No it’s not the World Cup
but a new budget and new PAYE rules
Britain’s new coalition
Government will deliver its first budget this summer and in accordance with
their pledge to hold this within 50 days of coming to power this date has now
been set for 22 June 2010, notably during the World Cup. The sceptics amongst us might feel this
is timed so as to bury any bad news such as tax increases whilst we are all
enjoying a barbeque summer and the events in South Africa.
The coalition negotiations Agreement
issued on 11 May 2010 covers the full range of policy matters such as deficit
reduction, public spending, immigration, political reform etc, however it is
clear that tax measures are high on the agenda as tax comes in at third place
in the Agreement and therefore taxpayers
can probably expect some dramatic changes.
The personal income tax allowance
(currently £6,475) is expected to increase gradually from 2011/12 with the longer
term objective of rising to £10,000 in future years. Unfortunately for employees and the self-employed, the Labour
planned increase in national insurance contributions will be implemented by the
new Government. The standard rate
for employees will rise by 1% to 12% and the higher rate will actually double from
1% to 2%. The employer rate will
increase from 12.8% to 13.8%.
However, the threshold at which an individual becomes liable to national
insurance is expected to rise.
The largest tax increase appears
to be geared towards investors with the capital gains tax rates anticipated to
mirror that of income tax. The
implications of this are that taxpayers may see their capital gains tax
liabilities rise to 40% or even 50%.
It follows that investors may decide to cash in their investments before
any increases come into effect and look at alternative investment vehicles for
the future. An Increase in the
threshold at which inheritance tax becomes due has also been put on hold.
What is also worth pointing out
is that the coalition Agreement states very clearly that tackling tax avoidance
is essential for the new government, and that all efforts will be made to do
so.
PAYE Penalties
With effect from 6 April 2010 any
employer or contractor who does not pay PAYE on time and in full may have to
pay a penalty. The penalty is not automatic and will not be levied when a
payment is late rather it will be levied from April 2011. In other words, you may find you have
to pay a penalty even if you have not been notified of this during the year by
HMRC. This is potentially a huge
source of revenue for HMRC as ensuring payments are received on time whether by
post or electronically is often overlooked by employers, especially as there
are actually seven different deadlines depending on what day the 22nd
of the month falls on.
Perhaps before getting out the
barbeques and switching on the football it may be worthwhile reviewing your tax
affairs and considering any planning opportunities before the first coalition
Budget.
A few impending dates to note:
19 May 2010 Forms P35 & P14 for 2009/10 to be filed with HMRC
31 May 2010 Form P60 for 2009/10 to be given to each employee
6 July 2010 Forms P11D for 2009/10 to be filed with HMRC
19 July 2010 Class 1A National Insurance Contributions to be paid
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