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SEPTEMBER 2008 – E-NEWS

This month we report on how the government is compensating charities for the impact that recent tax changes will have on their income and the new system of employer licensing being introduced for those wishing to bring migrant workers into the UK.

We also include our usual round-up of news. Please browse through this month’s articles using the links below and contact us if any issues or questions arise.

GIFT AID TRANSITIONAL RELIEF

Charities are entitled to claim a tax repayment in respect of gift aid donations made by individuals. The tax repayment was 22% until April 5, 2008, being the basic rate of tax on payments made through gift aid. As you are no doubt aware the basic rate of tax was reduced to 20% from the beginning of this tax year. In order to compensate charities for this drop in income the government has introduced Gift Aid Transitional Relief which tops up the tax repayment due to the charity until April 5, 2011.

Charities who have already submitted repayment claims for 2008/09 should now receive their transitional relief entitlement as the Finance Act 2008 has recently received Royal Assent. There is no requirement for charities to make a separate claim for the payment.

HMRC has confirmed that from now on Gift Aid Transitional Relief will be paid automatically in addition to the tax repayment claimed.

Internet Link: HMRC guidance

NMW CHANGES

HMRC has announced that some changes to penalties and calculation of arrears of National Minimum Wage (NMW) payments have been delayed to April 2009. The delay is apparently due to the slower than expected passage through parliament of the Employment Bill.

The changes deal with HMRC powers, in particular giving powers to remove records from business premises and more significantly a change to the way in which underpayments or arrears of NMW payments to employees are calculated.

From April 2009 NMW arrears will need to be calculated by reference to the current rate of NMW rather than the rate of NMW in force at the time of the underpayment.

Internet Link: Employers Bulletin

SALARY SACRIFICE ARRANGEMENTS

Salary sacrifice is a complex area which should not be overlooked. HMRC has added some questions and answers on this difficult subject to their website.

If you are planning any salary sacrifice arrangements please do get in touch.

Internet Link: HMRC Q and A

PENALTIES

HMRC has published a leaflet on the new HMRC penalties warning tax payers to make sure that their records are sufficient to comply with the new penalty regime. The new legislation covers returns and other documents issued for periods commencing from April 1, 2008, which are due for submission from April 1, 2009.

If you have any concerns about the penalties or the records you should be maintaining please do get in touch.

Internet Link: Penalties leaflet

LICENCE TO BRING IN MIGRANT WORKERS

The UK Border Agency has started a television campaign aimed at employers to help prepare them for the introduction of the government's new rules for skilled migrant workers which become effective from November 2008.

The government is introducing a ‘points-based’ system. Businesses wanting to employ skilled foreign workers from outside Europe and sponsor their entry to the UK must apply for a licence.

The TV advert, which shows a man jumping over hurdles before being considered for entry to the UK, is apparently designed to send a message that those who do not comply with the rules will be refused entry.

UK Border Agency Chief Executive Lin Homer said: "The Points-Based System is one of the biggest shake-ups to the immigration system in a generation ensuring only those with the skills we need will be able to work or study here and no more.

“Our message to businesses is loud and clear - if you want to employ foreign workers from outside the EEA, you need to apply now for a sponsor licence. Business benefits from migrant labour but must join us in helping crack down on illegal working and ensure a system which is both firm and fair."

More information about the criteria and how to register as a sponsor can be found on the UKBA website.

Internet Links: News article and UKBA website

VAT TREATMENT OF CHARITY CHALLENGE EVENTS

HMRC has issued revised guidance on Charity Challenge Events, including those that qualify for the VAT Charity Fundraising Exemption.

Many charities use Charity Challenge Events, for example running, walking and cycling events, to raise funds through sponsorship of the individuals who take part.

Following representations from the charity sector HMRC has been working with them to produce revised guidance to assist charities to determine the correct VAT liability of such events.

Internet Link: VAT Business Brief 36/08

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