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Welcome...
To June's Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.
Client Updates:
A belt
from Eco Emporia was featured in the US edition of Vogue and modelled
by Cameron Diaz www.ecoemporia.com/vogue . It is fantastic to see new clients achieve success and we are
fortunate to have such a diverse array of clients.
The Booking
Agent have asked me to share details of their FREE services with you,
please see attachment for full information.
Future
Events:
Caroline from www.a-count-a.bilty.co.uk and myself are presenting at an FSB event on 18th June "How to manage your
cash flow" more information is attached as we would love to see you there,
but please book soon to avoid
disappointment. |
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Team Update:
We are delighted to
welcome Lauren Filer, who has been recruited as an office assistant, she
has already become an integral part of the team
If you
need further assistance just let us know or you can send us a question for
our Question and Answer Corner.
Please contact us for advice in your own specific
circumstances. We're here to help!
June
2009
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| Car Scrappage Scheme Tax
Implications |
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The car scrappage scheme, which was launched on 18 May 2009,
also applies to small vans that weigh up to 3,500kg. So if you are thinking
of trading in your 10 year old van for a new one, this could be a good
time.
Capital Allowances
The scrappage scheme
gives you a £2,000 discount off the list price, and it is this net
cost which will go into your capital allowances pool. A van will qualify
for the Annual Investment Allowance (AIA), which allows 100% of the cost to
be set against your business profits in the year of purchase. The AIA is
limited to purchases with a total of £50,000 per year, so you should
plan to spread out any large purchases. Any excess cost above the AIA cap
will qualify for capital allowances of 40% if the purchase is made before 1
April 2010, otherwise the excess will qualify for 20% capital allowances
per year.
VAT
If you are VAT registered you
will be able to reclaim the VAT charged on the purchase of a new van,
although not all of it where it is for an unincorporated businesses with
private use. However, you must reduce your VAT claim by £130.43,
which is 15% of the manufacturer's gross discount of £1,000. The
Government contribution to the scrappage scheme of £1,000 per vehicle
does not affect the VAT.
Car Benefits
If your
company is purchasing a car through the scrappage scheme, which will have
some private use, the driver will be taxed on a percentage of the vehicle's
list price. The percentage depends on the car's CO2 emissions, but the list
price is fixed. It is not reduced by the £2,000 discount given under
the scrappage scheme. |
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| Claiming Tax Relief on
Overseas Property |
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In
our Budget newsletter we mentioned that UK residents could now make claims
for tax reliefs associated with furnished holiday let property situated in
other EEA countries. The EEA countries are the 27 EU countries plus
Iceland, Liechtenstein and Norway. The tax reliefs that could be claimed
include:
- Setting losses on the let property against other UK
income;
- Capital allowances on equipment used in the property;
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Capital gains relief on selling the property;
- Entrepreneurs' relief
for disposals made after 5 April 2008;
- Business asset taper relief
for disposals made before 6 April 2008; and
- Business property relief
for inheritance tax.
These tax reliefs could apply for a number of
PAST tax years, but to qualify you need to prove all of the following
applied for the relevant year:
- The letting business was carried
on commercially with a view to a profit;
- The property was available
to let as furnished short-term holiday accommodation for at least 140 days
per year;
- It was actually let for these short-term periods for at
least 70 days per year; and
- Longer-term lettings, which exceed 31
consecutive days let to the same person, did not take up more than 155 days
per year.
If this applies to you we can help you make a claim for
tax relief which may be due. |
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| Credit Crunch Tax Credit
Protective Claims |
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You know the tax system is crazy when the Taxman encourages you
to claim a benefit, which you don't currently qualify for, just in case you
do start to qualify for the payment later in the tax year. That's exactly
the position the Taxman is taking for Working and Child Tax
Credits.
Working Tax Credit is paid to single people who work at
least 30 hours a week, and to parents and disabled workers who work at
least 16 hours per week, but in both cases the total family income must be
below a qualifying threshold. For a single childless person aged at least
25, the qualifying income threshold is currently £13,250 per year.
For a family with children the qualifying threshold is considerably higher,
up to around £80,000 in certain extreme cases, although the exact
amount would depend on the family's circumstances. Child Tax Credit is paid
alongside Working Tax Credit and is assessed on the same claim
form.
The income that counts towards the qualifying threshold is
the family's income spread out over the full tax year. If the family income
suddenly drops part way through the tax year, due to redundancy or business
failure, which is far more likely in the credit crunch, the family's
average income for the tax year may well be below the qualifying
threshold.
This is where the system gets really crazy. The family
or individual must make a Tax Credit claim before 6 July 2009 to allow the
claim to be back-dated to the beginning of the current tax year (2009/10).
Although the claim may initially give rise to a nil payment based on income
received in 2008/09, the claim for 2009/10 can be amended later to take
account of the reduced income for 2009/10. At that point payments will be
made based on the total family income averaged out over the tax
year.
If you feel your family income may be at risk in the current
unstable economic climate, it may make sense to submit a protective Tax
Credit claim before 6 July 2009. Do be careful if you are making a claim as
a single person, when you later become part of a couple, as you must tell
the Taxman when this happens. The Taxman requires couples (mixed or single
sex) to make Tax Credit claims as a couple, and will demand repayment of
Tax Credits paid to individuals who make an invalid single-person
claim. |
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| Beware the VAT
Threshold |
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Even if your business is not registered for VAT, you need to be
aware of the point where your total sales require you to become VAT
registered. This threshold is currently total sales of £68,000 for
any 12 month period ending on or after 1 May 2009.
If your annual
sales are near this limit you need to calculate your total turnover for the
last 12 months, every month, adding the latest month and subtracting the
earliest month each time, to check you haven't breached the threshold.
Alternatively, if you believe your sales for the next 30 days will exceed
£68,000 you must register for VAT immediately.
There are
several advantages of keeping your sales below the VAT
threshold:
- You don't have to register for VAT, but you can if
you wish to.
- If you are not registered for VAT, your customers do not
pay VAT on top of your basic prices. This makes your goods and services
appear to be better value for money for non-business customers or other
small non vat registered businesses.
- On your 2009/10 self-assessment
tax return, which will be issued in April 2010, you will only have to
complete three lines to report your business profits.
- You do not have
to submit your VAT returns online.
Currently a small percentage of
VAT-registered businesses submit their VAT returns online each quarter. But
for periods starting after 31 March 2010 all VAT-registered businesses with
a turnover of £100,000 or more will be compelled to submit their VAT
returns online. Also any business that becomes VAT registered after 31
March 2010 will also have to submit all their VAT returns online, whatever
its turnover.
If you become VAT registered before 1 April 2010 you
will not be forced into online filing straight away, as you will be able to
continue with paper VAT returns until your turnover exceeds £100,000,
or the law is changed.
There are of course penalties for failing
to register on time so please contact us if you need any help with the
decision to register for VAT. |
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| Question and Answer
Corner |
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 Q. My business requires me to have up to
100 days a year away from home speaking at conferences. I always travel
first class rail, to allow me to prepare notes on the way, and stay in
four-star accommodation. The Tax Inspector has said my expenses are
excessive and I should only get a tax deduction for the cost of second
class travel and two-star accommodation. Is he
correct?
A. The Tax Inspector is not
correct. His own Employment Income Manual at paragraph EIM 31835 says: "The
tests that apply to travel expense relate to the nature of
the expense and not to the amount." It goes on to say:
"You should not refuse a deduction for first class rail travel, if that has
been incurred, on the basis that the same journey could have been made more
cheaply in standard class". As long as the travel and accommodation costs
were incurred wholly and exclusive for your business of lecturing the full
cost can be claimed.
Q. I pay income tax at 40%, but my
wife and child have no income at all. If I purchase fixed income bonds in
their names will the interest be effectively tax free, as it will be
covered by their personal allowances?
A. When you purchase the bonds in the names of your relatives you will be
giving them the capital you invest, as they will have complete control of
the bonds. There is no limit on the amount you can give to your spouse,
although there could be inheritance tax implications. Your wife will be
taxed on the interest from her bond, but if this does not exceed her
personal allowance of £6,475, there will be no tax to pay. If your
child is aged under 18, the interest from his bond will be taxed as part of
your income if it exceeds £100 per year.
Q. If I
start earning money from a website I have setup in my spare time, will I
have to pay tax and NI on that income? I am also employed full time on a
salary of £25,000 a year.
A. You
should register your new web business with the tax office as a
self-employed business. We can help you do this if you wish. Your
self-employment will not affect your employment, and your employer need not
know about your website business. However, you will have to complete a tax
return each year to declare all of your income; from your business,
employment and any investments. By registering as self-employed you will
also be automatically registered to pay class 2 NI in respect of your
self-employed profits. If these profits are expected to be less than
£5,075 for the current year, you should complete form CF10 which is a
request for exemption from paying class 2 NI. |
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| Key Tax Dates for June
2009 |
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 19/22 - PAYE/NIC and CIS
deductions due for month to 5/6/2009.
30 - Deadline for UK businesses to reclaim EC VAT chargeable in
2008.
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 Please contact us if we can help you with these or
any other tax or accounts matters.
In addition, if there's anyone
else who you think would benefit from the newsletter, please forward the
email to them or ask them to contact us to be added to the newsletter list. |
 If you are not already a client and are interested
in becoming one, we would love to come to meet with you to discuss how we
can help and provide you with a competitive quote for our
services.
All new client consultations are provided free of charge
and without obligation. |
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Goringe & Co. is an accountancy practice specialising in providing business and accounting services for companies and sole traders in West Berkshire and the surrounding area.
We deliver a professional, cost-effective, and reliable service. Visit our website http://goringeaccountants.co.uk for more information. |
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