Latest News

Change in Vat rate from 15% to 17.5 % from 1.1.10
No Paper filing of vat returns from 2010
National Minimum Wage
Main body of Companies Act 2006 becomes law today
Advisory Fuel Rates
'Tips Loophole' to be closed

Change in Vat rate from 15% to 17.5 % from 1.1.10

Change of VAT rate on 1 January 2010 A change in the VAT rate from 15% to 17.5% took place on 1 January 2010. This change affects any VAT registered business that sells or purchases goods or services that are subject to the standard rate of VAT.

For most business’s it is a straight forward change, any invoices raised on or after 1.1.10 will need to apply the new vat rate of 17.5 %. For business’s that offer services that span over the two vat rates there are special rules that can be used. This will be useful if you supply to non vat registered business’s or charities, it is essential to help your customers by invoicing at the appropriate rate when the goods were supplied or the service took place, this will enable them to benefit from the 15% rate for as long as possible. If your sale spans the change in the vat rate you can invoice for the part of the service or goods supplied up to 31.12.09 at 15% and then service or goods supplied after 1.1.10 at 17.5%. It is important though to keep accurate records and back up evidence of the supply date. For services this may be diary dates when the work took place. Time sheets showing what was done and when. For goods this could be signed delivery notes, orders etc.

If you take deposits and you took a deposit in December for goods or services supplied in January, then the deposit should be treated with 15% vat and the balance received after 1.1.10 at 17.5% vat.

For more detailed guidance on all issues relating to the change in vat rate you can find the full HMRC guidance sheet at HMRC.

No Paper filing of vat returns from 2010

HMRC has announced that from April 2010 businesses that have an annual turnover of £100,00 or more exc. vat will be required to file their vat return online and pay electronically. Furthermore any business that registers for vat on or after 1st April 2010 will also have to file their return online and pay electronically irrespective of the level of turnover.

HMRC will be sending formal letters to all current businesses that will be affected by the new policy in February 2010 confirming the above policy.

Footnote

 Our book keeping services ensure that vat returns are done in a timely and accurate manner with online filing. If you wish to contact us about these services then please either call us on 01384 468320 or complete our online quotation form

National Minimum Wage

The National Minimum Wage (NMW) rates are increased from today

There are different levels of NMW, depending on the employees age. The rates from 1st October 2009 are:

• £5.80 - the main rate for workers aged 22 and over 
• £4.83 - the 18-21 rate
• £3.57 - the 16-17 rate for workers above school leaving age but under 1

Most workers in the U.K. above the compulsory school age are legally entitled to be paid at least the NMW rate and these cannot be set aside by contract.

Main body of Companies Act 2006 becomes law today

Today sees some 550 sections of the companies act 2006 becoming law. There are now only a few sections remaining to become law from the act which has been introduced piecemeal over the last few years to allow businesses the neccessary time to prepare for the changes.

Those sections of the act being enacted today cover areas such as the formations and registrations of companies, re-registration of companies as a method of altering their status, directors addresses being protected from disclosure, reules governing shares and share capital and company names and business names

Advisory Fuel Rates

Fuel prices have gone up again, partly due to the rising price of oil, and partly due to the reintroduction of the fuel escalator which increased the duty on all road fuels from 1 April 2009. New advisory fuel rates have been announced to take effect from 1 July 2009, but employers can use the new rates immediately if they wish to do so.

The rate for petrol vehicles for engine sizes of 2000cc or more has increased from 17p per mile to 18p, but rates for smaller petrol engines have remained the same. All rates for diesel engines have decreased by 1m per mile. Rates for LPG vehicles are held the same except for the middle band of engine size from 1400cc to 2000cc, which has decreased by 1p per mile. So you may be better off using the old advisory fuel rates until 1 July 2009.

Its is worth noting that advisory fuel rates are not statutory rates, employers can use different rates providing that they can show that the cost of fuel used in their company vehicles is higher, either because the average cost of fuel purchased locally is higher, or the vehicle for which the rate is being claimed is less fuel efficient.

The new advisory fuel rates are based on the following average per litre costs, with the previous average costs shown in brackets:

• Petrol: 97.5p (93.1p)

• Diesel: 103.4 (107.8p)

• LPG: 52p (55p)

If you want to use a per mile rate which is higher than the advisory fuel rate to reimburse employees for the cost of fuel, you should keep records to show how they calculated the average fuel cost per mile for their company cars.

Where employees use their own cars for business journeys the tax free authorised mileage rate is still capped at 40p for the first 10,000 miles per tax year and 25p for additional miles. However, many employers don't even pay those rates to employees who have to drive on business. Where there is a shortfall the employee can reclaim the difference on their self-assessment tax return, or if they don't complete an SA return and the claim is less than £2,500 they can use form P87 (Tax relief for expenses of employment)

'Tips Loophole' to be closed

Employers are to be banned from using tips and service charges to "top up" staff pay to meet the minimum wage from October, the government says.

The change will benefit those working in industries such as restaurants, where tipping is commonplace.

Employment Relations Minister Pat McFadden said that the practice of allowing firms to use service charges to pay staff was unfair.

Unions, which have long campaigned for change, welcomed the move.

"When people leave a tip for staff, in a restaurant or anywhere else, they have a right to know that it will not be used to make up the minimum wage. It is also important for employers to have a level playing field on wages," Mr McFadden said.

Derek Simpson, the Unite trade union's general secretary, said that the government was doing the right thing for low-waged waiting staff.

"Hard-working staff will be delighted to learn that bad employers can no longer line their pockets with the money that customers intended to go to workers," he said.

The Department for Business Enterprise and Regulatory Reform said businesses supported the change.

 

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