To December’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.
If you need further assistance just let us know or you can send us a question for our Question and Answer Section.
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.
Please contact us for advice in your own specific circumstances. We’re here to help!
HMRC continue with modernisation plans
The recent formal announcement that HMRC will be replacing local offices with thirteen large regional centres has served to alert the general public to what tax professionals and accountants have known for some time – that to meet government cost and performance targets, HMRC must cut back on frontline staff and take forward digital interactions with taxpayers and their advisers. The announcement comes at a time when HMRC are also facing criticism over customer service issues.…
Company cars – April 2016 increases
The financial benefits of driving a company car have continued to erode over recent years, but this benefit remains one of the most popular and potent perks of a job. In general terms, less tax will be payable on ‘greener’ cars, but the tax charges on lower emissions vehicles are set to rise significantly in real terms over the next few years.…
The government announced at the summer 2015 Budget, that a new dividend allowance of £5,000 will be introduced from 6 April 2016. Broadly, from that date, it is expected that the existing dividend tax credit will be abolished, a new annual dividend tax allowance of £5,000 will be introduced, and the rates of tax on dividend income will change. …
HMRC win ‘Rangers’ tax case
The Scottish Court of Session’s recent judgment in the ‘Rangers’ EBT’ case (Murray Group Holdings & Others  CSIH 77) has attracted much attention in the press, with opinions of both support and criticism being voiced. It is not often that a Court both overturns the decisions of two Tribunals beneath it, and expressly declines to follow previous cases that have gained a certain acceptance.…
Comprehensive Spending Review, 2015: what will it do for small businesses?
George Osborne’s Comprehensive Spending Review may have been eagerly expected by small businesses, yet in many respects it failed to deliver anything notable to ease the plight of entrepreneurs. There was little recognition and appreciation for the major contribution that small businesses make to the overall UK economy. After scrutinising the Autumn Statement and Spending Review, accountants have been in broad agreement that the overall package delivered little of real significance for the UK small business sector.…
December Questions and Answers
Q. Can I claim for the time I spend repairing my rental property? I own three rental properties and spend a considerable amount of time each year undertaking various necessary repairs. Can I pay myself say, an hourly rate, for the time I spend on the properties and claim a corresponding deduction in my accounts?
A. Any amounts taken from the property rental business will simply be viewed as a withdrawal of profits from the business and taxed accordingly. The HMRC Property Income Manual states ‘A landlord can’t deduct anything for the time they spend themselves working in their own rental business. They can deduct any wages or salaries they pay to their spouse, civil partner or other relations for working in the rental business provided the amounts paid represent a proper commercial reward for the work done. The spouse, civil partner or relative will be taxable on their earnings if their income is large enough’.
Q. What is the difference between zero-rated and exempt supplies for VAT? I have recently started running my own business providing training services. HMRC have advised me that VAT is not charged on the type of services I am providing. Does this mean that my services are zero-rated for VAT or actually exempt? Do I need to register for VAT? I am confused!
A. Although both zero-rated and exempt supplies result in no VAT being applied to the supply, the consequence is very different between them and it is important to get it right.
Zero-rating is a rate of VAT, albeit at zero per cent. The goods and/or services to which it applies are taxable supplies. This in turn renders any supplier of zero-rated goods and/or services liable to register for VAT, where appropriate (see the GOV.uk website here for further information on registration). The advantage of VAT registration is that VAT can be reclaimed on costs.
However, a business making solely exempt supplies is not making taxable supplies, so cannot register for VAT. Consequently, all VAT incurred upon expenditure becomes an additional irrecoverable cost.
Where a supply could be either zero-rated or exempt, zero-rating takes priority.
Q. Is medical treatment taxable? One of my most valuable employees has been ill over recent years and as a result has had to take several weeks off work. If I pay for any medical treatment on his behalf, will my employee be liable to tax on it?
A. Expenditure by employers on medical treatment for employees is generally chargeable to income tax either as a payment of earnings or as a taxable benefit. However, from 1 January 2015, an exemption from income tax applies where an employer funds recommended medical treatment where the recommendation itself meets certain specific requirements. This means that expenses incurred by an employer to cover medical treatment which is recommended to an employee for the purposes of assisting the employee to return to work after a period of absence due to injury or ill health should not be treated as a chargeable benefit on the employee. The exemption applies to expenditure up to a cap of £500 per tax year per employee.
See the HMRC Employment Income Manual here for further details.
December Key Tax Dates
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/12/2015
30 – Deadline for 2014/15 self assessment online returns to be filed if you are an employee and want tax underpaid to be collected by adjustment to your 2016/17 PAYE code (for underpayments of up to £3000 only)