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Veterinary roundup - November 2015

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16 November 2015

Many practices will hold CPD events and no doubt refreshments will be provided.  We have recently seen HMRC conclude on a number of occasions that VAT on such refreshments is not reclaimable unless the events are solely for staff.  Whilst this certainly seems somewhat unfair, HMRC take the view that this is non-staff entertaining and therefore follows the usual block on the ability to reclaim VAT on non-staff entertaining costs.  Firm but fair?!  Not in this case we would argue, firm yes, but sadly not very fair!

New National Minimum Wages rates came into force from 1 October 2015.  HMRC should have sent to you details, however, to recap they are: 

 CategoryNew National Minimum Wage Previous National Minimum Wage 
Main rate (workers ages 21 and over) £6.70 

£6.50

Aged 18-20 £5.30 £5.13 
Aged 16-17 £3.87 £3.79 
Apprentice £3.30 £2.73 
 

One to watch out for on the horizon is that from 1 April 2016, the National Living Wage (NLW) will be £7.20 an hour for employees aged 25 and over. The National Minimum Wage will still apply for workers aged 24 and under.

Advisory fuel rates

If you reimburse staff business mileage for use of company/practice provided cars (as opposed to where they use their own cars), you should continue to ensure that you consider the latest advisory fuel rates:

Please click here for the Government link.

The rates can change quarterly and therefore watch out for a potential change on 1 December 2015.

Where staff use their own car for business mileage, the advisory rates remain unchanged, being 45p per mile for the first 10,000 miles and 25p thereafter, per tax year per employee.  Reimbursement above these rates would result in taxable benefits in kind arising.

emailed practices in June earlier this year about fraud and things to consider to help protect you and your practice.

On this note, we have recently heard of cases where criminals send an email to staff within a business which appear to be from a senior colleague (i.e. a spoof email) requesting payments for bogus items or changes to payment details for legitimate business purchases with the end result that the money ends up in the hands of the criminal.

Since then we have become aware of a non-client veterinary practice that has had thousands of pounds removed from their practice bank account because someone had got hold of their login details.  Their bank have been able to recover but unfortunately not all of the funds.

It is certainly worthwhile reviewing online security, consider changing passwords frequently and reviewing the security of passwords more generally.

The Autumn Statement is slightly earlier this year than last and the Chancellor is due to make his announcements on Wednesday 25 November.  

After a few bombshells in the post Election July 2015 Budget, which we covered at the time

...it remains to be seen whether this Autumn Statement will be a damp squib or something a little spicier.

Pensions - rumours of limiting tax relief to basic rate tax 

The past few years have seen a myriad of pension changes.  We touched upon the most recent key announcements back in August this year. 

There are rumours that the government may make a further move in the Autumn Statement to limit pensions tax relief to basic rate tax for both higher rate and additional rate tax payers.  Whether this will be borne out remains to be seen.  Some of those who believe this will happen are advocating making pension contributions before the Autumn Statement. That said, historic pension changes have tended to be effective from the following 6 April, although clearly this is not guaranteed.  Whilst we are able to advise on the tax implications of making pension contributions, you should speak with your Financial Advisor about financial planning matters and making pension contributions.

Currently the Financial Services Compensation Scheme (FSCS) provides protection for monies held in banks and building societies.  The protection limit is reducing as follows from 1 January 2016:
  • For individuals: reducing from £85,000 to £75,000 per bank or building society.
  • For joint account holders: reducing from £85,000 to £75,000 for each account holder per bank or building society.

A key point remains is that if you have multiple accounts but they fall within the same group of banks /building societies, then the limits above apply on a group basis. 

Do you wish that there was a simpler way of dealing with benefits in kind and that you could do away with P11Ds?  Well in some instances this is going to be possible by processing certain benefits provided from 6 April 2016 onwards through the payroll, i.e. from the start of the 16/17 tax year.

The government have provided a summary on their website.

Click on the links on the left hand side of the web page to go to different sections, which will talk you through the changes.

Whilst it does not necessarily spell the end to the admin of P11Ds, at least for some it provides a potential opportunity to ease the admin burden.

Since the Summer 2015 Budget, the government have been readying themselves to help us by doing away with some admin with effect from 6 April 2016.  That’s right, less admin!  Well, in some cases, please read on.

Currently for those instances where the practice pays for business expenses on behalf of employees, there are one of two ways this can be dealt with:

      1. If the practice has a HMRC dispensation in place for the particular expenses in question, no further action is required, or

      2. The business expenses have needed to have been included on P11D forms as a benefit in kind and then an associated Relief For Expenses (S336 form) form completed.

The end result of both 1 and 2 above is that the business expenses are not taxable.

From 6 April 2016, for business expenses incurred after that date by an employee and reimbursed by the practice, neither 1 nor 2 will be required.  All current business expense dispensations will no longer apply from 6 April 2016.

HMRC have what are known as benchmark scale rates that are approved rates that can be provided to employees for a particular expense (without there being any tax or NI charges), instead of reimbursing the employee’s actual costs.  Details of these can be found here.

Please note that the working rule agreements referred to in the link attached do not apply to veterinary practices.

An alternative to applying benchmark scale rates is to agree bespoke rates directly with HMRC, which can be used for five years, although there needs to be a particular business case for these. 

In order to apply for a bespoke rate, you would need to provide HMRC with evidence, on a sample basis, that your practice’s employees would generally incur such expenses which are higher than the benchmark rates.

If you have already agreed bespoke rates with HMRC since 6 April 2011, then you will be allowed to retain these, without needing to re-agree bespoke rates with HMRC, until the fifth anniversary of that agreement.  That said, in order to retain any current bespoke rates that you may have agreed, you would need to submit an application to HMRC to continue to use these.  

Inflation update

I thought it would be helpful to summarise the latest inflation rates as published:

RPI:  0.8%, September 2015

CPI: (0.1)%, September 2015

Wage inflation: 3.0%, 3 months to 30 September 2015