Archive for June, 2019

E-bike cycle to work scheme announced

Tuesday, June 11th, 2019

Readers who have been tempted to cycle to work but are challenged by fitness issues or really can’t afford the bike they would like, might be interested in the recent announcement that has extended the existing Cycle to work scheme to include the use of so-called e-bikes.

These are bikes with electric motors that assist with taking on those challenging gradients.

Here’s what the Department for Transport have said:

A refreshed Cycle to Work scheme could help many more commuters turn to greener journeys using e-bikes.

  • push to increase use of e-bikes to help tackle congestion, speed up commutes and cut travel costs coincides with the launch of Bike Week
  • refreshed government guidance will make it easier for employers to provide cycles and equipment including e-bikes worth over £1,000
  • employers encouraged to get their workforces cycling through loan and pooled cycle schemes, as part of government plans to encourage more active travel

Commuters will have more opportunities to boost their health, benefit the environment and speed up their journey to work, thanks to updated Cycle to Work guidance.

Cycling Minister Michael Ellis has announced a refreshed scheme today (9 June 2019), which could help many more commuters turn to greener journeys using e-bikes, 70,000 of which were sold in the UK last year.

E-bikes have an integrated motor that helps a cyclist pedal, allowing them to reach speeds of up to 15.5 mph in the UK. They are seen as a game changer for their potential to make it easier for older or less fit people to make cycling a part of their commute.

The refreshed guidance will make it easier for employers to provide bicycles and equipment including e-bikes worth over £1,000, by making it clear that FCA authorised third party providers are able to run the scheme on their behalf.

If you are interested, we suggest that you seek out a local bike dealer who can organise the formalities for you.

Did you know income rates can be as high as 60 percent?

Thursday, June 6th, 2019

Most of us know that income tax is charged at three main rates: 20%, 40% and 45%.

Unfortunately, there are certain levels of income that trigger a loss of benefits or allowances as well as a charge to income tax. Because of this, the percentage rate of tax charged can be higher than the underlying rate of income tax. For example:

Joe’s taxable earnings have always been under £100,000, however, for 2018-19 Joe estimates that his income will be £123,700. Bad news…

As soon as income for tax purposes exceeds £100,000 Joe loses part of his tax personal allowance (£11,850 for 2018-19). In fact, for every £2 that his income exceeds £100,000 he will lose £1 of this allowance. This means that as soon as income is equal to or higher than £123,700 the personal tax allowance is no longer available. Taking this into account, Joe’s tax bill on the top £23,700 of his income is 40% (£9,480) plus, 40% of the lost allowance – a further £4,600. In total, Joe retains just £9,200 of his £23,000 income (£23,000 – £9,200 – £4,740). His percentage tax charge is therefore 60% on this marginal band of income between £100,000 and £123,700.

Similar, marginal rates apply if:

  • your income moves above the threshold where working tax or child tax credits cease to be available,
  • a higher paid parent’s income tops £50,000 for the first time, at which point child benefits would be under threat, or
  • those with incomes in excess of £150,000, paying income tax at 45%, will find the tax relief they can claim for pension contributions will be reduced.

To avoid or lessen the impact of these marginal rate charges you will need to discuss the possibility of reducing your income below the trigger points. There are various strategies that can be employed to achieve this, including the sacrifice of salary for non-tax benefits such as increased employer pension contributions or longer holidays.

Time to rethink your remuneration strategy?

If you are concerned that you may be drifting towards these higher marginal rates of income tax, now is the perfect time to reconsider the way you structure your remuneration package. Please call if you would like our help to do this.

Tax Diary June/July 2019

Wednesday, June 5th, 2019

1 June 2019 – Due date for Corporation Tax due for the year ended 31 August 2018.

19 June 2019 – PAYE and NIC deductions due for month ended 5 June 2019. (If you pay your tax electronically the due date is 22 June 2019)

19 June 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2019.

19 June 2019 – CIS tax deducted for the month ended 5 June 2019 is payable by today.

1 July 2019 – Due date for Corporation Tax due for the year ended 30 September 2018.

6 July 2019 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2019 – Pay Class 1A NICs (by the 22 July 2019 if paid electronically).

19 July 2019 – PAYE and NIC deductions due for month ended 5 July 2019. (If you pay your tax electronically the due date is 22 July 2019)

19 July 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2019.

19 July 2019 – CIS tax deducted for the month ended 5 July 2019 is payable by today.

Employing students in the summer break

Wednesday, June 5th, 2019

If you employ students to manage your staff needs over the summer break period, you will need to add them to your payroll and apply PAYE and NIC rules.

Students should be advised that they will pay tax and NIC if:

  • they earn more than £1,042 a month on average, and
  • pay NIC if they earn more than £166 a week.

Students can also apply for a possible tax refund if they work for part of a tax year.

Students who normally live and study in the UK but work abroad during the holidays will need to pay:

  • UK tax on anything they earn above their Personal Allowance, currently £12,500, and
  • National Insurance if they work for a UK employer.

If you work for a foreign employer you don’t need to pay National Insurance in the UK, but you might have to pay contributions in the country you’re working in.

Tax free perk before annual leave

Wednesday, June 5th, 2019

It is possible to make small tax-free payments to employees, including directors, and this might be an appropriate time to make a small tax-free bonus in advance of the annual holidays.

Employers and employees don’t have to pay tax on such a benefit if all of the following apply:

  • it cost you £50 or less to provide,
  • it isn’t cash or a cash voucher,
  • it isn’t a reward for their work or performance,
  • it isn’t in the terms of their contract.

HMRC describes these payments as a ‘trivial benefit’.

You can’t receive trivial benefits worth more than £300 in a tax year if you are the director of a ‘close’ company. A close company is a limited company that’s run by 5 or fewer shareholders.

Planning note

The only exception to the above is if the trivial benefits are made available as part of a formal salary sacrifice arrangement.

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