Top Ten Teasingly Topical Tax Tips<br />James Hayes FCCA<br />
1 - Capital Allowances<br />The annual investment allowance is reduced from 100k to 25k!<br />Purchase or rental of cars is now wholly based on a vehicles CO2 emission levels.<br />Emissions under 110gr/km qualify 100% first year allowance<br />Full rental is tax allowable, provided the CO2 level is not more than 160gr/km.<br />Plant and machinery tax rate reduces from 20% to 18%.<br />Long life and other assets is reduced from 10% to 8%. <br />Cars in excess of 160gr/km will not receive a balancing allowance on disposal.<br />
1 - Capital Allowances<br />Source www.direct.gov.uk<br />
1 – Benefits in kind<br />Company cars<br /><ul><li>A car between 76 and 120 gr/km would be taxed at the rate of 10% /13%.
For cars emitting between 1 and 75gr/km percentage is reduced to 5% (8% for diesel).
Zero emission cars -0%.</li></ul>Vans<br />BIK of £3,000 plus a further £550 if fuel is provided by the employer for private travel.<br />Can avoid a benefit if do not to use the van for personal journeys.<br />BIK reduced to nil for vans which cannot produce C02 emissions at all. <br />
1 – Private Cars for Company Business<br />Rate for business mileage in a private car now 45p a mile for the first 10,000 business miles.<br />Where an employer pays a lower rate than this the employee can make a claim for tax relief.<br />
2 – Research and Development <br />The rate of SME Relief increased from 175% to 200%<br />From April next year:<br /><ul><li>the £10,000 de-minimus threshold is abolished
SME credit limit re PAYE and NICs is to be abolished;
the rate of relief increases further to a whopping 225% </li></ul>When the work that you do seeks, through the resolution of scientific or technological uncertainty, to achieve an advance in overall knowledge or capability in a field or science or technology.<br />
3 – VAT Flat Rate Scheme<br /><ul><li>The flat rate scheme is a simplified way of calculating VAT.
Is designed for small businesses with turnover under 150k pa
Applying a fixed percentage to gross turnover and ignores VAT incurred on purchases.
It makes keeping books and records easier.</li></ul>“Oh No it’s VATman !”<br />
4 - CGT - Entrepreneurs Relief <br />£10million, gains on qualifying business disposals taxed at only 10%. <br />Be careful of disposals where business property is concerned.<br />
Organisational interdependence. </li></ul>Tax bandings are shared between companies that are associated.<br />The definition of who is associated rested called “common control.” <br />The law has recently changed.<br />Attribution now based on substantial commercial interdependence.<br />
A new relief for purchasers of residential property who acquire interests in more than one dwelling.
Buyers of two or more residential properties which are “linked” claim a relief to have the total consideration taxed at a lower rate. </li></li></ul><li>7 – NIC Holiday<br />The National Insurance contributions holiday is available to new businesses start ups.<br />A years exemption to employers national insurance. <br />A NIC(e) Holiday<br />
9 – IR35<br />Personal service companies “PSC’s”, avoid being treated as an employee by forming a company.<br />PSC’s are still effective, infact more so.<br />Key is mutuality of obligation and control.<br />If<br /><ul><li>There is no obligation to offer a particular amount of work.
no payment if no work is done.</li></ul>Then<br />It is difficult for HMRC to argue that IR35 should apply.<br />
9 – Income Shifting<br />But the transactions were exempt under inter-spousal settlement exemptions.<br />Key is shares are not just a right to income.<br />Arctic Systems case.<br />Pay dividends to a spouse to minimise tax.<br />HOL contended that dividends paid were bounteous and not commercial .<br />In effect tax her income as the husbands. <br />
9 – New Penalty Regime for SA Cases <br />“Get out of jail free card” - capping the late filing penalty to the amount of tax outstanding has been abolished.<br /><ul><li>1 day late – an initial penalty of £100.
3 months late – a daily penalty of £10 per day, up to a max of £900.
6 months late – the greater of 5% of tax due or £300.
12 month late – the greater of 5% tax due or £300. In more serious cases up to 100% of the tax due .
On top of this, penalties for late payment exist.