Goldman Sachs attempt to defer bonus payments

It first emerged on January 13 2013 that the banking giant Goldman Sachs would defer the payment of  Goldman’s UK bonuses from the last three years (2009-2011) from February until early April for their top rate tax staff. Income tax on people earning an annual salary of more than £150,000, like these bankers, is set to drop from 50p to 45p on April 6 2013, allowing banks the opportunity to pay less tax by delaying payments. In such a calculated tax plan a banker who earned £1million in deferred bonuses would save £50,000 in tax.

Goldman’s bonuses are typically paid 40% in cash during the year they are earned and 60% in shares which are deferred over the next three years. At the end of December last year, the bank paid out around $40 million (£24.8 million) of such deferred share awards to US employees just ahead of the “fiscal cliff” vote in the United States to help them benefit from lower income taxes.

However, Goldman later did a ‘U’ turn and abandoned the plan for deferral payments of UK bonuses under the huge pressure from the public backlash. The Goldman’s tax plan was perfectly legal although the news triggered a mountain of ctitisism from the media and even from within the banking industry.

In the meantime, London-based insurance broker Aon is going ahead and helping 250 of its highly paid staff save 50% income tax by deferring bonus payments until the new tax year. The Aon bonuses relate to the 2012 financial year and were due to be paid in March. They will now be paid in April after the beginning of the new tax year.

If you are a contractor or run a small business, Belsize Accountancy will advise you on your tax planning using UK approved methods. Please contact us on 0207 043 0052 or at info@belsizeaccountancy.co.uk.

Are you ready to report PAYE in Real Time from 6 April 2013?

We would like to remind the employers of small businesses that they need to be ready for reporting PAYE details online to HMRC as a routine payroll process from 6 April 2013.

From this date, employers must start sending PAYE information electronically to the HMRC in real time by using payroll software, referred to as Real Time Information (RTI). This means that you the employer must send details online to HMRC every time you pay an employee, at the time you pay them. Via this method, HMRC will be able to tell you how much you should pay each month, and ensure that you pay the right amount each time and so help you to avoid late payment penalties.

If you run your own payroll but don't currently use payroll software, you will need to purchase the software or use a payroll service provider such as an accountant, bookkeeper or payroll bureau. If you already use payroll software or a service provider, you should have checked with them by now and confirmed that the product or service you use has been updated so you can send your PAYE in real time. lf you employ nine or fewer people, you can use one of the free payroll software packages or HMRC's free Basic PAYE Tool. However these free packages have limitations and are more cumbersome to use than recommended payroll software.

Reporting PAYE in real time is mandatory, so you must send PAYE in real time from your employee’s first payday on or after 6 April 2013. Failing to comply with the regulations could lead to penalties.

You still need to submit your end of year returns (P14s and P35) for the year 2012-13 by 19 May 2013. But you should report your PAYE details as required even if you haven’t completed the end of year return.

You need to make sure you have accurate and up-to-date information about all your employees (name, date of birth, gender, address and valid National Insurance number) when you make the submission.

You will also need to do the following things after 6 April 2013:

1.  Change some of the ways you report PAYE, including:

     • providing new information in your payroll records, such as hours the employee worked

     • completing employee information for temporary or casual workers and employees paid below

        the National Insurance Lower Earnings Limit

     • letting HMRC know whenever you change a payroll ID - otherwise HMRC will treat it as a new

        employment, which will result in a duplicate employment or incorrect tax code

     • how you inform HMRC about starters and leavers.

2. Make sure you or your payroll services providers use the up to date RTI compliant software and send the PAYE details in real time.

Most businesses will be affected by the new RTI requirements from April 2013. This includes UK Limited Company contractors. Our research has found that there are a large number of UK contractors who have yet to prepare for the new RTI reporting required for their payroll. If you are one of these contractors, and haven’t heard of RTI until now, you will need to act soon.

Belsize Accountancy provide payroll services to our clients and help them to send the PAYE details online to the HMRC as a routine process every month. We will make sure the payroll software is suitable for online submission and save you time on adjusting to the new system. Please feel free to contact us for further information on 0207 043 0052 or info@belsizeaccountancy.co.uk.

London To Become Centre For Renminbi Business

Last year, the UK government launched an initiative to make London a centre for offshore renminbi business, following an influx of Chinese entrepreneurs and businesses to the UK. The Bank of England has agreed to discuss setting up a reciprocal three year sterling renminbi swap line with the People’s Bank of China (PBoC), in an effort to boost offshore renminbi business in London. It is expected that London will become the hub for Chinese overseas investment as few countries support payments in renminbi.

Belsize Accountancy offer support to Chinese speaking contractors and businessmen looking to relocate to the UK. We can assist with new business set ups and currency conversion. For further enquiries, please contact us on 0207 043 0052.