Regulation date nearing

Each year, the government introduces regulatory changes affecting businesses on two common commencement dates. These dates are 6 April and 1 October.

There are a number of changes due to come into force in April 2011. What follows is a summary, but not an exhaustive list, of the more important new rules with which businesses will need to comply.

Some changes have a bearing on the financial year and, as a consequence, may be effective from 1 April.

Corporation Tax

The main rate of corporation tax drops from 28 per cent to 26 per cent, while the small profits rate drops from 21 per cent to 20 per cent, both for the financial year that begins on 1 April.

Electronic filing for corporation tax

As from 1 April 2011, all companies and organisations must file their company tax returns online in the iXBRL format. This covers any accounting period ending after 31 March 2010. What’s more, they must make their payments electronically too.

The rules on how to calculate corporation tax have not altered, nor has the return itself.

Any company or group that is required to put together accounts under the terms of the 2006 Companies Act must now do so using the Inline eXtensible Business Reporting Language or iXBRL. The format is designed specially for business reporting. Information that relates to the period of the company tax return must be tagged accordingly. Unincorporated organisations such as charities, clubs or societies, or a charity that is incorporated under the Charities Act, must file their computations using iXBRL.

In the case of groups of companies, the individual companies must submit their returns in the iXBRL format. Should a parent company be required to put together group accounts in addition to separate accounts, these must also be filed in iXBRL. However, the consolidated accounts need to include the same details about the parent company as the individual accounts would have done.

The new rules apply to the filing of year-end P35 and P14 forms and in-year P45 and P46 forms.

All corporation tax payments, and related payments such as the interest charged on overdue payments and late filing penalties, must be made electronically. Online that means direct debit, using debit or credit cards on the BillPay service, or using a bank’s or building society’s internet service. Offline electronic methods include BACS, CHAPS or a telephone banking service.

There are only two exemptions from the new rules. These are companies whose directors and company secretary are members of a religious faith whose beliefs run contrary to using electronic communications, and companies that are subject to a winding up order or is in administrative receivership.

Industry taxes

As from 1 April, the rates that apply to Landfill Tax, the Aggregate Levy and the Climate Change Levy increase as appropriate.

Stamp Duty Land Tax

A new rate of SDLT of 5 per cent applies to the sale of residential properties of a value of £1 million or higher. However, this does not cover non-residential or mixed-use properties. Where contracts were embarked upon before 25 March 2010 but were not completed by 6 April 2011, it is likely that the new charge will not apply.

Employment regulations

Extra paternity leave

As from 3 April, there are important changes to paternity leave and pay.

New fathers gain the right to additional paternity leave and pay (APL&P) if their partner gives birth on or after 3 April 2011.

Additional paternity leave (APL) means a father can take up to 26 weeks’ leave to care for the child.

Under the new regulations, parents have the option of dividing maternity leave between them. Fathers have the legal right to take up the final three months of paid maternity leave due the mother provided she returns to work. They will be paid the statutory maternity pay per week for the three-month period.

They will also have the chance to take a further three months of unpaid leave, bringing the total amount of parental time-off for couples of newborn children to 12 months.

Fathers can only start their APL 20 or more weeks after the child’s birth, and once their partner has returned to work from statutory maternity leave or ended their entitlement to statutory maternity pay, or maternity allowance.

The employee’s APL will have to have ended by the end of the 52nd week after the child’s birth. The father only receives additional statutory paternity pay (ASPP) during the time their partner would have been receiving statutory maternity or maternity allowance.

Flexible working requests

As from 6 April, the rules allowing working parents to request flexible working arrangements were to have been extended to those with a child aged 17. The current rules limit the right to make a request to those with a child aged 16 and those with a disabled child aged below the age of 18.

However, the Government has recently announced that it will be postponing the extension of the entitlement.

The Government said it is committed to extending the right to request flexible working to all employees in due course, as set out in the Coalition Agreement. But the purpose for delaying the extension of flexible working is to allow businesses breathing space in the current economic climate.

Right to request time off for training

The Government has also reversed moves to extend to workers in firms with fewer than 250 employees rules entitling staff to the right to request time off for training.

Positive action on recruitment and promotion

As from 6 April, employers can recruit or promote employees with a protected characteristic if they are of equal merit to another candidate and if the employer believes that employees with that characteristic are underrepresented in the workforce or are disadvantaged by it.

But employees will only be able to conduct positive action in those cases it is a balanced way of tackling under-representation or disadvantage.

They cannot choose a candidate who is less well qualified or suited simply on the grounds of that characteristic.

Those characteristics include, among others, race, age, disability, religious belief, sexuality and pregnancy.

Scrapping of default retirement age

The default retirement age of 65 is dropped as from April 2011.

Under the new rules, employers will no longer be able to terminate the employment of staff members simply because they have reached 65.

The default retirement age of 65 is to be phased out between 6 April and 1 October 2011.

The change means that, from 6 April 2011, employers cannot issue any notifications for compulsory retirement using the DRA procedure.

Between 6 April and 1 October, only people who were notified before 6 April, and whose retirement date is before 1 October, can be compulsorily retired using the DRA.

While after 1 October, employers will not be able to use the DRA to compulsorily retire employees.

The decision to scrap the default retirement age was made in response to a combination of a shortfall in pension savings and the increasing longevity of the UK population.

Employers will continue to be allowed to run with a compulsory retirement age for employees provided there is an objective business justification for doing so.