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Welcome...
To April's Tax Tips & News, our newsletter designed to bring you
tax tips and news to keep you one step ahead of the taxman.
We are
delighted to introduce Dena Morris as our latest team member. She is an
experienced Chartered Certified Accountant, please join us in welcoming her
to the team.
We are sadly saying goodbye to Lauren this month who
has been with us for over a year helping to keep us organised. She has
accepted a 6 month position in Greece, but we look forward to seeing her
return with a great suntan!
Finally we will be welcoming Patrizia
Chessell later this month, who has been appointed as a new office &
accounts assistant, we look forward to her joining the team.
As
always if you have any queries or would like to have a business review
please do not hesitate to contact us on 0118
9419997.
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| Company Car and Van
Changes |
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The
taxable benefit charged for the use of company cars and fuel for those
vehicles is increasing from 6 April 2010. Say you drive a petrol-powered
car with CO2 emissions of 160g/km. In the tax year to 5 April 2010 you are
taxed at 20% of the vehicle's list price. From 6 April 2010 the taxable
benefit for driving the same car will be 21% of its list price.
The tax position for those who have free fuel with their vehicles
is even worse. Until 5 April 2010, the value of the fuel-benefit for all
company cars is based on a fixed value of £16,900 multiplied by the
percentage used to calculate the car benefit. So there is the combined effect of the increased percentage and the increased
multiplier. From 6 April 2010 this value increases to
£18,000. This means the taxable benefit of having free fuel for a
petrol car with emissions of 160g/km will increase from £3,380 to
£3,780.
Company van drivers are also hit by the rise in the
fuel benefit. Currently where free fuel is provided in a company van, and
the van is used for some non-business journeys, the driver is taxed on
£500 per year for the use of that fuel. From 6 April 2010 the van
driver will be taxed on £550 per year for use of the
fuel.
You can reduce these high tax charges by switching to
a low emissions car. Where the CO2 emissions are 120g/km
or less the car benefit for petrol cars is just 10% of the list price, and
half that amount where CO2 emissions are 75g/km or less. We could only find
one car with emissions in that bottom category: Toyota plug-in
Prius, which has an official CO2 emissions rating of only 67g/km.
If your vehicle has zero emissions such as an electric car or van, there is no tax charge at all from 6
April 2010. What's more, when your business buys a new electric vehicle it
can write-off the full cost for tax purposes in the year of acquisition. |
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| VAT Payments and New
Penalties |
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From 1 April 2010 all VAT payments made by cheque will be
treated as being paid on the day the cleared funds reach
the Taxman's account. Previously the VAT was treated as being paid on the
working day the cheque reached the VAT Office. A cheque will normally take
at least three working days to clear. Where VAT payment is received late
more than once in 12 months you may have to pay a default surcharge (a
penalty).
The Taxman will exercise his discretion not to charge a
default surcharge for VAT periods that commenced before 1 April 2010, where
the paper VAT form and the cheque payment are both received on time. VAT
cheque payments for periods that begin on and after 1 April 2010 will have
to clear the Taxman's bank account by the due date, or surcharges may
apply.
Where the VAT return is submitted online the payment for
any VAT due must also be made online. However this can cause problems where
the VAT due for the quarter exceeds £10,000.
Many banks
impose a daily limit of £10,000 for electronic payments for both
business and personal accounts. Larger electronic payments can be made by
CHAPs but this may involve bank charges of up to £35 per transaction.
You need to check with your bank in advance about the best way to pay a
large VAT bill electronically.
If your business is not already VAT
registered but your sales are edging up towards the VAT compulsory
registration threshold, (£70,000 from 1 April 2010), you need to be
particularly careful about when you register. From 1 April 2010 there is a
new set of penalties for failing to register for VAT on time. The penalty
is based on the underpaid VAT. The minimum penalty will be 10% of the VAT
due, and the maximum penalty 100%. The highest penalty will be charged
where there has been deliberate concealment of the need to register for
VAT. |
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| New Rateable Values from 1
April |
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Business rates are a big fixed cost for many small businesses
and it is not easy to move to smaller premises if your sales decline.
What's more, the rateable value of commercial properties is revised every
five years, normally upwards. The latest revaluation takes effect from 1
April 2010, but it is based on the market value of the property at 1 April 2008, when the value of all commercial property
was at an all time high!
If you think you property has been valued
too highly for business rates, you can appeal against the rateable value of
the property. This can be done online through the website of the Valuation
Office Agency (VOA): http://www.2010.voa.gov.uk/rli.
However, before you decide to launch into an appeal you should check what
your neighbouring businesses are paying, and whether they have already
submitted an appeal against their premises value. You can also do that
online on the VOA website.
You need to have good grounds for your
appeal. For example, perhaps something in the property's immediate
surroundings has altered and had a detrimental effect on trade. Perhaps
there are a high number of empty neighbouring buildings, or there has been
a change in the size or use of the premises. The VOA also encourages you to
talk to your local valuation office before submitting a formal appeal
against your business rates.
You can also apply for small
business rates relief where the rateable value of the property is
less than £18,000 (for properties in England). This normally needs to
be done through your local rating authority. There are different small
business rates relief schemes for properties in Wales and Scotland, which
will have various caps for the relief available.
The Budget also
announced a temporary increase in business rates relief for properties in
England with rateable values of up to £6,000. Businesses occupying
such properties can claim full exemption from business rates for 12 months
from 1 October 2010. In addition businesses occupying English properties
with rateable values of up to £12,000 will be able to claim a tapered
reduction in their business rates from that date. |
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| New Employment
Regulations |
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There are a host of new employment related regulations coming
into force on 6 April 2010. This is a brief summary of those regulations
that are likely to affect you or your business.
- Fit
notes - these replace sick notes issued by GPs and will state what
the worker can do, rather than what he or she is prevented from
doing.
- Pension date - the date from which the
individual can draw the state retirement pension will not necessarily fall
exactly on a woman's 60th birthday. For example, a women who reaches age 60
between 6 April 2010 and 5 May 2010 will have a state pension date of 6 May
2010. This date also affects the payment of the employee's NI
contributions.
- NI contribution years - individuals
who reach state retirement age only have to accumulate 30 full years of NI
contributions or credits to gain a full state pension.
- A
single year of NI contributions will count towards the state
pension. Until now a person had to accrue at least one quarter of their
working life (about 11 years for a man, 10 for a woman) to be entitled to
any state retirement pension. Each year of NI contributions will be worth
roughly £3.20 of weekly pension at current rates. It will be
essential to accurately record the NI number for every employee, so that
each individual can collect their pension entitlement when they
retire.
- Home responsibility protection credits (HRP)
will be given on a weekly basis. This will allow the HRP credit to be
combined with actual NI contributions to make up a full year of NI credits.
HRP credits are given where a person stays at home to look after a child
and claims child benefit. |
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| April Question and Answer
Corner |
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 Q. I was
trying to sell my business before the new tax year, to avoid a potentially
large tax bill from an increase in the rate of capital gains tax. I haven't
been able to, so what's the position for the 2010/11 tax
year.
A. The rate of capital gains tax
(CGT) has been kept at 18% for 2010/11, so you have not lost out by
delaying the sale into the 2010/11 tax year. In fact you may benefit from
entrepreneurs' relief that applies to gains on the disposal of businesses,
and reduces the effective rate of CGT down to 10%. The cap on this relief
has been doubled to £2 million for gains made on and after 6 April
2010.
Q. I work as a consultant through my own company
based in Surrey. I have just secured a contract in Manchester, which is
expected to last eight months. Due to the distances involved I will need to
stay in Manchester for at least four nights a week. If I rent a small flat,
rather than stay in a Bed & Breakfast place, can my company reimburse all
the expenses associated with the flat, such as cleaning costs and cooking
utensils?
A. Your workplace in
Manchester will qualify as a temporary workplace as the contract is
expected to last for less than 24 months. Thus all reasonable travelling
and accommodation expenses connected with that assignment can be reimbursed
to you by your company. You should provide receipts for all the expenses,
unless the amount is covered by a dispensation agreement your company has
with the Tax Office, such as for mileage claims.
Q. My
company has recently taken on an industrial unit that needs extensive
fitting-out before it can be used by the business. How can I ensure that
all the fittings I use will qualify for the maximum amount of capital
allowances?
A. The cost of fittings that
qualify as plant or integral features can be set against your company's
Annual Investment Allowance (AIA), which will give 100% capital allowance
in the year of acquisition. The AIA cap has been increased to
£100,000 per year for expenditure incurred on and after 1 April 2010.
Plant is broadly stuff that is not fixed permanently to the building, such
as shelves or display units. Integral features are fixed to the building
and fall into these five categories:
- Cold water systems (not
hot)
- Electrical systems (including lighting)
- Space or water
heating systems, including a powered system of ventilation, air cooling or
air purification
- Lifts, escalators or moving walkways
- External
solar shading
If the fitment does not qualify as plant or integral
features it can qualify for 100% enhanced capital allowance (ECA) if it has
energy or water saving qualities, and it has been included on the approved
ECA list at www.eca.gov.uk. |
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 5 End of 2009/10 tax year. Last day to use up your annual exemptions for
capital gains tax, inheritance tax and ISA's.
14 Return and payment of CT61 tax due for quarter to 31 March
2010.
19/22 PAYE/NIC and CIS deductions due for
month to 5/4/2010 or quarter 4 of 2009/10 for small employers. Interest
will run on any unpaid PAYE/NIC for the tax year 2009/10. |
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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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