Paying the pension penalty

A healthcare company and its managing director were ordered to pay more than £20,000 after they admitted misleading The Pensions Regulator (TPR) about providing their staff with a workplace pension.

They each pleaded guilty to one charge of knowingly or recklessly providing false or misleading information to TPR and two counts of wilfully failing to comply with their automatic enrolment duties when they appeared before magistrates earlier this year.

The case once again highlights the importance of compliance when it comes to the regulations – and the fact the TPR continues to take a tough approach to those who don’t.

Darren Ryder, TPR’s Director of Automatic Enrolment, summed it up after the case when he said: “We will not tolerate non-compliance and, as this case shows, neither will the courts.”
The TPR’s latest report also highlights its work to ensure employers meet their automatic enrolment pension duties.

A total of 35,862 enforcement powers were used between January and March 2018 compared to 28,446 the previous quarter.
On top of that 3,721 more fixed penalty notices were issued this quarter compared to last quarter and 2,037 more compliance notices were issued.

Darren Ryder, said: “Huge numbers of employers are starting their workplace pensions duties every month and the vast majority are successfully meeting their duties.
“However, where an employer fails to do the right thing for their staff, we will take action using the wide range of powers available to us.”

Nicola Parish, TPR’s Executive Director of Frontline Regulation, also fired a warning, adding: “We are working to be a clearer, quicker and tougher regulator.”
Employers that refuse to pay workplace pension fines could have their assets seized to pay their debts.

TPR issues fines to employers that fail to meet their automatic enrolment duties and can secure court orders if the debts are not paid.
It is to now appoint High Court Enforcement Officers (HCEOs) to enforce court orders in England and Wales and the equivalent in Scotland and Northern Ireland on those employers that have refused or failed to comply.

If an employer does not pay its debt, HCEOs could visit the business premises to remove items to sell, to the value of the amount owed. This could include the employer’s vehicles.
And unlike bailiffs, HCEOs have the power to force entry to locked commercial premises to seize assets.
Separately, TPR will consider whether it should prosecute employers that remain non-compliant with their automatic enrolment duties despite being given a court order demanding they pay the fines they have incurred.

At WNJ we continue to provide the help and advice that businesses need to meet their responsibilities as a result of the scheme and to ensure they do not fall foul of the regulations.

Make sure rule changes aren’t taxing

The new tax year is upon us and that means a host of previously-announced rule changes have now come into force.
Many will have an impact on small business owners and the self-employed, so it is important to be aware of them and to take advice to ensure that they don’t have an adverse effect on your or your business.
Here is our simple guide to the tax-rule changes for 2018-19 and their possible impact. If you would like to discuss any of the issues raised or to talk about any tax issues please contact me on 01772 430000.

Tax-free dividend allowance
From April 6 the amount of money you are allowed to earn from dividends before paying tax has fallen. The previous dividend allowance of £5,000 a year has now dropped to £2,000.

National Insurance contributions
This threshold for Class 2 and Class 4 NI contributions is now £6,205 a year – up from £6,025 in 2017-2018.
If you earn less than this, you won’t need to pay NI at all, though you can opt to make voluntary Class 2 contributions. The threshold for Class 4 has also gone up, from £8,164 to £8,424 in 2018-2019.
The rate for Class 2 contributions is also going up. In 2017-2018, you had to pay £2.85 per week– in this financial year it is £2.95 per week.
Class 2 NIC gives entitlement to contributions based benefits and, therefore, making a voluntary payment could be worthwhile.

Capital gains tax allowance
The capital gains tax allowance as to £11,700 in the 2018-19 tax year. This is up from £11,300 in the tax year prior. This means if you’re planning to sell an asset that qualifies for capital gains tax, you will get a smaller tax bill.

Personal allowance increases
For 2018/2019, the personal allowance is £11,850, up from £11,500 in the previous tax year.

Business rates
The way business rates are increased has also changed. They will now be tied to the Consumer Prices Index (CPI). That could be good news for some businesses as CPI tends to be lower than the Retail Prices Index (RPI) that was used previously.

VAT threshold
The government has announced that the threshold will remain at £85,000 for two years from 1 April 2018.

Pension contributions
From this month, employers need to make a two per cent mandatory contribution into their employee’s pension fund – up from one per cent in the previous tax year. And it will rise to three per cent next April.

National Living Wage
Also from this month the National Living Wage has gone up to £7.83 from £7.50 –a 4.4 per cent increase. This means employers have to raise the wages for workers over 25 who are paid at the minimum wage.

Spring statement – nothing to see here

It was previewed as being a low key affair and Chancellor Philip Hammond’s Spring Statement certainly lived up to that billing.
Those who weren’t expecting much were not disappointed and for many businesses already battling with a raft of legislation and used to the double-whammy of two Budgets a year in the past, that will have come as a welcome relief.

As widely anticipated there were no announcements of any tax changes – we will all have to wait until his Autumn Budget for any indication of those.
However, there were announcements from Mr Hammond of more “consultations” which could impact on small businesses further down the line.

The subjects under the microscope range from finding ways of getting more tax from international digital businesses to a proposal for extending entrepreneurs’ relief to some shareholders whose holdings drop below the qualifying five per cent level.
The Chancellor has also been mulling the possibility of lowering the VAT threshold – so again watch this space.
Some commentators have interpreted the statement as indicating that an end to austerity is now in sight – they believe the government is now looking at increasing spending. Again, watch this space.

Meanwhile, the key changes to for the fast approaching new tax year have already been announced and passed into law.
So April will see the usual changes to the income tax rates and allowances as well as National Insurance contributions.

This year there will also be a cut in the dividend allowance from £5,000 to £2,000.
The tax increases on company cars may look relatively modest, but their cumulative impact could be significant for some people.

Many employees will also see the extra net income from the tax changes eaten up by their higher minimum auto-enrolment pension contributions.
The lifetime allowance for pensions has been raised and there will be changes to employee termination payments and the new rules for enterprise investment schemes.

To discuss any of the issues that have been raised in this article or any aspects of tax please contact either myself or my colleague Kevin Taylor