Payroll insight
...highlight the PTA to encourage employees to register and use this facility to track their tax details...
reserved ‘tax’, so NI thresholds continue to be set by the UK Parliament. The UK annual upper earnings limit, upper secondary threshold for under-21s and the apprentice upper secondary threshold all increase to £45,000 from 6 April 2017, in line with the UK’s forty per cent threshold. However, with the Scottish threshold being frozen at £43,000, Scottish higher rate taxpayers will pay a 52 per cent marginal rate of tax and NI on the £2,000 difference (forty per cent tax, twelve per cent NI). The draft budget sets out the Scottish Government’s revenue forecasts for income tax over the remainder of the parliamentary term and the proposals are projected to generate around £1.5 billion of additional revenues up to the end of 2021–22 to be invested in vital public services in Scotland such as the National Health Service. It is estimated that freezing the higher rate threshold will raise a further £160 million. Address records remain a challenge A report (http://bit.ly/2jsKKu9) by the National Audit Office (December 2016), revealed an IT error which meant HM
Revenue & Customs (HMRC) had failed to inform 420,000 individuals of their new tax status in 2015. These individuals eventually received their new ‘S’ tax code three months after it came into force in April 2016. The report contends that the key challenge to HMRC’s delivery of the Scottish income tax is maintaining and updating its record of address details in order to identify Scottish taxpayers. The report stresses that accurate address information is crucial to ensure that the potential for tax avoidance and evasion is mitigated. HMRC also needs to be able to report the actual amount of Scottish income tax collected to the Scottish Government, and provide an IT solution that allows private pension providers to claim relief at source. Informing HMRC of any change to an address remains the responsibility of the individual and the CIPP is reliably informed that the most efficient method to use would be the personal tax account (PTA).
If an employer submits a full payment submission (FPS) showing a new address three times, HMRC will update their records for the individual and update the PTA. Although change of address data is not the employer’s responsibility, a point to bear in mind is that there may well be employees who don’t want HMRC to have their change of address; students, for example, who may want to keep their parental home address for formal correspondence but their term-time address for their employer. As a last point, employers could assist by ensuring that company handbooks/policies include information about the importance of address details being kept up to date and that it is the employee’s responsibility. Perhaps employers (human resources in larger organisations) could also highlight the PTA to encourage employees to register and use this facility to track their tax details; this may even have the benefit of reducing the number of queries that come in to the payroll department. n
A week before the 31 January 2017 deadline for filing a self-assessment (SA) tax return for tax year 2015–16, HM Revenue & Customs (HMRC) released a list of the latest most outlandish items which taxpayers tried to claim in their 2014–15 tax return Expenses and SA returns
T his list of strangest expenses ● holiday flights to the Caribbean ● luxury watches as Christmas gifts for staff – from a company with no employees ● international flights for dental treatment ahead of business meetings ● pet food for a Shih Tzu ‘guard dog’ ● Armani jeans as protective clothing for painter and decorator ● cost of regular Friday night ‘bonding sessions’ – running into thousands of pounds ● underwear – for personal use ● a garden shed for private use – plus the was released to encourage other taxpayers not to make similar claims:
Penalties Penalties for late self-assessment tax returns are as follows: ● an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time ● after three months, additional daily penalties of £10 per day, up to a maximum of £900 ● after six months, a further penalty of 5% of the tax due or £300, whichever is greater ● after twelve months, another 5% or £300 charge, whichever is greater. There are also additional penalties for paying late of 5% of the tax unpaid at thirty days, six months and twelve months. ❑
costs of the space it takes up in the garden ● betting slips ● caravan rental for the Easter weekend. All of the expenses above were rejected. Ruth Owen, HMRC director general of customer services, said: “Year after year we receive a number of ludicrous expense claims, ranging from international holiday flights to expensive designer clothing, which we would never uphold. Why should the honest taxpayer pick up the bill for others? HMRC will only accept those claims which are genuine, such as legitimate travel expenses or the cost of tools for the job.”
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Issue 28 | March 2017
| Professional in Payroll, Pensions and Reward |
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