CHILD BENEFIT INCOME TAX CHARGE – What you need to know
There has been extensive coverage in the press recently concerning the new Income Tax charge that comes into effect on 7th January 2013.
The new charge – Is basically a tax to reclaim Child Benefit if you or your partner has income in excess of £50,000. There is a sliding scale for incomes between £50,000 and £60,000. This sliding scale works on the basis that for every £100 in excess of £50,000 you (or your partner) will be taxed at 1% of the Child Benefit.
For example, if your income was £55,000, you would effectively lose 50% of the Child Benefit by way of an Income Tax charge.
The charge will be in place for this (2012/13) tax year and will give rise to underpayments of tax for the year. If the underpayment, together with any tax due under self-assessment is under £3,000 and your self-assessment Tax Return is submitted to HMRC before 30th December 2013, the underpayment can be collected via your PAYE tax code. Otherwise you will be expected to pay the tax in one lump sum on or before 31st January 2014.
What you should do – If HMRC think you will be affected you will receive a letter from them. If you believe you will be affected and do not receive a letter from HMRC, you will need to contact them.
The letter will also provide you with a link to enable you to elect not to receive Child Benefit. There are advantages and disadvantages to this, and given that this new tax will be in force early in the New Year, you should start thinking about what you want to do now, rather than wait until the last minute.
For more information and advice, please get in touch with Tim Subhan or your usual contact at Myrus Smith.
GETTING READY FOR REAL TIME INFORMATION (RTI)
In what is being hailed as the biggest change in PAYE since its introduction in 1944, RTI reporting will be with us from April 2013, with mandatory participation for all firms by October next year, to coincide with the introduction of the Government's Universal Credits.
Under this new scheme, employers and pension providers will submit electronically an RTI Return to HMRC each time employees are paid. This will show the amount of tax, National Insurance and other deductions before or when employees are paid rather than waiting until after the tax year.
As HMRC will be receiving information when or before payments are made they will be better able to make sure the correct deductions are made from pay. The result of this is that more employees will pay the right tax and National Insurance in the tax year.
Action to take now
Making sure your Employee data is correct is paramount. You should, therefore, review your current payroll processes and check your data is in the correct format. Accurate recording of your employee's name, National Insurance number and date of birth is essential. In order to ensure accuracy you may want to check employee information against official documents such as passport, birth certificate etc.
HMRC will notify employers 4 – 6 weeks prior to when they must begin RTI submissions.
Our payroll department has already made a number of successful test submissions and our systems are fully geared up to deal with all aspects of RTI.
Should you wish to discuss your payroll requirements or require any information on RTI, please get in touch with us.
GIFT AID DECLARATIONS
HMRC have made some important changes to the statutory requirements that have to be included in a valid Gift Aid Declaration. They will continue to accept Declarations in the old format up to 31 December 2012, but expect all Declarations signed after that date to be in the new format.
You will find that HMRC have helpfully set out three model Declarations for:
- Single Donations
- Continuing Past and Future Donations
- Sponsorship Gift Aid
Please go to www.hmrc.gov.uk/charities/new-model-declarations.htm for further information.
This is a simple matter to overlook, but it could prove very expensive. As HMRC do not inspect Gift Aid Records every year, it could easily be four or more years before an invalid Declaration is discovered, with a subsequent clawback of all tax previously recovered.
Therefore, a final tip to all Treasurers, Fundraisers etc. – make sure you destroy any stocks of old Gift Aid Declarations so they cannot be inadvertently used after 31 December 2012.
|31st January 2013
||is the deadline for filing your 2012 Tax Return – if you have yet to let us have the information to prepare your Return, time is running out!
Please, please, let us have your Tax Return information as soon as possible, so that we can minimise the last minute rush and be more pro-active in dealing with your tax affairs.
|6th July 2013
||2012/13 Form P11D filing deadline.
|31st July 2013
||Second payment on account for 2012/13.
|31st October 2013
||Deadline for filing 2013 'paper' Tax Returns. The online filing deadline remains 31st January 2014.
LEAVERS AND JOINERS 2012
Thelma Smith - September saw the retirement of a firm favourite from our payroll department. Thelma had been with Myrus Smith 23 years and many of you will have had regular contact with her over that time. Dawn O'Brien has stepped into her shoes and will also be well known to our payroll clients.
Kashif Yasin – is leaving us for pastures new and will be missed by both the clients he worked with and all of us at Myrus Smith. We wish him and his family all the very best for the future.
Louis Ratnam – will be joining us this month. Louis has many years of experience in the profession and joins us as a senior in our Audit Department.
Tracey Daniels - Last (but by no means least!) Tracey joined us back in May as part of our secretarial team. She would like to say that she is successful in keeping Tim away from the biscuit tin, but this wouldn't be true!
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