LBW Accountants Blog

VAT Flat Rate Scheme

 The VAT flat rate scheme is an administrative time saving scheme introduced by H M Revenue & Customs whereby registered businesses with an annual turnover of less than £150,000 can save time in submitting their VAT returns. The scheme is optional and although it was introduced to be “revenue neutral”, it is quite clear taxpayers would only opt for the scheme if they were to save money.

The scheme operates by identifying which business category the taxpayers falls into which in turn determines the appropriate flat rate. The business then pays over to H M R & C flat rate VAT by reference to their gross business turnover. There is no claim for input VAT (the time saving aspect of determining this figure) with the exception of making a claim for input VAT on capital assets costing £2,000 or more being an acquisition of capital assets from the same supplier at the same time.

The crucial figure in the calculation is the gross business turnover. This will comprise the gross of VAT sale if the sale itself is chargeable to VAT but will also include any sales by the business which are either zero rated, exempt (business rental receipts) or outside the scope of VAT (bank interest). There have been cases in which bank interest has been argued to not be included as business turnover if it is merely a temporary source of income but care would be needed if it can be regarded as a regular business source.

For example if sales for any particular quarter were say £30,000 on which VAT at 20% is £6,000 and the business also had a rental receipt of £4,000, the flat rate percentage would be applied to £40,000 (£30,000 + £6,000 + £4,000).

Due the increase earlier this year in the basic rate of VAT, businesses also need to be aware of the new limit for mandatory withdrawal from the scheme. This now stands at £230,000 inclusive of VAT.  

Business records check

H M Revenue & Customs are proposing to introduce realtime business records checks. This will involve them sending out letters to arange a visit to look at the record keeping of business, the idea being to make recomendations to improve the records such that they have more confidence in their accuracy for making returns of income for the business.

It has however been identifed that agents such as ourselves are not receiving copies of these letters and it has also been identifed that where telephone contact is made this is being used to elicit information about the business in circumstances where taxpayers may not be guarded in the answers they are giving and whci may be open to misinterpretation.

The watchword here is caution. If you receive correspondence from H M R & C it should not be assumed we will receive copies and thus you should contact this office immediately on the receipt of any communication from H M Revenue & Customs and you should also be cautious of any telephone contact made and whilst not wishing to be obstructive you should request that any such queriesshould be in writing.

Short Life Assets

Short Life assets elections are a method of accelerating the capital allowances which can be given on plant and machinery.  In recent years this claim has fallen into disuse due the introduction of first year allowances and annual investment allowances (AIA). However, with the reduction of the AIA to £25,000, the use of this claim may make a comeback.

The claim can be made for any assets which do not qualify for AIA. The assets themselves must have an expected economic life for the business of less than 8 years (this was 4 years prior to the 2011 budget announcements). Each assets is claimed for in the normal way but instead of being pooled with all other assets it is treated entirely separate such that when it is either sold or scrapped any balance of allowances can be claimed in the relevant year rather than the carrying value being absorbed and thus unidentifiable from the rest of the pool of capital allowances. This claim should not be used for any assets on which a profit on sale is likely (this would accelerate a balancing charge!).

To ensure the claim is made appropriately a detailed fixed asset register would need to be maintained to identify when the asset is sold or scrapped and indeed if it does exceed an 8 year life, the time when the asset should then be transferred back into the main pool.

Business Premises Renovation Allowances

This again a little used relief which originally had a lifespan expiring in 2012 but which has now been extended for a further 5 years.

It is designed as an incentive to bring derelict or unused properties back into use by allowing 100% of the expenditure on the conversion or renovation costs to be deductible for capital allowances purposes.

Naturally there are a number of qualifying conditions. First of all the property must be located in a disadvantaged area as defined by the Assisted Areas Order 2007. To determine whether or not your property is in such an area a post code search on www.dtistats.net/regional-aa/aa2007.asp will provide an initial indicator and a subsequent contact with the DTI will confirm the position.

The expenditure itself must be capital (if it has been written off to profit an d loss you would have already had your relief) and must be on the conversion of a qualifying building into business premises.

The property must also have been unused for 12 months prior to the commencement of the work and must not have previously been used as a dwelling.

Certain trades are excluded being fishing and aquaculture, shipbuilding, coal and steel industries as well as synthetic fibres, the primary production of certain agricultural products and the production and manufacture of substitute milk or milk products!

Tax Disclosure Initiative

H M Revenue & Customs have recently announced a new disclosure initiative.

The purpose of the initiative is to encourage taxpayers who have for one reason or another not made a full disclosure of all their income. The initiative, which is entitled “The Plumbers Tax Safe Plan”,  is focused on plumbers, gas fitters and those who work in the heating and associated trades but despite the title, is in fact open to all taxpayers.

The initiative operates in a similar fashion to the previous more focused initiatives in so far as taxpayers who wish to take advantage of the initiative have a set period of time to notify a registration for the initiative (in this case 31^st May 2011) and they then have until 31^st August 2011 to identify the tax due and make arrangements to make payment of the tax, interest and penalties.

The benefits of taking advantage of the disclosure facility, where applicable, are that it puts the taxpayers affairs straight and the penalty charged will be either 10% or 20%.  If H M Revenue & Customs identify themselves any undisclosed income the penalties can range from 30% to 100% and most often will be at the upper end of this scale as the disclosure itself will have been unprompted on the part of the taxpayer which carries a higher penalty.

It has also been suggested that H M Revenue & Customs will only require disclosure of the previous 5 tax years (although this is worded specifically for plumbers etc.).

Whilst we would have no reason to believe income will not have been disclosed previously, there may be some sources of income overlooked or indeed you may be aware of someone who has undisclosed income and who would benefit from the facility now being offered. If either should be the case please let me know so we can discuss the best way forward.

End of tax year planning

The current tax year finishes on 5^th April 2011. This means there is only just over one month remaining for you to take advantage of certain opportunities before this date which cannot be carried over to the following year.

Inheritance & Gifts

You can give away up to £3,000 each year in gifts without having to take this sum into account for inheritance tax purposes. This will reduce the value of your estate and hence your future IHT liability. You should always ensure that the making of the gift does not impact on your current standard of living. The sooner you are able to start making gifts of this nature the better.

You can carry forward for one year only any unused part of this allowance so if you did not make the use of this allowance last tax year you can use that allowance this year as well but you must use this year’s allowance first before using last year’s allowance.

Capital Gains tax

Each taxpayer has an annual exemption for gains made of £10,100. If the allowance is not used in any tax year it is lost.

You should consider selling assets prior to the year end and then repurchasing them. The sale will be such that the gain falls below the annual exemption limit. This will result in the increase of the base cost for those assets for any future disposal and thus reduce the tax charge in the future without giving rise to a tax charge now. Consider the following simple example. An asset cost £10,000 is now worth £20,000 but in (say) 2 years time may be worth £40,000. If the property was sold in 2 years time the capital gain would be £30,000(i.e. £40,000 less £10,000). With an annual exemption of £10100(assuming no increase in this allowance) the amount of gain which is taxable is £19,900. If however the asset was sold and repurchased the gain made on this sale would be £10,000 and as this is below the annual exemption no tax arises. The advantage is that the base cost of this asset has now increased to £20,000 so that when it is sold in 2 years the gain becomes £20,000 (£40,000 less £20,000). After deducting the annual exemption the taxable gain is now £9,900.

The costs of buying and selling the asset does need to be considered and so too should the specific matching rules which apply to shares where the repurchased shares are actually matched with the sold shares if the repurchased takes place with 30 days of the sale. Possible fluctuations in the share price between sale and purchase would also need to be taken into account as well. For more detail on this matter please contact Gary who will be glad to discuss this with you.

Personal Taxes

As with Capital gains tax there is an annual tax free allowance which if not used cannot be carried forward to a later year. It is important that non-working spouses who have no private sources of income are fully using their allowance. The same applies to adult children who are perhaps attending higher education. If it can be identified they can provide some input to your business then they can be paid to use up their allowance.

Care need to be taken with national Insurance thresholds and the specific rules for employing students during holiday time.

Thought should also be given to transferring income producing assets between husband and wife to move income from one to the other to make use of unused personal allowances as well as moving income from a 40% taxpayer to a 20% taxpayer. This may not be relevant to the current tax year due to the proximity of the end of the year and the fact that up to 11/12ths of the income for the current year will already have arisen but the full benefit can be taken for the whole of the next tax year. Any such transfer would need to be made on a “no-strings attached” basis.

Investments

You may have recently received the first of the monthly newsletters from LBWFS regarding a number of financial products which are currently available so we will mention, only briefly, the importance of using up you annual ISA allowance, ensuring your pension contributions for the current year are paid up to your required maximum and if you wish to make any additional contributions are paid before the end of the year. Investments in Venture Capital trusts will also need to made before the end of the tax year although by their very nature care needs to be taken with this risk type of investment.

If you wish to consider any of these tax efficient investments please contact Dominic who will be able to assist you.

Entrepreneur’s relief: Selling your business (Pay 10% tax)

Entrepreneur’s relief is a capital gains relief, available on the disposal of business assets, which was introduced with effect from 6^th April 2008 and replaced the previous relief, taper relief. Taper relief was available for the disposal of any kind of asset both business asset and non- business asset there being two scales depending on the type of asset. However, entrepreneur’s relief is only available for disposals involving business assets.

A business asset for the purposes of the relief is essentially involves a business being carried on as a trade.  A trading company for example can carry out non-trade activities. However, if these become substantial then the relief may be in jeopardy.  Substantial in this case is regarded as being 20% by reference to such measures as turnover, asset values, expenses and time spent by officers and employees of the business

There have been a number of changes in the short life this relief has been available but essentially the end result is that tax is paid at an effective rate of 10% on the qualifying disposal as opposed to 18% or 28% (depending on the taxpayers marginal rate of tax). With current top rates of income tax at 40% and 50%, this is quite an attractive relief.

Naturally with such a low rate of tax applying, there are a number of conditions which need to be satisfied. It will also be necessary to distinguish between the disposal of a business or part of a business, the disposal of business assets and the disposal of shares in a limited company.

The disposal of a business is straightforward. To qualify the business has to have been run as a trade (this will exclude rental businesses) and has to have been owned for more than 12 months. Typically the sale will be of the goodwill of the business either to a third party or to a limited company set up by the vendor to take advantage of this relief.

If there is a disposal of a business to a limited company set up by the vendor, this will be regarded by H M Revenue & Customs as a sale between connected parties. In this instance care will need to be taken of the valuation of the goodwill. H M Revenue & Customs may question the valuation of the goodwill either to realise more capital gains tax or to suggest the goodwill has been overvalued and if the sale proceeds have been left on a director’s loan account with the new company (the usual method of operation as the new company will not have the funds to pay for the goodwill) and the funds withdrawn they may suggest the director’s loan account has been overdrawn with the tax consequences that arise being relevant.

The disposal of business assets (known as an associated disposal) may be a little more difficult to achieve. Typically this will arise in the situation where the business assets are kept out of the business accounts but are used for the business purposes. For example the property from which a business is run may be held in personal ownership whilst the business is run by a limited company. In these circumstances the entrepreneur’s relief will be available only if the disposal of the property arises at the same time as the withdrawal of the taxpayer from the business either by way of the sale of the shares in the relevant limited company or accompanies the sale by the individual of the business or interest in the business concerned.

Particular care does need to be taken with the timing of the disposal of the property or asset if they are to be sold to someone other the acquirer of the shares or business. The disposal of the property prior to the sale of the shares could render the sale of the asset non-qualifying for the relief as it is necessary for the asset to be used for the purposes of the business up to the time of the sale of the shares or business.

Because of this restriction H M Revenue & Customs will look carefully at the sale of part of a business to determine whether it is in fact part of a business or just the sale of business assets. The rules surrounding the entrepreneur’s relief are similar to those which operated with Retirement relief which was withdrawn in 1998 and H M Revenue & Customs have indicated they will rely on decided cases from the former relief in deciding whether or not entrepreneur’s relief will apply to the disposal of part of a business.

If the conditions for the relief are satisfied there may be an apportionment of the gain between qualifying and non-qualifying where for example part of the property is not used for the business purposes or where it has only been used as such for part of the time of ownership. In addition an apportionment will be required where rent has been charged by the owner to the business for the use of the property (but this will only apply after 5^th April 2008 due the fact that the previous relief, taper relief, did not impose such restrictions and it was common for rent to be charged as a result)

The final category to consider is the disposal of shares. Again there are restrictions covering this type of disposal as well. These conditions require the company to be trading and the shareholder to hold at least 5% of the ordinary and voting share capital of the company as well as being an officer or employee of the company. However, the legislation implies, in the case of shares, that the disposal of part of a holding will qualify for the relief providing the shares satisfy the qualifying conditions in the 12 months prior to sale.

As we indicated at the outset this is a generous relief and can typically result in sole trader who perhaps has a successful business transferring that business to his own limited company. The value of the business is then left on director’s loan account and after 10% tax has been paid the remaining 90% will be available for withdrawal to meet normal day to day living requirements. However withdrawal of these funds for this purpose should only be made once a normal salary has been paid (to ensure there is continuity in the national insurance record) and the payment of a dividend. This fund of money can then be used to top up having only had 10% tax paid or for one off expenditure (funds permitting) without any further taxes being due.

Here at LBW we are able to advise and structure your business activities to enable you to take the best advantage of this relief and to ensure you do not fall foul of any of the pitfalls that can arise. If you feel the relief may be of some benefit to you please contact us and we will be glad to discuss this further with you.

This month’s topics:

1.    Employee mileage rates and VAT

2.    Tax payment dates – getting it right and avoiding interest and penalties

3.    Tax payment methods – avoiding the pitfalls

Happy New Year and welcome to this month’s newsletter from L B W Chartered Accountants. We are sending the newsletter earlier than normal as the office will be closed from 2pm on the 23^rd December and will reopen on 4^th January 2011.

 Employee mileage rates and VAT

Any expense incurred by an employer in reimbursing an employee for business journeys they undertake will be tax deductable for the employer and if the correct level of reimbursement is selected will not be taxable on the employee. Clearly this would not apply if the whole of the fuel, both business and non-business, was paid for by the employer such that a fuel benefit applies.

Naturally H M Revenue & Customs have set what they see as reasonable levels of reimbursement and will regularly update those levels as they see fit.

If any employee is provided with a company car and pays for all the fuel for the car themselves then the levels of reimbursement per mile with effect from 1^st December 2010 which do not give rise to a taxable benefit on the employee are as follows:

                                    Petrol                           Diesel                          LPG

1400cc or less             13p                              12p                              9p

1400cc to 2000cc       15p                              12p                              10p

Over 2000cc               21p                              15p                              15p

The same rates will apply to an employee reimbursing their employer in circumstances where all the fuel is paid for by the employer and the employee is required to reimburse any non-business mileage.

Naturally as this system is open to abuse H M Revenue & Custom is will require mileage logs to be maintained incorporating full details of the journey undertaken including date, mileage and purpose of the journey.

If however, the car in question belongs to the employee then they may be reimbursed up to 40p per mile for the first 10,000 business miles and 25p thereafter. Again mileage logs would need to be maintained to support the claim.

In all instances of reimbursement a VAT claim can be made by a VAT registered business relating to the fuel element of the reimbursement. If the reimbursement is solely the fuel then the VAT claim is based on the rates in the table above. If the reimbursement is the 40p and 25p rates quoted above then the fuel element can be based on the table printed above for the fuel only option.

In all cases the VAT fractions are applicable of 7/47 for any claims made before 3^rd January and 1/6 after 4^th January.

One final point on the 40p/25p rates, these rates represent the maximum “tax free” rates. If an employer reimburses the employee less than the maximum rate, the employee may make a claim from H M Revenue & Customs for any shortfall as a deduction from income which may then generate a refund of tax. For example if an employer reimburses an employee 30p per mile and the employee travels 6000 miles then as they are paid less than the maximum permissible figure they may claim as a deduction from their taxable income 6000x(40p-30p), £600. The potential refund in this case is £120 for a basic rate taxpayer or £240 for a higher rate taxpayer.

Tax payment dates – getting it right and avoiding interest and penalties

The end of January is typically the time of year when most people who have a self assessment tax liability and who have not had that liability included in tax code, will be required to pay their taxes. A smaller number of individuals will also need to make payments on account at the end of July as well. With ever increasing powers to charge interest and penalties for all forms of taxes it is important to ensure that taxes of any kind are paid on time.

Having invested vast amounts of money on computer systems H M R & C are naturally promoting payment by electronic methods but even these methods have pitfalls. The various payment methods will be explored below. However, before considering payment methods a brief run down on the due dates for various taxes.

Self assessment income tax and capital gains tax. This is due on 31^st January. If payments on account are required a further payment will be due on 31^st July.

PAYE NI & CIS taxes. These are due on the 19^th of each month for the tax month ended on the 5^th. In other words they are due 14 days after the end of the tax month. If certain criteria are met these payments can be paid quarterly (19^th July, 19^th October, 19^th January & 19^th April).

VAT. For taxpayers filing electronically this is due on the 7^th of the month following the normal filing deadline which is the end of the month following the end of the quarter. For example for a quarter ending 31^st December 2010 the payment is due by 7^th February 2011.

Corporation tax. This will be due for payment 9 months and 1 day after the end of the company’s financial year (there are exceptions if the trading period is shorter or longer than 12 months). 

Tax payment methods – avoiding the pitfalls

As to the methods of payment they are as follows:

Bill pay. Using this you can make payment by use of you debit or credit card. It does however take 3 days to process efficiently through the system.

Internet and telephone banking. Again this will take 3 days to process.

Bank Giro. You can call into your bank and pay by cheque using the payslip provided by H M R & C. Again there is a 3 day processing period.

By Post. Similar to bank giro except your cheque and payslip are sent by post. As with the other methods a 3 day processing period applies.

As you can see no one method is quicker than any other, they all take 3 days to process. You can use the method which is better for you.  Some banks will advertise a faster payment service (FPS) for electronic payment, however, it should be noted that H M R & C do not accept this service and so planning ahead for your payment is important.

Here at L B W attempt to ensure all clients are aware of the due date for payment in plenty of time to not only ensure payment is made by the due date but also the ensure your funds are in the right place for making payment.

If however funds are not available for payment by the due date you may be able to take advantage of H M R & C business payment support facility whereby it may be possible to enter into an arrangement to settle any tax liabilities over a period of time. H M R & C do look at any requests in great detail and do have the power to inspect records after any such arrangement is in place to ensure the facility has be not been abused.

To use this facility H M R & C will need to know before the payment becomes due that the payment deadline will not be met. The staff here at LBW have great experience in dealing with these circumstances and in the first instance you should contact Gary or Steve to discuss how this may assist you.

Welcome to this month’s newsletter from L B W Chartered Accountants.

Over the forthcoming months we will be publishing a newsletter containing topical tax tips which we hope will be of interest to you.

This month we will be looking at some of the government’s changes to the pension contribution regulations and employer supported childcare. Following on from last month’s “green” topics we will also have a look at tax efficient energy saving plant machinery and equipment.

Pensions

Following the introduction of a new pensions regime in April 2006 (A-day), the previous government made some fundamental changes to the maximum permitted levels of contribution to pension scheme primarily arising out the introduction of the 50% tax rate, to counter what they perceived would be an abuse of the rules to minimise tax liabilities at a time when the government wished to maximise the tax yield. The rules they introduced were extremely complicated and had a serious impact on high earners who wished to invest substantial sums in pension funds. 

When the new government came in earlier this year they promised to look at these complicated rules and to legislate to make them more understandable. These changes have now been published and should be welcomed in terms of their simplicity.

With effect from 6^th April 2011, the maximum contribution a taxpayer can make into a pension scheme per annum, providing they have sufficient earnings, is £50,000.

Furthermore the concept of carrying forward unused relief has been brought back. If a taxpayer is a member of a pension scheme in any tax year and actually makes a contribution in the year, but this falls short of the maximum permissible, then any unused element of the £50,000 can be carried forward for up to 3 years. It is important to note that if no contribution is made in any year then the carry forward for that year of the unused relief is not allowed, there has to be a contribution. 

Capital allowances and energy efficient plant machinery and equipment

Last month we looked at the government’s attempts to show it’s green credentials with low emissions company cars and the cycle to work scheme. We also looked, in earlier newsletters, at the change in government policy in respect of the reduction in the qualifying expenditure limits for the 100% Annual Investment Allowance. What can sometimes be overlooked is that there is also the ability for businesses to claim the full cost of energy saving plant, machinery and equipment in the year in which it is bought without having regard to the general limits on claiming allowances.

There are 4 main categories (although there may be a certain element of overlap between the categories) and these are as follows:

Energy saving plant and machinery: The government has produced a list of the products which qualify for the relief. This can be viewed at www.eca.gov.uk

Environmentally beneficial plant and machinery: Again a list of the technologies and products has been produced on www.eca.gov.uk.

Low emission cars: This applies to vehicles which are either electronically propelled or produce less than 110gm/km in emissions (this figure can be found on the V5 document for the car) and will only apply to new cars.

Zero emission goods vehicles: Again the vehicles must be new and must produce no emissions whatsoever. In this instance the accelerated allowance will only be available until 2015.

                If you wish to find out more about this relief please contact Steve or Gary.

Childcare

H M Revenue & Customs are changing the level of the tax relief for employees who participate in the employer supported childcare scheme with effect from 6^th April 2011.

Under the existing rules employers can voluntarily provide their employees with childcare vouchers for qualifying children in qualifying circumstances. The payment for the childcare vouchers is up to a specified level (currently £55 per week) tax deductable for the employer and the amount is also exempt from both income tax and national insurance.

With effect from 6^th April 2011 the level of the childcare voucher which can qualify for the exemptions is to be means tested for any employees who join the scheme on or after 6^th April 2011.

The employer is responsible for carrying out an earnings assessment for all relevant employees which must be done at the start of each tax year. A reduced level of exempt childcare voucher will apply if the employee is a higher rate taxpayer and a further reduction applies to taxpayers suffering tax at the additional 50% rate.

These changes will not affect any employees who are in the scheme at 5^th April 2011 in respect of vouchers they receive after that date. If however they leave the scheme only to rejoin at a later time they will be regarded as a new employee for the purpose of this relief. Therefore if such a scheme is contemplated, taking action before 5^th April 2011 could save money for any higher paid employees. 

Welcome to this month’s newsletter from L B W Chartered Accountants.

Over the forthcoming months we will be publishing a newsletter containing topical tax tips which we hope will be of interest to you.

This month we will be looking at some of the government’s attempts to show its environmentally friendly credentials by looking at the associated tax breaks to tax efficient bicycles and low cost company cars. We are also introducing our TAX SAVE scheme.

The Cycle to work scheme

In an effort to reduce greenhouse gases and to a lesser extent promote personal health the government introduced a few years ago the “cycle to work scheme”. The scheme can operate on two separate levels and both levels involve tax breaks for the employee concerned. In addition both levels apply to not only the bicycle but also to any safety equipment that is provided with the bike. The offer of the provision of the bike for these journeys has however, to be made to all employees in the workforce (they do not have to take up the offer it must just be made available).

In the first case the employer will buy the bike (& equipment if relevant). The VAT can be recovered and the employer can claim tax relief by way of a capital allowance claim.  

The bike is then loaned to the employee concerned and no income tax or Ni will arise on the employee if the bike is used for business journeys which include journeys from home to work or between employment sites during the day. Non-business journeys are permitted as long as these amount to no more than 50% of the total journeys undertaken. Quite how it can be established that the bike is used solely for the purpose of qualifying journeys or indeed monitored by the employee is not known but the guidelines make it clear that logs of journeys is not required and the employer is obliged to make it clear to the employees concerned that the use is restricted as detailed above.

The second case involves a salary sacrifice. This scheme enables the employer to recover the cost of the bike from the employee (over whatever period is determined). The effect of the sacrifice is to reduce the employee’s salary permanently. As a consequence the salary on which tax and Ni (both employee and employers) is reduced but of course should the scheme end the employee is not automatically entitled to the salary being reinstated to the level before the sacrifice. Salary sacrifice is part of employment law and needs to be considered carefully.

At the end of the loan period the employee can purchase the bike from the company if they wish to do so. This must be at a market value otherwise a benefit in kind will apply to the individual and income tax and Class 1A National insurance payable as a result. H M Revenue & Customs recently issued guidelines as to the appropriate percentage of the original cost to be used for this purpose. This is a factor of both that original cost and the time that has elapsed since the purchase of the bike. A capital allowance adjustment is required on the sale and Vat will be relevant also. Alternatively the scheme can be allowed to continue after the end of original loan period.

 Of more practical concern is the question of insurance. The bike is a company asset and may need insuring against theft. We would expect any employers liability whilst using company equipment will be covered under the current employer’s liability policy but it would be worthwhile checking.

 Should the cost of the bike and equipment exceed £1,000 a standard consumer credit licence will be required (for under £1,000 the OFT (Office of Fair Trading) has set up a group licence for employers who comply with the terms of the scheme).

As with all such schemes it is important that the relevant paperwork is put in place and if you wish to avail yourself of this scheme and it’s associated benefits please contact Gary or Steve to discuss further.

Company cars – Are they making a comeback?

Over the years the actual cost to the individual in terms of tax paid on a company car has increased such that more and more people do not see there being any benefit in having a company car. The last government in an effort to show “Green“ credentials reduced substantially the tax that would arise on fuel efficient company cars in terms of both the tax cost as well as vehicle excise duty.

 The problems with fuel efficient cars were that they were small (but usually inexpensive), had little esthetic appeal and perhaps were not suitable for use in business circumstances. In addition there were not many cars to choose from. As the government has not backed off on this, a number of manufacturers decided to change policy and produced fuel efficient vehicles that not only qualify for the lowest level of taxation but also have much more of an esthetic appeal to the driving public in so far as they look like the typical company car. As an example Volvo, who are more renowned for large “gas guzzling” cars, now produce a saloon car that qualifies for the 10%  rate of benefit which results in an annual tax bill for the employee of less than £360 (all this for driving around in a new, good looking car!).

 As the car benefit is low so too is the fuel benefit if it is decided that the employer will pay for all private fuel as well as business fuel. For the same model Volvo this would cost just £28 per month.

 If you wish to find out more details please contact Steve or Gary.