Government scraps plans to abolish Class 2 NICs

Business and Tax Round-up

Government scraps its plans to abolish Class 2 NICs

The government recently scrapped its plans to abolish Class 2 national insurance contributions (NICs). They were originally due to be abolished in April 2018, but the plans were delayed for a year until April 2019. The government has now announced that Class 2 NICs will not be abolished during this Parliament.

Former Chancellor George Osborne had previously announced the plans, stating that abolishing Class 2 NICs would benefit an estimated 3.4 million self-employed workers. Class 2 NICs are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year.

In a written statement to MPs, Robert Jenrick, Exchequer Secretary to the Treasury, stated that eliminating Class 2 NICs would have introduced ‘greater complexity’ to the UK tax system. He added: ‘The government remains committed to simplifying the tax system for the self-employed, and will keep this issue under review in the context of the wider tax system and the sustainability of the public finances.’

Responding to the government’s decision, Mike Cherry, National Chairman of the Federation of Small Businesses (FSB), commented: ‘The Treasury should have worked harder to develop more effective ways to protect around 300,000 low-earners and maintain their contributions for the State Pension.’

Mental health becoming 'less taboo'

Mental health becoming ‘less taboo’ in UK workplaces

A survey conducted by the British Chambers of Commerce (BCC) in conjunction with insurer Aviva has suggested that discussing mental health in the workplace is becoming ‘less taboo’ for both employers and employees.

Almost 30% of firms have experienced an increase in the number of employees taking time off work due to mental health issues.

Meanwhile, a further 33% of business owners reported an increase in the length of time staff members take off as a consequence of mental health concerns.

Employers are supporting employees with their mental health issues by reviewing individual workloads, agreeing to flexible working arrangements, organising counselling and training managers to better support their staff members.

Dr Adam Marshall, Director General of the BCC, said: ‘As the world of work changes, it is absolutely critical for business leaders to pay ever closer attention to the health and wellbeing of their employees – especially at a time when firms are facing severe challenges finding and retaining the skilled staff they need.’

Making tax digital

HMRC publishes VAT Notice for Making Tax Digital

In July 2018, HMRC published a new VAT Notice for Making Tax Digital for VAT (MTD for VAT), providing ‘additional clarity’ for businesses mandated to use the system from April 2019.

Under MTD for VAT, businesses with taxable turnover above the VAT registration threshold (currently £85,000) will be required to keep records in digital form, and file VAT returns using ‘functional compatible software’. If a business’s taxable turnover subsequently falls below the VAT registration threshold, the MTD requirement will remain.

VAT Notice 700/22 outlines the digital records businesses will be required to keep, and provides information on the ways in which transactions can be recorded digitally. It also supplies guidance on what counts as ‘functional compatible software’, and highlights instances in which software programs do and do not need to be linked digitally.

As outlined in the Notice, records to be kept digitally include ‘designatory data’; the VAT account linking primary records and the VAT return; and information regarding supplies made and received. Digital records can be held in multiple compatible formats, and taxpayers will be permitted to use spreadsheets in combination with MTD software. However, manual transfer of data will not be allowed.

Business group calls to HMRC to simplify tax administration

Business group calls for HMRC to simplify tax administration

The British Chambers of Commerce (BCC) recently called for HMRC to ‘cut the complexity’ associated with tax administration and compliance.

A survey carried out by the business group in conjunction with software company Avalara suggested that 75% of firms believe that the overall burden of tax administration and compliance has increased compared to five years ago.

A further 64% of firms reported that VAT generates ‘the biggest administration and compliance burden’, whilst many business owners feel ‘under pressure’ to be prepared for the April 2019 introduction of Making Tax Digital (MTD).

The BCC stated that there is a ‘real need’ to reduce compliance costs, transaction costs and the complexity of business tax, and has urged HMRC to ‘make compliance easier’, and improve its process for collecting tax.

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Tax Tip

The self-assessment deadline is approaching!

Don’t forget to complete your 2018 self-assessment tax return by midnight on 31 January 2019 if you file online. The penalty for late filing is £100 if your return is up to three months late, increasing thereafter for continued payment failures. Any tax you owe also needs to be paid by 31 January 2019. There is a penalty of 5% of the tax due for the first 30 days, which increases by 5% after six months, and a further 5% after 12 months.

We can help you to prepare and file your tax return: please contact us for more information.

Reminders for your diary

December 2018

1 December New Advisory Fuel Rates (AFR) for company car users apply from today.

19 December PAYE, Student loan and CIS deductions are due for the month to 5 December 2018.

30 December Online filing deadline for submitting 2017/18 self assessment return if you require HMRC to collect any underpaid tax by making an adjustment to your 2019/20 tax code.

31 December End of CT61 quarterly period. Filing date for Company Tax Return Form CT600 for period ended 31 December 2017.

January 2019

1 January Due date for payment of corporation tax for period ended 31 March 2018.

14 January Due date for income tax for the CT61 quarter to 31 December 2018.

19 January PAYE, Student loan and CIS deductions are due for the month to 5 January 2019. 

19 January PAYE quarterly payments are due for small employers for the pay periods 6 October 2018 to 5 January 2019.

31 January Deadline for submitting your 2017/18 self assessment return (£100 automatic penalty if your return is late) and the balance of your 2017/18 liability together with the first payment on account for 2018/19 are also due.

31 January Capital gains tax payment for 2017/18. 

31 January Balancing payment – 2017/18 income tax and Class 4 NICs. Class 2 NICs also due.

February 2019

2 February Deadline for submitting P46(car) for employees whose car/fuel benefits changed during the quarter to 5 January 2019.

19 February PAYE, Student loan and CIS deductions are due for the month to 5 February 2019.