May’s Tax Tips & News
Welcome to 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!
Flat Rate VAT
The flat rate VAT scheme for small businesses is designed to reduce administration hassle for the businesses that use it, not to reduce the amount of VAT the business pays over to HMRC, but that is often a side effect of using the scheme. – read more >>
A “nudge” in this context is a piece of advice or an arrangement designed to encourage you to pick the option the Government wants to you to choose, such as contributing to a pension, or eating healthier foods. – read more >>
If you have more than one home, – properties actually used as your home – you can elect for one of those properties to be your tax-exempt main home. Once this election is made, it can be changed at any time, and this allows you to manage the tax you pay when disposing of your properties. – read more >>
The Taxman is reaching out to employees with second incomes; which could be anything from selling home-made items, to working as a self-employed consultant. All of the income and expenses from that second source of income should be declared to HMRC, and the correct tax must be paid where a profit has been made. – read more >>
Questions and Answers
Q. If a director takes a £25,000 loan from his company and agrees to pay interest at say 3.5%, does this need to be declared on the company’s tax return or on a form P11D?
A. This must be shown on the company’s corporation return if it has not been repaid to the company within nine months of the end of the accounting year in which this was made. This will generate a corporation tax charge equivalent to 25% of the outstanding amount. The amount of interest paid on the loan is irrelevant for the corporation tax charge.
However, if the loan is made for a fixed period at a fixed interest rate which is equal to, or higher than, the official rate of interest (now 3.25%), there is no benefit in kind charge for the director personally, and no need to report this on the form P11D.
Q. If my employer leases a car to me at the fair market value for such a lease, which I pay in full to the employing company, will I be taxed as if I had the use of a company car with no lease?
A. The law that taxes company cars was recently changed to ensure employees are always taxed on the provision of a company car, irrespective of how that car is provided. So although you lease the car from your employer you will still be subject to the benefit in kind charge, which is calculated as a percentage of the vehicle’s list price when new. The percentage varies from 0% to 35% depending on the vehicle’s CO2 emissions. Any amounts you pay to your employer for the personal use of the car reduce the benefit in kind charge, but you will not be better off using the leasing arrangement.
Q. My husband supports the IT and telecoms systems used by my company, which pays him £150 per week through the payroll for this work. Can the company also pay a small pension contribution on his behalf?
A. Yes your company can pay a pension contribution for your husband as he is an employee of the company, although as he earns less than the personal allowance (£10,000 per year) the company is not obliged to auto-enrol him in a pension scheme. The company can claim a tax deduction for his wages and pension contribution, as long as that total sum is not excessive for the work he does. You may want to get some comparable quotes for IT and telephone systems support to check you are paying a fair rate for the work he does.
May Key Tax Dates
02 – Last day for car change notifications in the quarter to 5 April – Use P46 Car
19 – Deadline for Employers’ 2013/14 end of year PAYE Returns (P35, P14, P38 & P38A). Penalties for non-submission.
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/5/2014
31 – Deadline for copies of P60 to be issued to employees for 2013/14