Pothole-related breakdowns continue to rise, says RAC

Data shows that 2,830 RAC individual member breakdowns were logged between October and December 2017 where vehicles had broken down due to damaged shock absorbers, broken suspension springs or distorted wheels, likely due to poor quality road surfaces.

The number of these potential pothole breakdowns was up from 2,547 in the same quarter of 2016. It suggests that the surface quality of some UK roads has already been impacted by the higher rainfall and increased days of frost during the last quarter of 2017 compared with the same period in 2016.

The RAC believes the condition of many roads is therefore hanging in the balance with the potential for a further sharp rise in the number of potholes by the spring if the weather is particularly wet or cold over the next few months.

There was also a sharper increase in pothole-related breakdowns between the third and fourth quarters of 2017 than there was in the year before. While an increase is always expected between the two seasons as the weather turns colder, breakdowns rose by 45% between the last two quarters of 2017, compared to 38% in 2016.

The total number of RAC ‘pothole’ faults in all four quarters of 2017 exceeded the equivalent quarters 12 months earlier in 2016. And October to December of last year also saw the highest ever proportion of fourth quarter RAC breakdowns where poor quality road surfaces were likely be a factor, with 1.2% of all breakdowns associated with such faults – up from 0.8% in 2015 and 1% in 2016. Previously, the highest proportion of fourth quarter RAC ‘pothole’ breakdowns stood at 1.1% in 2013.

The RAC’s Pothole Index, a 12-month rolling measure of the share of pothole fault breakdowns compared to 2006, corrected for seasonal weather effects and improving longer term vehicle reliability, has risen again for the third successive quarter.

Using a base of 1.00 established in 2006, the Index for the fourth quarter of 2017 stood at 2.59 – with the higher the figure, the greater the likelihood of an RAC member suffering a breakdown caused by a pothole and so potentially the worse the standard of some roads.

The Index is now at its highest since the second quarter of 2016 suggesting that the condition of our roads has been declining steadily over the last 18 months – although at 2.59 it is thankfully still well below its peak of 3.5 reached in Q2 2010.

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2018/19 payroll changes

The Autumn Budget 2017 announced changes to tax and NI limits. What do you need to know to prepare for the 2018/19 payroll year?

Tax code changes. The personal allowance has increased. For 2018/19, it will rise by £350 to £11,850 from 6 April 2018. Therefore, unless you receive an amended tax code notification, all “L” suffix codes will need to increase by 35 for 2018/19, e.g. code 1150L becomes 1185L.

NI changes. The employment allowance, which relieves employers of the first £3,000 of employers’ NI, is still available for 2018/19. The NI thresholds have increased so both employees’ and employers’ Class 1 NI will be due on earnings over £162 per week (£8,424 per year).  If an employee is under 21, check that you are using the NI category letter M instead of A as although they still have to pay employees’ NI on earnings over £162 per week, your company won’t have to pay 13.8% employers’ NI on earnings between £162 and £892 per week. This also applies to apprentices under 25 when the NI code should be H.

Optimum salaries and dividends. If the directors are also shareholders and receive remuneration in the form of a minimum salary and dividends, what’s their optimum salary/dividend package for 2018/19? Assuming: (1) they don’t have an employment contract so the national minimum wage doesn’t apply; (2) your annual employers’ NI bill is already more than £3,000, so you will have fully utilised the employment allowance; and (3) they have not yet accrued maximum entitlement to the state pension, then the sweet spot is to go to the NI threshold but no higher. So for 2018/19, this would be a monthly gross salary of £702 which takes them up to the NI threshold. With regards to dividends, if the director shareholders want to go up to the basic rate limit (£34,500 for 2017/18) but no further, assuming they have no other income, they can have dividends of £3,426 that can be taken tax free in the personal allowance (£11,850 – (£702 x 12)). The next £2,000 (down from £5,000 in 2017/18) of dividends will also be tax free as they are within the dividend allowance. This leaves the balance of dividends of £32,500 (£34,500 – £2,000) which they will have to pay personal tax on at 7.5% (£2,437.50) due by 31 January 2020.

For 2018/19 add 35 to any tax code ending in L.  Director shareholders not bound by minimum wage requirements can receive a salary of £702 per month tax and NI free with the rest as dividends.

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