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August 2012 email newsletter

Posted by: edwinsmith on August 31st, 2012

To view a copy of our August 2012 newsletter please click here.

Please also consider subscribing to our monthly newsletter by using the link on the left hand side.

Filed under: Newsletters

Advisory fuel rates 1 September 2012

Posted by: edwinsmith on August 30th, 2012

H.M. Revenue and Customs (HMRC) have published the latest advisory fuel rates relating to mileage payments for business travel in company cars. These are as follows:

Engine size Petrol LPG
1400cc or less 15p 10p
1401cc to 2000cc 18p 12p
Over 2000cc 26p 17p


Engine size Diesel
1600cc or less 12p
1601cc to 2000cc 15p
Over 2000cc 18p

The changes this quarter are the decrease of 1p per mile in LPG for engines sizes 1400cc or less and 1401cc to 2000cc, and the decrease of 2p per mile in LPG for engines over 2000cc.

The new rates will be effective from1 September 2012. However, for the first month employers may continue to use the previously published rates if they choose to.

These rates will be reviewed again in November 2012 and any changes made will be effective from 1 December 2012. The revised fuel rates will be published on the fuel rates page on the HMRC website when they are released.

Advisory fuel rates can be used to calculate the following:

  • Reimbursement to employees of fuel used for business travel in a company car
  • Repayment by employees of fuel used for personal travel in a company car
  • Allowable input VAT on business mileage claims

A more detailed explanation of the use of these rates is on the HMRC website.

The rates applying for earlier periods are also on the HMRC website.

If you have any questions regarding the use of advisory fuel rates or mileage payments please contact us.


Filed under: PAYE, Tax, VAT

Tax on interest – Form R85 – can it be paid gross?

Posted by: edwinsmith on August 24th, 2012

Do you have savings but earn a low income? Almost everyone who lives in the United Kingdom (UK) is allowed to earn or receive income of at least £155 each week before tax has to be paid. The limits are higher if you are over 65, over 75 or born before 6 April 1935. If your income is below the limits and you have money in a bank or building society account which earns interest, you may be paying tax when you don't have to.

You can use a tool on the HMRC website which will indicate whether you should be filling in the form 'Getting your interest without tax taken off' (form R85). If eligible you would need to complete a form for each account held and submit it to your bank or building society. The form R85 is available on the HMRC website.

If your circumstances change and your income increases so that it is no longer covered by tax allowances you must notify your banks and building societies so that they can revert back to deducting tax from your interest payments. If this is not done, you may build up a tax liability for the year and be required to complete a tax return.

If you would like any help please contact us.

Filed under: PAYE, Tax

PAYE Tax Calculations – P800

Posted by: edwinsmith on August 10th, 2012

From May 2012, HM Revenue & Customs (HMRC) started to send out P800 tax calculations for the tax year 2011-12 for those taxpayers who have overpaid or underpaid through the Pay As You Earn (PAYE) system. These underpayments or overpayments may have arisen due to a change in a taxpayer’s circumstances during the year which has not been reflected in their tax under the PAYE system. 

Those taxpayers who have paid too much tax will be sent a cheque, in most cases, within 14 working days from the receipt of a P800 Tax Calculation. HMRC are also making repayments of tax to customers who overpaid tax for the years 2003-04 to 2007-08. Please note that HMRC will never send notifications of a tax rebate by email. Such emails are likely to be fraudulent. 

If you have paid too little tax and the underpayment is less than £3,000, HMRC will usually automatically collect any underpayment through your tax code over the next tax year, i.e. from April 2013 (as long as you have enough PAYE income from a continuing employment or pension). If paying the amount over a year would cause financial difficulty you may be able to agree with HMRC to spread the payments over two or three years. 

In some limited circumstances where there have been delays in HMRC using information HMRC may not collect the tax under Extra Statutory Concession (ESC) A19. 

If you think your Tax Calculation is wrong you should contact HMRC or contact us for advice

Filed under: PAYE, Tax

HMRC Tax Calculator for income tax and national insurance

Posted by: edwinsmith on August 3rd, 2012

HMRC have a new free tax calculator tool which can be used to estimate the amount of Income Tax (not including other taxes such as Capital Gains Tax) and National Insurance contributions you can expect to pay on your income. It also shows how this money is spent by the Government. It is aimed at people who pay tax through Pay As You Earn (PAYE). 

The tax calculator can also be downloaded as a free mobile app from Apple iTunes or Google Play.

The calculator can be accessed from the ‘All calculators and tools menu’ on the HMRC website – choose HMRC tax calculator. 

The calculator is just an estimate, based on the figures entered and may not  match pound for pound the Income Tax and National Insurance shown on a payslip. It does not ask you for any personal identity information (other than date of birth if that is relevant for the calculation) or store the information and HMRC cannot access the data. 

There are two calculations available, one for simple situations and a second for more advance circumstances. 

The simple calculation can be used if you can answer 'yes' to these statements:

  • you're under State Pension age
  • you get the basic tax-free Personal Allowance
  • you have employment income only – not occupational or personal pension income or other income, e.g. from savings
  • you pay Class 1 National Insurance contributions
  • you don't contribute to an occupational or personal pension through your employer
  • you earn £100,000 or less


At Edwin Smith we can provide full and accurate tax calculations. Please contact us if you require further advice.

Filed under: PAYE, Tax