Archive for May, 2018

Stop the Loan Sharks

Monday, May 14th, 2018

We have all heard of individuals who have been affected by the nefarious antics of loan sharks, lenders that breach the normal fiscal rules by taking advantage of needy persons who do not qualify for support from mainstream banking sources.

The government has announced additional funding to crack down on this activity. Their announcement, published 25 April, is worth a mention.

Loan sharks face a fresh crackdown today (25 April), with more funding to tackle unlawful lending, and an increase in the amount of money seized from loan sharks to support those most vulnerable to their nasty tactics.

  • over £5.5 million will be spent to fund the fight against loan sharks, helping to investigate and prosecute illegal lenders, and support their victims
  • £100,000 of money already seized from loan sharks will also be spent to encourage people in England at risk of being targeted by loan sharks to join a credit union, helping them to access a safer form of finance and get their lives back on track
  • and for the first time in Northern Ireland a new education project will be created to raise awareness of the dangers of loan sharks and to support vulnerable communities

In total, £5.67 million of funding will be provided to Britain’s Illegal Money Lending Teams (IMLT) and bodies in Northern Ireland to tackle illegal lending – a 16% increase compared to the previous year. The money will be used to investigate and prosecute illegal lenders, and to support those who have been the victim of a loan shark.

Since the Illegal Money Lending Team was established in England in 2004, they’ve made over 380 prosecutions, leading to 328 years’ worth of sentences, and have written off over £73 million of illegal debt, helping over 28,000 people to escape the jaws of the loan sharks. Similar teams operate in Scotland and Wales.

In Northern Ireland, the Consumer Council will lead its first ever education and awareness campaign to help prevent the most vulnerable from being bitten by loan sharks, and the Police Service of Northern Ireland (PSNI) will get funding for a specialised officer who will lead on illegal lending within the Paramilitary Crime Task Force.

Whilst government action in these areas is to be applauded, there seems to be no concerted action to assist organisations that do provide credit to individuals who would find it difficult to obtain credit from a High Street bank or other regulated sources.

When child benefit becomes a liability

Wednesday, May 9th, 2018

A typical two parent, two child family can claim £34.40 per week in Child Benefit (CB). In a tax year this would amount to £1,789.

Often, this becomes part of the family housekeeping and is spent.

Consider Mary and John and their two children. John collects the CB, it is paid into his current account and used to fund the household budget. John elected to stay at home and look after the management of the family. Mary is a solicitor and has a full-time job in a local practice.

In the current tax year, Mary will receive bonuses that increase her salary to £60,000. This is £10,000 more than her previous year’s salary which amounted to £50,000. After a 40% income tax deduction, Mary will receive an additional £6,000. Mary and John decide to use the extra cash to part finance a holiday in Florida and top up their ISAs.

Imagine their surprise when Mary discovers her self-assessment tax bill is £1,800 more than she expected. The culprit, the High Income Child Benefit Charge (HICBC).

The HICBC levies an additional tax charge on families that claim CB and where one of the parents earns more than £50,000 in a tax year. Effectively, CB must be repaid at the rate of 1% of CB received for every £100 the highest earner’s income exceeds £50,000. In Mary’s case, this excess income was £10,000 and therefore 100% of any CB received will have to be repaid. Accordingly, Mary’s self-assessment included a £1,789 HICBC.

Reluctantly, Mary and John had to withdraw the £1,789 from their ISAs.

Mary thought that receiving just £6,000 of her £10,000 bonus was bad enough, but she now realises that the true “tax” cost was £5,789 (£4,000 income tax and £1,789 HICBC). The combined tax hit was not 40% of her income but 58%.

Parents who exceed the £50,000 income limit for the first time and draw CB will find themselves in a similar position to Mary and John and will need to plan accordingly.

Tax Diary May/June 2018

Wednesday, May 9th, 2018

1 May 2018 – Due date for corporation tax due for the year ended 30 July 2017.

19 May 2018 – PAYE and NIC deductions due for month ended 5 May 2018. (If you pay your tax electronically the due date is 22 May 2018)

19 May 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2018.

19 May 2018 – CIS tax deducted for the month ended 5 May 2018 is payable by today.

31 May 2018 – Ensure all employees have been given their P60s for the 2017-18 tax year.

1 June 2018 – Due date for corporation tax due for the year ended 31 August 2017.

19 June 2018 – PAYE and NIC deductions due for month ended 5 June 2018. (If you pay your tax electronically the due date is 22 June 2018)

19 June 2018 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2018.

19 June 2018 – CIS tax deducted for the month ended 5 June 2018 is payable by today.

Why tax credit payments can change

Wednesday, May 9th, 2018

If you are claiming tax credits make sure that you keep an eye on changes that may affect the amount you receive.

Your payments can go up if:

  • your income goes down by more than £2,500
  • your benefits stop or go down
  • you start getting personal independence payment (PIP), Disability Living Allowance (DLA) or other disability benefits for yourself or a child
  • you have a child
  • your childcare costs go up

You should report these changes within 1 month to make sure you get everything you’re entitled to. Payments can’t usually be backdated any further than this.

Your payments can go down or stop if:

  • your income goes up by more than £2,500 – report this straight away to reduce the amount you’re overpaid
  • you haven’t renewed your claim
  • your award notice shows you’ve been overpaid
  • you stop getting PIP, DLA or other disability benefits for yourself or a child
  • your child is now 16, 18 or 19 and you haven’t told the Tax Credit Office they’re in approved education or training
  • your childcare costs go down
  • you or your partner start claiming Universal Credit

Who qualifies for the minimum wage

Wednesday, May 9th, 2018

As you would expect there are a range of conditions that affect the answer to this question. We have reproduced below a summary of the main conditions to be observed.

Workers must be at least school leaving age to get the National Minimum Wage. They must be 25 or over to get the National Living Wage.

Contracts for payments below the minimum wage are not legally binding. The worker is still entitled to the National Minimum Wage or National Living Wage.

Workers are also entitled to the correct minimum wage if they are:

  • part-time
  • casual labourers, for example someone hired for one day
  • agency workers
  • workers and homeworkers paid by the number of items they make
  • apprentices
  • trainees, workers on probation
  • disabled workers
  • agricultural workers
  • foreign workers
  • seafarers
  • offshore workers

 

Apprentices are entitled to the apprentice rate if they’re either:

  • under 19
  • 19 or over and in the first year of their apprenticeship

 

Apprentices over 19 who have completed the first year of their apprenticeship are entitled to the correct minimum wage for their age.

The following types of workers aren’t entitled to the National Minimum Wage or National Living Wage:

  • self-employed people running their own business
  • company directors
  • volunteers or voluntary workers
  • workers on a government employment programme, such as the Work Programme
  • members of the armed forces
  • family members of the employer living in the employer’s home
  • non-family members living in the employer’s home who share in the work and leisure activities, are treated as one of the family and aren’t charged for meals or accommodation, for example au pairs
  • workers younger than school leaving age (usually 16)
  • higher and further education students on a work placement up to 1 year
  • workers on government pre-apprenticeships schemes
  • people on the following European Union programmes: Leonardo da Vinci, Youth in Action, Erasmus, Comenius
  • people working on a Jobcentre Plus Work trial for 6 weeks
  • share fishermen
  • prisoners
  • people living and working in a religious community
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