Health benefits

Good employers look after their staff, and that includes ensuring that they get any necessary treatment for injuries incurred while working. However, if an employer pays for, say physiotherapy, to help with an injury which was not work-related this will amount to taxable benefit for the employee.

The rules relating to health treatments for employees are a patchwork of exemptions and special conditions. What’s more they are not covered in the HMRC booklet: 480(2019) Expenses and benefits guide, so it is not surprising that employers get things wrong.

The basic rule is that any health-related treatment for the employee, which is paid for by the employer, is taxable unless it is:

• given while the employee is working overseas and the treatment is required to be given overseas;
• part of a package to allow an employee to return to work, but this is capped at £500 per employee per year;
• related to injuries or diseases which result from the employee’s work.

Medical treatment includes treating any mental illness, so would cover counselling, but the difficulty may be how to justify that the treatment is needed solely because of a work-related trauma or stress.

HMRC is currently writing to large employers asking them how they assess whether physiotherapy treatment paid for on behalf of employees, falls into the tax-free category of treatment. If the employer replies with employee-specific detail it may be in danger of breach patient confidentiality and GDPR requirements, so such requests should be handled with care.

Written by the Tax Advice Network

SA Late filing penalties

We warned you in our newsletter on 28 February 2019, that HMRC had delayed issuing the late filing penalties for the 2017/18 self-assessment tax returns this year, due to Brexit related pressures on staff time.

Well the Brexit issue is still not resolved, but HMRC has started to issue those late filing penalties. HMRC has said it will take until 12 April 2019 (the new Brexit day), to issue all the penalties, which will give taxpayers at least two weeks to submit their 2017/18 SA return before daily £10 penalties start to apply from 1 May 2019.

If you receive a late filing penalty, but its not due as the return was submitted on time, the best way to get it removed is to ring HMRC. Where you believe you had a reasonable excuse for not filing your SA return on time, the appeal should be submitted within 30 days of the date of the penalty notice.

A reasonable excuse needs to be in place for the majority of the period in which the taxpayer was trying to file the return, and the return must be filed as soon as possible after the source of the reasonable excuse was removed. A serious illness throughout January 2019 may be accepted as a reasonable excuse, but if HMRC does not accept it as such the taxpayer will have to explain to the tax tribunal why he did not file the return earlier.

However, where the taxpayer did not know he had to file a SA return as the notice to file was not sent to his correct address, that could amount to a reasonable excuse. Receiving incorrect advice from HMRC about whether a return is due can also be accepted as a reasonable excuse.

Written by the Tax Advice Network

Non-resident CGT

Since 6 April 2015 we have had to worry about non-resident clients who sold UK residential property, as they have to report the gain within 30 days of the completion date under the NRCGT rules. From 6 April 2019 the NRCGT regime is extended to all types of UK property, and the tax will also be payable within 30 days of completion for all such transactions.

The new NRCGT rules are a complete rewrite of the current rules. The new regime applies to any non-resident who disposes of UK land, buildings or structures, or of an interest an entity which derives more than 75% of its gross asset value from UK land (a property-rich entity).

The 6 April 2019 start date applies even for non-resident companies, as it’s a transaction-based tax not a trading-based tax. The NRCGT charge applies at normal CGT rates for individuals and trusts, but companies will pay corporation tax on the gain at the normal CT rate of 19%, due to drop to 17% from 1 April 2020. Any companies which would have paid tax on ATED-related gains can stop worrying about that, as the charge on ATED-related gains is abolished from 6 April 2019.

To test whether an individual is non-resident for the NRCGT rules, apply the statutory residence test (SRT). The residence status of a company is usually clear from where it was formed, and where the management and control is exercised from.

Indirect disposals of UK land are caught where the investor has a substantial interest (at least 25%) in a property rich entity at the date of disposal, and has held that investment at any time in the two years prior to the disposal. The indirect interest may be traced through a series of entities. There are also connected persons rules which can mean shareholdings by different people may have to be aggregated. However, if the entity uses the UK land for trading purposes that land is left out of account.

These new rules are complex, and the HMRC draft guidance is quite brief. The main thing is to be aware of is that the gain must be reported, and the tax paid, within 30 days of the completion date.

Written by the Tax Advice Network

Welcome to our monthly newswire. We hope you enjoy reading this newsletter and find it useful.

 

Building a data-led strategy

 

Businesses are capturing more information than ever before. The most successful firms are analysing that information and are focused on building their strategy around customer and market data.

 

Data management strategy

To create a data-driven business, you need to have a data management strategy. This needs to start with your culture and people. You need to encourage the right behaviours among your staff. It might help to create a training programme, which ensures your people are capturing data properly, on the right systems and in a way allows your business to gain useful insights from that data.

 

Analytics

There is no point in capturing data if you can’t analyse it. Your business needs to manage data well and it needs to value data analytics. Don’t jump straight into rolling out software and technology. Take the time to define the needs of the business and build your analytics systems around that. Define what you need to know in order to drive sales, increase profitability or retain existing clients. Then feed these questions into your data analytics strategy.

 

Your analytics should seek to provide answers to these questions in order to add value to your business. Now that your people and systems are in place, your business will be in a better position to collect data, analyse it and use the outputs to improve company performance with data driven insights.

Look for opportunities to use data

Unless you have data, you are just another person with an opinion.  Look out for ways to use data to improve your business. Use customer data to improve your business development and marketing efforts. You can use data to reduce costs or to manage your supply chain more efficiently. You can even use data driven insights to help improve cash-flow by improving your debtor days and cash management across your business.

 

Remember, most businesses (and therefore, most of your competitors) are not very good at managing their data. If you can capture, analyse and utilise data throughout your business more effectively than they can, you will have a significant competitive advantage.

 

Remaining productive when you are traveling

 

In theory, when you travel with work, you should have time to focus on getting a few things done. In reality, it can be almost impossible to work in a busy airport or on a busy flight. Here are a few tips to help you to be more productive when you are on the road.

 

Plan ahead

There is nothing worse than starting a piece of work and realising that you need WiFi because the document you need is in the cloud, or that your battery on your laptop is low. Staying productive while you are on the road is all about planning ahead. Download the files you need, take a power pack with you for your devices and hit send / receive in your inbox, when you are on WiFi. Try to avoid relying on in-flight WiFi – it is generally slow and frustrating.

 

Make the most of being away from the office
If you are in an airport lounge or on a busy flight, put on headphones. Listening to music can help to drown out distractions and allow you to focus. If you need to write a business plan, sometimes it can be good to do so while sitting on a plane, away from interruptions, phone calls or emails. If you are driving rather than flying, maybe you can do a few calls (hands-free of course).

 

Exercise

If you are jet-lagged or tired following time spent traveling, some gentle exercise will help to re-energise you and get you ready for the day ahead. Many hotels have a gym or pool. If not a morning jog is a good way to start your day.

 

Don’t forget to rest

Travel can be exhausting. Make the most of being away and get some sleep in a hotel room. If you are traveling through the night, try to get at least a nap. If you need to work, maybe focus on simple tasks like clearing email, when you are too tired to focus on anything complex.

 

Creating a high performance organisation

 

High performance organisations stimulate more effective employee involvement and commitment in order to achieve increased profits, improved productivity and higher levels of customer loyalty.

 

We are living in uncertain times. The highest performing businesses will, by their very nature, ride out the storm more effectively than their competitors. So how do you create a high performance organisation?

 

A truly high performance business will deliver higher levels of productivity, customer satisfaction, sales and will have increased employee retention.

 

The backbone of a high performing business is a resilient workforce. You need to build a team that is highly motivated, high performing and consists of people who look forward to coming to work every day because they feel they are a part of the company and the bigger picture.

 

In addition to hiring the right people, you need to create a culture that allows your team to perform at a high level. It all starts with communication.

 

You need to communicate the vision, strategy, values and beliefs of your business in order to create a shared purpose. They need to buy into your vision for the company so that they feel invested in its future success.

 

Next, you need to empower your people. Set their high level objectives and communicate these to each member of your team. Explain how each objective contributes to the overall success of the business.

 

Now step back and give your people the space to get on with working towards those objectives. Be present and available for when they need to escalate issues.  Set regular team meetings but never micro-manage. It is also important to create appropriate reward strategies so that your high performing people feel rewarded for their commitment, and remain motivated.

 

Remember, perfection is not attainable, not even in the very highest performing organisations. However, if you aim for perfection, you might just end up a notch below that, which is where a high performance business should be.

 

Using Snapchat as a marketing tool

 

Snapchat is a popular video and image sharing app. It has become one of the most popular social media platforms but can it be used by businesses as a marketing tool?

 

Originally, Snapchat allowed Android and iOS smart-phone users to send and receive images that could only be kept for a short time, once received.

 

However, Snapchat has evolved and users can now use the ‘story’ function where your photos and videos can be broadcast among your followers, with the ‘snaps’ staying available for 24 hours.

 

According to Snapchat, the app enjoys average daily usage of 186 million people globally. The average Snapchat user uses the app over 20 times a day and spends an average of 30 minutes on the app, creating and sharing 3 billion snaps every single day.  Aside from providing a gateway to a younger, more mobile savvy audience, Snapchat has created smart marketing tools that extend reach and help businesses connect with audiences in unique ways. Snapchat provides a variety of paid marketing options to meet specific business goals. You can create a smart Snap Ad, a quirky Sponsored Geofilter, or interact with your potential clients through a Sponsored Lens.

 

Snap ads are paid-for, full screen, three to ten-second vertical adverts that you can create yourself on the Snapchat platform. They appear in between friends’ stories and Snapchat content such as Snapchat’s stories or publishers’ stories. The person watching can swipe up at any time for more info, maybe to read an article, or visit a website. Snap Ads are highly targeted.

 

Filters and lenses are paid for promotional tools. Filters add images such as your company logo or animations such as cartoon ears to faces in a photo. They are useful tools if you are trying to build brand awareness. Lenses also add content to a user’s photo, in the form of augmented reality elements such as animations. For example, your brand can be set to pop up on the screen during a selfie.

 

You can also build your brand, for free, using Snapchat. For example, you can build your firm’s story on the platform and tell your audience about your latest products and services. You can also build groups on Snapchat in order to share useful tips with existing customers, demonstrate new features or new products to your client-base, etc.

 

Welcome to our monthly newswire. In this issue we cover a number of recent tax changes and things to be aware of in the future. As usual contact us if you wish to discuss any matters further.

NO TAX CHANGES ANNOUNCED IN SPRING STATEMENT

Despite the continuing uncertainty surrounding Brexit the Chancellor delivered his Spring Statement on 13 March. The purpose of this statement is to update the House of Commons and the country on the state of the economy; it is not intended to include any major tax announcements, and none were made by the Chancellor.

As already announced, the personal allowance and the higher rate tax threshold will increase on 6 April 2019. The personal allowance rises to £12,500 and the basic rate band to £37,500, which means that for most taxpayers the higher rate tax threshold will be £50,000. These thresholds were due to come into effect from 6 April 2020 but the Chancellor announced that the start date would be brought forward by one year. Note that the limits will then remain the same for 2020/21.

Changes to Scottish income tax bandings are set out below.

SCOTTISH INCOME TAX RATES FOR 2019/20

The Scottish Parliament has the power to set income tax rates on non-savings and non-dividend income for Scottish taxpayers. It has been confirmed that the 5 band structure and tax rates (19%, 20%, 21%, 41% and 46%) will remain the same for 2019/20. The thresholds for lower tax rates will rise in line with inflation and the higher rate threshold has been frozen.

The 41% Scottish higher tax rate will apply to taxable income in excess of £30,930 as the higher rate threshold will be frozen (at £43,430 when the personal allowance is taken into account). The 46% additional rate will continue to apply to income in excess of £150,000.

Scottish taxpayers (who live most of the time in Scotland) are given an S prefix PAYE code to ensure that they pay the right amount of tax on their employment income. It is important that HMRC are advised of their correct residential address.

Welsh Income Tax Next

The Welsh Assembly now also has the power to set its own income tax rates but have not yet exercised this power. Hence Welsh taxpayers will be subject to the same income tax rates as England and Northern Ireland.

 

LAND AND BUILDINGS TRANSACTIONS TAX

Land and Buildings Transactions Tax is the Scottish equivalent of Stamp Duty Land Tax. For residential properties, the rates and bands for land and buildings transactions tax (“LBTT”) will be unchanged for 2019/20, although the additional dwelling supplement will be increased from 3% to 4%.

The lower rate for non-residential properties will be reduced from 3% to 1%, and the upper rate increased from 4.5% to 5%. The upper rate will apply to the portion of the purchase price over £250,000 (reduced from £350,000).

PERSONAL SERVICE COMPANY CHANGES FROM APRIL 2020

In the Autumn Budget the Chancellor announced that the “off payroll” workers rules that currently apply in the public sector would be rolled out to the private sector in 2020. The government have now issued a consultation paper that sets out proposed tax and national insurance changes that will impact on those supplying their services through personal service companies.

End users will be required to determine whether the rules apply to the services provided by the worker via his or her personal service company. This will be a significant additional administrative burden on the large and medium-sized businesses who will be required to operate the new rules. The current CEST (Check Employment Status for Tax) online tool would be improved before the proposed start date.

 

No change for “Small” Employers

 

“Small” businesses will be outside of the new obligations and services supplied to such organisations will continue to be dealt with under the current IR35 rules with the worker and his or her personal service company effectively self-assessing whether the rules apply to that particular engagement.

 

The definition of “small” has been widely awaited and the Government have confirmed that it intends to use the existing Companies Act 2006 definition. That is where the business satisfies 2 or more of the following features:

• Annual turnover of £10.2 million or less
• Balance Sheet total of £5.1 million or less
• 50 employees or less

 

The new obligations to determine whether the rules apply, deduct tax and national insurance, and report payments under RTI will apply to the agency or intermediary making payments to the personal service company where the end user is large or medium-sized. There will be an obligation to pass details of the status determination up and down the labour supply chain.

 

The liability for tax and national insurance will be the responsibility of the entity paying the personal service company, however if HMRC are unable to collect the tax from that entity the liability will pass up the labour supply chain thus encouraging those entities further up the supply chain to carry out due diligence to police compliance.

 

Please contact us if you would like to discuss how the proposed changes are likely to impact on your business.

 

ADVISORY FUEL RATE FOR COMPANY CARS

 

In line with recent reductions in fuel prices, HMRC have reduced their suggested reimbursement rates for employees’ private mileage using their company car from 1 March 2019. Where there has been a change the previous rate is shown in brackets.

 

Engine Size	Petrol	Diesel	LPG
1400cc or less	11p (12p)		7p (8p)
1600cc or less		10p
1401cc to 2000cc	14p (15p)		8p (10p)
1601 to 2000cc		11p (12p)
Over 2000cc	21p (22p)	13p (14p)	13p (15p)

 

Note that for hybrid cars you must use the petrol or diesel rate.  You can continue to use the previous rates for up to 1 month from the date the new rates apply. The Advisory Electricity Rate for fully electric cars is 4 pence per mile.

 

DISGUISED REMUNERATION LOAN CHARGE STARTS APRIL 2019

 

This new charge will apply to certain loans to directors and employees that are still outstanding at 5 April 2019 and new arrangements put in place after that date.

 

The charge affects arrangements involving loans made via Employee Benefit Trusts (EBTs) and similar disguised remuneration schemes adjudged by HMRC and the courts to be tax avoidance and liable to PAYE and National Insurance Contributions.

 

There are new reporting and payment obligations that come into force for employers using such schemes from 5 April 2019  Where the employer does not pay the tax and national insurance the liability can be passed to the individual who benefited from the loan.

 

Where the individual concerned had taxable income in the 2018/19 tax year of less than £50,000 they will be able to repay the liability over 5 years, and spread over 7 years if their 2018/19 taxable income of less than £30,000.

DIARY OF MAIN TAX EVENTS

APRIL / MAY 2019

 

Date	What’s Due
1/04	Corporation tax payment for year to 30/6/18 (unless quarterly instalments apply)
1/04	MTD for VAT starts to apply to VAT record keeping and VAT reporting for return periods commencing after this date (unless deferral to 1 October 2019 applies)
6/04	Start of 2019/20 tax year.
6/04	New workplace pension limits apply, 5% from the worker and 3% from the employer, an overall minimum of 8% of earnings
19/04	PAYE & NIC deductions, and CIS return and tax, for month to 5/04/19 (due 22/04 if you pay electronically)
1/05	Corporation tax payment for year to 31/7/18 (unless quarterly instalments apply)
19/05	PAYE & NIC deductions, and CIS return and tax, for month to 5/05/19 (due 22/05 if you pay electronically)

 

Employment allowance

Have you claimed the employment allowance where you are eligible to do so? It is worth up to £3,000 per year per business, but many small businesses don’t realise that they can claim.

The allowance is available to most businesses and charities who have employees, but it is blocked for those who undertake public sector contracts, and for one-person companies. Payrolls set-up to pay personal care and support workers can claim the allowance, and should do so.

If you were not eligible to claim the employment allowance at the beginning of the tax year because you were the sole director of their company with no other employees, you can claim later when you take on an employee. The full £3,000 for the year is available to cover employer’s class 1 NIC, even if the claim was made part way through the tax year.

Where a claim for employment allowance was missed for an earlier tax year, it can be claimed within four years of the end of the year. Claims for 2014/15 must be made by 5 April 2019 by submitting an EPS for that year.

Written by the Tax Advice Network