General Taxation

Tax crackdown on ‘synthetic self-employed’ in Budget

The Treasury is finalising plans to overhaul tax rules which allow self-employed people to avoid paying national insurance contributions.
The move will be targeted at people who set themselves up as private companies to take on work.

The BBC understands it could be announced in this month’s Budget.

The Treasury believes a third of people claiming self-employed status as a “personal service company” are actually full employees and should pay more tax.

It says without reform, high levels of non-compliance with tax rules could cost HM Revenue and Customs, which collects taxes, £1.2bn a year by 2023.

It is now looking at demanding that firms which use personal service company contractors take legal responsibility for ensuring “off-payroll” contractors stick to the tax rules known as IR35.

A similar move in the public sector on “synthetic” self-employed has raised £410m extra in taxes since 2016, HMRC estimates suggest.

Full employees pay higher levels of national insurance compared with the self-employed.

Philip Hammond is under pressure to raise taxes at the Budget following the Prime Minister’s pledge of £20bn worth of extra spending on the NHS by 2023.

Personal income tax allowances could be frozen, despite a Tory pledge at the 2017 election that they would rise to £12,500 for lower rate taxpayers and £50,000 for higher rate taxpayers by 2020.

Freezing them could raise up to £2bn a year.

Reform of the IR35 rules would not raise as much, but might be less politically controversial.

Source Business Matters


Welsh rates of Income Tax (WRIT)

Customers who have been identified by HMRC as Welsh taxpayers will receive a Notification letter in November informing them of their Welsh taxpayer status.

It is important that HMRC is notified of any change of address to ensure that customers receive their notification letter. Please encourage your employees to check that HMRC has their correct address by registering and logging onto their Personal Tax Account.

Source HMRC

Employment Law Minimum wage

Are you paying Apprentices the correct rate?

The start of the new academic year often coincides with an increase in the number of young people starting an apprenticeship. Data shows that nearly a fifth of apprentices at Level two and Level three are paid less than the appropriate National Minimum Wage (NMW) or National Living Wage (NLW).

The NLW and NMW rates increased on 1 April. The new rates must be applied from the first day of the first pay period on or after 1 April 2018 and are as follows:

Apprentices are entitled to the Apprentice rate of £3.70 per hour (previously £3.50 per hour) if they are:

Aged under 19

Aged 19 or over and in the first year of their apprenticeship.

Apprentices aged 19 or over who have completed the first year of apprenticeship are entitled to the age-related minimum wage:

– 19 to 20 year olds are entitled to at least £5.90 per hour

– 21 to 24 year olds are entitled to at least £7.38 per hour

– 25 year olds and over are entitled to at least £7.83 per hour.

The Government is currently running a campaign advising apprentices to check their pay and complain if they are being paid incorrectly. If you are not paying the correct rate you may receive a Notice of Underpayment from HMRC, setting out the arrears to be paid to your workers together with a penalty. Employers may also be publicly named.

Source HMRC

Auto enrolment

Auto enrolment pension changes


You will have received email messages from NEST and other pension providers regarding the increases in the minimum auto enrolment pension contributions, which come into effect from April 2019. The employee’s basic contribution will increase to 5% and the employer’s to 3%.