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Glasgow
+44 (0)141 221 2984

Edinburgh
+44 (0)131 225 6366

Stirling
+44 (0)1786 451745

Dumbarton
+44 (0)1389 765238

Hamilton
+44 (0)1698 459444

French Duncan

Blog

Changes to pensions auto-enrolment from April 2019

Our payroll services team would like to remind all French Duncan clients that changes to pensions auto-enrolment are due to come into place from April 2019. Regulatory auto-enrolment for pensions is offering most people in the UK workforce a valuable means of building a pension cash pot. However, company finance directors, finance teams and payroll administrators need to make provisions for a further increase in contributions taking place from 6 April 2019.

Increased pensions auto-enrolment contributions from April 2019
The existing 2018/19 pensions contributions and deductions you are required to make amount to a minimum of 3% of gross salary for qualifying employees and 2% for employers. From 6 April 2019 the requirements increase to 3% minimum employer contribution and 5% staff contribution.

All businesses operating PAYE payrolls are required by law to make the minimum contributions for all their qualifying employees at the very least. Where employers cover the current minimum contribution requirement of 5%, which rises to 8% from next April, staff are not required to make contributions.

The 2018/19 employee earnings levels affected by pension contributions legislation range from £6,032 to £46,350. The increases to pensions contributions requirements relate to all auto-enrolment pension schemes and all existing pension schemes apart from defined benefits schemes. You can find out more about auto-enrolment pension schemes on The Pensions Regulator website.

Implementing these increases
You will need to inform all your employees about these changes and a template letter is available on The Pensions Regulator website, if required. 

You'll also need to clarify which increases apply to your business. This information can be accessed from your pensions scheme documentation or direct from your pension scheme provider. 

These changes will apply to all qualifying employees except for individuals that requested you put them into a scheme which does not require employer contributions.

Your payroll processing software will need to be updated so these increases can be applied from 6 April 2019 onwards. So, if you do use the services of a payroll bureau you should confirm that these requirements will be in place. If you run a monthly payroll the April 2019 pay run needs calculating at the new rates from 6 April, so if your software does not support these types of pro-rated contributions you'll need to speak with your pension scheme provider and software supplier or payroll bureau to work out exactly how you will handle these changes.

French Duncan Payroll Services provide comprehensive payroll support to all clients. Get in touch if you would like information about our payroll services to business clients and the way our auto-enrolment software processes legislative changes of this nature.

Making Tax Digital - Latest Update

This blog was originally published on LinkedIn on 17 October 2018.

There were some interesting developments in yesterday’s update from HMRC regarding Making Tax Digital (MTD) for VAT.

1. HMRC has decided to defer the mandation date by 6 months for certain types of VAT registration entities.

This 6 month deferment applies to the following VAT registration categories: trusts; ‘not for profit’ organisations that are not incorporated; VAT divisions; VAT groups; public sector entities required to provide additional VAT return information (Government departments, NHS Trusts); local authorities; public corporations; traders based overseas; those on payments on account; and, annual accounting scheme users.

The revised mandation date for these organisations is 1 October 2019 and this effectively provides 1 year from now to be ready for MTD for VAT, however, it is still advised to start preparing for this sooner rather than later. HMRC expect that deferral will apply to around 3.5% of those VAT registrations mandated under MTD.

2. HMRC’s pilot service is now open to sole traders and companies whose VAT affairs are up to date and are ‘straightforward’.

However, the pilot service is not yet open to businesses that: are partnerships; trade with the EU; are based overseas; submit annual returns; make payments on account, use the VAT Flat Rate Scheme; and, those newly registered for VAT that have not yet submitted a VAT return. It is expected that businesses with a default surcharge within the last 24 months will be able to join the pilot by the end of this month.

There will be many businesses that don’t view themselves as having ‘straightforward’ VAT affairs that should in fact still be able to join HMRC’s pilot, in order to help them prepare for the MTD go live date. This could include limited companies that are required to carry out partial exemption calculations.

HMRC have updated their Overview of MTD webpage and this includes a revised timeline showing the mandation and pilot joining dates. This can be found at the following link: https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital

Although deferment will likely be welcomed by those affected, it is looking ever more likely that MTD for VAT is not going away. And for the vast majority of VAT registered businesses that don’t fall within the October 2019 deferment, it is strongly recommended that they still get ready for their April 2019 mandation date.

French Duncan are assisting clients with their MTD preparation and offer a range of services around this, such as outsourced bookkeeping & VAT return preparation/submission, systems reviews/healthchecks and general advice around MTD and how it impacts on the business operation.

Budget boost for business investment?

The 2018 Budget delivered opportunities for businesses, intended to support and encourage them to invest.

One of the key developments confirmed by the Chancellor – but originally announced in previous Budgets – is that corporation tax will fall to 17% from 2020. This new low rate will make incorporation more attractive for smaller businesses and reduce the tax burden for companies of all sizes.

Along with the cut in headline rate, the Chancellor also announced some specific measures for business investment.

Capital allowances
The annual investment allowance (AIA) will increase from £200,000 to £1,000,000 for all qualifying investments in plant and machinery. The increased allowance only applies on investments between 1 January 2019 and 31 December 2020. This is a generous extension and will benefit many businesses. Indeed for most businesses this will cover all their expenditure on such items. Where an accounting period spans these dates, the calculations need some care as they are quite tricky.

The AIA allows a company to deduct the full cost of an investment from profits before tax, and can be claimed against items that you keep to use in your business, as well as costs of demolishing plant and machinery, parts of a building considered integral, known as ‘integral features’, some fixtures, e.g. fitted kitchens or bathroom suites, and alterations to a building to install other plant and machinery .

Alongside this, a new Structures and Buildings Allowance has been introduced .This has been set at 2% of construction or conversion costs over 50 years, where all the contracts for physical construction works were entered into from 29 October 2018. This is in effect a re-emergence of the old Industrial Buildings Allowance, albeit at 2% and not 4%, but broadened out to cover a much larger range of industries.

It’s not all good news, however, as the Government has also reduced the special rate reduction from 8% to 6% for certain types of plant and machinery. In addition, ECAs for energy efficient and other environmentally beneficial investments are being withdrawn from April 2020.

If you are planning any capital investments for your business, please get in touch to discuss what tax-efficient options are available to you. Please bear in mind that the rules regarding when expenditure is incurred, and therefore what rate of allowances applies when the rate is changing , are quite complicated. If you are planning to time your investment to take advantage of these changes , you will need to understand these rules.

 

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