If you don’t notify the Taxman that you owe nil payment for PAYE and NI for any month or Quarter you are at risk of receiving threatening demand letters or even a knock at the door demanding payment. This situation can arise if you take a break from work but don’t actually leave employment. Your PAYE scheme can still exist even though you are not taking any salary payments.

So what do I need to do to keep the Taxman from paying me a visit?

Until recently letting the HMRC know about nil payments was only doable by post, this however can be a bit of a hit or miss affair. Now the HMRC has introduced an Online option, to report a nil PAYE liability go to www.hmrc.gov.uk/payinghmrc/paye-nil.htm, select the month for which no PAYE is due, enter your HMRC accounts office reference and click submit and within 30 seconds you should know the job is done.

If you prefer the old mail option it is still available and there is also the HMRC’S Payment Helpline: 0845 366 7916, but for the most efficient and quick method go for the new recommended Online Option.

Five clients of Carrington Accountancy have just won £100 each after Spain claimed victory against Holland in the World Cup Final on Sunday.

Carrington Accountancy held their annual summer social event at Corney and Barrow on July 25th. Carrington, like everyone else in the country was completely gripped by the World Cup and decided to celebrate holding a Lucky Bet Competition at the event. All clients who attended were entered into a draw to win 1 of 5 betting slips giving odds of 4/1 on a Spanish World Cup Victory. Carrington paid the £20 stake for each ticket. The five lucky winners were selected at random out of a hat on the night and left to wait in anticipation, to see if Spain could win the World Cup, for the very first time. Visit Carrington Accountancy’s Facebook Page to view pictures from the night.

Nicky Owen, Director of the company said “I am delighted that Spain won, everyone at Carrington had their fingers crossed, especial David Brown who had made the crucial decision to back Spain. The event turned out to be a real success and I hope that everyone enjoys their winnings”

David Brown, accountant at Carrington Accountancy came up with the innovative idea for the competition after being given a betting tip from an undisclosed source. The psychic octopus Paul has been speculated! Carrington who were voted the UK’s no. 1 Contractor Accountants for 2009, were delighted that the Lucky Bet Competition resulted in 5 of their clients and associates collecting their £100 from the betting shop on Monday morning, as too were the winners.

“What a result!! Thanks very much – I’ll be remembering this World Cup!” Neil Osmond (Carrington Accountancy Client, Lucky Bet Competition Winner)

Carrington was formed in 1996 and offers specialist accountancy services to contractors and small businesses. Carrington Accountancy offers completely unbiased advice to contractors who may need to set up and run a limited or who may need to work through an Umbrella Company. This year Carrington Umbrella Services are celebrating their 10 year Anniversary and would like to thank all their clients and associates for their continued support and loyalty.

Until Monday morning that is, your alarm goes off and you know you have to face the crowded, over-heated herd of commuters on the underground or sit in traffic baking while bikes just ease by.

Let’s face it, there really hasn’t been a better time to get on your bike and take advantage of some unusual generosity from HM Revenue & Customs, which allows employers to loan cycles and cyclists’ safety equipment to employees as a tax-free benefit.

Employers of all sizes across the public, private and voluntary sectors are eligible to implement a tax exempt loan scheme for their employees. To qualify for the tax exemption, the cycles and cyclists’ safety equipment loaned by the employer under the scheme must be available to all employees.

How the Cycle to Work Scheme Works

Step 1) The employer has to agree to pay for the bike and pay the bike retailer directly. The employee can choose a bike with a value of up to £1,000.

Step 2) The employee needs to confirm purchase with a Cycle to Work Scheme admin company such as Cyclescheme who will then issue a voucher.

Step 3) The employee presents the voucher to the bike retailer in exchange for the bike.

Step 4) The Company agrees with the employee or themselves (if they are the sole employee of the company!) to have a salary sacrifice for 1/12 of the value of the bike deducted per month for a 12 month period.

Step 5) This gives Tax and NI relief for the VAT inclusive cost of the bike.

Step 6) At the end of the year, the employee has to buy the bike from the company, but this is at a massively reduced rate of only 5% of the original cost. After the year has finished the salary sacrifice will stop.

Step 7) The company will benefit too from corporation tax relief on the purchase of the bike, possibly reclaiming VAT on the bike and from reduced Employers NI due to the effect of the reduced salary for the 12 month period.

Rachel Macaulay, Carrington Accountancy Client and Budding Cyclist, Explains how easy it really is to ‘Get on Your Bike’

Q) How easy was it to arrange the scheme with the cycle retailer you selected? Were there any specific requirements from them?

A) Very easy; the most time consuming aspect was getting the voucher from Cycle to Work. This took about two weeks (I was impatient to get my bike). Once I had the voucher, I just phoned my shop of choice (I went to Evans but there are a large number to choose from) and picked out what I wanted. The store then added up the total, I signed a couple of forms and that was it. I picked up my bike a couple of days later.

Q) Did you purchase just the bike through the scheme or did you purchase other items that were included in the scheme?

A) I bought a lot! Bike, locks (get the best ones you can, and more than one to be safe), high-viz clothing, helmet, back rack and panniers, and a basket. Basically, make the most of the opportunity and get everything you think you’ll need.

Q) Have you experienced any problems with your payroll since you started the scheme?

A) No, Carrington took care of everything and I haven’t had any problems. At the end of the year, I was sent an email by Cycle to Work offering me the opportunity to buy the bike (which I did, at a cost of around £45).

Q) What tips / advice would you give to other contractors looking to use the Carrington Cycle to Work Scheme?

A) Have a budget in mind before you go shopping, it’s easy to get carried away. Discuss the scheme with Carrington before you get started and they’ll point you in the right direction, it really is quite straightforward.

For those who are based in London go to http://www.tfl.gov.uk/roadusers/cycling/11598.aspx for advice on routes and safety. They also offer free road lessons.

After much talk of huge deficits to be reduced and collective pain to be suffered, many people are feeling that it was not quite as bad as it could have been and that it possibly did not go far enough in tackling the deficit.

However, it must be remembered that only 20% of the measures are coming through tax cuts with the other 80% from public spending cuts, so a lot of the pain has not been delivered through this Budget.

The main measures announced were:

VAT

The main rate of VAT increases from 17.5% to 20.0% with effect from 4 January 2011. Flat Rate VAT percentages will be increased accordingly.

Corporation Tax

The rate for large companies reduced from 28% down to 24% with the reduction coming in stages over the next 4 years. This measure is to try to stem the flow of businesses away from the UK to lower tax regimes and to encourage foreign businesses to locate and invest here.

The small company rate has been reduced from 21% to 20%, effective from 1 April 2011 (as opposed to the increase to 22% which Labour had tabled).

IR35

IR35 will be reviewed along with small business tax in general over the coming year but for the immediate future, IR35 remains in force.

Capital Gains Tax

The CGT rate for basic rate taxpayers remains at 18% but increases to 28% for higher rate taxpayers from 23 June 2010. It should be noted that the amount of the gain (after all allowable deductions) will be added to income to determine whether higher rate tax applies or not.

The Annual Exempt Allowance of £10,100 remains the same but taxpayers will be able to choose which gains to set it against in order to minimise CGT. For instance, it would be better to set against a gain after 23 June 2010 if you are a higher rate taxpayer in order to save CGT at 28%, rather than against a gain from before 23 June 2010 which would only be taxed at 18%.

Also from 23 June 2010, Entrepreneurs’ Relief (giving an effective tax rate of 10% on qualifying business assets) has been extended from a lifetime gain of £2m to £5m.

Income Tax

Personal allowances will be increased by £1,000 to £7,475 from April 2011. However, the basic rate upper threshold will be reduced from April 2011 to bring more people into higher rate tax. The amount of this reduction is to be announced at a later date.

Capital Allowances

The Annual Investment Allowance giving 100% relief against profits will be reduced from £100k down to £25k with effect from April 2012.

Writing Down Allowances will reduce from 20% to 18% for periods ending after 1 April 2012.

Bank Levy

A new bank levy is to be introduced based on banks balance sheet values and this should raise around £2 billion.

Pensions

The hideously complicated system for relief for pension contributions will be repealed and the government will enter consultation on a simplified system. The initial suggestion is that there may be an annual allowance of between £30k - £45k.

From 2011/12 pension funds will be required to buy annuities when the pensioner reaches 77 rather than the current age of 75.

New Business Encouragement

New businesses setting up (excluding London, the South East and East of England) will be exempt from up to £5,000 of Employers National Insurance for each of up to 10 new staff within the first 12 months of trading. This is likely to be operational from September.

We can now look forward to the Public Spending Review in October when the real cutting will take place. It will be a delicate balancing act to avoid a double dip recession and inflation whilst keeping interest rates low.

John Mumford

David Brown, one of our PCG accredited accountants explains the ins and outs of IR35 legislation, what it means and how to ensure that you avoid any issues with the Inland Revenue.If you would like to know more please contact us on 0207 324 6030 or email David direct on David.Brown@carringtongroup.co.uk

We are pretty sensitive to the fact that nowadays we all get somewhat bombarded with emails containing social media communications so we thought it might be a better idea to send you all a ‘news’ email once a week. This will contain details of everything we have blogged about, tweeted about, plus anything we have loaded to You Tube – you can then take your pick! We would also love you all to take a look at our Facebook page – we are constantly updating this and intend to have some ‘exclusive offers available on it shortly. http://bit.ly/aaER2g

We will still be sending you our usual ‘reminder’ emails and if anything urgent happens that we feel can’t wait we will be in touch.

Carrington Accountancy this week….

• Blogged about John Mumford being interviewed by Umbrella Detective. John talks about the impact of the Working Time Directive, wrong PAYE codes and planned developments here at Carrington. http://bit.ly/bFmQgo
• Blogged about the new PAYE Penalty regime – lean when and how much the new penalties are for late payment of PAYE and what you can do to avoid these. Also watch John and Kyle explain this again on You Tube http://bit.ly/bFmQgo and http://bit.ly/9y8yaZ
• Published their ‘Question of the Month’ for May. Simply put - ‘How is my VAT liability calculated using the Flat Rate VAT scheme’ . We have found this to be a very common question that crops up on a regular basis. http://bit.ly/aaER2g and http://bit.ly/bFmQgo
• You can also find links to everything on our blog via out Twitter page – just search ‘Carrington Accountancy’ and become a follower! twitter.com/CarringtonAcc
• Our fees - we operate a 'clear price for a clear service' policy and always want to be very transparent with what we charge. A full schedule of our fees can be found at http://bit.ly/95S2yg
• Self Assessments for 2009/2010 - REMINDER. If you haven't already submitted your online form to us please do so at http://bit.ly/98jXgD
• Steve Finn - we are delighted to report that Steve has been picked again for the first Test at Lords against Bangladesh http://bit.ly/bFmQgo
• Summer Social - We are hosting a World Cup client get together on Friday 25th June at Corney and Barrow, St Pauls. You will be able to enjoy some drinks and chat with us plus watch what will be a very exciting match between the current favourites Brazil and Argentina. We hope you can make it and would appreciate an RSVP from you to allow for catering.

We hope you all have a lovely long weekend and enjoy the May bank holiday.

We are absolutely delighted that Steve Finn has continued his meteoric rise this season and has been picked to play for England against Bangladesh.

Steve will play in the first Test at Lords, the home of cricket. It is the first big match of the English summer and we know that Steve hopes his performance will result in him booking his place in the Ashes tour party that goes to Australia in November.

We wish Steve all the very best and we will be looking out for the Carrington stickers on his bat! Carrington is proud to sponsor this hardworking sportsman.