Business checklist: April 2012 tax and legal changes

Every April sees a raft of tax changes for you, your firm and your staff, while employment law will also dominate the business agenda. We explain what changed in April 2012.

Legal changes from April 2012

New unfair dismissal rules

What changed?

Some employees now need a longer time of service with you before they can claim for unfair dismissal. New employees who start work with you will need to put in two years’ work before they can claim for unfair dismissal. Rules for your existing staff haven't changed — they can still claim after a year.

When did it come in?

6 April 2012

What action should I take?

• Distinguish between those employees the new law applies to, and those to whom it doesn’t apply.
• Bear in mind that while an employee you dismiss may not have worked long enough to bring an unfair dismissal claim, he or she may have the chance to bring a discrimination claim.
• Get legal advice if you are in doubt about where you stand.

Reporting accidents at work

What changed?

New Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) rules have changed the reporting requirement for injuries so that only accidents resulting in incapacitation for more than seven days must be reported. Employers have 15 days to file the report, not including the day of the accident. Firms must still record accidents resulting in incapacitation for more than three days.

When did it come in?

6 April 2012

What action should I take?

• Tell staff responsible for reporting accidents about the new system.
• Update your health & safety policies and procedures.
• Don’t forget that failure to report an accident is a criminal offence.

Website ‘cookie’ laws

Perhaps the most important change was the EU law on website cookies. If you have a website and you did nothing, there is a high chance that you will be breaking the law. Read a summary of the practical steps you can take to comply, here.

Tax changes from April 2012

Personal allowances

Personal allowances for the under-65s rose by £630 to £8,105; the 20% basic tax rate limit decreased by £630 to £34,370 to balance out this increase — higher-rate tax payers now pay 40% at £34,371.

When did it come in?
6 April 2012

What action should I take?

• Make the most of your money by increasing your pension contributions and gift aid donations, as you only pay basic rate tax on both these.

Corporation tax

The small companies rate of corporation tax was held at 20%. However, the main rate of corporation tax was cut by an additional 1% to 24% from April 2112. Further planned cuts will also go ahead and bring the corporation tax rate down to 22% by 2014.

The 100% Annual Investment Allowance (AIA) on expenditure was cut from £100,000 to £25,000. And a capital allowances loophole was closed: the taxman brought forward the closure of a loophole which allowed businesses to accelerate capital allowances claims for plant and machinery and obtain advantageous early tax relief.

When did it come in?

Corporation tax — 6 April 2012

AIA — 1 April 2012 for businesses that pay Corporation tax and 6 April 2012 for businesses that pay income tax.

Note: It was announced in The Chancellor's Autumn statement that the Annual Investement Allowance will be increased (subject to legislation) to  £250,000 per year commencing 1 January 2013.

What action should I take?

• The AIA allowance only affects you if you plan to invest in plant or machinery.
• If you are an unincorporated business such as a sole trader, you may well suffer the effect of reductions to capital allowances without the benefit of the good rate of corporation tax.
• Ask your accountant if a tax-motivated incorporation would benefit you.

Tax breaks to stop on eco-cars: relief ends in March 2013

When does it come in?
1 April 2013

What action should I take?

• Don’t forget you can only take advantage of the 100% first year allowance for very low emission cars (with CO2 emissions of less than 110 g/km) before 1 April 2013.
• If your company is replacing vehicles in its fleet, check out eco-cars. Over 120 eligible cars, from city cars to family estates and MPVs, are now on sale in the UK.
• Consider an electric van — under the Plug-in Grant, buyers of new electric vans can get 20% off the cost price (up to £8,000). The dealer checks you are eligible and gives you the discount when you pay.

 Related articles:

• Dismissals and redundancies
• Health and safety: 27 FAQs
• Tax rates and thresholds