Moore stephens consultants 6pp dl spring 2013
- 1. PAYE Coding Why Moore Stephens? The vast majority of people, we find, do not review • Specialist advice gained from years of their payslips and the same can be said for PAYE sector experience coding notices, these items may at best get a brief glance but very few people ever question the • No jargon approach, just straight answers information presented. However by ignoring these, • Members of national accounting and you could in fact be storing up a large tax bill, due taxation healthcare groups to the incorrect amount of tax being deducted via Pay As You Earn (PAYE). • Always local to you, we come to you unless you want to drink our free coffee In previous years HMRC would send a taxpayer’s • Two dedicated specialist points of contact for agent a copy of the coding notice when issued, but this stopped a few years ago and therefore for all clients most people it is only when their self -assessment tax return is being completed that the problem is So Why Moore Stephens – because we are highlighted. good for your financial health This year we have seen a significant increase in the number of taxpayers both employees and Contact : pensioners, who have received multiple coding notices for the same income and in many cases Rob Branch these codes have all been incorrect. email: robert.branch@moorestephens.com A coding notice will in some way be based on the information taken from your tax return, as coding Luci Parry notices are often issued in advance of the tax return email: luci.parry@moorestephens.com being processed, it can mean that information is out of date and that income sources have changed Connect with us on significantly. In one extreme case we discovered one employee who had their employment income being taxed at 20%, however because they should have been paying tax at 40%, they were faced with a rather large lump sum payment to be made. Spring 2013 We would therefore advise that anyone receiving a coding notice should have it checked and that if you Consultants are concerned about the amount of tax that is being deducted from your employment or pension income that you should come and talk to us. 30 Gay Street, Bath, BA1 2PA PRECISE. PROVEN. PERFORMANCE. 01225 486100
- 2. Highest Published Real Time Information Pension are Still Topical Rate to Fall From the 6 April 2013 HMRC are launching real and Changing time information for employers. The idea is that The 50p tax rate is to go and to be replaced with instead of employers reporting their payroll details The subject of tax relief on pension contributions 45p, having first been introduced in 2010/11, at the end of the tax year, they will do so on a has been a hot topic for the past 12 months and HMRC have decided that this higher rate is no more frequent basis. HMRC have been carrying it continues to make headlines. The Chancellor longer ‘working’ and that the amount of revenue out a number of pilots and are expecting that RTI announced in his autumn statement that from that has been raised is not as initially expected. should be implemented without any problems to 2014-15 there is to be a reduction in the maximum employers. In summary RTI will mean that as an amount of tax relief that can be claimed in a year. It would appear that when doing the sums HMRC employer makes a payment to an employee they had not expected so many taxpayers to have will report this information to HMRC, so if you make The recent changes to tax relief in this area saw the deliberately shifted income into the previous tax monthly payments then you will complete monthly annual allowance being reduced to £50,000, this is year. The review has shown that pre-emptive returns, if it is more frequent and you pay your now to be further decreased to £40,000 from 2014- measures taken by people who could control their employees every week, then you will need to do 15. The allowance covers both payments into a income saw total declared taxable income of those weekly returns. defined contribution scheme and the increase in the earning more than £150,000 a year slump from value of the pension that has been built up during £116bn in 2009/10 to £87bn in 2010-11. This may seem irrelevant to your circumstances the year for those with defined benefit schemes. but if you claim a deduction in your accounts for An individual’s lifetime allowance for their pension As HMRC have been analysing the 2010/11 tax payments to a spouse or other family member then provision is also to be decreased to £1.25m which is receipts, so the conclusion that has been drawn is this too needs to be reported when paid as in the a fall from the current limit of £1.5m that the additional rate has yielded £1bn, unlike case for any other employee. If this is not done the £2.5bn that the Labour Government originally then when your accounts are prepared annually, the As well as reducing the annual allowance, there predicted in 2009. deduction will not be allowed against tax as you will has been discussion about implementing a number not have complied with RTI during the course of the of changes to the NHS pension scheme which There has been surprise within the accounting year and to then retrospectively do the Returns in may include raising the normal pension age and profession that this high rate of tax has not been the months will incur penalties that will make the significantly increasing the pension contributions reduced before and it has been forecasted that this payments much less tax efficient, if at all. into the scheme. The contribution rates are being current tax year may also be a disappointing tax increased from April 2013 but further increases are collection. So what does this mean for you, well Our advice is that yes, RTI should be simple and also likely. having misjudged the shifting of income at the straightforward but it will change how information is introduction of the 50p tax regime, HMRC will be gathered and then communicated but it does need Unlike the implementation of the £50,000 annual paying close attention to the income declared in to be set up correctly so as to not fall foul of HMRC. allowance, it is thought that the decrease in the 2012/13, so if you have any concerns please talk to us. allowance to £40,000 will mean that not just the Please contact us if you need further assistance “high earners” will be impacted, but that this will Don’t forget though that the highest unpublished concerning this. have a significant impact on the medical profession rate of tax, 60% will still be found and for 2012/13 with the lower amount catching many more this occurs in the band of income from £100,000 to individuals. It is likely therefore that in the future £116,210 and in 2013/14 the band increases up to “It’s not your salary that individuals will look to retire earlier from the NHS £118,880. scheme in order to avoid the lifetime allowance and makes you rich, it’s your return to work thereafter, either in or out of the NHS. spending habits. ” We would therefore advise that you need to Charles A Jaffe consider all of your pension arrangements and not just your NHS pension.