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Non-compliance with minimum wage regulations

14 June 2019

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 the 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
Accommodation Offset	£7.55 per day: £52.85 per week

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.

Commenting on the findings, Bryan Sanderson, Chair of the LPC, said:

‘Our analysis reveals a worrying number of people are being paid less than the minimum wage. We recently celebrated 20 years of the minimum wage – it has raised pay for millions of workers, but it is essential that people receive what they are entitled to.’

‘It is also vital for businesses to be able to operate on a level playing field, and not be illegally undercut on wages.’

Where an underpayment of the national minimum wage is identified in an investigation by HM Revenue and Customs (HMRC) (including an underpayment of the national living wage rate), the compliance officer may issue a notice of underpayment requiring the employer to pay the arrears to the worker(s) and pay a financial penalty to the Secretary of State.

The penalty is set at 200% of the total underpayment. There is a minimum payment of £100 and a maximum payment of £20,000. The maximum payment applies for each worker who has been underpaid, not to the total payment for all workers.

For more information click here.

Money Laundering

24 May 2019

The purpose of Money Laundering is verifying the identity of the person you are doing business with. If a company does not have sufficient information about a client, that person may be able to launder money or partake in other corrupt activities without any red flags being raised.

It can sometimes be inconvenient to check your clients. However, those that understand why this needs to be done and ultimately have nothing to hide will cooperate. It is always helpful to explain that you are adhering to the Money Laundering Regulations, something out of your control.

HMRC has published a list of businesses that have not met their obligations under the Money Laundering Regulations.

As a supervisor of the Money Laundering Regulations, HMRC has a duty to publish details of businesses that have been penalised for not complying with the regulations.

HMRC advises that it considers cases individually to decide whether to publish details in full, anonymously, or not at all. Where a decision is made to publish in full, the following information may be published:

the name and address of the business owner or business
the nature of the breach or breaches
the penalty issued by HMRC
the status of any appeal against the penalty

HMRC publishes anonymously if it considers that the effect of publishing details about an individual or business would be disproportionate.

Know the Money Laundering Regulations so you do not get caught out.

Help to Save

21 September 2018

Hardworking people on low incomes are set to benefit from a new government savings account that offers a 50% bonus. The launch of the new account follows an 8-month trial, with over 45,000 customers who deposited over £3 million.

Help to Save will reward savers with an extra 50p for every £1 saved, meaning over 4 years a maximum saving of £2,400 would result in an overall bonus of £1,200.

Help to Save is easy to use, flexible and secure, will help those on low incomes build up a ‘rainy day’ fund, and encourages savings behaviours and habits.

How much is saved and when is up to the account holder, and they don’t need to pay in every month to get a bonus.

Account holders can save between £1 and £50 every calendar month and accounts last for 4 years from the date the account is opened.

After 2 years, savers get a 50% tax-free bonus on savings. If saving continues, there is another 50% tax-free bonus after 4 years.

On maximum savings of £2,400 over 4 years, the overall bonus would be £1,200.

Savers can apply online or use the HMRC app.

Help to Save

the scheme, administered by HM Revenue and Customs, will be open to UK residents who are entitled to Working Tax Credit and receiving Working Tax Credit or Child Tax Credit payments.
people living overseas who meet either of these eligibility conditions can apply for an account if they are: a Crown servant (or their spouse or civil partner); a member of the British armed forces (or their spouse or civil partner).
Help to Save is an example of digital transformation designed to make it quicker and easier for citizens to interact with government online and on-demand. The #SmarterGov campaign has been launched to drive innovation, savings, and public service improvement across the public sector.

General Data Protection Regulation

15 February 2018

The GDPR is the EU General Data Protection Regulation which will replace the Data Protection Act 1998 in the UK and the equivalent legislation across the EU Member States.

The Data Protection Act 1998 implements the EU Data Protective Directive 1995, however given that they came into force during 1990s, when there was no social media or cloud computing, they are extremely out of date.

The GDPR comes in to force on 25 May 2018 so here are some simple steps to help your company prepare:

AWARENESS – Make sure that the decision makers and key people in your organisation are aware that the law is changing to the GDPR.
INFORMATION YOU HOLD – Document what personal data you hold, where it came from and who you share it with.
COMMUNICATING PRIVACY INFORMATION – You should review your current privacy notices and put a plan in place for necessary changes.
INDIVIDUALS RIGHTS – Check procedures to ensure they cover all the rights including how you delete personal data and provide data electronically.
SUBJECT ACCESS REQUESTS – Update your procedures and plan how you will handle requests with the new timescales.
LAWFUL BASIS FOR PERSONAL DATA – Identify the lawful basis for your processing activity, document it, and explain it in your privacy notice.
CONSENT – Review how you seek, record any damage consent.
CHILDREN – Put a process in place for the verification of individuals of varying ages, do you need parental or guardian consent?
DATA BREACHES – Have procedures in place to detect, report, and investigate personal data breaches.
DATA PROTECTION – Familiarize yourself with the codes of practise.
DATA PROTECTION OFFICERS – Designate someone to take responsibility for data protection compliance and assess where this role sits in your organisation.
INTERNATIONAL – Determine your lead data protection supervisory authority if you operate in more than one E member state.

Many of the GDPR’s main concepts and principles are much the same as those in the current Data Protection Act (DPA), so if you are complying properly with the current law then most of your approach to compliance will remain valid under the GDPR and can be the starting point to build from. However, there are new elements and significant enhancements, so you will have to do some things for the first time and some things differently.

Key changes are as follows:-

Higher fines – fines of up to 4% of turnover or €20,000,000 (whichever is highest) for a breach of GDPR.
Mandatory Notification – mandatory reporting of all breaches of data protection that could result in risk to individuals.
Sensitive personal data – stricter rules apply to the processing of personal data such as medical information.
Consent – Obtaining consent will be harder, silence or inactivity will not constitute consent, it must be clear, freely given and also easy to get out of.
Additional rights – new rights to transfer your data from one service provider to another.
Data Protection Officer – You must appoint a Data protection Officer.

Whilst these changes may seem a huge burden, the direct implementation of GDPR will make all EU countries much more uniform in their approach to data protection. With a little forward planning, this doesn’t need to be a stressful time.

More silly taxpayer excuses from HMRC

9 February 2017

HMRC have released more unusual excuses from taxpayers who failed to complete their self-assessment tax return on time. These include:

1. ‘My tax return was on my yacht…which caught fire’

2. ‘A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed’

3. ‘My wife helps me with my tax return, but she had a headache for ten days’

4. ‘My dog ate my tax return…and all of the reminders’

5. ‘I couldn’t complete my tax return, because my husband left me and took our accountant with him. I am currently trying to find a new accountant’

6. ‘My child scribbled all over the tax return, so I wasn’t able to send it back’

7. ‘I work for myself, but a colleague borrowed my tax return to photocopy it and lost it’

8. ‘My husband told me the deadline was the 31 March’

9. ‘My internet connection failed’

10. ‘The postman doesn’t deliver to my house’

With the self-assessment submission deadline of 31 January now past and an automatic penalty of £100 for failing to submit your return on time, please contact us if you need help bringing your affairs up to date.

Why the UK Tax year begins on April 6

11 May 2016

In some countries the tax year coincides with the calendar year, however for us brits this is not the case. To understand the reasoning behind the UK’s tax year start date of 6thApril you have to go back to medieval times.

In England and Ireland the New Year used to start on 25th March also known as ‘Lady Day’ (the commemoration of the angel Gabriel’s announcement to the Virgin Mary that she would become he mother of Jesus Christ) this was one of the most important days in the religious calendar. The other important dates were Midsummer on 24th June, Michaelmas on 29th September and Christmas day 25th December. All accounts including debts and rents had to be settled by these days and as Lady Day was the first this gradually became regarded as the start of the financial year.

The move forward to April 6 resulted from changes to the calendar and the number of days in various years. Despite the Julian calendar working well for centuries in Europe, it did not align with the solar calendar which caused problems over time, in particular with the Roman Catholic Church as the celebration of Easter had been gradually getting later. By 1752 England was the only European country to still be using the Julian calendar making it 11 days out of alignment with the rest of Europe. To tackle this issue 11 days were dropped from September and to ensure that there was no loss of tax revenues the Treasury extended the 1752 tax year by adding these 11 days at the end. Consequently the beginning of the 1753 tax year was moved to 5thApril.

In 1800, the start of the tax year was moved to the 6th April to mitigate for the differences between the Julian calendar and Gregorian calendar. Ever since this has remained the date of the beginning of the tax year for the UK, becoming formalised in 1900.

New Partner at Kilby Fox – Frances Tebbutt

1 May 2015

Here at Kilby Fox we have welcomed in the new finical year with a big change!

On 1st May one of our client managers Frances Tebbutt jumped into a new role as a partner at the firm.

Frances is AAT and ACCA qualified accountant and during her time here has gained extensive knowledge in all areas of audit and accountancy. As a client manager Frances has worked with all clients from sole traders to limited companies.

“I am excited to be joining the firm for which I have been working as an employee for the last 14 years, as a partner, and to be given the opportunity to assist the existing partners to take the business forward.”

We wish her all the best in this new and exciting role within Kilby Fox.

How Are Dividends Taxed?

20 February 2015

Dividends are widely used by companies as a tax efficient way of remunerating its shareholders. The tax system surrounding dividends however is a little more complicated than some other sources of income. This confusion often arises due to the tax credit received on dividends.

This impacts basic rate and higher rate tax payers differently. Examples of how dividends are taxed for each are shown below:

Basic rate taxpayer

The tax credit received on dividends was put in place to account for the tax already paid by the company on its profits. The way it works is to gross up the dividend you receive by 10% and then deduct this tax credit from your personal tax bill. This effectively results in no tax being due on the dividends received for basic rate taxpayers.

Example:

Description	Workings	Figures
Dividend paid to you		£1,000
Gross dividend (value used on your personal tax return)	£1,000 / 0.9	£1,111
Tax credit received	10% of the gross dividend	£111
Tax on dividend at the basic rate of 10%	£1,111 x 10%	£111
Tax due	Tax on dividend less tax credit	Nil

Higher rate taxpayers

The area where the tax credit has the biggest impact, is for higher rate taxpayers (2011/12 – earnings over £42,475). Dividends are technically taxed at 32.5% for higher rate taxpayers, however once we account for the tax credit, we are left with an effective rate of tax of 25%.

Example:

Description	Workings	Figures
Dividend paid to you		£1,000
Gross dividend (value used on your personal tax return)	£1,000 / 0.9	£1,111
Tax credit received	10% of the gross dividend	£111
Tax on dividend at the higher rate of 32.5%	£1,111 x 32.5%	£361
Tax due	Tax on dividend less tax credit	£250

Conclusion:

If you are a basic rate taxpayer, then the in no further tax to pay on the dividends you receive. However, if you are a higher rate taxpayer, it is important to ensure you set aside 25% for the tax due.

Key Tax Deadlines

29 January 2014

Here at Kilby Fox we have put together some key dates for your diary to help with your tax assessments and tax deadlines.

October 2014

5th – Deadline to notify chargeability for income tax/capital gains tax for 2013-2014 if not registered for self-assessment. Complete form CWF1 for self-employment or form SA1 for non self-employed income, or form SA401 for Partners.

31st – Midnight deadline for paper submission of self-assessment tax returns for tax year ended 5 April 2014 to be received by HMRC.

December 2014

30th – Deadline for online submission of self-assessment tax returns for tax year ended 5th April 2014 for HMRC to collect tax through clients’ PAYE codes, where they owe less than £3,000.

January 2015

31st –

Deadline for online submission of self-assessment tax returns for tax year ended 5 April 2014.
Deadline for paying self-assessment balancing payments’ for tax year ended 5 April 2014.
Deadline for first self-assessment payment on account for tax year ended 5th April 2015.

Monthly repeat dates:

Construction industry scheme (CIS) deadlines:

– Deadline for receipt of the contractor’s monthly return whether submitted of paper, electronically or in the case of a nil return over the telephone is the 19th of every month.

PAYE and Class 1 National Insurance Contribution (NICs) deadlines:

– Deadline for electronic payments to be cleared in HMRC’s bank account for any PAYE and class 1 NICs is the 22nd of each month.

Employer Payment Summaries:

-The Employer Payment Summary (EPS) is used to notify HMRC that no payment is due, or of any amounts being recovered from payments. If you want the EPS to apply to a specific month, you need to send the EPS before payment to the HMRC is due on the 19th following the end of the tax month.

Quarterly Repeat dates:

Cheque payments for any outstanding PAYE and Class 1 NICs must reach HMRC Accounts office by the 19th of each quarter.

First Quarter 19th July 2014
Second Quarter 19th October 2014
Third Quarter 19th January 2015
Fourth Quarter 19th April 2015

Cleared Electronic payment must reach HMRC’s Bank account no later than the 22nd of each quarter.

First Quarter 22nd July 2014
Second Quarter 22nd October 2014
Third Quarter 22nd January 2015
Fourth Quarter 22nd April 2015

Why Outsource Your Bookkeeping

20 November 2012

Bookkeeping can be time consuming and complicated and is a considerable burden for any company, which is why we pay particular attention to all our clients’ requirements and handle every one of them individually.

We’ve compiled a list of points as to why you should outsource your bookkeeping.

It enables you to focus on your business: outsourcing your bookkeeping to one of our team gives you more time to concentrate on running your business.
Increased productivity and efficiency: An efficient business normally means a profitable business. Outsourcing your bookkeeping allows you and staff members to focus on your business goals which will intern increase productivity.
Reduced Risk: Outsourcing your bookkeeping allows you to reduce the risk associated with in house bookkeeping. Our outsourced services mean you can relieve yourself of any underlying risks, and focus on what you do best, running your business.
Freedom: There’s no doubt that when you spend less time on your bookkeeping, as well as getting it done more efficiently and with reduced risk, you’re left with much more freedom to run your business in the way you want to.

For help and advice with your bookkeeping please contact a member of our team on 01604 662670 or via email on [email protected]