Interesting News

News Bulletins

OCTOBER 2008 - E-NEWS

This month we update you on the long awaited tax rebate for employed basic rate taxpayers, details of the new minimum wage and changes to the benefits system. And there’s a warning about fake HMRC emails to be aware of!

EXTRA TAKE HOME PAY

For many employed individuals who are checking their payslip this month it should include a welcome bonus of a £60 reduction in their income tax deduction. The reason for this is the increase in the personal allowance which finally took effect for paydays from 7 September. Don’t expect the bonus each month as the effect for October onwards will be a reduction in tax of £10 a month!

However not everyone will see the benefit as higher rate taxpayers, although benefiting from the increase in their personal allowance, will be paying more tax at the higher rate of 40% due to a change in the higher rate threshold.

As has been widely reported the increase in personal allowance from £5,435 to £6,035 means that the majority of basic rate taxpayers will be £120 better off for the current tax year. The increase is designed to compensate those taxpayers who were worse off following the removal of the 10% starting rate of tax from non-savings income.

HMRC published some guidance for both employers and employees on the changes and this can be found using the link below.

Please get in touch if you require any clarification of the new rules - contact Alan Rolfe on 023 8046 1200 or email alan.rolfe@hwb-accountants.com

Internet Links: HMRC guidance, Employee guidance and Employer guidance

TEMPORARY EXEMPTION ON STAMP DUTY LAND TAX

In a move to help the property market and first time buyers, Alistair Darling has introduced a Stamp Duty Land Tax (SDLT) exemption or holiday for purchases of residential property from 3 September 2008 to 2 September 2009 (inclusive). The exemption effectively raises the current nil rate band of £125,000 (£150,000 in disadvantaged areas) to £175,000 for the period of one year only.

The effect of this increase is that where residential property is bought or leased (for in excess of 21 years) costing not more than £175,000, no SDLT will be payable. SDLT continues to be payable at 1% on property from £175,000 to £250,000 before the percentage rises.

The transaction must still be reported using the relevant return form SDLT1 even though no SDLT is payable.

For more information contact Alan Rolfe on 023 8046 1200 or email alan.rolfe@hwb-accountants.com

Internet Links: HMRC guidance SDLT and SDLT calculator

FAKE HMRC EMAILS

HMRC is warning taxpayers that they are aware of a high number of emails being sent out offering a tax rebate. The warning confirms that HMRC do not email taxpayers advising them of tax rebates or invite them to complete an online form to receive a rebate.

The advice goes on to say that anyone receiving such an email should not visit the website contained within the email or disclose any personal or payment information.

Internet Link: HMRC fraud attempts

CHANGE TO BENEFITS SYSTEM

From 27 October 2008, in a change to the benefits system, Employment and Support Allowance (ESA) will replace the current state benefits (Incapacity Benefit and Income Support) which are paid to individuals on incapacity grounds. The new ESA will initially only be payable to new claimants.

According to government guidance

"… the principle of Employment and Support Allowance is that everyone should have the opportunity to work and that people with an illness or disability should get the support they need to engage in appropriate work, if they are able."

Existing Incapacity Benefit or Income Support claimants will initially continue to receive their existing benefits, so long as they satisfy the entitlement conditions.

The change to the benefits system will have some implications for employers with the issue of a new SSP1 form. This form is used where an employee has reached their maximum entitlement to SSP. The changes to SSP1 are designed to make it quicker to complete, as less information has to be reported for benefit claims starting on or after 27 October 2008.

Another form the SSP1L (Leaver’s statement of SSP), which is currently given to employees who leave within 8 weeks of claiming sick pay, will be discontinued from 27 October 2008.

For more information contact Andrea Vowles on 023 8046 1200 or email andrea.vowles@hwb-accountants.com

Internet Link: http://www.dwp.gov.uk/esa/

NMW RATES TO RISE

National Minimum Wage (NMW) rates are set to rise from 1 October 2008. The increased rates will be as follows:

Adult rate (workers aged 22 and over) will increase to £5.73 (from £5.52)
Development rate for 18 - 21-year-olds will increase to £4.77 (from £4.60)
Young people’s rate for 16 - 17-year-olds will increase to £3.53 (from £3.40)

For more information contact Andrea Vowles on 023 8046 1200 or email andrea.vowles@hwb-accountants.com

Internet Link: NMW rates

Hopper Williams and Bell Limited. Registered in England and Wales No:4770023