April 2009

The legislation governing how businesses deal with disputes with their employees is changing from April 2009. The new simpler and more flexible system is intended to save businesses time and money.

Acas, the employment relations service, have now issued a new Code of Practice following parliamentary approval and accompanying guidance which will lays out the principles and provides practical guidance on procedures for handling disciplinary and grievance matters in the workplace.

The Employment Act 2008:

• repeals the mandatory three-step process for discipline/grievance issues; and

• allows employment tribunals to adjust awards by up to 25% if an employee or employer has acted unreasonably in not following the principles in the new Acas Code.

The Government is providing additional help for all employers to get the maximum benefit out of this new system by working with Acas.

From April 2009, help on the new rules will be available from the Acas helpline on 08457 47 47 47. Trained Acas conciliators will also be available throughout the country to help resolve workplace problems.

Acas are also running a variety of courses aimed at helping businesses during a recession, such as redundancy and restructuring, managing people in difficult times, understanding and managing redundancy, varying a contract of employment, and employment law update.

Internet links: HMRC employer bulletin  Acas article

April 2009

With the economic downturn continuing to take its toll, Weatherer Bailey Bragg accountants are reminding companies, partnerships, sole traders and individuals to make best use of their loss relief in trading in the most tax-effective way.

Companies can…

• arrange for an earlier audit, where appropriate, finalising accounts and agreeing tax computations as quickly as possible to bring forward loss relief claims

• make use of the measure announced in the November 2008 Pre-Budget Report, which allows them to set a loss of up to £50,000 against profits from the previous three years. This applies to losses in accounting periods ending between 25 November 2008 and 24 November this year

• review projected results in the current accounting period to see if they stop paying corporation tax in quarterly instalments. This applies to large companies, defined for these purposes, those with profits of more than £1.5 million in each of two consecutive accounting periods

• for investments standing at a loss now, the loss can be set against other capital gains.

Partnerships and sole traders can…

• can carry back a trading loss of up to £50,000 against profits from the previous three years. Depending on the year end, this may result in problems in which case it may be worth considering changing the accounting date so that you can utilise the loss and also increase the loss by triggering overlap relief.

Individuals…

• Can crystallise a capital loss on a property by transferring the property, other than their main residence, to someone other than their spouse or civil partner, such as a fiancée or fiancé, but care needs to be taken that no strings are attached – such as reverting to the donor after marriage – as the taxman is likely to think it had not been disposed of in the first place.

April 2009

Salary sacrifice is a change to an employee’s contractual pay entitlement. It often involves the giving up of some entitlement to pay in return for some other form of benefit, such as employer pension contributions or childcare vouchers. Depending on the sort of benefit involved, tax and/or National Insurance savings can often result for both the employer and employee.

Following changes in the law in 2008 on what benefits employers must provide to employees during Additional Maternity Leave, HMRC published guidance on Statutory Maternity Leave and salary sacrifice. Similar changes took place in respect of employees on adoption leave. In the recent HMRC Employer Bulletin they provided a link to the guidance.

The guidance also covers what non-cash benefits should be provided to employees during Statutory Maternity Leave.

HMRC have confirmed, following requests from employers, that they plan to publish further guidance on their website, including the tax and NICs implications of providing non-cash benefits, in-year recording and end of year reporting of these complex areas.

If you would like to discuss these issues in more detail or the opportunities afforded by salary sacrifice more generally, please do get in touch.

Internet link: HMRC guidance on salary sacrifice

April 2009

HMRC have issued a reminder to employers with 50 or more employees that they must send their employee starter and leaver information – P45s, P46s and P46(Pen) for pensions – online from 6 April 2009. As always, failure to comply with these new rules could result in a penalty.

HMRC’s Simon Lidster said:

“If you’re an employer with 50 or more employees, and you’re not filing your P45s and P46s online, time is running out. Register now, so you don’t end up facing a penalty.

These employers also need to remember that their 2008/09 Employer Annual Returns must be submitted online to HMRC by 19 May. Returns are being accepted now, so we are urging employers to send them in as soon as they are ready.”

If you would like any help in this area, please do get in touch.

Internet link: HMRC press release

April 2009

Accountants Weatherer Bailey Bragg say the Chancellor’s limited resources meant yesterday’s budget has done little to help smaller firms.

Despite being pitched as a budget to kick-start the country’s faltering economy, the announcements could have done more to ease the pressure on the UK’s 4.7 million small and medium-sized enterprises (SMEs).

Yesterday (April 22) chancellor Alistair Darling announced some helpful measures which were welcomed:

• Loss-making firms would be able to claim back tax on profits from the last three years in the loss carry-back scheme.

• Capital allowances temporarily doubled to 40 per cent (with effect from April 2009) to encourage investment

• £750million Strategic Investment Fund to support strategically-important and low carbon projects.

But there will be the opportunity to save more tax-free, with the annual limit for tax-free ISAs to rise to £10,200.

There were also measures to ensure those earning more than £150,000 a year will pay 50 per cent income tax, and to reduce tax relief on pensions for people on more than £150,000 a year from April 2011.

Steve Horsley, partner at Weatherer Bailey Bragg, said:

“The budget yesterday did not do much to help smaller firms during this recession, but there are some positives. It’s a little disappointing, but there is not much to give away in these uncertain economic times.

“However, businesses can do a lot to ensure they have more cash by ensuring their finances are in order and getting advice to ensure they are not paying more tax than they need to be.”