We have prepared a "round up" of some of the new opportunities
offered by the Finance Acts 2005 - so far we have had 2! There
are also articles that include a "VAT warning" for publicans,
new minimum wage rates, a possibility of overpayments of NIC
contributions, and new rates to claim by company car drivers
who pay for their own fuel.
Tax Round Up - post the Finance Acts 2005
Due to the general election earlier this year we have had
to endure 2 Finance Acts and a whole host of tax law rewrites.
We have listed below some of the new legislation - particularly
where this offers a new opportunity.
Trusts - New £500 income band trusts, and
trusts for children and disabled beneficiaries will benefit
from changes in the rates of tax charged.
Childcare Vouchers - Childcare vouchers
can now be offered by employers up to £50 per week, tax and
national insurance free to employees with children.
Computers and bicycles - Both items can
now be provided by employers free of benefit in kind charges.
Capital Allowances on business premises - This
will allow a useful 100% first year allowance for the costs
of renovating and converting business premises. Property must
be in disadvantaged area and have been vacant for one year.
Relief will be clawed back if property is sold within 7 years.
As this is a State Aid provision EU approval is required which
may not be given until 2006.
Civil Partnerships from 5 December 2005 - Same
sex couples can enter into a formal civil partnership from
this date. This means they will be treated the same as married
couples for tax purposes. Although this will generally advantage
couples from an inheritance tax and capital gains tax point
of view, there are planning concerns - particularly ownership
and elections for a principal private residence and tax credits.
Anti avoidance - Included in both Finance
Acts 2005 are a variety of measures to counter what the government
considers to be tax avoidance schemes. Whilst the detail is
beyond the scope of this short newsletter it does demonstrate
the Inland Revenue's commitment to counter such "tax avoidance"
arrangements.
National Minimum Wage - Increases October 2005
The adult rate (for workers aged 22 years and over)
will increase from £4.85 per hour to £5.05 per hour.
The development rate (for workers aged 18-21 years) will
increase from £4.10 to £4.25 per hour.
This development rate can be applied to new workers aged 22
and above with a new employer and who are receiving accredited
training.
Guidance for payments to younger workers (generally minimum
wage rate for 16-17 year olds is £3 per hour) and piece rate
workers can be obtained from the wage helpline 0845 6000 678.
HMRC VAT section - Help for publicans!
HMRC issued a news release on the 19 September 2005 in which
they offered to help publicans.
"We will be working with individual pubs and the industry
as a whole, to help Public Houses pay the right tax at the
right time, and to provide information about the schemes we
offer, which can simplify VAT matters."
They further advise:
"Thousands of pubs all over the country can expect to receive
a letter from HMRC, giving some advice about the particular
issues, problems and mistakes that VAT Officers come across
when they visit
pubs.". So far so good!
And then:
"The letters and advice will be backed up by a programme
of visits to pubs by VAT assurance officers, some of which
will be without an appointment."
So beware, apart from the prospect of receiving written advice
on VAT matters you may also get unsolicited visits!
And don't forget HMRC is now a combined government agency.
If a VAT officer calls, and is unhappy with your VAT record
keeping and compliance, it is more than likely that other
departments will be advised and come calling. PAYE inspections
and so on.
In the light of this "revelation" by HMRC it may well be
of benefit if our publican clients arrange for us to take
a look at their records in the first instance. Please call
if you would like to organise a "VAT health check".
Company Car Users that pay for their own fuel.
If you have the use of a company car but pay for your own
fuel, the rates per mile advised by the tax office, increased
from the 1 July 2005.
You can now claim the following rates per mile with the blessing
of HMRC.
1400cc or less - petrol 10p, diesel 9p, LPG 7p.
1401cc to 2000cc - petrol 12p, diesel 9p, LPG 8p.
Over 2000cc's - petrol 16p, diesel 13p, LPG 10p.
Don't forget that if your employer does not reimburse you
for business related fuel costs, you can make a claim on your
tax return.
These rates are also accepted by HMRC for VAT purposes. Employers
can still recover the deemed VAT input tax included in the
petrol related mileage rate.
National Insurance Contributions - can you pay too much?
Indeed you can!
For readers of our newsletter who are not clients you should
apply for a refund if your NIC contributions for 2004-2005
have exceeded:
Employed and/or self-employed
If your combined national insurance payments have exceeded
£3,025.77. (This could comprise class 1, class 2 or class
4 contributions)
Self Employed only.
If your payments have exceeded £2,266.65. (This will be made
up of class 2 and class 4 contributions only).
Losses in self employment are also losses for NIC purposes
and should be taken into account when calculating a potential
overpayment.
Claims are subject to a six year time limit. If you would
like a quote for us to make the claim for you, please call
for an appointment.
Small Business Rate Relief - an update
In England and Wales
Last month we reported on the Small Business Rate Relief
for England and Wales.
Just to set the record straight there is no such relief available
at present in Wales - the Welsh Assembly have voted against
the adoption of the relief for the time being.
Apologies for the error, our comments under the heading England
and Wales applied to England only.
Tax Diary October/November 2005
1 October 2005 - Due date for corporation
tax for the year ending 31 December 2004.
19 October 2005 - PAYE and NIC deductions
due for month ending 5 October 2005. (If you pay your tax
electronically the due date is 22 October 2005)
1 November 2005 - Due date for corporation
tax for the year ending 31 January 2005.
19 November 2005 - PAYE and NIC deductions
due for month ending 5 November 2005. (If you pay your tax
electronically the due date is 22 November 2005)
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DISCLAIMER - 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
