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Mileage Allowances

Oct8

Q. Until 31 May 2011 I was employed as loss adjuster for company A, and I drove 4,400 business miles in my own car for that company in 2011/12. I then joined rival company B, and drove a further 8,080 miles on business, also in my own car, by 5 April 2012. Both companies paid me 40p per mile for those business journeys. Can I claim anything extra on my tax return?

A. Yes. The approved tax free mileage rate for 2011/12 was 45p per mile, for the first 10,000 business miles. However, this mileage threshold applies per employment. As you held two jobs with completely separate employers in the year, and drove less than 10,000 miles in each job, all your business mileage can be claimed at 45p per mile. You can claim £624 (5p x 12480 miles) on your tax return for 2011/12.

 

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Age Allowances

Oct1

Q. I’m worried about the Granny tax. Is this going to affect me? I’m aged 64 with an annual income of around £16,000.

A. The so-called Granny tax is actually a change in entitlement to allowances from 6 April 2013. You are currently entitled to a personal allowance (tax free amount) to set against your income, of £8,105. From 6 April 2013 you will be entitled to a personal allowance of £9,205.

As you will reach age 65 in 2013/14 you may have expected to receive the higher age allowance of £10,500 which is available to people currently aged 65 or over. However, because the rules are changing on 6 April 2013, only those born before 6 April 1948 will be entitled to the age allowance of £10,500, everyone else will get the normal personal allowance. This is not as unfair as it seems as the age allowance will be frozen, probably for ever more at £10,500, but the personal allowance will increase each year, and is likely to reach £10,000 in 2014/15.

 

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Homes Worth Over 2 million pounds!

Sep24

The Government wants to clamp down on tax avoidance by people who purchase their homes through companies, or other structures like trusts or partnerships, (known as non-natural persons). It is proposing new tax charges will be applied follows:

a) From 1 April 2013 an annual charge will apply on the value of residential property worth £2 million of more owned by non-natural persons; and
b) From 6 April 2013 Capital Gains Tax (CGT) will be charged on the disposal of residential property where the selling price is £2 million or more, and the seller is a non-natural person who is not resident in the UK.

There will be an exemption from the annual charge for established property development businesses, but only if the business has been operating for at least two years.

When a UK based company sells a property it already pays UK corporation tax on the gain, similarly a UK based partnership or trust would pay UK tax on any profits it makes selling property in the UK or elsewhere. A company or other non-natural person based outside the UK for tax purposes does not pay UK tax on the sale of a UK property, so the new CGT charge is designed to level the tax playing field with UK-based property owners.

If you own high value residential property within a company or other structure you may want to take steps to remove it from that structure, especially if the company is based outside of the UK.

 

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

VAT Opting to Tax on Buildings

Sep17

Buildings are generally exempt from VAT, but there are a lot of exceptions to this.

A person who holds an interest in a building (freehold or leasehold) can opt to tax the building, such that income from selling or letting the building is subject to VAT.

If you purchase a building and the purchase price includes VAT, you do not have to opt to tax that building.

Consider Ali who owns a VAT registered car repair business. He purchases a new commercial unit for £200,000 plus VAT of £40,000. The unit is used entirely for the car repair business, so Ali can reclaim the VAT of £40,000 in the same way he reclaims VAT on other purchases.

Ali does not have to opt to tax the unit to reclaim that VAT. In a few years Ali may want to sub-let the unit, in which case the rent will be exempt from VAT. This will make Ali’s business partially exempt, which may mean he cannot reclaim all the VAT charged on his purchases. In that situation Ali may choose to opt to tax the building so the rent must have VAT added.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Tax Campaigns Update

Sep3

The Taxman is determined to target tax evaders, so has been running several campaigns to target particular business sectors, such as doctors, electricians and e-traders.

The latest campaign is aimed at individuals who should be paying tax at 40% or 50%, but who have not submitted a tax return when requested to do so. These people will be offered a reduced penalty if the missing tax return is submitted by 3rd October 2012, and all the outstanding tax is also paid by that date.

If you know someone who has put their head in the sand regarding their tax affairs, please ask them to get in touch with us as soon as possible, so we can help them complete their missing tax returns.

Later this year the Tax Office will be targeting door-to-door sellers who sell to customers in their own homes. These sellers are often paid on a commission basis for the goods they sell, and may be vague about their own tax status.

Another campaign will target all tradesmen who provide home maintenance, repair or home improvement services. This will cover all small builders and skilled craftsmen who are not subcontracted to larger building firms.

 

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

RTI and PAYE

Aug27

Q. What’s all this about RTI? Do I have to do something by October? Is it going to cost me more?

A. Real Time Information (RTI) is a new way of submitting PAYE information to the tax office. All employers will have to use RTI by October 2013 (not this year), but some employers are starting to use RTI early in a test phase from April 2012. The aim is to add more employers to the RTI project at intervals, depending on how the first tests go. The tax office says your payroll software should cope with RTI when the time comes. We suggest you ask your software provider when their RTI update will be ready, and how much it will cost. We can help you prepare your payroll for RTI. This involves checking you have the full name, gender, date of birth and accurate NI number for every employee, including those who earn less than the NI threshold.

 

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Tax Return and Not Sure About Income

Aug20

Q. I don’t have the all the figures needed to complete the tax credits renewal form, and I’m worried I’ll lose my tax credits as the deadline is 31 July. The main problem is my income is as a musician as I don’t know what my total income is until I receive the royalty statements.

A. Don’t panic. You are required to return the tax credits renewals form by 31 July, or renew by phone, but you can submit estimated figures for 2011/12. When your self-employed accounts are ready you can submit the final figures and your tax credits award will be adjusted as necessary. As long as you submit final figures by 31 January 2013 you should not lose your tax credits.

 

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

Government Department Contractors

Aug13

Q. I’m an IT contractor currently working for a government department through my own company, for £300 per day. I’ve heard that all contractors will have to go on the department payroll. I don’t want to be a wage-slave, so what should I do?

A. The government has announced that all senior appointments in government departments, such as executive positions, will have to be paid through payroll. This does not apply to other contractors. However, other government department contractors who are engaged for six months or more, and who are paid more than £220 per day, must when their contracts come up for renewal, or start afresh, include terms that allow the government department to seek formal assurance that income tax and NI obligations are being met.

 

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.

PAYE Reconciliations Starting

Aug6

Between now and October 2012 around 5.1 million taxpayers will receive notice of a tax under or over-payment, arising from the PAYE reconciliation exercise for 2011/12. These PAYE adjustments are the natural result of calculating whether each taxpayer has paid the right amount of tax through PAYE or not.

The PAYE system does not cope well when a person has several employments or pensions running concurrently, or changes the benefits in kind (such as a car or medical payments) part way through the tax year. As a result the amount of tax deducted from salary or pension is not perfect, although more problems are being overcome every year.

When the HMRC computer calculates that you have under or over-paid tax for the year it will send you a tax calculation on form P800. We will not get a copy of the P800 as your tax agent, so if you want us to check the figures for you please send us a copy.

If you are going to check the tax calculation yourself, start with the forms P60 or P45 you have received from your pension provider or employer for the tax year. First ensure you are comparing documents for the same tax year, the latest P800 form should be for 2011/12, but you may be sent calculations for earlier tax years. Is all the tax deducted as reported on the forms P60 also shown on the P800? There have been cases of HMRC mixing up the PAYE records of two taxpayers, so watch for any discrepancies in your taxed income figures.

You also need to check that your full personal allowance has been included, and the amounts for benefits or other income are accurate. These figures are often estimated at the beginning of the tax year, and may not have been amended to reflect the true amounts.

If you would like any further information, please do not hesitate to contact Southside Accountants Wimbledon & London.