DISGUISED REMUNERATION LOAN CHARGE STARTS APRIL 2019

This new charge will apply to certain loans to directors and employees that are still outstanding at 5 April 2019 and new arrangements put in place after that date.

The charge affects arrangements involving loans made via Employee Benefit Trusts (EBTs) and similar disguised remuneration schemes adjudged by HMRC and the courts to be tax avoidance and liable to PAYE and National Insurance Contributions.

There are new reporting and payment obligations that come into force for employers using such schemes from 5 April 2019  Where the employer does not pay the tax and national insurance the liability can be passed to the individual who benefited from the loan.

Where the individual concerned had taxable income in the 2018/19 tax year of less than £50,000 they will be able to repay the liability over 5 years, and spread over 7 years if their 2018/19 taxable income of less than £30,000.

UPDATED GUIDANCE ABOUT SCAMS

You might have read or heard in the media that the number of fake phone calls and emails purporting to be from HMRC has risen sharply in recent weeks.  One of the latest scams involves a caller claiming that HMRC has started proceedings against you for tax fraud or evasion and from there offering you the services of a lawyer – for upfront payment.

Because sometimes HMRC does make calls or send emails, to help you sort the genuine from the bogus it has updated its guidance on how to spot scams and what steps to take.  The guide includes a list of circumstances in which you might be contacted, for example, it is currently carrying out national minimum wage checks by telephone interview.  Check HMRC’s latest guide on how to recognise a genuine contact.

ADVISORY FUEL RATE FOR COMPANY CARS

In line with recent reductions in fuel prices, HMRC have reduced their suggested reimbursement rates for employees’ private mileage using their company car from 1 March 2019. Where there has been a change the previous rate is shown in brackets.

Engine Size Petrol Diesel LPG
1400cc or less 11p

(12p)

  7p

(8p)

1600cc or less   10p  
1401cc to 2000cc 14p

(15p)

   

8p

(10p)

1601 to 2000cc   11p

(12p)

 
Over 2000cc

 

 

21p

(22p)

 

13p

(14p)

13p

(15p)

Note that for hybrid cars you must use the petrol or diesel rate.  You can continue to use the previous rates for up to 1 month from the date the new rates apply. The Advisory Electricity Rate for fully electric cars is 4 pence per mile.

 

PERSONAL SERVICE COMPANY CHANGES FROM APRIL 2020

 In the Autumn Budget the Chancellor announced that the “off payroll” workers rules that currently apply in the public sector would be rolled out to the private sector in 2020. The Government have now issued a consultation paper that sets out proposed tax and national insurance changes that will impact on those supplying their services through personal service companies.

End users will be required to determine whether the rules apply to the services provided by the worker via his or her personal service company. This will be a significant additional administrative burden on the large and medium-sized businesses who will be required to operate the new rules. The current CEST (Check Employment Status for Tax) online tool would be improved before the proposed start date.

SCOTTISH INCOME TAX RATES FOR 2019/20

 The Scottish Parliament has the power to set income tax rates on non-savings and non-dividend income for Scottish taxpayers. It has been confirmed that the 5 band structure and tax rates (19%, 20%, 21%, 41% and 46%) will remain the same for 2019/20. The thresholds for lower tax rates will rise in line with inflation and the higher rate threshold has been frozen.

The 41% Scottish higher tax rate will apply to taxable income in excess of £30,930 as the higher rate threshold will be frozen (at £43,430 when the personal allowance is taken into account). The 46% additional rate will continue to apply to income in excess of £150,000.

Scottish taxpayers (who live most of the time in Scotland) are given an S prefix PAYE code to ensure that they pay the right amount of tax on their employment income. It is important that HMRC are advised of their correct residential address.

LAND AND BUILDINGS TRANSACTIONS TAX

Land and Buildings Transactions Tax is the Scottish equivalent of Stamp Duty Land Tax. For residential properties, the rates and bands for land and buildings transactions tax (“LBTT”) will be unchanged for 2019/20, although the additional dwelling supplement will be increased from 3% to 4%.

The lower rate for non-residential properties will be reduced from 3% to 1%, and the upper rate increased from 4.5% to 5%. The upper rate will apply to the portion of the purchase price over £250,000 (reduced from £350,000).

NO TAX CHANGES ANNOUNCED IN SPRING STATEMENT

Despite the continuing uncertainty surrounding Brexit the Chancellor delivered his Spring Statement on 13 March. The purpose of this statement is to update the House of Commons and the country on the state of the economy; it is not intended to include any major tax announcements, and none were made by the Chancellor.

 As already announced, the personal allowance and the higher rate tax threshold will increase on 6 April 2019. The personal allowance rises to £12,500 and the basic rate band to £37,500, which means that for most taxpayers the higher rate tax threshold will be £50,000. These thresholds were due to come into effect from 6 April 2020 but the Chancellor announced that the start date would be brought forward by one year. Note that the limits will then remain the same for 2020/21.

 

DON’T LOSE YOUR PERSONAL ALLOWANCE!

For every £2 that your adjusted net income exceeds £100,000 the £11,850 personal allowance is reduced by £1. Pension contributions and Gift Aid can help to reduce adjusted net income and save tax at an effective rate of 60%.

The restriction applies between £100,000 and £123,700 adjusted net income. Another way that you could avoid this trap would be to agree with your employer to sacrifice some of your salary in exchange for a tax free benefit in kind. These rules changed from 6 April 2017 but employer pension contributions, bicycles, and employer provided childcare would continue to be tax effective.