| Enews - August 2006 | ||||||||||||
Introduction This month we report on a diverse range of topics from fire safety regulations, the issue, by HMRC, of guidance on the previously reported changes to inheritance tax and updated guidance on the provision of childcare. We also include our usual round up of news. Please browse through this month’s articles using the links below and contact us if any issues or questions arise.
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New fire safety regulations
New guidance has been published on the Regulatory Reform (Fire Safety) Order 2005 which is due to come into force on 1 October 2006. The Department for Communities and Local Government (DCLG) has published guidance explaining what businesses need to do to comply with the new rules. The short guide identifies the steps which must be taken to comply with the new legislation. These include:
Sabeeha Khan (a senior solicitor with national law firm Irwin Mitchell) said, ‘this new legislation is heralded as the biggest single reform of fire safety legislation in over 30 years. It will effectively shift the emphasis of fire prevention and reducing risk away from authorities and towards employers, increasing their accountability if they fail to carry out their duties.’ Separate guidance is available for Scotland.
Guidance on inheritance tax Previously we have reported on the changes to inheritance tax (IHT) and trusts, which were announced in the Budget and caused great controversy. HMRC have tried to clarify the rules by publishing some new and updated guidance aimed at taxpayers. The guidance deals with IHT and reflects the changes to the taxation of trusts, lifetime gifts and some pensions.
Postal changes The postal charging changes came into effect from 21 August 2006. You should have received details of the new sizing guide direct from the post office. Gone are the days of putting a single sheet of A4 into an A4 size envelope, as it will generally be cheaper to fold them to a maximum A5 size before posting, taking advantage of the small letter size rate. The rules are relatively straightforward and you can see exactly how they work by clicking on the links below.
Tax credits final reminder Tax credits are a state benefit which is generally available to lower income families. However, the credits are significantly increased where individuals pay for childcare. To check whether you may qualify click on the HMRC website link below. Individuals who have already claimed tax credits for 2005/06 have to finalise their provisional award for 2005/06 and to advise HMRC of any changes in their circumstances for 2006/07. This procedure is known as the renewals process. The deadline for the submission of tax credit renewals is 31 August 2006 and HMRC have been busily advertising this fact in the national press. The payment of tax credits will stop at the end of August if claimants have not renewed their applications by that date. If you need any help with the completion of your form please do get in touch.
Employer supported childcare HMRC have issued revised guidance to employers on the tax and NIC free provision of childcare. The guidance has been updated to take into account the increase in the tax and NIC free limit from £50 to £55 a week which came into effect from 6 April 2006. The childcare provision is either made by the employer contracting directly with a nursery, or other registered childcare provider, or providing the employee with nursery vouchers. The allowance of £55 a week is available to each employee, not to each child, which means that both parents could claim for the same child receiving tax free childcare of £110 per week between them. The schemes offered by employers must be open to all employees. The guidance also gives details of the requirements for workplace nurseries.
HMRC letters As in previous years, HMRC offices will be sending out letters over the next few weeks with advice for small businesses on calculating business income for the purposes of self assessment. The letters have been criticised in the past for giving the impression to taxpayers that there was something wrong with their tax returns. HMRC select those businesses which they believe may be likely to make errors when completing their accounts or self assessment tax returns. The letters are issued after statistical analysis of the businesses accounts information from previous years or where HMRC believe the business operates in what they regard as a risky area. Where taxpayers have an accountant acting on their behalf, the accountant should also be issued with a copy of the letter. If you receive a letter it is very important that you get in touch.
UK businesses get tough on debt Research from the Credit Services Association (CSA) suggests that British businesses are resorting to the courts at an early stage in order to recover debts. This is despite the fact that taking such action is likely to destroy business relationships. The CSA’s representative Godfrey Lancashire commented that, ‘Businesses want their cash and see litigation as the fastest way of getting it. Before a debt collection agency would have several weeks to achieve a result, now they are often being instructed to go legal within a matter of days.’ This approach may have implications as Godfrey Lancashire explained ‘the majority of debts are recoverable without having to resort to the courts, without the additional costs and without, therefore, jeopardising future relationships with customers.’
Businesses frustrated by youth skills As A-level and GCSE results are released, David Frost, Director General of the British Chambers of Commerce (BCC), described the frustration businesses feel about the lack of youth skills in the UK: ‘The government still has not grasped the nettle on youth skills. We will no doubt hear that grades have yet again improved and that more young people than ever are taking exams. But the overwhelming majority of businesses are exasperated with the quality of recruits they interview from secondary schools and colleges.’ The BCC have reported that nearly 80% of the firms that they talked to said that young people who they employ after leaving school with A-levels are ill-equipped for the world of work. ‘Businesses are fed up with having to teach literacy and numeracy skills to new recruits and deplore the decline in young people taking science subjects and languages. They want meaningful clarification on what grades really mean and a supply of young people with a real understanding of what will be expected of them in the workplace’.
Women urged to save for retirement A couple of months ago we reported on the Pensions White Paper which looks at many proposals for pension reform. We have included the link to the White Paper below. One of the issues discussed in the White Paper is the continuing problem of women reaching retirement age with little entitlement to the state retirement pension. In addition to this, working women save significantly less than men and approximately two thirds of women have no private pension at all. James Purnell, Minister for Pensions Reform, said that ‘Women must think about the way they save in order to help address the pensions’ gender gap. Today’s state pensions are unequal - with 30% of women retiring on a full state pension, compared to 85% of men’. The Government has pledged to tackle the inequality faced by many women by reforming state pensions.
Employers incorrectly advised of underpayments HMRC have published guidance on their website that they have incorrectly advised some employers they have underpaid their PAYE/NIC payments for the year ended 5 April 2006. HMRC have now amended their records and apologise for any inconvenience caused. Their advice to employers that have received a notice detailing an underpayment, and who believe it is incorrect, is to contact them direct. If we can help please do get in touch.
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