Back to the future (Part 2)

In the second article on ‘reverse planning’ and the need to avoid end-of year surprises, we turn our attention to businesses and the self-employed.

If you have responsibility for staff, it really pays to be keeping track of the latest changes in the tax and NI regime. Rather than wait until the last minute, do some planning in conjunction with your accountant. You’ll find that it can reduce your levels of stress and inconvenience quite noticeably.

Here’s one particular talking point from April 2015. If you employ someone who’s under 21, you will no longer have to pay employers’ NI if they earn less than the Upper Earnings Limit of £815 per week. It’s something you’ll need to take into account when dealing with your payroll. And from next April, this tax break will be extended to the wages paid to apprentices under the age of 25. These tax breaks can impact upon the plans a business may have for recruitment, so taking note of them at the earliest opportunity is very wise.

I’ve also been highlighting a new exemption that was to have been introduced from April 2015 for trivial benefits in kind. It would have allowed you to pass non-cash gifts of up to £50 a year to your employees without any tax liability arising. Ideal for recognising birthdays and similar events, whilst creating some good feeling with your staff along the way.

Unfortunately, the Government decided to delay the introduction of the new rule – perhaps concerned about the amount of time available in the run-up to the general election. More information should be around later in the year, but it’s possible you might be able to come to some kind of informal arrangement with HMRC in the meantime. Uncertain, but worth considering and perhaps posing the question.

If you’re self-employed, meanwhile, direct debits of Class 2 NIC should stop after the last payment for tax year 2014/15, which would be around 10^th July 2015. It’s important to check that you’re not inadvertently still making payments from your bank account and therefore it could be wise to cancel the direct debit after the final payment. Of course it should also be noted that there will be an increase to your usual tax bill in future returns because HMRC will now use the self-assessment system to collect Class 2 NIC.