Accountancy Blog

Outsourcing payroll – is this a good idea?

Does it make sense for your business?

Around 1.4 million businesses in the UK employed members of staff in 2018, and all of them shared one thing in common: the legal requirement to run payroll.

This task consumes a large amount of time each month, with multiple processes to complete in order to comply with legislation and pay workers on time.

Most of the 35,000 medium-sized firms and 7,500 large businesses in the UK have their own in-house teams to handle payroll.

Apart from anything else, failing to pay staff on time can have a catastrophic effect on morale, and have knock-on effects in employees’ lives.

But for almost 97% of the other businesses with employees in the UK, classed as small firms with 49 or fewer workers, the burden of payroll is patently clear – both in terms of time and the resources it takes up. More…

National Insurance – where are we headed?

National insurance contributions (NICs) are set aside to pay the state pension and other benefits, but due to the UK’s ageing population the National Insurance Fund is under increasing strain, with the state pension taking up more than 90% of its annual outlay in 2018.

A review by the Government Actuary’s Department (GAD) predicted the fund would be empty by around 2032.

There is no pot of money set aside to pay future state pensions, which are funded on a pay-as-you-go basis, which means that future pensioners are reliant on the NICs of future workers to pay their pensions.

On its website, the GAD said: “If the system is to continue to cover the current form of state pension and other benefits, then either the fund’s income has to rise or expenditure has to be controlled”. More…

Delay Making Tax Digital says tax bodies and House of Lords

Leading tax bodies have joined the House of Lords in calls to delay the introduction of Making Tax Digital (MTD) for all taxes, less than three months before it’s due to come into force for VAT.

MTD is finally due to commence on 1 April 2019 for VAT-registered businesses with an annual taxable turnover of more than £85,000 in 2019/20.

However, a House of Lords executive committee released a report in November 2018 calling on HMRC to push back the rollout of MTD for VAT by one year – to 1 April 2020.

It also recommended the start date of MTD for other taxes, such as income tax and corporation tax, should be postponed until at least April 2022.

The peers’ report warns that many small businesses in the UK are not ready for the MTD, a view that is shared by the Chartered Institute of Taxation (CIOT) and the Association of Tax Technicians (ATT). More…

Digital system for IHT – good or bad?

The Office for Tax Simplification (OTS) has urged the Government to implement a digital system for inheritance tax, following complaints the current form-filling system is too complex.

On average, there are around 570,000 deaths in the UK every year, although inheritance tax is due on less than 5% of estates.

Although the majority of estates are not liable to pay the tax, executors had to fill out inheritance tax returns for almost half of all deaths in 2015/16.

For more than a third (38%) of those, administering a loved one’s estate took more than 50 hours to complete, with some spending more than 100 hours.

Estate administration is the process of handling a person’s tax and legal affairs after they have died, while tax is deducted on the value of the estate before being distributed to beneficiaries.

Administrator’s duties include obtaining formal documents, calculating the value of their estate, working out and paying taxes, and obtaining a grant of probate. More…

R&D investment grows

Businesses in the UK spent £23.7 billion on research and development (R&D) in 2017, according to the latest data from the Office for National Statistics (ONS).

The ONS found that year-on-year expenditure on R&D increased by £1.1bn – or 4.9% – compared to statistics for 2016.

Firms in the pharmaceutical sector continued to have the highest level of R&D spending of all product groups at £4.3bn.

Software development businesses increased expenditure on R&D by 34.7% – to £1.4bn and a 6% share of all R&D spending by UK businesses in 2017. More…

The apprenticeship levy – your understanding so far

Businesses are finally beginning to understand the apprenticeship levy, after previously voicing serious concerns over its complexity and lack of flexibility.

The apprenticeship levy took effect on 6 April 2017 and means businesses with an annual pay bill of more than £3 million must pay the levy towards apprenticeship funding.

It is charged at 0.5% of an employer’s annual pay bill, and each employer receives an allowance of £15,000 to offset against their levy payment.

Business groups, including the Institute of Directors (IoD), urged the Government to address ongoing problems with the levy – and it attempted to do so by announcing a package of reforms in Budget 2018.

Levy-paying businesses can transfer up to 10% of their training funds to other employers in their supply chain in 2018/19, and this will increase to 25% from April 2019. More…