Welcome to the March 2013 Newsletter from Connolly Accountants Ltd

As the 2013 Budget approaches, speculation is mounting over the measures that could be announced by Chancellor George Osborne on Wednesday 20 March.

Comments made by the Conservative Party chairman have fuelled speculation that the income tax personal allowance could be raised beyond the level currently planned - while the recent downgrading of the UK's top AAA credit rating has prompted calls for the Chancellor to take urgent action to boost the economy.

Meanwhile, with HM Revenue & Customs' new Real Time Information (RTI) regime looming closer, the Chartered Institute of Taxation has called for an extension to the penalty-free period for employers who submit inaccurate returns, amid concerns about the 'onerous' new obligations being placed on employers.

The landmark RTI regime comes into effect in April, and will require most employers to report the payments and deductions they have made under PAYE when or before each payment is made.


Income tax allowance 'could be raised further' as Budget debate begins

Comments made by Conservative Party chairman Grant Shapps have fuelled speculation that the Government may consider raising the starting point for paying income tax above the Coalition's stated target of £10,000.

From April this year, individuals will receive the first £9,440 of their income free of tax - a rate that Chancellor George Osborne has described as being within 'touching distance' of the £10,000 personal income tax allowance goal.

However, some experts now believe that the forthcoming Budget could unveil another rise in the threshold, allowing the Chancellor to use the two ensuing Budgets - in 2014 and 2015 - to raise it up to or beyond the £10,000 mark.

'We've already said that we want to get it up to £10,000 and I don't think I'd be revealing too much to say that our ambition might be to get it higher,' Mr Shapps said.

His remarks followed a recent pledge by Labour to reintroduce the 10p starting rate of income tax, which would be funded by a 'mansion tax' on properties worth more than £2m.

Meanwhile, the recent downgrading of the UK's AAA credit rating by ratings agency Moody's has prompted calls for measures aimed at boosting the economy, with the British Chambers of Commerce commenting that 'urgent action is needed in the Budget next month to get the economy moving again, and any lacklustre performance will not be acceptable'.

The Government has already confirmed that the inheritance tax threshold is set to be frozen until at least April 2019 in order to fund reform of the social care system. Before the election, Chancellor George Osborne had pledged to increase the threshold to £1m, and in the 2012 Autumn Statement he announced that it would rise by 1% to £329,000 with effect from 2015/16.

However, the threshold will now be frozen at its current level of £325,000 until at least 2019, with the additional revenue being used to cap bills for long-term care for the elderly at £75,000 from April 2017.

Recent reports have also revealed that the Chancellor will not announce the introduction of a new tax break for married couples, despite previous speculation that the tax allowance, which forms part of the Coalition agreement, would be included in the 2013 Budget.

The measure, allowing married couples and civil partners to transfer part of their tax-free personal tax allowance to their partner, is still expected to come into effect by 2015. Under the plans, a 'stay at home' spouse or civil partner would be able to transfer around £750 of their annual tax-free personal allowance to their partner, equating to a tax reduction of around £150 a year for basic rate taxpayers.

Our website will be updated following the Chancellor's 2013 Budget Speech - please visit http://connollyco.rc.clientzone.com for the latest news and announcements.


Revenue urged to show lenience as Real Time filing approaches

HM Revenue & Customs is being urged to extend the penalty-free period for employers who submit inaccurate PAYE returns under the new Real Time Information regime.

The call came from the Chartered Institute of Taxation (CIOT) and follows the launch of a Government consultation on plans to levy penalties on inaccurate submissions as soon as Finance Bill 2013 gains Royal Assent.

The CIOT suggests that employers should not be fined until April 2014, adding that the penalty regime should be 'proportionate and give time for employers to get used to the new and sometimes onerous obligations RTI imposes on them'.

The CIOT also proposes that the penalty-free period should be extended for the last tranche of employers, who are scheduled to join RTI in April 2014. It suggests that no penalties are imposed on these firms until April 2015.

Colin Ben-Nathan, chair of the CIOT's Employment Taxes committee, said: 'It is welcome that the new late filing and late payment penalties will not be applied until April 2014.

'However, given this, it seems odd that the penalty for inaccuracies in RTI returns will be in place from Summer 2013. Employers may take the view that it is best to delay filing if there is a risk they could be penalised for an inadvertent mistake'.

We can help with your PAYE needs - please contact us for further advice and assistance.


ESSENTIAL TAX DATES FOR MARCH

2 March
Last day to pay any balance of 2011/12 tax and Class 4 NICs to avoid an automatic 5% late payment penalty.

20 March
2013 Budget Statement.

31 March
End of Corporation Tax financial year.
End of CT61 quarterly period.
Filing date for Company Tax Return Form CT600 for the period ended 31 March 2012.


QUOTE OF THE MONTH

'This latest surge in fuel prices and its impact on spending indicates that UK drivers and families can't take any more. We're no longer talking of the motorist as a cash cow for tax and speculator greed, but a horse slowly but surely being flogged to death.'

AA president Edmund King, commenting on the news that fuel prices are set to reach record levels this Easter, while petrol sales have slumped to a 23-year low.


WEBSITE OF THE MONTH

www.wrap.org.uk

Offering information and advice on reducing waste and increasing efficiency.


ON OUR WEBSITE

Key business and tax information
For a wealth of information on running a business and the latest tax-efficient business strategies, visit the Your Business area of our website.

Maximising your personal wealth
And for a host of advice and information to help you make the most of your personal finances, visit Your Money.

Penalty notices sent to 850,000 taxpayers
HMRC is sending out 850,000 penalty notices to taxpayers who have failed to file their self assessment tax returns by the 31 January deadline.
Click here for the full story

Acas consults on new workplace settlement agreements
Arbitration organisation Acas is consulting on a code of practice for the new 'settlement agreements', which are designed to enable employers to end an employment relationship on agreed terms.
Click here for the full story

Government urged to lift NEST restrictions 'now'
The Government should lift the restrictions governing the new National Employment Savings Trust as 'a matter of urgency', an influential Committee of MPs has advised.
Click here for the full story

Business reacts to shared parental leave reforms
The Government has published a Bill detailing the manner in which parents can share parental leave, together with the extension of flexible working rights.
Click here for the full story

Self-employed 'facing growing tax burden'
Self-employed individuals are facing the same tax challenges as small and medium-sized businesses, a new report has warned.
Click here for the full story