Income Tax

The personal allowance will be increased to £9,440 for the tax year 2013/2014.

There will be a further increase in the personal allowance to £10,000 for the tax year 2014/2015.

The higher rate threshold will be reduced to £32,010 in the tax year 2013/2014 and to £31,865 in the tax year 2014/2015.

As previously announced, the highest rate of income tax will be reduced from 50% to 45% for taxpayers with taxable income over £150,000 for the tax year 2013/2014.

Corporation Tax

The small companies rate of Corporation Tax will remain at 20%.

The main rate of Corporation Tax will be reduced by 1% to 21% in April 2014.

There will be a further 1% cut in the main rate of Corporation Tax to 20% in April 2015 so that it coincides with the current small companies rate of Corporation Tax.

 Employment

The Government is to introduce an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 secondary NICs liability from April 2014.The allowance will be claimed as part of the normal payroll process through Real Time Information (RTI).

The threshold for employment-related taxable cheap loans to be treated as earnings of the employment, will increase from the current threshold of £5,000 to £10,000 for 2014/15 and subsequent tax years.

A new childcare scheme will be introduced from Autumn 2015 to support working families with their childcare costs. For childcare costs of up to £6,000 per year per child, support of 20% will be available worth up to £1,200. From the first year of operation, all children under 5 will be eligible and the scheme will build up over time to include children under 12. The scheme will provide support for families where all parents are in work and not receiving support through the Childcare Element of Working Tax Credits/Universal Credit, or where one has an income over £150,000. Support will be provided through a childcare account redeemable at any registered childcare provider.

Pensions

Legislation will be introduced in Finance Bill 2013 to reduce the annual allowance to £40,000 and to reduce the standard lifetime allowance to £1.25 million for the 2014-15 tax year onwards.

Legislation will be introduced in Finance Bill 2013 to increase the capped drawdown limit for pensioners of all ages from 100 per cent to 120 per cent of the value of an equivalent annuity.

VAT

The VAT registration and deregistration thresholds will be increased in line with inflation so that with effect from 1 April 2013: -

• the taxable turnover threshold which determines whether a person must be registered for VAT, will be increased from £77,000 to £79,000;
•  The taxable turnover threshold which determines whether a person may apply for deregistration will be increased from £75,000 to £77,000; and
•  The registration and deregistration threshold for relevant acquisitions from other EU Member States will also be increased from £77,000 to £79,000.

 Capital Gains Tax

The capital gains tax annual exemption will be increased to £10,900 for the tax year 2013/2014.

Legislation will be introduced to extend the CGT relief for reinvesting capital gains into SEIS shares.

There will be a new exemption introduced in Finance Bill 2014 on the sale of a controlling interest in a business into an employee ownership structure.

Inheritance Tax

The Inheritance Tax nil rate band will be frozen at £325,000 until 5 April 2018.

Fuel Duty

The fuel duty increase that was due to take place on 1 September 2013 will be cancelled.

HMRC is to launch a new campaign targeting businesses with one or more outstanding VAT returns.

The campaign will start on 28 February 2013. HMRC have stated that they will be looking closely at the VAT affairs of such businesses, which could involve a VAT inspection being triggered. 

Where outstanding VAT returns are submitted before 28 February 2013, it may be possible to agree better terms with HMRC in respect of penalties, time to pay arrangements etc.

Businesses should therefore ensure that all outstanding VAT returns and payments are brought up-to-date as soon as possible.

Please contact us if you require further information.

The Annual Investment Allowance (AIA) provides 100% relief up to a fixed annual limit for most expenditure on plant and machinery, instead of the normal capital allowance of 8% or 18% on a reducing balance basis.

The limit has varied a number of times considerably since the allowance was introduced in April 2008. It was initially £50,000, but was increased to £100,000 from April 2010.

From 1 April 2012 (for corporation tax purposes) or 6 April 2012 (for income tax purposes) it fell to £25,000.

However in the 2012 Autumn statement the Chancellor announced that it would be increased to £250,000 for expenditure incurred in the two-year period beginning on 1 January 2013 and ending on 31 December 2014.

This gives a significant incentive to bring forward expenditure that might otherwise have been incurred on or after 1 January 2015.

Please contact us if you require further information.

Time is running out for businesses that still need to prepare for the introduction of Real Time Information (RTI).

From April 2013, employers must report to HM Revenue & Customs on their employees’ tax, national insurance contributions and other deductions when or before their wages and salaries are paid. Employers will need to send their first return – called a Full Payment Submission (FPS) – for salary or wage payments made to employees on or after 6 April 2013. Employers with 250 or more employees will also have to have to send an Employer Alignment Submission before their first FPS.

Providing this Real Time Information requires the use of specific software and relies on employers having accurate employee data.

Employers should act now.

Being able to comply with the RTI requirements takes preparation. Employers cannot leave this to the last minute.

• They must gain an understanding of what, when and how data must be filed.
• Data must be accurate and complete. Any gaps, such as dates of birth or full first names, must be filled in. RTI data will be required even for employees being paid below the national insurance lower earnings limit.
• Employers need to consider the technical implications, including whether their existing payroll software will be RTI-compliant.

Software

The software implications of RTI compliance are significant. If their existing software is not being updated, employers need to choose their new, RTI-enabled payroll software carefully to make sure it is appropriate for business as well as RTI needs, as well as being cost-effective.

Some employers may decide that this could be an appropriate time to switch to using a payroll service. Again, thought should be given to the choice and cost of service provider.

Training

Payroll staff will need specific training on new processes and software. Demands on payroll staff will increase substantially under RTI, due to strict filing deadlines. Understanding how to deal with specific issues, such as reporting of cash payments to staff working in the hospitality sector will be important.

All employees will need to be made aware of the introduction of RTI, the potential impact on their pay (as PAYE adjustments may be made during the year), and the importance of keeping their employer and HMRC up-to-date with any relevant changes in circumstances.

HMRC View

HMRC recognises the challenge for businesses gearing up for RTI. They have warned: “There is more to it than simply buying or updating software – although this is key. Employers may need to add employees such as casuals or those below the lower earnings limit to their payroll system and must think about their payroll practices to make sure that they work for real-time reporting.”

Penalties

HMRC has announced that there will be no penalties for late FPSs this year, nor will there be automated late payment penalties until April 2014. However, penalties may apply for the tax year 2013/14 if HMRC discovers inaccuracies on FPSs.

Preparing well before April 2013 is the best way for employers to minimise their risks of incurring any RTI-related penalties.

We can help

If you have any queries or concerns, please contact us. We can guide you through the preparations you need to make, to ensure you are well placed to cope with the changes.

For your information,

We have recently become aware that some clients have received emails that purport to be from HM Revenue & Customs stating that they are due a tax refund.

The email requests that you register with “Tax Gateway” and asks for your bank account details so that the refund can be paid into your account.

This email is a scam and you should delete it from your inbox. 

You should also note that HM Revenue & Customs do not contact you about your tax affairs by email. They will only write to you or telephone you.

If you have any concerns regarding the above or any other matter please contact Kerry Coyle at our office.

The High Income Child Benefit Charge came into effect on 7 January 2013. This charge affects taxpayers whose income exceeds £50,000 p.a. and they (or their partner) receive Child Benefit payments. If both incomes in a household exceed £50,000, the charge will only apply to the higher earner.

For taxpayers with an annual income between £50,000 and £60,000, the total amount of the charge will be a proportion of the Child Benefit received.  The charge is calculated as 1% of the amount of Child Benefit received for every £100 of the taxpayer’s income that exceeds £50,000.

For taxpayers with an income above £60,000 p.a., the amount of the High Income Child Benefit Charge will be equal to the amount of Child Benefit received.

Affected taxpayers need to decide whether it is worthwhile to continue receiving Child Benefit payments. If they decide to continue receiving Child Benefit payments, they will be required to register for Self Assessment and submit a Tax Return to HM Revenue and Customs for the tax year ending 5 April 2013 onwards, in order to pay this charge.

HM Revenue and Customs have contacted taxpayers who may be affected by the introduction of this charge. If you have received such correspondence from HM Revenue and Customs, or believe that you may be affected by the High Income Child Benefit Charge, please contact the office for further information.

A tale of two accountants

McAleer Mullan Jackson recently congratulated two of its young accountants on successfully achieving their chartered accountancy qualifications.

Emma Coll and Jonathan Potter have both been working at the practice whilst completing their training – although their journeys began in rather different ways, with Emma coming through the university route and Jonathan having combined work and study since he completed his A-Levels to achieve the same result. 

Having decided on a career in accountancy, Emma – a former pupil of Loreto Grammar – embarked first of all on a three year degree course at Queen’s University in Belfast.  After graduation she secured a training contract at the Omagh firm, and with her degree exempting her from the first tier of exams she proceeded to complete her CAP2 and her final admittance exams (FAEs).

Reflecting on her experience Emma said:  “I really enjoyed my degree and would definitely recommend that route for anybody wanting to pursue a career in accountancy.  Obviously there’s the social aspect and the whole experience of being a student, which I really enjoyed, but also the people I met on the course were a great support going forward into the professional exams.  The FAE course is also delivered at Queen’s and some of the university lecturers are the same so for me it was all familiar, which was good – and I loved being back.

“As far as making the transition to the workplace was concerned I felt I was well-equipped and had a good grounding in the basic principles of accounting.  Probably the thing I found most challenging was getting to grips with the software we use here and just the way we conduct our business in general – but I’ve received great support from the other staff members.  I definitely have no regrets – obviously student debt is an issue but I think you only get one chance in your life when you can go and live the university experience and I’m glad I did it.”

Meanwhile, Jonathan, who previously attended Fivemiletown College, took a more vocational route to becoming a chartered accountant.  He left school at 18 and straight away got a job at McAleer Mullan Jackson, as a trainee chartered accountant.  He then spent one day each week for two years at South West College, to obtain his accounting technician qualifications, before undertaking the chartered accountancy exams.

“I went in at CAP1 level but was exempt from half of the exams because of my previous qualifications.  I was working all week and travelling to Belfast for class every Saturday, and then the following year there were some Friday nights included as well.  It was fairly intense but the firm were very understanding about study leave, and it was all worth it in the end!  “I’m from a farming background so I’ve always been used to working alongside my studies.  My sister went to university and from talking to her I don’t think I’ve missed out on anything – and I don’t have any student debt which for me is a big bonus.  I’d like to see high schools and colleges promoting the Accounting Technicians Ireland course as a route into chartered accountancy more.  If I had to do it over again, I wouldn’t change a thing.”

Commenting on the pair’s success, Hugh McAleer said:  “Our firm has been in existence now for 26 years and we have nine chartered accountants on our staff.  The addition of Emma and Jonathan to this number brings another young and dynamic edge to our practice.  The FAE exams have about a 60% pass rate so for both of them to have passed is a great achievement and we congratulate them wholeheartedly.”

New face at local accountancy firm

McAleer Mullan Jackson Ltd, recently welcomed a new face to their team in the shape of chartered accountant, Paul Crossley.

Paul joins the practice having completed the Final Admitting Exams of Chartered Accountants Ireland in 2011. He brings to the table over twenty years’ experience in Banking and Finance, including six years as manager in the Ulster Bank’s Fermanagh & West Tyrone Business Centre.

Commenting on the new appointment, Hugh McAleer said that Paul’s wealth of experience would be a valuable asset to the firm and its clients in the challenging economic environment.

He added:  “Having Paul, an experienced banker, on board puts our practice in a strong position when negotiating with the banks on behalf of our clients.”

Paul may be contacted via email, paul@mmjca.com or tel: 028 8225 0253.