Employer CD-Rom, Tax Credits and the new Fuel Rates

Employer CD ROM

All users need to download and install the November update even though you might have previously updated it.

Tax credits

Claimants who are self employed should give the Tax Credit Office their profit figure for 2009/10 by 31 January 2011 otherwise they may receive too much benefit and have to find the repayments.

New Fuel Rates

From 1 December 2010 the following fuel rates apply;

Engine Size	Petrol	Diesel	LPG
1,400 cc or   less	13p	12p	9p
1,400 cc - 2,000 cc	15p	12p	10p
Over 2,000 cc	21p	15p	15p

VAT can be reclaimed by employers from within the above figures but they need to keep the fuel receipts. Petrol hybrid cars are classed as petrol cars.

Claiming Car Costs - A Refresher

The rules changed in 2009 and some key points are:

Cars purchased from April 2009: 

Co2 emissions	Amount of claim
Up to and including 110g/km	100% first year allowance
Up to and including 160g/km	20% per year
Over 160g/km	10% per year

Cars leased from April 2009:              

                 

Co2 emissions	Amount of claim
Up to and including 160g/km	Profit & Loss charge allowed in full as a deduction in computing taxable profits
Over 160g/km	15% disallowance of rental expenses

Pre-April 2009 cars:

 

Cost	Amount of claim
Under £12,000	Treatment is unchanged
£12,000 and over	20% per year

Basically it now takes a business much longer to receive the tax relief.

Overall, it’s still too difficult to say whether having a company car is better or taking a higher salary is.

Employers Update

The Revenue is moving towards supplying all guidance to employers online, that is, not in hard copy.

From 2011- a few months from now - they will no longer issue paper Employer packs and CD-ROM or those Post Budget packs. (There are a few exceptions but they are so very rare as not to be worth mentioning.) A new downloadable product called ‘Basic PAYE Tools’ ( naff name) is replacing the Employer CD-ROM and in September you should have downloaded an update to the latest CD-ROM which had the effect, behind the scenes, of making your PC ready to ‘receive’ the first download next February /March when you would normally expect to receive your Year End pack from the Revenue.

Given all that, you will need to register to receive ‘email alerts’ whenever a new Employer Bulletin or other useful information becomes available on their website. 

The link is at: www.hmrc.gov.uk/paye/forms-publications/register.htm

VAT Tips - VAT and vehicles and the latest on correcting errors

The VAT treatment of cars or vans are quite different so beware. If it’s a car then:

1. Input tax cannot be recovered on the purchase unless the business operates as a car-hire firm or a driving school or if you are a taxi driver. Please also remember that where the car is so much as available for private use then this will prevent you from reclaiming the input tax.
   
   
2. If it’s been bought on a lease hire agreement where VAT is charged on the monthly instalments paid to the leasing company then 50% of the tax can be reclaimed.
    
3. You can reclaim the tax on all fuel as long as you declare VAT on the private element of the motoring and this is done through the Fuel Scale charge adjustment on each VAT return. Alternatively just do not reclaim any of the VAT on the fuel bills if that is more beneficial for you.
    
4. You can claim tax on all maintenance costs as the vehicle has to be roadworthy and safe in any event.
    
5. Be wary about treating cars as vans and in particular, a double pick-up needs to have a physical payload of 1 tonne or more to be classed as a van.

VAT  - correcting Errors

Under the recent new rules an error can only be corrected if it originally happened within the last four years.

New National Minimum Wage Rates - reminder

The new rates effective from 1 October 2010 are:

	£ per hour
Aged 21 and over	5.93
Aged 18 - 20	4.92
Aged 16 - 17	3.64
Apprentices under 19	2.50
Apprentices over 19 and in the first year of apprenticeship	2.50

Capital Gains Tax and the latest Budget

The latest Budget has increased the value of the gains on the sale of your business which will only be taxed at 10%. Until 5 April 2010 the level was £1 million, from 6 April 2010 until 22 June 2010 it rose to £2 million and from 23 June 2010 it increased significantly to £5 million. Any excess gains – during your lifetime – over the limit will be taxed at 28%.

The sale of non-business assets will result in a 28% liability unless you are basic rate taxpayer when some of the gain may be liable at only 18%.  In cases such as these it would be helpful to transfer a share of the asset that is not jointly owned already to a spouse or civil partner as they will have their annual exemption available and some of the excess may only be assessed at 18%

P46(Car)

Since 6 April 2009 the Revenue have not wanted employers to submit form P46 (Car) when a car provided to an employee is replaced with another one. However, you must submit the form if;

1. You provide an employee/director with their very first car which is available for private use;
    
2. You provide them with a second or further car available for private use;
    
3. An employee has a company car but now starts to earn at the rate of £8,500 per year, or they become a director (where their rate of pay does not matter.)