Readers are reminded that from 1 April 2019, the National Living Wage (NLW) and National Minimum Wage (NMW) hourly rates increased to:

• 25 and over – £8.21
• 21 to 24 – £7.70
• 18-20 – £6.15
• Under 18 £4.35
• Apprentices £3.90

Workers who are entitled to receive these rates as a minimum include:

• 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

Workers who are not necessarily, entitled to the NLW ort NMW include:

• 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 are not 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 (EU) programmes: Leonardo da Vinci, Erasmus , Comenius
• people working on a Jobcentre Plus Work trial for 6 weeks
• share fishermen
• prisoners
• people living and working in a religious community

These rates are not advisory, where they apply, they are compulsory

Responsibility for monitoring that employers “obey” the NLW and NMW regulations falls on HMRC, and they have specific powers to enforce and punish business owners that fail to pay their staff the statutory rates set out above.

On their website, HMRC say:

It’s a criminal offence for employers to not pay someone the National Minimum Wage or National Living Wage, or to fake payment records.

Employers who discover they’ve paid a worker below the correct minimum wage must pay any arrears immediately.

HMRC officers have the right to carry out checks at any time and ask to see payment records. They can also investigate employers if a worker complains to them.

If HMRC finds that an employer has not been paying the correct rates, any arrears have to be paid back immediately. There will also be a fine and offenders might be named by the government.

It’s the employer’s responsibility to keep records proving that they are paying the minimum wage – most employers use their payroll records as proof. All records have to be kept for 3 years.

As these rates change annually, it is imperative that employers affected by these regulations review their payroll systems to ensure they are paying the correct amounts and keeping records in the correct format.

From April 2020, HMRC are changing two important tax concessions that apply to landlords letting property that they as owners have previously occupied at some point as their home (Principal Private Residence (PPR)).

The first is the reduction of the present rule that exempts the final 18 months of ownership from any Capital Gains Tax (CGT) charge. From April 2020 it is proposed that this will be reduced to 9 months.

The second change is to letting relief. Presently, if a landlord has previously occupied a rental property, when it is sold the landlord can claim lettings relief.

Briefly, this relief is currently the lowest of:

• The same amount you got in PPR,
• £40,000, or
• The same amount as the chargeable gain you made from letting your home.

The example that illustrates this in action reproduced from the Gov.uk website follows:

Example:

You make a gain of £120,000 when you sell your home, which you owned for 12 years. You lived in the whole property for 6 years, then you let it out in full for 6 years.

You get Private Residence Relief for the time you lived there (6 years). You also get relief for the last 18 months you owned the property, even though you were not living in it.

This means you get Private Residence Relief for 7.5 of the years (62.5% of the time) you owned the property.

You get Private Residence Relief on the same proportion (62.5%) of your gain. This means you will not pay tax on £75,000 of the gain.

The remaining 37.5% (£45,000) of the gain not covered by Private Residence Relief is your chargeable gain.

If you qualify for Private Residence Relief and have a chargeable gain, you may also qualify for Letting Relief.

Because you made a chargeable gain of £45,000 while letting your property (and got £75,000 in Private Residence Relief) you can claim £40,000 in Letting Relief. This means you’ll pay Capital Gains Tax on £5,000.

Change to letting relief from April 2020

From April 2020, lettings relief will still be available, but only if you as the landlord are living in the same property – in shared occupancy – as your tenant.

Action to take before April 2020

If you are already considering the sale of a rental property, that you have previously occupied as your home for a period of time, you may want to consider bringing your plans forward as this may have a positive impact on any CGT payable when you do sell.

We would be happy to help you consider your options, please call if you need advice on this topic.

If you have employees, and if one or more of those employees benefit from the use of facilities that you provide, cheap loans, a company car for example, it is well known that you as their employer will need to inform HMRC of the amount of these benefits following the end of the tax year.

Employers new to this situation would commonly appreciate that these benefits will have an impact on the affected employees’ personal tax, but they may not appreciate that the sum total of all benefits provided – to all their employees – will create an additional employer only, National Insurance Charge (NIC).

The NIC charge is classified as Class 1A contributions and is 13.8% of the total benefits provided.

Accordingly, if you provide a company car to three employees (employees would include directors in most cases) and the taxable benefit is £4,000 for each car provided, then the total Class 1A NIC charge that the company will need to pay is £1,656 (£4000 x 3 x 13.8%).

Compliance with the associated regulations that deal with benefits and assessment and payment of Class 1A NIC are set in stone. There are penalties for not submitting returns to HMRC on-time and penalties and interest if you are late in paying any Class 1a that may be due.

Existing clients that have been through this annual compliance hoop before will no doubt be aware what needs to be done. If you are a new employer, and have provided taxable benefits, we can help you to prepare and submit the employee benefit forms (P11Ds) and the annual P11D(b) return (that informs HMRC how much Class 1A you owe).

Please call if you need assistance with this process.

1 May 2019 – Due date for Corporation Tax due for the year ended 30 July 2018.

19 May 2019 – PAYE and NIC deductions due for month ended 5 May 2019. (If you pay your tax electronically the due date is 22 May 2019)

19 May 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2019.

19 May 2019 – CIS tax deducted for the month ended 5 May 2019 is payable by today.

31 May 2019 – Ensure all employees have been given their P60s for the 2018-19 tax year.

1 June 2019 – Due date for Corporation Tax due for the year ended 31 August 2018.

19 June 2019 – PAYE and NIC deductions due for month ended 5 June 2019. (If you pay your tax electronically the due date is 22 June 2019)

19 June 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2019.

19 June 2019 – CIS tax deducted for the month ended 5 June 2019 is payable by today.

If you are an employer, you have a statutory duty to provide your employees with a copy of their P60 (pay and tax details for 2018-19) on or before the end of May 2019.

If you distribute P60s and then discover that changes need to be made you will need to give employees a replacement P60 – a paper or electronic version – or a letter confirming the change.

This requirement is additional to your other filing deadlines related to your payroll and later in the year you will need to deal with the reporting of expenses and benefits to HMRC.

If we take care of your payroll for you, these matters can be dealt with in a timely manner. If we don’t take care of your payroll, and you would like to be relieved of this tiresome chore, please call so we can discuss your needs.