What is the ‘NIC holiday’?

What is the ‘NIC holiday’?I’ve heard about a NIC holiday, but I’m not sure what it means or if I’m eligible. Can you tell me more about it please?

Satish, Chelmsford

Its full title is the Regional Employer National Insurance Contributions (NICs) Holiday for New Businesses. As the name suggests, it is focused at new business, set up between 22 June 2010 and 5 September 2013.

Under the scheme, new businesses may qualify for a reduction of up to £5,000 from their employer’s NICs that would normally be due, for each of the first ten employees they take on for up to 12 months.

You can only apply for the NICs holiday if your principal place of business is located within specific areas of the UK when your business started up, which can be found on HMRC's website, www.hmrc.gov.uk.

Most trading entities can apply, i.e. sole trade, trading charity, company, investment business etc.

Please note, there can be complications if the business is in receipt of other state aid, unclear in what region it is, when it started or whether it is truly new.

You can apply for the scheme online on HMRC's website or if a bit more complex as above, HMRC prefer you to submit a paper form which you can obtain from the Employers Helpline on 0845 60 70 143.

If you think you may have been eligible, but didn’t apply for the scheme, you may also be able to backdate a claim.

If it sounds like you may qualify, you should complete and submit a form. Your local TaxAssist Accountant would be happy to help you with your claim or any other payroll matters.

We provide tax accountancy services in Chelmsford and throughout the UK. http://www.taxassist.co.uk

Reducing the reporting of expenses and benefits

Reducing the reporting of expenses and benefitsI’ve just submitted forms P11D and P11D(b). They’re so fiddly and time-consuming- is there any way I can reduce the paperwork and preparation time?

Naomi, Hornchurch

You could apply for a dispensation (or form P11DX) from HMRC. If you are successful, this form completely removed the requirement to report anything on form P9D or P11D. Therefore, there is also no need to pay any tax or national insurance on items covered by a dispensation.

There is a list of expenses that can be covered by dispensations, but examples of expenses typically covered are:

• Travel, including subsistence costs associated with business travel
• Fuel for company cars
• Hire car costs
• Telephones
• Business entertainment expenses
• Credit cards used for business
• Fees and subscription

Put simply, to stand a chance at obtaining a dispensation, you must have an independent system in place for checking and authorising expense claims so as a minimum, someone other than the employee must check their claim. If you are a sole director, you may still be successful, provided that you obtain receipts for all expenditure and the expenses are within the list referred to above.

A dispensation covers the items indefinitely, however, HMRC reviews them regularly (usually at intervals of five years or less) to make sure the conditions under which it was granted still apply.

If you would like assistance in applying for a dispensation or would like to discuss another tax or accountancy related matter, please do not hesitate to contact your local TaxAssist Accountant.

We provide tax accountancy services in Hornchurch and throughout the UK. http://www.taxassist.co.uk

Employer's Credit Card

Employer's Credit CardQ: In error, one of my employees recently paid for an expensive handbag on the company credit card; rather than her own. She’s performed really well in the last year, so I said she could keep it and not bother paying the company back too. But are there any tax implications?

Dave, Southampton

A: Firstly, you will need to add it to her earnings when calculating her National Insurance deductions. For the purposes of her PAYE calculation, it will be ignored though.

You will also then need to report it on form P11D in box C, but this will not trigger any Class 1A National Insurance for you to pay.

And finally, she will then need to complete a tax return and declare her income and the ‘benefit’ shown on her P11D.

Therefore, National Insurance will be deducted from her almost immediately via the payroll. And then she will be taxed on the benefit once the tax year end has passed. In effect, the cost of the bag is treated like any normal wages; there’s just a delay in the collection of the tax.

If you would like more advice on expenses and benefitsor wish to discuss something else tax or accountancy related, please feel free to contact your local TaxAssist Accountant

We provide tax accountancy services in Southampton and throughout the UK.  http://www.taxassist.co.uk

Beneficial Loans and Paying Interest

Beneficial Loans and Paying InterestQ: I have received a loan of £10,000 from my employer, on which interest is chargeable at the current HMRC official rate. However, the interest is not payable until the end of the loan period. In the interim period the interest is rolled up and carried forward. Does this give rise to a benefit in kind?

Ryan, Galston

A: You will have a benefit in kind, based on the difference between interest calculated at the HMRC official rate and the amount actually paid to the company during the same year.

Therefore because you will not physically pay the interest until a later tax year, the accrued interest cannot be taken into account when calculating the benefit in kind.

The benefit in kind should therefore be reported on form P11D for each tax year until the year in which the loan is repaid and the accrued interest is settled.

Once the interest has been paid, a retrospective claim for relief can be made for up to six years after the tax year the benefit occurred in.

If you would like more advice on expenses and benefits or wish to discuss something else tax or accountancy related, please feel free to contact your local TaxAssist Accountant.

We provide tax accountancy services in Galston and throughout the UK.  http://www.taxassist.co.uk

Discounted Loan Rates for Employees

Discounted Loan Rates for EmployeesQ: As part of my employee benefits package, my employers have offered me a mortgage at a discounted rate. However, they have mentioned I will have to pay tax on this. Is this correct?

Harvey, Eccles

A: Unfortunately it is correct. If an employer provides an employee with a subsidised loan, the employee will be assessed on the difference between the interest rate actually charged and what is known as the “official rate” of interest.  The employee will then pay income tax (20% if you are a basic rate taxpayer, 40% if you are a higher rate taxpayer and so-on) on the value of the benefit received each year. So it is still more beneficial to take up the low interest loan you have been offered.

Despite being charged tax on the benefit of having the low interest loan, you would not be liable to make any National Insurance Contributions, as your employer would be liable to pay these.

If you would like some personal tax advice or wish to discuss something else tax or accountancy related, please feel free to contact your local TaxAssist Accountant.

We provide tax accountancy services in Eccles and throughout the UK.  http://www.taxassist.co.uk