Childcare vouchers

The government is offering help in deciding whether employees would be better off receiving tax credits or taking childcare vouchers from their employer. By using an online calculator staff can determine whether they are eligible and if they would benefit from the voucher scheme.

Childcare vouchers can save many parents with children aged up to 15 up to £1195 per year for the parent (£2390 if both parents apply), enabling employees to pay for childcare out of their Pre-tax and National Insurance income.

As the employee doesn’t pay NI on the vouchers, this also equals big savings for the employer!

For further information and an overview of the information you need to input into the calculator, visit http://www.hmrc.gov.uk/calcs/ccin.htm.

National insurance holiday for new businesses in the regions begins

The new regional National Insurance Contributions (NICs) holiday for new businesses announced in the June, 2010 has now come into effect.

New business set up outside London, the South East and East of England will be eligible for a holiday worth up to £5,000 for up to the first ten employees they hire in their first year of business. This means a maximum saving on the employer's national insurance payments of up to £50,000.

The scheme will run for three years. It is estimated that 400,000 new businesses will benefit by having a lower tax bill from employing new staff.

New businesses established since the announcement in the Budget on the 22nd June, and which meet the qualifying criteria, will also be eligible to apply.

There is full guidance on the business link website. The scheme is available to new businesses in Shropshire. Please contact us if we can help.

General advice about previous year PAYE tax liabilities

You may have been hearing in the news about HMRC sending out letters advising people that they had underpaid or overpaid tax. Please note that there are no implications for business tax – the error applies to personal tax only and some six million people nationally are affected. The good news is that over 4 million of those can expect rebates – averaging £420 – because they have overpaid. But 1.4 million will receive letters saying they have to pay more. People most likely to be affected are those who failed to tell the HMRC about a change to their circumstances, such as starting a new job or receiving a new work benefit such as a company car.

The general advice is not to contact HMRC if you have not received a letter – they are issuing them from now to the end of January next year and if you haven’t received one, you’ve paid the right amount of tax. If you do get a letter and owe less than £2,000, your tax code will be altered from April 2011 so you’ll effectively be paying back in monthly instalments.

If you owe more than £2,000 you will receive a bill for a lump sum. There is a procedure called the extra statutory concession A19, which allows HMRC to write off tax, if it was provided with all the relevant information, but failed to use it within 12 months of the end of the tax year in which the information was received. Although few appeals succeed, HMRC will discuss payment arrangements on a case by case basis.

If you have any concerns and wish to discuss this or anything else to do with your business then please do get in touch.