News from Cryer Sandham Limited
Business and financial news

March 2009 Newsletter

 

 

 

1.     2009-2010 Tax Rates

 

For 2009-2010 the annual basic tax free allowances for each individual are as follows:-

 

National Insurance £5,720

Income Tax £6,475

Capital Gains Tax £not yet advised (likely to be £10,000)

Inheritance Tax £325,000

 

The basic rate of income tax remains at 20% and the higher rate of tax remains at 40%. The earnings threshold for the change from basic to higher rate tax has been increased from £34,800 to £37,400.

 

National Insurance rates remain at 8% for the self employed (dropping to 1% on profits over £43,875), 11% for employees (dropping to 1% for earnings over £43,875) and 12.8% for employers.

 

In response to the current economic climate the planned increase in the corporation tax rate for small companies from 21% to 22% has been postponed for 12 months.

 

2.     Directors’ Duties

 

As there has been recent changes to the Companies Acts we thought it would be useful to remind directors of some of their duties under the Acts.

 

General fiduciary duty

A director has a statutory duty to act in the way he or she considers in good faith to be the most likely to promote the success of the company for the benefit of members as a whole. In fulfilling this duty, the director must, as far as is reasonably practicable, have regard to:


• the likely consequences of any decision in the long-term
• the interests of the company’s employees
• the need to foster business relationships with suppliers, customers and others
• the impact of the company’s operations on the community and the environment
• the desirability of maintaining a reputation for high standards of business conduct; and
• the need to act fairly as between members of the company

The duty of care and skill
The duty must be exercised by a reasonably diligent person with both;
• the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company
• the general knowledge skill and experience that particular director has.
.
The duty to exercise independent judgement

• The duty to be independent of others not involved in the decision making within the company.

• To avoid situations where s/he has or could have a direct or indirect interest that conflicts with the interest of the company.

 

3.     Employment Law update

 

When using the services of others a number of important factors depend on employment status of that individual. The most important of these are:-

• What minimum statutory rights they have
• What implied obligations apply to the contract
• How their taxes are paid
• The liability of the employer to pay for wrongs committed in the course of employment

Get these wrong and you are likely to end up with costly action being brought against you by the individual themselves or possibly HMRC

 

For all employers it is now universally recognised that there are 3 categories of employment:-

 

a) The employee

  • does the work personally, has mutuality of obligation, and is ‘at employer’s disposal’
  • often enjoys significant ‘perks’ over and above minimum rights
  • enjoys all available statutory rights subject to length of service
  • tax is paid at source by the employer
  • the employer is liable for all wrongs

 

b) The worker

  • does the work personally but has no job security and there is no obligation to accept the work offered (typically agency workers and direct casuals)
  • enjoys some statutory rights, in particular
    • health and safety protection
    • protection from unlawful discrimination
    • working time regulation
    • minimum wage
  • tax is paid at source by the employer
  • the employer is liable for all wrongs

 

c) Self employed

  • they are ‘in business on their own account’
  • they provide services to clients (preferably more than one) rather than employers
  • they exhibit levels of control over when, where and how projects are conducted
  • there is no obligation to accept work or to be provided with work.
  • they provide their own tools and equipment
  • there exists the possibility of substitution
  • fees are paid gross of tax (unless under the Construction Industry Scheme)
  • they should insure themselves for any wrongs committed