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April questions and answers

Newsletter issue - April 2019.

Q. I have some permanent employees and I also pay temporary workers as and when I need extra help. I understand that changes have recently been made to the rules concerning payslips. Could you please provide some clarification?

A. Prior to 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, you need to include the hours they have worked. 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.

In particular, these changes are designed to help gig economy workers and staff who regularly work overtime.

Q. I have been running my own business for several 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 father's house in March 2018, which I subsequently sold in December the same year. I have never lived in the house. The total value of my father'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 father 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 father's estate is less than £175,000, then assuming that he did not make any gifts in the seven years before his death, there will be no inheritance tax payable on the estate.