Tax your government needs you!
You will have no doubt seen in the news that over 400 bosses of small and medium enterprises (SMEs) have signed a letter to stop next year’s planned National Insurance rise. The general feeling is that the proposal to increase the tax "threatens to derail the economic recovery".
The letter points out: "Between us we run hundreds of SMEs across the country. Our businesses are at the heart of the economy and the centre of our local communities. For the past two years we have worked hard to protect our staff and businesses through the recession.
"We believe that the government’s proposal to increase National Insurance, placing an additional tax on jobs, comes at exactly the wrong time in the economic cycle."
Well, your businesses are at the heart of the economy and the centre of our local communities and the proposal will cost you.
Do you ever feel the government doesn’t listen to you as proprietors of the aforementioned SMEs? Well, contrary to the handling of the National Insurance issue, it seems it does want to adopt a consultative approach which is surely great news for us all. It appears the government wants to understand and respond to the views of business on the tax system. It says: "A stable, sustainable and competitive business tax system is critical to ensure businesses can start up, grow and invest. The government recognises the importance of the views of business when reviewing, revising and developing business tax policy."
As a result of this (did they seek your opinion I wonder?), the Treasury has published a paper entitled ’Tax Framework for Business’.
In a seven-page thrilling read, it outlines the policy principles, and states: "The UK needs a sustainable tax base from which to raise sufficient revenue to support the public finances and to provide investment for public services." The paper adds that in its approach to making tax policy for business both domestically and internationally the government will consider any changes against the following principles:
Competitiveness the tax system plays an important role in assessments of the UK’s overall competitiveness. The government is committed to ensuring that the UK remains an attractive location in which, and from which, to do business.
Fairness the government will seek to ensure fairness across the tax system, and that businesses pay their fair share of tax.
Minimising distortions the government will seek to maintain a tax system that minimises distortions to commercial decisions, while recognising that the tax system can have a role in supporting the UK’s competitive strengths and addressing market failures.
Simplicity when developing and reviewing business tax policy, the government will consider simplicity alongside other policy objectives, and will seek to avoid unnecessary complexity when developing new business tax legislation.
Stability and certainty the government recognises the value of stability and certainty to business. It seeks to avoid unnecessary changes to tax legislation.
Check your payslips!
To help ensure employees pay the right amount of tax and National Insurance, at the right time, HMRC has introduced the biggest change to PAYE processing in 25 years.
The National Insurance and PAYE Service (NPS) has one single record for each individual customer containing all their PAYE details. This means that employees should only have to make a single phone call for any queries they may have.
HMRC has issued advice on various problems in tax code migrations, but has now warned that some employees might be on the wrong tax code.
Employees are advised to check their April payslips because it’s possible that they may have been advised of a different tax code to the (supposedly duplicate) one sent to their employer for the ’correct’ deduction of tax at source!
Employees are warned to look out for any unexpected changes to the amount they are paid and to phone HMRC if they believe there is a problem.
A real sickener!
New sick leave rules affect you. The European Court of Justice has decided that statutory entitlement to paid annual leave will continue during long-term sick leave.
A Federation of Small Businesses (FSM) poll indicated that only 19% of businesses say this will make no difference to the way they employ staff. Thirty eight per cent 38% of businesses like yours will be more cautious about taking on new staff with health problems; 21% will be less likely to take on new staff; 19% will consider removing their company sick pay policy and just pay the statutory minimum; and 17% will be more likely to dismiss staff on long-term sick leave. But even then, the ruling provides that payments in lieu of leave upon termination of employment must include any untaken statutory annual leave even if the employee has been on sick leave for the whole of the leave year.
The same ruling states that workers can now choose to take any missed annual leave at a later date if they were sick during a period of annual leave. That will clearly have a negative effect on your business.
"Small firms have done all they can to retain their employees and take on new staff throughout the recession," said John Walker, the Federation of Small Businesses’ national chairman.
"However, measures put in place by the European Court of Justice on sick leave are hampering small businesses’ ability to help tackle unemployment which is at its highest for 17 years.
"These FSB-ICM figures show that the changes in the law on sick leave are hampering employment opportunities to get long-term unemployed back into work."