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HM Revenue & Customs drops insistence that all company directors must submit tax returns

HM Revenue & Customs (HMRC) has dropped its insistence that all company directors must submit tax returns following a series of tribunal rulings.

For several years, HMRC has advised in its guidance on the gov.uk website that company directors should register for Self-Assessment and this has also been part of online tools designed to help individuals determine whether they need to submit a tax return.

However, the requirement is not enshrined in law and has been repeatedly contradicted by tribunal rulings.

HMRC now says directors are not required to file Self-Assessment tax returns if they have been taxed under PAYE and do not need to pay tax on other income.

However, if HMRC issues a notice to file a Self-Assessment tax return, a director must do so, unless a request to HMRC to withdraw the notice is accepted. HMRC is not obliged to withdraw the notice, even if there is no tax to pay.

Guidance on the gov.uk website has now been updated to reflect HMRC’s new position.

Link: HMRC changes guidance for directors’ returns

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Payroll sector prepares for key changes in 2019/20

The next 12 months will see a number of new changes to payroll policy that could have an impact on a wide range of businesses.

To give an overview of how businesses could be affected by these changes, below are some of the highlights that employers will need to prepare for.

Private Sector IR35

From April 2020, where an individual is engaged by a medium or large-sized business in the private sector and works through a company, the employer will be responsible for assessing the individual’s employment status under the off-payroll working rules (IR35).

Where the rules apply, the business or agency will be responsible for deducting income tax and National Insurance contributions (NICs) via PAYE and will be required to pay employer NICs.

Businesses will be able to use the Check Employment Status for Tax (CEST) service, which is available to help businesses determine whether the off-payroll working rules apply. These new rules will not affect small businesses.

Postgraduate Loans (PGL)

From April 2019, taxpayers will be required to start repaying PGLs if they meet the threshold of £21,000 (England and Wales only). If they do meet the threshold, a deduction of six per cent will be taken from their wages.

The existing starter checklist provided by the Government will be updated to include a section for PGL. Employees’ P60 forms will also be changed to include a new box for PGL deductions, however, the existing P45 form will remain the same.

Parental Bereavement Leave and Pay

Employers will have to get to grips with a new workplace right to Parental Bereavement Leave and Pay for parents who lose a child under the age of 18.

This new right will include parents who have suffered a stillbirth after 24 weeks of pregnancy.

Those who qualify for the new right, which will commence from 6 April 2020, will be entitled to two weeks of paid Parental Bereavement Leave.

During this period, they will be paid at the statutory flat weekly rate of £145.18 or 90 per cent of average earnings (whichever is lower), if the person has at least 26 weeks continuous service at the date of their child’s death and earnings above the Lower Earnings Limit.

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