A mix of information this month, and please note
the payroll deadlines set out in the Tax Diary below.
Do you Provide Vans for your Employees - or do you
drive a company van?
New rules came into effect on the 6 April 2005:-
Those currently charged £500 benefit in kind for free use
of the van for private motoring will no longer suffer this
charge as long as private use is restricted to ordinary commuting
to and from work.
Very occasional private use should not invalidate this exemption
- e.g. visiting the dentist twice a year on the way home,
but calling in at the supermarket every Friday is likely to
(i.e. regular private use) - or driving the van to France
on holiday (i.e. extensive private travel!)
Those with unrestricted use of a van will remain subject
to a taxable scale charge of £500 per annum or £350 if the
van is more than four years old at the end of the tax year.
Employers who have drivers that have restricted use from
6 April 2005 should review their records and notify the Revenue
of any employees who should no longer pay tax on their use
of a company van! Contracts of employment may need to be amended
and other rules and in-house procedures put in place.
General rules for ALL vans new and old from 6 April 2007:-
The reduction for older vans will be abolished. At this stage,
unrestricted use of company vans will be taxed at £3,000 plus
an additional charge of £500 if free fuel is provided for
private motoring.
Landlords - further twists on let properties
Furnished Holiday Lettings - what is a "holiday"?
Income from furnished holiday properties is treated as a
trade. (Property needs to be available to let for at least
140 days per year and actually let for 70 days. Normally the
property should not be let to the same tenant for more than
31 days.)
So where is the twist?
The legislation does not dictate what a 'holiday' is, or,
where it should be held. A city centre apartment let short
term to businessmen, for instance, should qualify.
Furnished Holiday Let property will attract more substantial
relief, such as rollover relief and taper relief for capital
gains tax purposes, and business property relief reducing
inheritance tax. Losses incurred by letting the property can
also be set off against other earnings.
Furnished Holiday Lettings - possible VAT complication.
Income from letting holiday accommodation is a standard rated
supply for VAT purposes. Landlords will need to consider this
fact carefully!
If any of the following circumstances apply please call,
as we may have to consider registration for VAT purposes or
including your rental income and outgoings in existing VAT
registrations and returns.
-
Are your total rents received in excess of the current
VAT registration limit? (From the 1 April 2005 this is
£60,000.)
-
If you own the property in your own name, or jointly,
are you already registered for VAT as a sole trader or
partnership? If the property is held jointly the VAT registration
for the separate business partnership would need to be
in the same (collective) names.
Rental Property - other than furnished holiday lets.
Domestic properties let long term as an investment, and not
a trade, attract relief for investment in energy saving measures
(loft or cavity wall insulation) until 5 April 2009.
Landlords can claim a maximum allowance of £1500 per house.
This must be capital expenditure incurred exclusively for
the purposes of the rental activity, with no claim for capital
allowances or other tax deductions already applying.
PAYE - Coding out other income.
If you have income included in your self assessment in addition
to income on which you pay tax through PAYE, you may find
cash flow easier if the tax due on your self assessment income
is paid on the usual due dates rather than being dealt with
through your PAYE code.
To make sure such income is NOT included in your PAYE coding,
you can object to it being 'coded out'. If you object,
then the Revenue should remove it.
Please note that where other income is coded out for the
first time in 2005/06 and you remain in self assessment then
payments on account will still be based on 2004/05 liabilities.
This means that income may be double-counted and result in
overpayment until your 2005 Tax return is done, unless you
make a claim to reduce payments on account.
If you have issues in these areas please call and we will
be pleased to sort out your code number, and if appropriate,
contact the Revenue on your behalf to apply for a reduction
in your payments on account.
VAT late payments - Default Surcharges.
If you have been obliged to make a late payment of VAT resulting
in a default surcharge - primarily due to unforeseeable and
unreasonable late payments made by your customers to you -
then under certain circumstances you may be able to appeal
against this surcharge.
Insufficiency of funds is not normally a reasonable excuse
for non-payment of VAT so how do you know which late payments
may give grounds for an appeal? Circumstances are complicated
and if you think they apply, please get in touch to check
- but the following points should give you guidance:-
. Could you have reasonably foreseen the late payment or
are they due to sudden events beyond your control? (e.g. late
withdrawal of overdraft, late payment by an otherwise reliable
customer, insolvency of a large customer, fraud, burglary
or act of God?)
. Did you receive enough money within the quarter to cover
the VAT payment?
. Have you taken reasonable steps to overcome the difficulties
you face in payment of your VAT?
. Are you tied to a single or very few customers (for instance
a county council or government department?)
. Have any actions by HM Customs and Revenue contributed
to your problems (late reply to correspondence, investigations
or late repayments, for instance?)
In addition to the items mentioned above we are aware that
successful appeals have been made where the responsible person
(bookkeeper, proprietor etc.) has fallen ill, absconded, died
or otherwise has been unable to deal with the computation
or payment of a VAT return on time. If this happened, say,
in the first few weeks of a quarter then Customs would normally
expect a business to be able to cope, but if it were to take
place in the last couple of weeks then there may be grounds
for appeal.
If any of the above circumstances could give you grounds
for appeal - call us!
Tax Diary May/June 2005
1 May 2005 - Due date for corporation tax
due for the year ending 31 July 2004.
19 May 2005 - PAYE and NIC deductions due
for month ending 5 May 2005. (If you pay your tax electronically
the due date is 22 May 2005)
19 May 2005 - The payroll form P35 and P14's
must be filed by this date - employers late in filing this
form may receive a penalty. If you have not already done so,
there may still be time to register to send in this return
electronically - you may then qualify for the £250 Revenue
incentive payment!)
31 May 2005 - Ensure all employees have
been given their P60s.
1 June 2005 - Due date for corporation tax
due for the year ending 31 August 2004.
19 June 2005 - PAYE and NIC deductions due
for month ending 5 June 2005. (If you pay your tax electronically
the due date is 22 June 2005)
6 July 2005 - Ensure forms P11D(b), P9D
and P11D are submitted to the Revenue and copies or extracts
given to your employees.
Summing Up
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Summing Up - PLEASE NOTE: The ideas shared with you in this
email are intended to inform rather than advise. Taxpayers
circumstances do vary and if you feel that tax strategies
we have outlined may be beneficial it is important that you
contact us before implementation. If you do or do not take
action as a result of reading this newsletter, before receiving
our written endorsement, we will accept no responsibility
for any financial loss incurred.
