Top Tax Tips

Tax Tips and News for 2016

This issue … Making Tax Digital: Launch of PTAs; VAT Partial Exemption Changes Following Le Credit Lyonnais; 2016 Fuel and Van Benefit Rates Set; Introducing Innovative Finance ISAs; January Questions and Answers; January Key Tax Dates

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[gdlr_tab title="Making Tax Digital: Launch of PTAs"]

As part of a £1.3bn investment to transform HMRC into one of the most digitally advanced tax administrations in the world, HMRC have published a report and discussion paper setting out how new procedures for interacting with HMRC and paying tax will be implemented under the Making Tax Digital banner.

It is intended that by April 2016, every individual and small business will have access to their own secure digital tax account that enables them to interact with HMRC digitally. By 2020, businesses and individual taxpayers will be able to register, file, pay and update their information at any time of the day or night, and at any point in the year, to suit them. For the vast majority, there will be no need to fill in an annual tax return.

The government is also to consult on the issue of payment - on options to simplify the payment of taxes, align payment arrangements and bring payment dates closer to the time of the activity or transactions generating the tax liability. HMRC will be running a series of consultation events in January and February 2016 to discuss these issues with stakeholders.

The Making Tax Digital project has also presented the opportunity to align payment arrangements across different taxes and to provide a more joined-up service for taxpayers. The government has already brought the collection of Class 2 National Insurance Contributions (NICs) for the self-employed into the arrangements for self-assessment, which means that from April 2015, Class 2 NICs are being collected alongside Class 4 NICs for most. The government is also consulting on the abolition of Class 2 NICs and reform of Class 4 to further simplify the system (see www.gov.uk/government/consultations/consultation-on-abolishing-class-2-national-insurance-and-introducing-a-contributory-benefit-test-to-class-4-national-insurance-for-the-self-employed/the-abolition-of-class-2-national-insurance-introducing-a-benefit-test-into-class-4-national-insurance-for-the-self-employed for further details).

HMRC have now officially launched Personal Tax Accounts (PTAs), which enable UK taxpayers to manage their tax affairs online. More than a million customers completing their self-assessment electronically will be directed to their online PTA which will:

- provide a clear and joined-up view of the tax they pay and benefits they are entitled to;
- enable customers to update their tax details as they occur in real time, removing the need to resubmit information; and
- make it easier and more efficient to contact HMRC officials through services like web chat and virtual assistant.

Between now and May 2016 HMRC will continue to add new services to the PTA, including:

- improvements to the 'Check your tax estimate service' so customers can look a year ahead and back on their current, future and previous tax position;
- a new online payment and repayment service;
- expanding the opportunity for non-self-assessment customers to choose to stop receiving paper from HMRC;
- integration of the tax credits online service in time for 2016 renewals;
- introducing change of circumstances for the marriage allowance service; and
- introduction of the new national insurance/state pension service.

Further information on the Making Tax Digital project can be found atwww.gov.uk/government/publications/making-tax-digital.
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[gdlr_tab title="VAT Partial Exemption Changes Following Le Credit Lyonnais"]

In Brief 22/15 HMRC confirm changes to the VAT Regulations 1995 to ensure that UK law is aligned with EU law following the decision of the European Court of Justice (ECJ) in the case Le Credit Lyonnais (C-388/11). The changes take effect from 1 January 2016.

In Le Credit Lyonnais, the ECJ found that the VAT Directive could not be interpreted so as to allow a company to take into account the turnover of its foreign branches when calculating how much input tax it can deduct in the member state where it has its principal establishment, using a 'single pot' calculation. It also found that a sector in a partial exemption method could not be based on a geographic location. To reflect that decision, the March 2015 Budget announced proposals to exclude supplies made by overseas branches from partial exemption methods. As a result of feedback on the subsequent consultation, HMRC have narrowed the scope of changes, which are now set out in Brief 22/15.

Brief 22/15 can be found at www.gov.uk/government/publications/revenue-and-customs-brief-22-2015-changes-to-vat-regulations-following-judgment-in-the-case-of-le-credit-lyonnais-c-38811/revenue-and-customs-brief-22-2015-changes-to-vat-regulations-following-judgment-in-the-case-of-le-credit-lyonnais-c-38811.
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[gdlr_tab title="2016 Fuel and Van Benefit Rates Set"]

The Van Benefit and Car and Van Fuel Benefit Order 2015 (SI 2015/1979) comes into force on 31 December 2015 and takes effect for the tax year 2016-17 and subsequent tax years. The Order contains provisions for the following:

- the cash equivalent of the van benefit will rise from £3,150 to £3,170 for 2016-17;
- the van fuel benefit will increase from £594 to £598; and
- the cash equivalent of the benefit of fuel for a car is calculated by applying the 'appropriate percentage' (normally calculated by reference to the CO2 emissions of the car) to the figure in ITEPA 2003, s 150(1). SI 2015/1979 provides that this figure will rise from its current level of £22,100 to £22,200 for 2016-17.

Provisions in Finance Act 2015, s. 10 phase out the nil van benefit charge for zero emission vans which was available for the tax years 2010-11 to 2014-15 inclusive. This is being phased out between 6 April 2015 and 5 April 2020 and means that employees using zero emission vans for more than insignificant private use will now be liable for the charge on a tapered basis until the full charge applies from 2020-21 onwards.

The cash equivalent of the benefit of a van for a tax year is calculated as follows:

- if the employee uses the zero emission van for insignificant private use for the tax year, the cash equivalent is nil;
- if that condition is not met for the tax year then,

(a) if the van cannot in any circumstances emit CO2by being driven and the tax year is any of the tax years 2015-16 to 2019-20, the cash equivalent is the 'appropriate percentage' of £3,150 (rising to £3,170 in 2016-17), and

(b) in any other case, the cash equivalent is £3,150 (2015-16 rate; rising to £3,170 in 2016-17).

The 'appropriate percentage' is:

20% for 2015-16;
40% for 2016-17;
60% for 2017-18;
80% for 2018-19; and
90% for 2019-20.

SI 2015/1979 can be viewed online at www.legislation.gov.uk/uksi/2015/1979/contents/made.
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[gdlr_tab title="Introducing Innovative Finance ISAs"]

From 6 April 2016, a new type of Individual Savings Account (ISA) will be launched - the Innovative Finance ISA. This new ISAs will be able to hold peer-to-peer (P2P) loans, which often pay significantly higher returns than cash accounts. Broadly, P2P lenders act as middlemen by matching people who wish to invest cash with those who want to borrow money. From 6 April 2016, interest and gains from P2P loans will qualify for tax advantages where these loans are made through an Innovative Finance ISA.

There are currently two types of ISA - cash ISA and stocks and shares ISA. The ISA Regulations specify which investments qualify for each of these accounts. P2P loans are currently not eligible for either type of ISA, other than where they are included within an investment trust or similar product that is eligible to be held within a stocks and shares ISA. The ISA Regulations also set out which financial institutions can offer ISAs, and specify the information that ISA providers must supply to HMRC. These regulations also specify other rules and features of ISA, including those concerning the ownership, transfer and withdrawal of ISA investments. The ISA Regulations will be amended by secondary legislation to establish a third ISA type - the Innovative Finance ISA. Accounts will be available to investors aged 18 or over. Along with loan repayments, interest and gains from peer to peer loans will be eligible to be held within this new type of ISA, without being subject to tax.

P2P lending platforms with full regulatory permissions from the Financial Conduct Authority (FCA) will be eligible to offer the Innovative Finance ISA in accordance with the ISA Regulations. Like other ISA providers, these platforms will be required to supply HMRC with certain information about the accounts they provide. Various account requirements set out in the ISA Regulations will be updated or modified to accommodate the Innovative Finance ISA.

As a result of these changes, an ISA investor will be entitled to subscribe new money each year to a maximum of one Innovative Finance ISA, one cash ISA and one stocks and shares ISA. The amount of new money paid into all of the ISAs held by an investor must not exceed the overall ISA subscription limit for the year.

For further information, see the GOV.UK website at www.gov.uk/government/publications/income-tax-innovative-finance-individual-savings-account-and-peer-to-peer-loans/income-tax-innovative-finance-individual-savings-account-and-peer-to-peer-loans.
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[gdlr_tab title="January Questions and Answers"]

Q. What is our IHT position following a change of ownership?

A. In 2014, my partner and I changed the ownership status of our house from joint tenants to tenants-in-common. At that time, my share of the equity was reduced from 50% to 25% and my partner's was, in turn, increased to 75%. Does this count as a lifetime gift for inheritance tax purposes (IHT)?

If you are married to you partner (spouse or civil partners), then the change will not count as a lifetime gift (a potentially exempt transfer (PET)) as it will be treated as an inter-spouse/civil partner transfer (assuming that your partner is domiciled in the UK). If, however, you are not married, the transfer will be treated as a PET, and you will need to live for seven years after the transfer date for it to be completely ignored for IHT purposes.

Q. CGT annual exemption and entrepreneurs' relief. Can the annual capital gains tax (CGT) exemption be utilised against a capital gain that qualifies for entrepreneurs' relief?

A. Yes it can.

If your qualifying net gains exceed the lifetime limit applicable to the time you make that disposal, no further relief is due and the excess over that amount is wholly chargeable at the CGT rate (18% or 28% for disposals made on or after 23 June 2010). The annual exempt amount is allocated in the most beneficial way, so is set first against gains having the highest rate of CGT. If you make a subsequent business disposal in a later year which qualifies for entrepreneurs' relief, the total relief (for all years) is still limited to your lifetime limit. Any gains exceeding that limit are wholly chargeable at the normal rate of CGT.

See the HMRC factsheet HS275 for further details (www.gov.uk/government/publications/entrepreneurs-relief-hs275-self-assessment-helpsheet/hs275-entrepreneurs-relief-2015).

Q. Can I claim for laundering my uniform? My employer provides me with a uniform that bears our company logo. I am required to maintain the uniform at my own expense without a contribution from my employer. Can I claim tax relief for the costs of keeping it clean?

A. You may be entitled to a uniform tax allowance if your work requires you to wear a uniform that is provided by your employer and bears a company logo. Depending upon your employment, this could be anything from a polo shirt with the company's logo on it, to a high-visibility jacket and overalls. If you are then required to maintain that uniform at your own expense without a contribution from your employer, you are likely to be entitled to the allowance.

Flat rate expenses for cleaning costs have been negotiated for operatives in particular industries (including shop workers wearing a branded uniform). You can find a full list of flat rate expenses on the HMRC website at www.hmrc.gov.uk/manuals/eimanual/EIM32712.htm. There are also separate flat rate expenses available for nurses and other health care workers.

The cost of clothing worn at work has been considered by the Courts on a number of occasions and in many cases they have ruled that the cost of work clothing is not incurred wholly and exclusively in the performance' of the taxpayer's duties. In general terms, you will not be able to claim a clothing allowance for the cost of upkeep, replacement and repair of ordinary clothing, even if you only wear it for work.
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[gdlr_tab title="January Key Tax Dates"]

1 - Due date for payment of Corporation Tax for the year ended 31 March 2015

14 - Return and payment of CT61 tax due for quarter to 31 December 2015

19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/1/2016 or quarter 3 of 2014/16 for small employers

31 - Deadline for filing 2015 Self Assessment personal, partnership and trust Tax Returns - £100 first penalty for late filing even if no tax is due or tax due is paid on time
- Balancing self assessment payment due for 2014/15
- Capital gains tax payment due for 2014/15
- First self assessment payment on account due for 2015/16
- Interest accrues on all late payments
- Half yearly Class 2 NIC payment due
- Further penalty of 5% of tax due or £300, whichever is greater for personal tax returns still not filed for 2013/14
- 5% penalty for late payment of tax unpaid for 2013/14 self assessment
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We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

If you need further assistance just let us know – we're here to help!

Contact us today on 020 8780 2349 to discuss how any of the above affects your personal or business finances or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.

by Donovan

Tax Tips and News for August 2015

This issue … Tax-free Childcare; Rent a Room; Help to Buy ISAs; Employment Allowance; August Questions and Answers; August Key Tax Dates

Tax-free Childcare

Tax-free childcare is part of the government's long-term plan to support working families and will provide up to 1.8m families across the UK with up to £2,000 of childcare support per year, per child, via a new online system. It was originally planned that the scheme would launch in Autumn 2015, but, as a result of a direct legal challenge from a small group of childcare voucher providers, development of the scheme was suspended. However, the Supreme Court has recently ruled that government proposals for delivering tax-free childcare are lawful, which means that the scheme can go ahead and is now expected to launch in 2017.

Here are some of the key points of the scheme:

• the scheme will be available for children up to the age of 12, and for children with disabilities up to the age of 17
• to qualify for tax-free childcare, parents will have to be in work, earning just over an average of £50 a week and not more than £150,000 per year. Unlike the current rules for employer-supported childcare, eligibility for tax-free childcare is not dependant on the employer offering the scheme
• self-employed parents will be able to qualify for tax-free childcare. For newly self-employed parents, there will be a 'start-up' period during which there will be no minimum income level requirement
• the scheme will be available to parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave

Anyone wishing to use the scheme will need to open an online account via the government website (www.GOV.uk) and pay in money to the account to cover the cost of childcare with a registered provider.

The government will top up accounts with 20% of childcare costs, up to a total of £10,000 - the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children). So, for every 80p invested, the government will top up with a 20p contribution.

HMRC will re-confirm a claimant's circumstances every three months via a simple online process.

Where circumstances change, and the parent no longer wishes to pay into the account, it will be possible to simply withdraw any funds that have built up. However, where funds that have already attracted tax relief are withdrawn, the government will also withdraw its corresponding contribution.

There are no particular rules regarding when and how much can be saved in the new accounts. The scheme is designed to give as much flexibility as possible regarding savings. This means that parents can build up a balance in their account to use at times when they need more childcare than usual, for example, over the summer holidays.

Rent a Room

In the Summer Budget 2015, the government announced that the level of rent-a-room relief will be increased from the current level of £4,250 to £7,500 from April 2016. This means that from 6 April 2016, an individual will be able to receive up to £7,500 tax-free income from renting out a room or rooms in their only or main residential property. The relief also covers bed and breakfast receipts as long as the rooms are in the landlord's main residence.

To qualify under the rent-a-room scheme, the accommodation has to be furnished and a lodger can occupy a single room or an entire floor of the house. However, the scheme doesn't apply if the house is converted into separate flats that are rented out. Nor does the scheme apply to let unfurnished accommodation in the individual's home.

The rent-a-room tax break does not apply where part of a home is let as an office or other business premises. The relief only covers the circumstance where payments are made for the use of living accommodation.

If additional services are provided (cleaning and laundry etc.), the payments must be added to the rent to work out the total receipts. If income exceeds £4,250 a year in total, a liability to tax will arise, even if the rent is less than that.

There are two options if the individual is receiving more than the annual limit a year:

• the first £4,250 is counted as the tax-free allowance and income tax is paid on the remaining income
• renting the room is treated as a normal rental business, working out a profit and loss account using the normal income and expenditure rule

In most cases, the first option will be more advantageous.

The principal point to bear in mind is that those using the rent-a-room scheme cannot claim any expenses relating to the letting (e.g. insurance, repairs, heating).

To work out whether it is preferable to join the scheme or declare all of the letting income and claiming expenses via self-assessment, the following methods of calculation need to be compared:

• Method A: paying tax on the profit they make from letting worked out in the normal way for a rental business (i.e. rents received less expenses).

Method B: paying tax on the gross amount of their receipts (including receipts for any related services they provide) less the £4,250 exemption limit.

Method A applies automatically unless the taxpayer tells their tax office within the time limit that they want method B.

Once a taxpayer has elected for method B, it continues to apply in the future until they tell HMRC they want method A. The taxpayer may want to switch methods where the taxable profit is less under method A, or where expenses are more than the rents (so there is a loss).

The individual has up to one year after the end of the tax year when their income from lodgers went over £4,250 to decide the best option to take, so it is worth taking a bit of time to work out which route produces the lowest tax bill, we can help you with this.

Help to Buy ISAs

The new help-to-buy ISA, which is expected to be available from Autumn 2015, will enable first-time buyers to save up to £200 a month towards their first home. Investors will receive £50 from the government for every £200 saved, up to a maximum of £3,000. This means that the maximum that can be saved in a help-to-buy ISA is £12,000. The government bonus is added to this amount, so total savings towards the property purchase can be up to £15,000.

Accounts will be limited to one per person rather than one per home, which means that those buying together can both receive a government bonus. A couple will be entitled to hold an ISA each, meaning that a total of £24,000 could be built up across two accounts. With the addition of the government bonus, a total of £30,000 can be built up by a couple under the scheme.

An initial deposit of £1,000 may be made into the account, in addition to regular monthly savings limits. This initial deposit also qualifies for the 25% boost from the government.

The minimum bonus payable by the government will be £400 and the maximum £3,000 per person.

The bonus can be claimed once savings have reached the minimum amount of £1,600. Under the scheme it will take investors just over four and a half years to qualify for maximum bonus of £3,000, if desired.

Help-to-buy ISAs will be available to individuals aged 16 and over. The bonus will only be available to first-time buyers purchasing UK properties.

New accounts will be available for four years, but once opened, there will be no limit on how long an account can be held.

The bonus will be paid when the property is purchased. It will be available on home purchases of up to £450,000 in London and up to £250,000 outside London.

There are certain restrictions under the new scheme, including:

• help-to-buy ISAs cannot be used if the property is to be rented out;
• purchases of overseas property do not qualify under the scheme;
• only one help-to-buy ISA may be held by an individual; and
• investors cannot open a help-to-buy ISA and a normal cash ISA in the same tax year.

Employment Allowance

The Summer Budget 2015 contained two announcements affecting the employment allowance (EA).

Broadly, the EA potentially cuts every company's NIC payments by allowing businesses and charities to offset up to £2,000 (2015-16) against their employer (secondary) PAYE NIC liabilities.

From April 2016, eligible employers will be able to reduce their employer Class 1 NICs liability by up to £3,000 per tax year, instead of the current £2,000.

Secondary Class 1 NICs are 'excluded liabilities', and therefore do not qualify for EA, if they are incurred:

• employing someone for personal, family or household work, such as a nanny, au pair, chauffeur, gardener. Prior to 6 April 2015 this category also included care support workers, but from 6 April 2015 where all an employee's duties are performed for a person who needs support because of old age, mental or physical disability or past or present alcohol or drug dependence, illness or mental disorder any Secondary Class 1 NICs are not 'excluded liabilities';
• on deemed payments of employment income for workers supplied by personal and managed service companies;
• by an employer who has had a business, or part of a business, transferred to them in the relevant tax year and the payments relate to an employee employed (either wholly or partly) for purposes connected with the transferred business, or part business; or
• as a result of avoidance arrangements.

The Summer Budget 2015 also announced that from April 2016, companies where the director is the sole employee will no longer be able to claim the employment allowance.

August Questions and Answers

Q. I have realised that I made a mistake on my most recent VAT return. What should I do?

A. You can adjust your current VAT account to correct errors on past returns if the error:

• was below the reporting threshold (broadly, less than £10,000, or up to 1% of your box 6 figure (up to a maximum of £50,000);
• was not deliberate; and
• relates to an accounting period that ended less than 4 years ago.

When you submit your next return, add the net value to box 1 for tax due to HMRC, or to box 4 for tax due to you. Make sure you keep good accurate records relating to the adjustment.

Q. A friend has told me that I may be entitled to a larger state pension if I pay Class 3A national insurance contributions. What are they and how do I know if paying them is worthwhile?

A. Class 3A is a new voluntary type of national insurance contribution (NIC) that is being introduced from 12 October 2015. Broadly, between then and 5 April 2017 certain people will be able to make a contribution to top up their state pension by up to £25 per week. Men born before 6 April 1951 and women born before 6 April 1953 will be eligible to make top up payments. The cost of the contribution will depend on how much extra pension the applicant wants to qualify for (between £1 and £25 per week), and how old they are when they make the contribution. A top up calculator is available on the GOV.uk website at www.gov.uk/state-pension-topup/y. The calculator will help you work out whether it is worthwhile you making Class 3A contributions.

Q. I have assets worth around £600,000, including my home. I am single, have never been married and have no children. I intend leaving my estate to my siblings. Will they qualify as 'direct descendants' and, in turn, will I qualify for the extra £175,000 family home inheritance tax allowance that was announced in the Summer Budget?

A. The draft legislation and guidance on this issue states that the relief will only be available where the family home is passed to children. This includes stepchildren, adopted and foster children, plus grandchildren. Therefore the family home allowance will not be available.

August Key Tax Dates

2 - Last day for car change notifications in the quarter to 5 July - Use P46 Car

19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/8/2015

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

If you need further assistance just let us know – we're here to help!

Contact us today on 020 8780 2349 to discuss how any of the above affects your personal or business finances or get in touch with us via our contact page to arrange a complimentary, no-obligation meeting.

This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.

by Robin Brown

Summer Budget July 2015

Welcome to the 8th July Summer Budget edition of Tax Tips & News.

In this analysis, we have mainly concentrated on the tax measures that will directly affect individuals, employers and small businesses.

Summary

Chancellor George Osborne has delivered the first Budget by a wholly Conservative government in almost 20 years. The March 2015 Budget provided some clues as to possible new measures and of course, the Conservative election manifesto contained a wide range of commitments to be introduced during the course of the current parliament.

The Chancellor said that this is a Budget for working families in a 'one-nation society'. In 'a big Budget for a country with big ambitions', he focused on how the government will continue with its deficit-reduction plans, whilst giving the promised support to 'hard-working families'. He said that whilst the deficit would be cut at the same pace as under the previous government, it would be a bold budget containing bold new measures.

As predicted, savings in welfare spending of around £12bn, and increases in revenue from tax avoidance and evasion to yield around £5bn made an early couple of headlines in the Chancellor's speech.

The welfare savings are to be funded by:

• ensuring those aged 18 to 21 who receive Universal Credit apply for an apprenticeship or traineeship, gain work-based skills, or go on a work placement 6 months after the start of their claim;
• subjecting benefit payments to a regional cap (£23,000 per year in London and £20,000 in other areas - cut from £26,000 a year);
• limiting child tax credits to two children for new claimants;
• working-age benefits, including tax credits and Local Housing Allowance, will be frozen for 4 years from 2016-17 and
• reducing rents for social housing by 1% a year for 4 years. Tenants on higher incomes (over £40,000 in London and over £30,000 outside London) will be required to pay market rate, or near market rate, rents.

With regards to tax avoidance and evasion, HMRC is to be given significant extra investment - some £60m between now and 2020 - for increased work on tackling evasion and non-compliance. It will be interesting to see how and where this money will be spent.

The Conservative manifesto pledged to introduce a new law within the first one hundred days of a Conservative government to prevent any rises in income tax, VAT or national insurance in the next parliament and it seems that this promise is now to be delivered. Broadly, a five-year 'tax lock' will guarantee no increases in income tax rates; no increases in VAT, nor an extension of its scope; and no increase in national insurance, nor an increase in its ceiling above the higher rate threshold. However, the Chancellor could still move the goalposts - there will still be plenty of scope to raise more revenue without increasing tax rates by widening the definitions of what is taxed, or by withdrawing tax reliefs.

This newsletter provides a summary of the key tax points from the July Budget, based on the documents released on 8 July 2015. It is possible that changes will be made between now and the publication of the draft legislation, which is due to be published on 15 July 2015. We will keep you informed of any significant developments.

Individuals

Tax rates and the personal allowance

Although the personal allowance for 2016-17 was set at £10,800 by the first Finance Act 2015, it has now been confirmed that it will rise from its current level of £10,600 to £11,000 for 2016-17. The government plans to increase the personal allowance to £12,500 by 2020.

The personal allowance will automatically increase in line with the equivalent of 30 hours a week at the national minimum wage for individuals over 21, once the personal allowance has reached £12,500. The Chancellor of the Exchequer will have a legal duty to consider the level of the national minimum wage in setting the personal allowance each year, until it reaches £12,500.

Increases to the personal allowance since 2010, when it was £6,475, mean that a typical taxpayer will be £905 a year better off in 2016-17.

The basic rate limit will be increased to £32,000 for 2016-17 and to £32,400 for 2017-18. As a result, the higher rate threshold will be £43,000 in 2016-17 and £43,600 in 2017-18.

National living wage

From April 2016, a new National Living Wage of £7.20 an hour for the over 25s will be introduced. This will rise to over £9 an hour by 2020.

Dividends

The dividend tax credit (which reduces the amount of tax paid on income from shares) is to be replaced with a new £5,000 tax-free dividend allowance for all taxpayers from April 2016.

Tax rates on dividend income will also be increased. The new rates of tax on dividend income above the allowance will be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

Non-domiciled individual

Whilst the Chancellor stopped short of Labour's proposals to completely abolish non-dom status, he said that 'it is not fair that people live in this country for very long periods of their lives, benefit from our public services, and yet operate under different tax rules from everyone else.'

From April 2017 anybody who has been resident in the UK for more than 15 of the past 20 tax years will be deemed to be domiciled in the UK for tax purposes and will therefore be required to pay UK tax on their worldwide income. A technical consultation on the finer points of this change will be published later this year.

It is unclear how many individuals will be affected by the new rules. Those resident in the UK for more than seven years are currently required to either pay UK tax, or pay an annual charge that ranges from £30,000 to £90,000, depending on how long the individual has lived in the UK. The latest figures show that in 2012-13, some 5,080 paid the annual charge.

Inheritance tax on the family home

Currently, inheritance tax is charged at 40% on estates over the tax-free allowance of £325,000 per person. Married couples and civil partners can pass any unused allowance on to one another. From April 2017, each individual will be offered a family home allowance so they can pass their home on to their children or grandchildren tax-free after their death. This will be phased in from 2017-18. Broadly, the family home allowance will be added to the existing £325,000 IHT threshold, meaning the total tax-free allowance for a surviving spouse or civil partner will be up to £1 million in 2020-21. The new allowance will be tapered away from those leaving more than £2 million with the intention that those leaving more than £2.35m will not benefit from the new allowance. The tapering policy does, however, have a major flaw -where a home worth £175,000 is included in an estate with a value of between £2m and £2.35m, an effective rate of 60% will be payable.

Property income

Currently, individual landlords can deduct their costs - including mortgage interest - from their profits before they pay tax, giving them an advantage over other home buyers. Wealthier landlords receive tax relief at 40% and 45%. This tax relief will be restricted to 20% for all individuals by April 2020.

Landlords will be able to obtain relief as follows:

• in 2017-18 the deduction from property income (as is currently allowed) will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction.
• in 2018-19, 50% finance costs deduction and 50% given as a basic rate tax reduction.
• in 2019-20, 25% finance costs deduction and 75% given as a basic rate tax reduction.
• from 2020-21 all financing costs incurred by a landlord will be given as a basic rate tax reduction.

In addition, from April 2016, the 'wear and tear allowance', which allows landlords to reduce the tax they pay (regardless of whether they replace furnishings in their property) will also be replaced by a new system that only allows them to get tax relief when they replace furnishings.

Rent-a-room relief

The rent-a-room relief limit is to be increased from the current level of £4,250 to £7,500 from April 2016. This means that from 6 April 2016 a person will be able to receive up to £7,500 tax-free income from renting out a room or rooms in their only or main residential property. The relief also covers bed & breakfast receipts as long as the rooms are in the landlord's main residence.

Tax-free childcare

From September 2017, working families with three and four-year-olds will receive 30 hours of free childcare - an increase from the 15 hours they are currently offered.

In addition, from 2017, parents will benefit from up to £5,000 worth of free childcare a year in a policy designed to help parents work. The government will also fund 15 hours a week of free childcare for all disadvantaged two-year-olds, worth £2,500 a year per child.

Taxation of lump sum death benefits

A change is being made to the pensions tax rules to reduce the tax charge that applies to taxable lump sum death benefits paid from registered pension schemes or non-UK pension schemes. Broadly, the rate of tax payable will be reduced from 45% to the recipient's marginal rate of income tax. This change will apply in relation to lump sums paid on or after 6 April 2016.

2015 Anniversary Games

Non-UK resident sportspeople will be exempt from UK income tax on any income received as a result of their performance at the 2015 Anniversary Games which are taking place at the Queen Elizabeth II Olympic Park and stadium between 24 and 26 July 2015.

Councillors' travel expenses

In relation to payments made on or after 6 April 2016, travel expenses paid to councillors by their local authority will be exempt from income tax and NICs.

Tax-advantaged venture capital schemes amendments

Amendments are to be made to the existing Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) rules. Broadly, the changes are as follows:

• The first measure specifies the age of a company that is eligible for investment under EIS and VCT. Companies must raise their first investment under EIS, VCT or other risk finance investment within 7 years of making their first commercial sale or 10 years if the company is a knowledge-intensive company. However, no age limit will apply to companies raising an investment where the amount of the investment is at least 50% of the company's annual turnover, averaged over the previous five years. The age limit will apply also to any business that has been owned previously by another company.
• In addition to the existing cap on annual investments of £5 million, there will be a new cap on the total amount of investments a company may raise under EIS, VCT or other risk finance investment, of £12 million or £20 million for knowledge-intensive companies (see below). Any risk finance investments used by a business previously owned by another company will count towards the total funding limit.
• If an individual subscribes for shares in a company and that individual already holds shares in the company, the new shares will not be eligible for EIS unless the individual has made a risk finance investment in the company before Royal Assent or the individual's shares in the company (excluding founders' shares) were a risk finance investment. A risk finance investment is an investment under EIS, SEIS or Social Investment Tax Relief.
• There will be a new requirement for the money to be used for the growth and development of the company (or subsidiary company).
• The rule prohibiting the use of money for the acquisition of shares will be extended to all investments made by VCTs on or after the operative date and will therefore apply to non-qualifying holdings.
• A new rule will prevent companies from using EIS and VCT investments to acquire a business.
• Higher limits are being introduced on total investment, age of company and number of employees to provide support for knowledge-intensive companies that are particularly likely to struggle to access finance. A knowledge-intensive company is a company:
• whose costs of research and development or innovation are at least 15% of the company's operating costs in at least one of the previous three years, or at least 10% of the company's operating costs in each of the previous three years and either
• which has created, is creating or is intending to create, intellectual property or
• which has employees with a relevant Masters or higher degree who are engaged in research and development or innovation and who comprise at least 20% of the company's total workforce.

For knowledge-intensive companies, the limit on employees will be raised from less than 250 to less than 500 employees.

• The following measures will be introduced with the intention of smoothing the interaction between SEIS and EIS:
• companies will no longer need to use at least 70% of SEIS funds before raising funds under EIS or VCT respectively;
• the EIS relief of investors in companies that redeem the shares of SEIS investors will no longer be reduced, so long as the SEIS relief on the redeemed shares is repaid;
• the legislation will be amended to clarify that farming outside the UK is not an eligible activity for EIS, SEIS, VCT and Enterprise Management Incentives.

The measures will have effect from April 2014 for the change to the rule on redemption of shares of SEIS investors; 6 April 2015 for the provision removing the requirement for 70% of SEIS funds to be used before a company may raise funds under EIS or VCT; and Royal Assent for shares issued under EIS and for investments made by VCTs and for determining whether investments held by the VCT are to be regarded as qualifying holdings.

Possible pension reform

The Chancellor indicated that there are major changes afoot in the pension tax regime. Changes to the current regime may mean that in future, pension savings operate along similar lines to ISAs - where money is invested, the government makes top-ups to the investment, and the proceeds can eventually be taken out tax-free. There are no further details on this at present but a pension reform Green Paper is to be published for consultation, so we will be monitoring this area for further developments.

Investment managers Capital Gains Tax treatment of carried interest

Carried interest arises from an individual's participation in an investment vehicle, typically a partnership, and they will normally be charged to capital gains tax on the full amounts they receive in respect of that interest. In relation to all carried interest arising on or after 8 July 2015, whenever the arrangements were entered into, deductions will only be allowed in respect of sums actually given by the individuals as consideration for acquiring the right to that carried interest. This change will not affect genuine investments in funds made by managers on an arm's length basis (known as 'co-invest').

Businesses

Annual investment allowance

The annual investment allowance (AIA), which has previously been increased temporarily to £500,000 until 1 January 2016, will be set permanently at £200,000 from that date.

Broadly, the AIA allows businesses to deduct the full value of certain items, including equipment and machinery, up to a total value of £200,000 from their profits before tax. This helps them with cash flow because it means the full tax relief is given in the year that items are purchased, rather than over several years. Any businesses considering making large investment on items qualifying for the AIA should now consider the timing of such spending.

Personal service companies

The government is concerned that the IR35 rules are not effective enough and non-compliance in this area is estimated to cost over £400 million a year. The government has therefore asked HMRC to liaise with business on how to improve the effectiveness of existing IR35 legislation. We can expect to see further developments in this area.

Extending averaging for farmers

As announced in the Spring Budget, the averaging period for farmers will be extended from two years to five years from April 2016. A consultation on the measure has now been published.

Corporation Tax

Reduction in corporation tax rate

The main rate of corporation tax has already been cut from 28% in 2010 to its current rate of 20%. The Chancellor has announced that the main rate will now be cut further from 20% to 19% in 2017, and then to 18% in 2020, benefiting over a million businesses.

Business goodwill amortisation

Corporation tax relief for the cost of purchased goodwill will be restricted for acquisitions and disposals on or after 8 July 2015. This measure will be enacted in Summer Finance Bill 2015.

Research and development tax credits

Universities and charities will no longer be able to claim the research & development expenditure tax credit with effect from 1 August 2015. This corrects an anomaly in the legislation and restores the original policy intention. This measure will be enacted in Summer Finance Bill 2015.

Orchestra tax relief

The Government will go ahead with its proposed new tax relief for orchestras with effect from 1 April 2016. Corporation tax relief will be available at a rate of 25% on qualifying expenditure. This measure will be enacted in Finance Bill 2016.

National Insurance

Employment allowance

Businesses will have their employer national insurance bill cut by another £1,000 from April 2016, as the employment allowance rises from £2,000 to £3,000. This increase means that from April next year, businesses will be able to employ four people full time on the national living wage and pay no national insurance at all.

Also from April 2016, companies where the director is the sole employee will no longer be able to claim the employment allowance.

Abolition of Class 2 NICs and reform of Class 4

The government has confirmed that it will consult in autumn 2015 on abolishing Class 2 NICs and reforming Class 4 NICs for the self-employed.

VAT

VAT on services used and enjoyed in the UK

The VAT "use and enjoyment" provisions will apply so that from next year, all UK repairs made under UK insurance contracts are subject to UK VAT.

Also, the government will consider a wider review of off-shore based avoidance in VAT-exempt sectors, with a view to introducing additional "use and enjoyment" measures for services such as advertising in the following year.

VAT refunds for shared services

The Finance Bill 2016 will provide for refunds to eligible public bodies of VAT incurred on specified shared services.

Tax Simplification

Office for Tax Simplification

Legislation will be included in Finance Bill 2016 to put the Office for Tax Simplification (OTS) on a statutory basis and it will become a permanent office of HM Treasury.

The OTS are to review:

• the closer alignment of income tax and National Insurance contributions; and
• the taxation of small companies.

Taxation of employee benefits and expenses

A new statutory exemption for trivial benefits in kind costing less than £50 will be introduced with effect from April 2016. This was first announced at Autumn Statement 2014 as part of a package of measures intended to simplify the taxation and reporting of employee benefits and expenses. Although the other measures were included in Finance Act 2015, this measure has been held over for inclusion in Finance Bill 2016.

Simplified expenses

Finance Act 2013 introduced simpler rules that can be used by unincorporated businesses to claim relief for some business expenses. Legislation will be included in Finance Bill 2016 to amend those rules to ensure that partnerships can fully access the provisions in respect of the use of a home and where business premises are also a home.

Simplification of the treatment of termination payments

The government will consult on the tax and NICs treatment of termination payments with a view to making the rules simpler and fairer.

Reviewing the rules for tax relief on travel and subsistence expenses

A discussion paper will shortly be published outlining proposals for new rules for tax relief on travel and subsistence expenses.

HMRC debtor and creditor interest rate

Currently, different rates of interest apply to tax-related debt depending on whether or not it follows from court action. Legislation will be included in the Summer Finance Bill 2015 to ensure that rates of interest payable on tax-related debts to which HMRC is a party are all contained within tax legislation.

With effect for interest accruing on and after 8 July 2015, the government will set the rate of interest which applies on taxation-related debts payable under a court judgment or order by HMRC to a rate equal to the Bank of England base rate plus 2%; and it will apply the late payment interest rate of 3% to taxation-related debts owed to HMRC under a court judgment or order.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

If you need further assistance just let us know – we're here to help!

Contact us today on 020 8780 2349 to discuss how any of the above affects your personal or business finances or get in touch with us via our contact page to arrange a complimentary, no-obligation meeting.

This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.

by Robin Brown

Tax Tips and News for May 2015

This issue … Forms P11D and P9D; Cancelling VAT or VAT-MOSS Registration; ATED Reporting; Auto-enrolment exemptions; May Question and Answer Section; May Key Tax Dates

Forms P11D and P9D

The forms P11D and P9D need to be submitted to HMRC by 6 July 2015 where expenses or benefits were provided to your employees in 2014/15, which are not covered by a dispensation, or are not otherwise exempt from tax. If the forms are not submitted on time, HMRC will issue penalties.

But how does HMRC know whether a P11D or P9D is due to be filed? In pre-RTI years when you completed the end of year form P35 you had to say whether a P11D was due. Those P35 questions were carried over to the "final" RTI report for each tax year, which is normally a full payment submission (FPS) report or employer payment summary (EPS). However, from 6 March 2015 there has been no legal requirement to complete those end of year questions, but most payroll software continued to include them in the final submission for the year.

If you didn't complete the "Is a P11D due?" question on the final FPS for 2014/15, HMRC may assume a P11D is needed anyway. To avoid any nastiness with automatic penalties you can tell the HMRC computer that no P11D/ P9D is needed and no Class 1A NIC is due by completing an online declaration.

The latest Employer Bulletin (no. 53) contains lots of tips for getting the P11Ds right first time, and it is well worth a read. You may find you don't have to submit a P9D for every low paid worker. Where an employee is provided with a medical benefit such as health insurance, and that employee earns less than £8,500 per year, you don't have to complete a P9D for the employee. We can help take the strain of your P11D task.

Cancelling VAT or VAT-MOSS Registration

If you registered for UK VAT in order to operate VAT-MOSS for your overseas sales of digital services to non-business customers, you may now find that the administration for such sales is just not worth the hassle. If so you may want to deregister for both UK-VAT and VAT-MOSS, and restrict your sales to UK-based consumers, or businesses located anywhere outside the EU.

The deregistration process for VAT-MOSS must be done online and it will take effect from the end of the calendar quarter in which notice to deregister is given. Thus to deregister from VAT-MOSS with effect from 1 July 2015 onwards, notice must be given by 15 June 2015. Note that once deregistered for VAT-MOSS your business can't use VAT-MOSS again for two calendar quarters.

The deregistration application for UK-VAT can be done online, and we can do this for you. The paper form VAT 7 can also be used to apply for deregistration from UK VAT. For a voluntarily deregistration the effective date is the date HMRC receives the application to deregister or a later date as agreed with HMRC.

ATED Reporting

The annual tax on enveloped dwellings (ATED) now applies to residential properties worth over £1m that are owned by a company, or a partnership with one or more corporate members, or in some cases a unit trust.

The ATED charge starts at £7,000 per year for properties worth over £1m but no more than £2m, and increases in steps to £218,200 per year for properties worth over £20m. This tax is normally payable to HMRC by 30 April within the year that charge applies to, which starts on 1 April.

So for most properties the 2015/16 ATED charge is payable by 30 April 2015 unless a relief or exemption is claimed. Although owners of properties which are in the lowest valuation band for 2015/16 (over £1m and not more than £2m) have until 31 October 2015 to pay this year's ATED charge.

Many companies and specific properties qualify for relief from ATED, but the relief must be claimed on an ATED return. Companies whose trade is: commercial letting, property development or property trading should qualify for relief from ATED and need to claim that relief on an ATED relief declaration return for their whole portfolio of properties.

If you would like us to submit an ATED return on your behalf, you need to complete a special ATED authorisation form: ATED1.

Auto-enrolment exemptions

Have you received a letter from The Pension Regulator (TPR) telling you to "ACT NOW" to prepare for auto-enrolment? The letter gives you just a few weeks to nominate a contact to receive communications about auto-enrolment, with the threat of fines or prosecution if you don't take action.

The "staging date" for your business will be stated in the letter. This is the date by which you must have a pension scheme ready for your employees to join, if you do indeed need one.

A large number of small companies will be exempt from auto-enrolment, if they don't technically have any "workers" at their staging date. A company director is not a "worker" if he or she does not have a contract of employment with the company. A company with no staff other than directors has no obligations under auto-enrolment if any of the following apply:

• It has only one director; or
• It has a number of directors, but none of those have an employment contract; or
• It has a number of directors, only one of whom has an employment contract.
  TPR doesn't know which directors in which small companies have employment contracts. If you receive a TPR letter asking for a contact to be established for auto-enrolment, you can get TPR off your back with one email to: customersupport@autoenrol.tpr.gov.uk . This should open a structured email in which you need to insert your: PAYE reference, Companies House reference and the letter code from the TPR letter.

If your company does have staff other than its directors, we should talk about what preparations you need to make to get ready for auto-enrolment.

May Question and Answer Section

Q. I live in France and I am about to sell my former home in the UK, which has been let out since I emigrated in August 2001. Do I have to pay tax in the UK on the gain?

A. As you have lived abroad for nearly 14 years you will probably be treated as "non-resident" in the UK for tax purposes, but we need to check that with a few more questions. If you are a non-resident, the gain would generally be exempt from UK capital gains tax (CGT).

However, a new non-resident CGT applies to gains made on the disposal of residential property for 6 April 2015. This new tax only applies to the property of the gain falling after 5 April 2015. So if you sell the property fairly shortly after April 2015 there should be little gain to tax, and the first £11,100 of the gain will be exempt from tax.

Q. I am the sole director of my own company and will take a salary of £10,600 this tax year. How much dividend can I extract from the company this year without paying higher rate tax?

A. Assuming your company makes sufficient profits you can take out net dividends of £28,606 (90% of £31,785), without breaking into the 40% tax band.

Q. My Dad is nearly 90 years old and has an income of £26,000. My Mum who is 85, has an income of less than £10,000. Can my Mum transfer some of her unused personal allowance to my Dad in 2015/16?

A. Unfortunately, the transferable allowance of £1,060, doesn't apply to people who were born before 6 April 1935. Your father will already receive the married couple's allowance, which is worth up to £816.50 for 2015/16. The transferable allowance is only worth £212 (£1,060 x 20%), so he is better off with the married couple's allowance.

May Key Tax Dates

2 - Last day for car change notifications in the quarter to 5 April - Use P46 Car

19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/5/2015

31 - Deadline for copies of P60 to be issued to employees for 2014/15

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

If you need further assistance just let us know – we're here to help!

Contact us today on 020 8780 2349 to discuss how any of the above affects your personal or business finances or get in touch with us via our contact page to arrange a complimentary, no-obligation meeting.

This blog is a general summary. It should not replace professional advice tailored to your specific circumstances.

by Robin Brown

Tax Tips and News for March 2015

This issue … Salary, dividend or pension contribution; RTI penalties; Child benefit claw-back; Company cars; March Questions and Answers; March Key Tax Dates

Salary, dividend or pension contribution?

When you work for your own company you can decide how much salary to pay yourself, how much to pay into your pension fund, and what proportion of the remaining profits to take as a dividend. The split is important as it will affect the tax and national insurance payable by you and your company.

A salary just sufficient to be covered by your personal allowance (£10,600 for 2015/16), will be tax free, assuming you have no other income. However, if your company has more than one employee (including directors), a salary of over £10,000 (for 2015/16) will mean the recipient has to be automatically enrolled in the company's pension scheme, under the auto-enrolment rules.

You must pay national insurance contributions (NIC) at 12% on your salary above £8,060. So if the company pays you £10,600, you take home £10,295 after NIC deductions. The company will also pay employer's NIC of £343.34 on that salary. However, most companies are entitled to an employment allowance of £2,000 p.a. to set against NIC due for all the employees. This means the company doesn't pay over employer's NIC until the £2,000 allowance is used up.

You could pay yourself a salary just under the NI threshold of £8,060, so you receive an NI credit towards your state pension, but you don't actually pay any tax or NI. However, at that annual salary level you will be "wasting" £2,540 of your tax free personal allowance, unless you have other income to cover it. The 1/9th tax credit attached to a dividend can't be repaid even if the dividend is covered by your tax free personal allowance.

Finally, don't forget your company can make contributions into your pension scheme and get a tax deduction for the cost. From 6 April 2015, if you are aged 55 or more you will be able to draw all funds from that scheme, although 75% of the fund will be taxable in your hands.

The implications of drawing funds out of a pension scheme can be complex and irreversible, so you should take advice from a financial adviser registered with the financial conduct authority (FCA) before making any decisions concerning pensions.

RTI penalties

Last month we warned you about the penalties coming into effect for late filed RTI reports. The good news is that HMRC are cutting employers just a little slack, and will now allow three extra days in which to submit the full payment submission (FPS) report.

Normally the FPS must be submitted on or before the day the employees are paid, but there are some circumstances in which the FPS can be submitted up to 7 or 14 days later. For example, the FPS can be submitted within 7 days of the pay day if the employees' pay can't be calculated until the end of their shift, such as for harvest workers.

If you have already received a late filing penalty notice for a period since 6 October 2014, you can ask for the penalty to be removed. Do this by logging an appeal via the online appeals system. Complete the "other" reason box with the statement "return filed within 3 days", and the penalty should be cancelled. We can do this for you if you send us a copy of the penalty notice.

Penalties for late paid PAYE were also due to be applied automatically from 6 April 2015. However, HMRC is now going to assess the reason for the apparent late payment of PAYE before sending out a penalty notice.

We hope this means HMRC will only issue a late payment penalty when it is clear that PAYE was deliberately paid late. This should avoid penalties being issued for disputed amounts that appear on your business tax dashboard (online accounts) with HMRC. If your online account shows you owe an odd amount of PAYE please let us know without delay.

Child benefit claw-back

If you or your spouse/partner claim child benefit, and at least one of you has adjusted net income of £50,000 or more for the year, the highest earner must declare the benefit on their tax return in order to pay back part or all of the child benefit as a tax charge.

HMRC is writing to taxpayers who it thinks should have paid the child benefit tax charge for 2013/14, but didn't. Unfortunately some people who have received such letters are childless, or haven't claimed child benefit for decades.

If you have received one of those letters by mistake, don't ignore it. HMRC can alter your tax return to collect the tax it thinks is due. You need to reject any such incorrect alteration to your tax assessment within 30 days, but we can help you do this.

If you do earn over £50,000 and want to keep your child benefit for 2014/15 there are a number of things you can do.

First, work-out your adjusted net income. This is your gross salary before tax, less expenses that have not been reimbursed by your employer, but which are tax deductible, such as the cost of travelling to a temporary workplace and professional subscriptions. The self-employed should start with taxable profits and deduct trading losses. Any profits from let property, gross amounts of interest and dividends must also be included.

Next, deduct the grossed-up amount of donations made under Gift Aid, and grossed-up pension contributions made to personal pension schemes. Paying more pension contributions or making additional Gift Aid donations before 6 April 2015 can reduce your adjusted net income, and hence preserve your child benefit.

Remember only 1% of the child benefit is clawed-back for every £100 of adjusted net income above £50,000, so you might lose only a small amount of the child benefit as a tax charge.

Company cars

Does your company still own or lease the car you use for private journeys? You may need to rethink that arrangement in light of the tax charges due to apply in the years ahead.

From 6 April 2015 all company cars will generate a tax charge for the driver and the employer, even electric cars will be taxed on 5% of their list price. The taxable benefit for other low emission vehicles (51-75g/kg) will leap up from 5% to 9% of the vehicle's list price. The taxable benefit for all other cars will also increase by two percentage points. The taxable benefit for high emission cars (over 210g/km), will increase from 35% to 37% of the list price.

In 2016/17 all company car drivers will suffer another 2% hike in taxable benefit, except for those which are already taxed at the maximum of 37% of the car's list price. From 2017/18 the tax shoots up again, as for each extra 5g of CO2 emissions the taxable benefit increases by two percentage points of the list price. "Classic" cars with no recorded CO2 emissions will also be hit with increased taxable benefit charges.

Say you were provided with a new Lexus NX 300 H Sport on 5 April 2014. Its list price is £40,000, and it has a CO2 emissions rating of 121g/kg. If you keep the car for four years you will be taxed 86% of its initial value:

March Questions and Answers

Q. In the February newsletter you said holiday pay was not a contractual right. I don't understand how that can be the case. Please explain.

A. New regulations came into force from 8 January 2015 which indicates that employees can't take a claim to a civil court for breach of contract if their employer fails to pay amounts of holiday pay on the basis of an entitlement under the Working Time regulations. The new regulations indicate that the right to holiday pay is a separate statutory right not contractual right. However, if the amount of holiday pay is stipulated in the employee's employment contract, and that amount is not paid, the employee may be able to claim breach of contract.

Q. My company uses the flat rate VAT scheme, so we don't reclaim VAT on the things we buy. When I set up the company it bought some office furniture for £1,500. I am now moving to new offices and selling the old furniture. Must the company charge VAT on the sale of the furniture even though it didn't reclaim VAT when it purchased the items?

A. Any sales the company makes, including selling on surplus assets, must carry VAT as the company is VAT-registered. There are different rules when selling land or buildings. The fact that the company didn't reclaim VAT when it purchased the assets is irrelevant.

Q. I run a pub which has a cash machine (ATM) inside. I've just received an extra business rates bill from the local authority in respect of the cash machine for £3,600! They haven't charged a separate bill for the ATM before now. Is there anything I can do?

A. You can appeal against the business property valuation, including the treatment of the ATM as a separate property. Do this by contacting the national Valuation Office Agency (VOA). If you can't agree a reduction in the property's rateable value you can take your case to a Valuation Tribunal. But don't delay, as if you succeed in getting a reduction in the rates due, you will only get a refund for periods from 2010 to 2015, if your appeal was made by 31 March 2015.

March Key Tax Dates

19/22 - PAYE/NIC, student loan and CIS deductions due for the month to 5/3/2015

31 - Last minute tax planning for the 2014/15 tax year. Ensure you use up all exemptions to which you are entitled.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

If you need further assistance just let us know – we're here to help!

Contact us today on 020 8780 2349 to discuss how any of the above affects your personal or business finances or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

This blog is a general summary. It should not replace professional advice tailored to your specific circumstance.

by Robin Brown