April Q&A

15 April 2019

This month we look at changes to payslips concerning temporary employees, backdating VAT claims and paying inheritance tax on the proceeds of a sale.

Q. I have several permanent employees and I also pay temporary workers when I need additional help. I understand that changes have recently been made to the rules concerning payslips. Could you provide clarification on this?

A. Before April 2019, employers were only obliged to give payslips to employees. From April 2019, all workers are entitled to receive an itemised payslip.

If the worker is not always paid the same amount, the hours they have worked needs to be included. This will enable the worker to check they have been paid the right amount and that they have been paid at least the new National Minimum Wage (NMW) rates, effective from 1 April 2019.

If you do not currently record the number of hours your staff work, you need to start doing so with immediate effect.

These changes are designed to help gig economy workers and staff who regularly work overtime.

Q. I have been running my own business for a number of years and my turnover has recently exceeded the VAT registration threshold. I have registered with HMRC and am waiting for my VAT number and certificate. Can I claim back VAT on purchases made by the business before the registration date?

A. There is a time limit for backdating claims for VAT incurred before the effective date of registration. From the date of registration, the time limit is:

  • 4 years for goods you still have, or that were used to make other goods you still have;
  • 6 months for services.

You can only reclaim VAT on purchases for the business now registered for VAT and they must relate to your ‘business purpose’. This means they must relate to VAT taxable goods or services that you supply.

You should reclaim them on your first VAT return and keep records including:

  • invoices and receipts;
  • a description and purchase dates;
  • information about how they relate to your business now.

Q. I inherited my late mother’s house in February 2018, which I sold in November the same year. I have never lived in the house. The total value of my mother’s estate is less than £175,000. Will I have to pay tax on the proceeds of the sale?

A. For tax purposes you will inherit the house at the market value at the date your mother died – the probate value. If there has been no increase in value between the date of death and the date of sale, there will be no capital gains tax to pay on the disposal of the house.

Since the total value of your mother’s estate is less than £175,000, then assuming she did not make any gifts in the seven years before her death, there will be no inheritance tax payable on the estate.

For further information about this topic, please call Paul Newbold on 0191 567 8611 or e-mail p.newbold@uhy-torgersens.com.

As one of the leading firms of accountants in the North East, with offices in Newcastle, Sunderland and Jarrow, we have the expertise to advise you on a wide range of tax-related issues.  If you would like to speak to one of our local experts, please call 0191 567 8611 or e-mail info@uhy-torgersens.com.