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Newsletter July 2011 |
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Most of the compliance deadlines for filing of payroll returns for 2010-11 have now passed. Many of our readers will already have a valid P11D Dispensation in place. If you have, this greatly reduces the administrative chores required when completing P11Ds for employees and directors. For those of you who haven’t applied as yet please read the first article. We also cover the VAT treatment of hot food sales, a reminder of the forthcoming reduction in the Annual Investment Allowance and finally guidance for eBay traders and others – when will HMRC consider your ‘hobby’ a trade? The next newsletter will be published Thursday 4 August 2011. |
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Nobody has company cars these days! |
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Previously a large number of employers have moved away from providing company cars to employees and offered cash allowances instead as a result of the continual increases in the tax payable under the company car regime. However, there have been a number of recent changes that may partly reverse this trend. For example, there are now several hundred cars available that fall under the 120g/km C02 threshold that are taxed at only 10% (non-diesel) or 13% (diesel), of list price. The 120g threshold does, however, reduce to 99g/km emissions with effect from 6 April 2012. There are even greater incentives for electric cars with employees and directors provided with such cars paying zero tax for five years. As regards capital allowances there are now 100% capital allowances available for purchases of cars where the C02 emissions are less than 110g/km. Alternatively, for leased cars the leasing restriction on the amount of rental deduction available against profits has been removed for cars with CO2 emissions less than 161g/km. Partly offsetting these changes has been the recent increase in the authorised mileage allowances to 45p for the first 10,000 miles in the tax year and 25p per mile thereafter. If you wish to reconsider the respective merits of offering a company car/cash alternative to employees/directors then please do not hesitate to contact jo.hamilton@dsonline.co.uk who can prepare the appropriate calculations for you.
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End of Life Statement for Sage 50 Accounts and Payroll v2008 and Instant v14 |
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On 1May 2011Sage issued an End of Life Statement for Sage 50 Accounts and Payroll v 2008 and Instant v14. In previous years, the time table for the cessation of support had been a short one, upgrades were not available after July of the same year, with support ceasing the following year. This year, they have given a greater notice period. Support will not be withdrawn until 30 April 2013 and upgrade prices will be available until 30 April 2012. Sage began withdrawing support for older versions of its software back in 2006, saying that it was becoming increasingly difficult for its support team to have detailed knowledge of the growing number of versions. If you currently use one of the above versions, we will be contacting you later in the year to discuss upgrading your software and the upgrade price we can offer. In the meantime, if you are contacted by Sage directly, they may suggest that you need to upgrade sooner. If so then please contact us to discuss your options. Should you require any further information please call Nick Jinks on 01782 614618 or email nick.jinks@dsonline.co.uk.
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P11D Dispensations |
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A dispensation is a notice from HM Revenue & Customs (HMRC) that removes the requirement to report certain expenses to them at the end of the year on forms P11D or P9D. There is also no need to pay any tax or National Insurance contributions to HMRC on items covered by a dispensation. Once granted, dispensations last indefinitely. However, HMRC reviews them regularly - usually at intervals of five years or less - to make sure that the conditions under which they were issued still apply.
HMRC strictly apply the dispensation from the date they accept an application, although in most cases they will agree to retrospective cover to the beginning of the current tax year. The application process is fairly straight forward, complete and submit form P11DX. Do take care in completing the form. If you are at all unsure of the answers to the various questions, or would like us to apply for you, please contact us.
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VAT and hot food sales |
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At present the more you prepare food for consumption, the more likely the supply will be considered a standard rated supply for VAT purposes. HMRC turned their nose up when an EU case recently came to a different conclusion. A German trader succeeded in having the supply of a hot sausage treated as a supply at a reduced rate rather than a catered supply which would have been subject to the standard rate in Germany. HMRC continues to view food sold on a takeout basis as a standard rated supply. However a recent UK case has drawn a further distinction:
So affected traders could now consider that they are making a split supply, some standard rated, some zero rated. Now may be a good time to check and make sure that you are not including VAT for the supply of takeaway goods that can now be treated as zero rated. These could also include:
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100% tax allowance has limited shelf life |
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At present purchases of qualifying plant and other equipment can be written off against your taxable profits. Tax relief is obtained by utilising the Annual Investment Allowance. For the current tax year, 2011-12, this amounts to a 100% write off with a limit of £100,000. As with most opportunities all good things come to an end! From April 2012 the annual limit is being reduced to £25,000. So if your plans over the next year or so include substantial investment in replacing worn out, or buying new, qualifying equipment, timing is absolutely critical. Call us if you would like more information about these changes.
Click here for a call back from our office regarding this article. |
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When is a hobby considered to be a trade? |
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HMRC are actively searching the internet for evidence of eBay traders that are consistently selling goods on eBay. They are known to be exploring the use of ‘internet robots’ to scour cyberspace! And this activity is not necessarily restricted to eBay traders. What about car boot sales, sales via classified ads? Which raises an interesting question - when does a hobby become a trade, and more importantly, when do any surplus funds become subject to tax? Generally speaking if you are selling your own private possessions you will not be trading. However you may be considered ‘in business’ if you habitually buy and sell goods on eBay and/or at car boot events. The list that follows is the published ‘badges of trade’ that HMRC use when considering this matter.
As you can see one or more of these cases could apply to most hobbies. The current penalty regimen adopted by HMRC precludes sticking your head in the sand. Don’t wait for the brown envelope to appear. If you are uncertain about the tax status of your money-making hobby call us now.
Click here for a call back from our office regarding this article. |
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Tax Diary July/August 2011 |
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1 July 2011 - Due date for corporation tax due for the year ended 30 September 2010. 6 July 2011 - Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs. 6 July 2011 - Deadline for submission of new Tax Credit application for 2011-2012, if you want to secure a full year's claim. 6 July 2011 - Deadline for submitting form 42 (reporting of transactions in employment related securities). 19 July 2011 - Pay Class 1A NICs (by the 22 July 2011 if paid electronically). 19 July 2011 - PAYE and NIC deductions due for month ended 5 July 2011. (If you pay your tax electronically the due date is 22 July 2011). 19 July 2011 - Filing deadline for the CIS300 monthly return for the month ended 5 July 2011. 19 July 2011 - CIS tax deducted for the month ended 5 July 2011 is payable by today. 1 August 2011 - Due date for corporation tax due for the year ended 31 October 2010. 19 August 2011 - PAYE and NIC deductions due for month ended 5 August 2011. (If you pay your tax electronically the due date is 22 August 2011). 19 August 2011 - Filing deadline for the CIS300 monthly return for the month ended 5 August 2011. 19 August 2011 - CIS tax deducted for the month ended 5 August 2011 is payable by today.
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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. |
Dean Statham, Dean Statham is a limited liability partnership, registered for VAT under reference 812 0016 96. Partners in the firm are members of the Institute of Chartered Accountants in England and Wales (ICAEW). This body has its headquarters in the UK and its rules of professional conduct can be obtained from its web site. Dean Statham are authorised to act as statutory auditors by the ICAEW. |