Financial Monitor (January 2009)
End of year tax planning
It is important that consideration be given to maximising tax reliefs and allowances available on an annual basis before 5 April each year.
- An individual is entitled to earn approximately £41,000 per annum before paying tax at higher rates. Those who are shareholders in family owned businesses should where practical ensure dividends are declared to provide maximum earnings at the basic rate of tax. No additional tax is paid by a basic rate taxpayer on dividends received.
- The annual capital gains tax allowance (currently £9,600) should also be utilised whenever possible. Those with share portfolios who have not utilised this allowance should consider crystallising gains by selling shares. If it is wished to retain these shares in the portfolio, then they can be repurchased after 30 days or bought back immediately through a spouse or via an ISA investment. Those who have taxable gains relating to any asset disposal may also wish to crystallise share losses to offset any tax payable.
- Pension contributions can no longer be carried back into previous years so those wishing to make personal pension contributions or additional voluntary contributions into their employer’s pension scheme need to do so before 5 April 2009 if they want tax relief in the 2008/09 tax year.
Self assessment tax liabilities
Please remember that any balance of self assessment tax due for the 2007/08 tax year which is not paid by 31 January 2009 will accrue interest from that date. If payment is not made by 28 February 2009 a surcharge of 5% of the tax due will be applied in addition to interest. In practice surcharges below £50 are not raised.
Health and Safety legislation
The Health and Safety (Offences) Act 2008 came into force on 16 January 2009. The Act does not create any new offences but raises the maximum penalties available to the Courts in respect of many health and safety offences. Prison terms of up to 2 years and maximum fines of £20,000 in a Magistrate's Court and unlimited fines in a Crown Court can now be applied depending on the offence. The object of the legislation is to encourage employers to take health and safety issues more seriously. The Chairwoman of the Health and Safety Executive has said, "Our enforcement policy targets those who cut corners, gain commercial advantage over competitors by failing to comply with health and safety law and who put workers and the public at risk. These new powers will be used sensibly and proportionately. Good employers and good managers have nothing to fear." Contributed by Rod Austin, a Health and Safety specialist who can be contacted on 01246 453224.
It is also not sufficient to simply have written policies and procedures in place unless they are properly communicated to employees and implemented. In a recent case an employer had excellent systems but failed to communicate these to the relevant employee who suffered severe burns as a result of not following the proper procedure. The employer was fined £50,000 with £15,000 costs.
Obligations to Employees Eyecare
Employers whose employees regularly use computers for their work must provide free eye examinations and pay for glasses where these are needed specifically for use with a computer. Those working with computers also need regular changes of activity to relieve eye fatigue.
Increased Compensation Limits
The cap on compensation available for unfair dismissal claims is being increased to £66,200 (previously £63,000) from 1 February 2009. From the same date the maximum weeks pay for calculating redundancy pay will increase from £330 to £350.
Increase in Statutory Payments
From 6 April 2009:
- Statutory sick pay will increase from £75.40 to £79.15 per week for those earning at least £95 per week
- Statutory maternity pay, adoption pay and paternity pay will increase from £117.18 to £123.06 per week for those earning at least £95 per week. The rules allowing employers to recoup some or all of these payments remain unchanged.
Holidays for those on Sick Leave
In 2005 the Court of Appeal decided that the right to annual leave only occurred during periods when employees were actually at work. The controversial decision was referred to the European Court of Justice who have ruled that employees who are on short or long-term sick leave are still entitled to accrue their right to the minimum four weeks paid holiday. Those holidays not taken during the holiday year because of sickness can be carried over to the next year. If an employee is dismissed following a prolonged absence then pay in lieu of the accrued annual leave that has not been taken must be paid based on normal rates of pay. It has not yet been confirmed whether an employee can take paid holiday leave during a period of absence through sickness.
Intrastat Changes
Businesses will now only need to submit Intrastat returns if either their purchases of goods from or sales of goods to other EU Member States exceeds £270,000 per annum. This exemption threshold has been increased from £260,000 to £270,000 with effect from 1 January 2009.
Similarly, the annual threshold above which the terms of delivery have to be included on Intrastat return declarations is increased from £14,500,000 to £16,000,000.
Whilst every care has been taken in the preparation of these notes we can accept no responsibility for errors or omissions contained in them or for any loss arising from their use unless we have been consulted professionally prior to any action being taken.
UHY Wingfield Slater
Wellington House, 39 Wellington Street, Sheffield S1 1XB
Tel: 0114 275 1544 Facsimile: 0114 275 1366 Email: info@uhy-wingfieldslater.com Web Site: www.uhy-wingfieldslater.com
Registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales
A member of the UHY Hacker Young Group of independent UK partnerships. A member of UHY, an international association of independent accounting and consulting firms.
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