Business Online Spring 2008 Newsletter Charitable giving: claiming tax relief on your donations Using the Gift Aid scheme to make charitable donations If your income varies can both benefit the charity you give to, whilst also you may pay 40% tax saving you tax. For those eligible, Gift Aid can increase in some tax years but not the value of your charitable donation by allowing the in others. This means your charitable gifts will only earn recipient organisation to reclaim the basic rate of tax on you extra tax relief when they your contribution. Higher rate taxpayers may then claim are paid in a higher-earning year. tax relief on the difference between the basic and higher However, you can now carry back Gift rate of tax, thus allowing you to make the most of your Aid donations that are made before you charitable gift. submit your self assessment tax return by completing the relevant box on that To include a charitable donation in the Gift Aid scheme all you need tax return. to do is confirm to the charity that you are a UK taxpayer. This can be done over the phone, by signing a form, or by checking a statement on a website run by the charity. You may also be asked to give your name Example and address for the charity’s records. One declaration can cover many If you submit your tax return for the year ended 5 April 2008 on gifts to the same charity, spread over a number of years. 31 December 2008, the Gift Aided donations you make in the period from 6 April 2008 to 31 December 2008 can be treated as Once your declaration is received the charity can claim back an extra if they were actually paid in the year to 5 April 2008. This ‘carry 28.2% of the amount you gave. This means that for every £78 you back’ increases your tax relief for 2007/08, and may reduce the donate, the charity can claim back £22, representing the basic rate balancing payment of tax you are due to make on 31 January 2009. income tax you have already paid on your gross income of £100. If your balancing payment reduces, your first on-account payment If you are a higher rate taxpayer paying income tax at 40%, the charity for 2008/09 will also reduce, leaving you less tax to pay overall in cannot claim back any further tax, but you can. When you give £78 January. under the Gift Aid scheme you can claim an extra £18 in tax relief, Remember, the donations you carried back will not gain extra which is 18% of your gross gift of £100. You may claim this tax relief in the 2008/09 tax year. The charity that received your extra tax relief through donations will not be affected by your carry-back election. your self assessment tax return. When the basic rate of tax reduces from 22% to 20% on 6 April 2008, the charity reclaim will reduce to 25% of the amount you give. However, the higher rate tax relief given on Gift Aid donations will increase from 18% to 20%. As a higher rate taxpayer you will gain more tax relief if you keep your donations within 2008/09 rather than carrying them back to the tax year ending on 5 April 2008. Contact us for more information on how Gift Aid may help to reduce your tax payments. Inside this Issue... Spring The new ISA regime: benefits for savers The Companies Act and your business: Business Round-Up what you need to know 2008 Web Watch & Reminders for Employment references: a legal minefield? Rise in fuel charges for company cars your Spring diary The new ISA regime: benefits for savers Changes to the rules governing Individual Savings of existing cash ISA savings will have to relate to the whole Accounts (ISAs) are set to come into force on 6 April 2008. amount saved in the current tax year, up to the day of the The Government believes that the reforms will provide transfer more ‘certainty, simplicity and flexibility for savers’. • Personal Equity Plans (PEPs) will be converted to stocks and shares ISAs. Under the Government proposals, the following key changes will take effect: There are also proposals to allow Child Trust Fund (CTF) accounts to rollover into ISAs on maturity. The first CTF accounts will mature • ISAs will be made available indefinitely; there is no in 2020, and there will be consultation on the best way to facilitate set end date the rollover. • Every adult will have an annual ISA investment Northern Rock customers allowance of £7,200. Up to £3,600 can be invested in a cash ISA with one provider; the The Government has also introduced special measures to ensure remainder of the £7,200 can be invested that Northern Rock customers are not penalised for withdrawing in a stocks and shares ISA with the savings during the bank’s period of financial instability last year. same or another provider Special dispensations enable Northern Rock savers who • The regulations remove the withdrew cash from their ISA accounts between 13 and 19 designations of ‘mini’ and ‘maxi’ September 2007 inclusive, to reclaim lost tax advantages by ISAs re-investing that money into an ISA account. • Savers will be allowed to Those people to whom the rules apply have until 5 April 2008 to transfer existing savings from re-deposit their funds into an ISA at Northern Rock, or obtain their cash ISA to their stocks a certificate from the Newcastle-based bank for the amount and shares ISA, including withdrawn and present this to an alternative ISA provider. cash ISA savings from These regulations are to be covered under the 2008 Finance Bill earlier years; for past and apply retrospectively from 13 September 2007. years the transfer will not affect the annual investment allowance For more details on the changes to the ISA regime • For the current and the dispensation available for Northern Rock tax year, the transfer savers, and for further help with planning your finances, please contact us. Employment references: a legal minefield? As an employer you will Keep to the facts Take extra care when Disclaimers inevitably be called upon dealing with sensitive Research suggests that not to supply a reference for a A key part of writing a legally sound reference is supplying information enough employers are attaching current or former member a disclaimer to references only factual information. Employers should be wary when of staff at some stage Confirming dates of employment they provide. An organisation providing information of a during your career. With and the job title are a minimum sensitive nature. Whilst confirming may state that they do not many job offers subject requirement if you are going accept liability for any action the employee’s absence record is to obtaining satisfactory to provide a reference. brought by the employee over acceptable, supplying in-depth references, they play Detailing the employee’s main the reference. However, it is details relating to their medical responsibilities and their reason important to remember that a pivotal role in the history is not. If an employee has for leaving is also recommended. a disclaimer alone may not be recruitment process. experienced significant periods of enough to negate the duty of ill health, it may be worth advising Even if a reference is factually care owed when completing a While an employer is not legally the prospective employer to liaise correct, the employer must take reference. bound to supply a reference with the individual concerned on measures to ensure they avoid for a current or past employee, the matter to avoid a potential creating an unfair or misleading it is considered good practice breach of confidentiality. to do so. However, provide impression of the individual Five tips to aid success an inaccurate or misleading concerned. Avoid deceptive or Maintain consistency ambiguous wording to ensure y Keep to the facts reference and your company Devise a company policy on clarity and accuracy. y Avoid misleading or ambiguous could find itself subject to supplying references in order litigation. Remember, data If you have limited knowledge to guarantee consistency. language to ensure clarity protection rules dictate that of the individual on a personal Determine who should complete y Attach a disclaimer the individual concerned may level then it is advisable to incoming reference requests y Devise a company policy to request to view their reference. make this known – it is better and follow this procedure for ensure consistency You can help to avoid the to keep your statement short all future references. It is also potential dangers by following rather than risk creating a recommended that employers y Avoid giving verbal references some simple steps to help your misleading representation of refrain from supplying verbal and disclosing detailed medical business comply with the relevant the employee’s character. references in today’s litigious records legislation. society. The advice in this guide is not exhaustive and it is recommended that you consult an expert if you are unsure of your legal obligations. The Companies Act and Rise in fuel your business: what you charges for need to know company Many features of company law date back more than 100 years, In addition, a comprehensive code of accounting and reporting will be required cars and are not necessarily suitable for from April 2008, while provisions stating that shareholders may agree limitation of From 6 April 2008 the cost of regulating modern companies. The providing fuel free of charge for auditors’ liability will also come into effect. new Companies Act, passed in 2006, company cars will increase by aims to modernise and simplify Reforms to commence in over 17%. company law and thereby reduce the October 2008 red tape burden faced by businesses. The fuel multiplier will rise from £14,400 Key parts of the new legislation that are to £16,900. This is used to calculate the Following the Government’s recent publication scheduled to come into force in October amount on which directors and employees of a final implementation timetable for the Act, this year include new rules that prohibit pay tax at up to 40%, and employers pay selected changes are set to come into effect the use of another company to fill the post national insurance contributions (NICs) at in April and October 2008, while some of the of sole director in order to protect the 11.8%. remaining provisions have been delayed until owner’s personal details. From 1 October 1 October 2009. 2008 companies must have at least one Directors paying tax at 40% will incur director who is a ‘natural person’. a rise of up to £350 a year from 6 April Reforms to commence in 2008, with an increase of up to £103.25 Changes to the legislation governing child April 2008 in NICs for the company. directors are also scheduled to commence Despite the delay to key parts of the on this date. If you currently have young Meanwhile new advisory fuel rates, Companies Act, the changes scheduled to relatives registered as directors of your used for negotiating mileage payments come into force this April will still go ahead company they will have to resign if they for business travel in company cars, as planned. The biggest change for small will be under 16 years old on 1 October came into effect from 1 January 2008. companies is that the post of Company 2008. Recommended reimbursement for Secretary will be optional from 6 April 2008. journeys made in petrol vehicles up to Your current Company Secretary may resign Measures affected by the delay 1400cc now stands at 11 pence per mile. from that date, although all the forms and Key provisions affected by the delay It may still be beneficial for some registration documents they may currently include the reforms relating to share deal with will still need to be completed and directors and employees to receive capital, company formation and directors’ filed. This change will make it easier for a residential addresses. Under the latter, free fuel – remember that private single person to run their own company. directors may file ‘service’ rather than motoring includes travelling from home addresses. Although you must home to work – so talk to us to Also coming into effect are important provide Companies House with your private reduce the impact the changes may changes to the way company accounts have to be prepared and filed at Companies residential address, it will be kept on a have on your business. secure private register. House. At present, private companies have ten months from the end of their accounting year to file full or abbreviated For help and further information on accounts with Companies House. This period the forthcoming changes, please do Five tips to reduce fuel will reduce to nine months for accounting contact us. consumption periods beginning after 5 April 2008. Abbreviated accounts 1. Use your gears wisely will still be permitted for small companies. 2. Check your tyre pressures 3. Choose an economical vehicle such as a hybrid or diesel car 4. Check that your spark plugs are in good condition 5. Leave the car at home and choose public transport Business Round-Up Businesses to incur new penalties over illegal workers Taxpayers Stiff penalties for businesses that employ illegal migrant workers are could sue due to take effect from 29 February 2008. Revenue Under new measures outlined by the Government, employers that following court negligently hire illegal workers could incur a fine of up to £10,000, ruling while businesses that knowingly take on illegal migrants could face an A landmark court unlimited fine and/or a two year custodial sentence. ruling has found The new penalties are designed to discourage what the Government that HM Revenue has called ‘exploitative recruitment methods.’ and Customs (HMRC) owes a Employers are currently required to carry out checks to determine duty of care to the whether prospective employees are permitted to work in the UK, taxpayer for errors providing them with a statutory defence from conviction if these legal that it makes. obligations are fulfilled. For this exemption to be valid, employers must conduct repeat document checks at least once a year for members of The Court of Appeal found that HMRC was liable for a series staff that have limited leave to enter or remain in the UK. Employers of mistakes made when processing builder Neil Martin’s that consciously take on illegal workers are prohibited from using this Construction Industry Scheme application in 1999. As a result defence. of the errors, Mr Martin lost £500,000 and experienced severe disruption to his business. The changes are just part of a wider Government clampdown on immigration and a drive to strengthen ‘British values’. Plans to ban The court unanimously agreed that HMRC owed a duty of care unskilled non-EU workers from entering the UK have also been to the claimant under common law, creating a precedent that will announced by the Home Office, while an Australian-style points system potentially affect future judgments. The ruling will reportedly is set to come into effect later this year. have major implications for HMRC, whose staff regularly assist This newsletter is for guidance only, and professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors taxpayers in completing HMRC forms. Migrants from outside the EU will have to pass a series of tests designed to ensure they possess skills that will benefit the UK economy. The decision repeals a 2006 High Court ruling in which HMRC was found to owe no duty of care if negligence occurred. can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication. For more information on the new penalties, please visit the Border and Immigration Agency website at Please contact us for help in completing HMRC www.bia.homeoffice.gov.uk. documentation – we will be delighted to assist you. Web Watch Reminders for your Spring diary Essential sites for business owners February 2008 14 Last date (for practical purposes) to 6 Disposals from today are subject to Fraud Advisory Panel request NIC deferment for 2007/08. the ‘new’ CGT rules. www.fraudadvisorypanel.org 14 Due date for income tax for the CT61 28 Last day to pay any balance of 2006/07 Aims to raise awareness of the damaging tax and Class 4 NIC to avoid an period to 31 March 2008. effects of fraud and offers advice on how automatic 5% surcharge. you can prevent it. 19/22 Quarter 4 2007/08 PAYE remittance March 2008 due. The Pension Service 31 End of corporation tax financial year. 20 Interest will begin to accrue on unpaid www.thepensionservice.gov.uk PAYE/NI for 2007/08. Contains useful information for businesses End of CT61 quarterly period. 30 Normal annual adjustment for VAT partial on pension schemes and benefits. Filing date for Corporation Tax Return exemption calculations (monthly returns). Form CT600 for period ended 31 March J4B Grants 2007. May 2008 www.j4bgrants.co.uk 3 Last day for notifying car changes in April 2008 Funding information for UK businesses. quarter to 5 April – P46 (Car). 5 Last day of 2007/08 tax year. 19 Last day for filing forms P14, P35, P38, Just Giving Deadline for 2007/08 ISAs. and P38A – 2007/08 PAYE returns – www.justgiving.com without incurring penalties. Provides tools to help with fundraising, Last day to make disposals using the 2007/08 CGT exemption and the ‘old’ Also last day for filing contractors’ including a charity search facility and CGT rules. returns. automatic Gift Aid reclaim. Last day for contracting back into the 31 Last day to issue 2007/08 P60s to State Second Pension for 2007/08. employees.
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