Employment Tax Expert

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Why will this government not admit that the majority of its “green” measures are just effectively a secret additional tax – take cars for example we are getting taxed to death on the price of fuel, vehicle excise duty, company car benefits etc but we are too polite as a nation when are we going to sit up and take notice that we are being conned left right and centre. If you think that’s a bit harsh then think about it

• what is the cost of oil – has the price risen or dropped – what about the price of fuel
• Road fund tax – what is this being spent on because it certainly isn’t roads and we now have a “special” allocation in the Budget for road repairs – where is this money coming from?
• public transport – trains are like meat wagons but remember you’re not paying for a seat just the privilege of auditioning as a sardine
• allowances mentioned in the Budget are currently a sham – a reduction by half of the percentage used to calculate the taxable car benefit if the car has a CO2 emission level of between 0 -75g/km sounds good but the FACT is there aren’t ANY cars in this country with emissions this low, the lowest is 88g/km – so what an excellent “giveaway”
• Electric cars – where is the infra structure to support them

So this employment tax expert says forget all the spin that’s out there and look at what you can do for you and your employees, because you can:

• Save tax and NIC
• Be enviromentally friendly; and
• Keep both your employees and the Board Room happy

Employee car ownership schemes and car salary sacrifice schemes are a real winner if constructed correctly – what have you got to lose, give us a call on 0800 917 9176 and see how we can shape the enviromental future of your car scheme as well as saving you money

Under Conservative proposals, income tax and national insurance contributions would automatically be deducted from employees’ gross pay, removing the need for employers to process different tax codes and pay income tax for employees. This means the responsibility for calculating NI and income tax contributions would fall to HMRC.

Now it doesn’t take brain of Britain to see that there are some fundamental issues here, for example the unreliability of HMRC I.T. systems, lack of Inland Revenue staff, lack of staff training, turnarounds (can you imagine having to wait for HMRC to let you know what to pay net and then having to produce a payslip – because they don’t do that!) to name but a few. However, this employment tax expert wonders whether this has more to do with HMRC not being a preferential creditor anymore and with the recession not over (0.1% growth does not mean we are out of recession! or did the fact that the debt was increased by a further £70 billion plus in January alone not register in the general scheme of things) many businesses may still struggle so HMRC will with this system potentially have their money and not be faced with unrecoverable PAYE/NIC.

Karen Thomson from the Institute of Payroll Professionals also highlighted some further issues which really do make this from a practical point of view a non starter:

• Gross pay – this is made up of many elements, some are taxable and others are not, so how would HMRC deal with this?
• Pension contribution deductions
• Payroll giving contributions
• Other deductions such as attachment of earnings, union subs etc.
• How would it work for salary sacrifice where the employer uses the payroll system to reduce the monthly amount rather than enter the actual amount?
• If money taken directly for employee tax and NI how would it work for employer NI?
• Cash flow issues as business has developed its processes around the current system
• Late leavers i.e. now an employer might do a BACs recall and re-process manually how would this work?
• How quickly would HMRC turn it around so that the employer could deduct items from net pay such as a company loan and of course provide a payslip?
• The UK business has invested in payroll software – what happens to these businesses?
• The UK business has invested in specialist tax and payroll professionals – what happens to these people?

Research has shown that calculating PAYE and NIC is not a problem for business – the areas of concern are in fact around benefits and expenses and understanding the rules of when something is or isn’t taxable and the method by which it is reported.

April 2011 all hail the massacre that is increased NIC but there is light at the end of the tunnel – salary sacrifice schemes and employee car ownership schemes to name but a few.

The PBR as to be expected was an election based exercise – do they think we are all stupid, put off the nasties until we are back in power!?! and bring forward  “for one year only” increases in some benefits. This was certainly getting back to the old battle lines between the parties – labour: earn under 20k and we are the party for you, conservatives, earn over 20k and we’re the party for you – well actually no because there is a whole band of people caught in the middle who technically speaking “get screwed” every time.

So we have action against avoidance schemes – now remember avoidance schemes are legal, it’s evasion that’s not. This employment tax expert hopes that as much effort is put into getting people to pay tax who should rather than hammering those that are genuinely trying to get the excessive demands of our tax system correct. Offshore accounts – it’s your final warning, it really, really is this time and so it goes on the number that have come forward is minute compared with the problem – so let’s be a bit more creative to get these people back into the tax system

and don’t get me started on garlic peelers and painting summer houses – yes the MPs expenses debacle carries on  – but that’s for another day …

It’s good to see that we have a focused government, sure of what they are doing – are you kidding, in an effort to enter Strictly Come Dancing himself  Gordy looks like he is heading for yet another U turn and this can’t be blamed on poor handwriting!

By all accounts it looks like the well publicised removal of tax relief on childcare voucher schemes may not be culled quite as spectacularly as first announced. Instead it looks like only higher rate tax payers will lose out, leaving two thirds of people still eligible.

With something as important as this you would have thought some very clear thinking would have been done to avoid such a monumental cock up in the first place but now that they have “rethought” you would expect them to come clean on the subject but with yet another patronising finger to the tax paying public we are being told to see what santa Darling brings in his pre budget report in December – so watch this space as Santa Darling and his little nodding elves hold court on 9 December – bet there won’t be any extra duty on whisky!