to gain an insight into how other leaders approach engagement and development of a shared business vision and this has also helped me to develop my own approach.

Communication isn’t a once a year activity and we support our WFM with regular departmental updates, informal ‘Coffee and Cake’ meetings and quarterly performance review sessions.  The idea is to maintain the focus on what each of us is doing in support of achieving the vision and how we are progressing with our personal objectives and challenges.  The aim is to keep the vision personal and to make sure that everyone knows what their efforts are achieving as part of the ‘Big Picture’. All of this kind of activity also contributes to our Investors In People (IIP) status because, after all, IIP is really all about doing the right things.

Do you agree that the key to achieving your targets lies in communicating your vision?  How are you realising your growth ambitions?  I’d be really interested to hear readers’ thoughts and suggestions, so please feel free to leave a comment in the box at the bottom of this post.  Alternatively, drop me an email: stephen.anderson@pmm.co.uk or call 01254 604323.  And, you can share this post on social media platforms by clicking on the social share icons at the top of the page.

Stephen Anderson, Managing Partner