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November 2012 email newsletter

Posted by: edwinsmith on November 30th, 2012

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

Please also consider subscribing by using the link on the left hand side.

Filed under: Newsletters

Revised advisory fuel rates 1 December 2012

Posted by: edwinsmith on November 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 11p
1401cc to 2000cc 18p 13p
Over 2000cc 26p 18p


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


The only change this quarter is the increase of 1p per mile for LPG engines sizes of 1400cc or less and over 2000cc. There are no changes to the petrol or diesel rates.

The new rates will be effective from1 December 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 February 2013 and any changes made will be effective from 1 March 2013.  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: Employers, Tax, VAT

Making a Will

Posted by: edwinsmith on November 28th, 2012

This post is to introduce you to the importance of making a will in the first instance. If you have made a will, when was the last time you reviewed it? Our preferences do change over time and so decisions we have made in the past may not now be appropriate. If you have not been introduced to the concept of dying tidily, please read to the end of this article to find out more.

Why make a will?

There is no requirement in law to make a will so why should you make one.  There are a number of reasons. Primarily, making a will ensures that your estate is distributed to relatives, friends or organisations in line with your own wishes and not the rules of intestacy.

You can choose the best people to be executors of your estate as well as appointing guardians of any children and providing directions as to burial or cremation etc.

Dying intestate

Should you die without a valid will in place, your estate will pass following the intestacy rules. These are a fixed set of rules which must be followed in order to determine who has an entitlement to your estate and how much can be passed to that individual. These rules are designed to meet the likely wishes of the average person. No family is typical and so this may be entirely inappropriate depending upon the specific circumstances.

If you are not married but live with your partner, your partner will have no automatic rights to inherit from you on your death if you die intestate. Jointly owned property, depending upon how it is owned (see below) may automatically pass. Some other examples of assets which may not pass under the rules of intestacy may be pensions and life assurance policies written into trust.

Jointly owned property

Property held with another person can be held either as Joint Tenants or Tenants in Common.

Property held as Joint Tenants will automatically pass to the other owner on death of one owner.  The property is said to pass by right of survivorship.  This happens despite any provisions you may have made in your will for that specific property.  Jointly held bank accounts usually pass in this way.

Property held as Tenants in Common is property owned by two or more people who each hold a share of the property. In this case, you as a part owner can choose to dispose of your share to any person with no agreement required from the other owner. Therefore, when a co owner dies, the right of survivorship does not apply and so the share passes under that persons will or pursuant to the rules of intestacy.

How do I make a will?

There are a number of formal requirements to be observed when drawing up a will. You may also wish to ensure that it is efficient from a tax perspective.

It is also important to ensure it will actually achieve your wishes as poor wording can sometimes be ineffective.

Although we can provide tax advice relating to a will, we cannot draft the document for you.

Does my will last forever?

You can change an existing will by executing a codicil which is effectively an addendum or appendix. A codicil must observe the same legal formalities of a will.

However, it is considered tidier to replace the existing will altogether. In these circumstances care must be taken to ensure that it is clear that all previous wills are revoked otherwise on death it may be necessary to consider the contents of all previous wills.

Marriage automatically revokes an existing will, unless the existing will expressly states that it is made in contemplation of marriage to a particular person. If it does, then marriage to that named person would not revoke the will.


If you do not have a will, now is the time to think about making one. If you do not already have a professional to assist you, then we can provide you with a recommendation.

If you have made a will, then perhaps this is the time to review it. This is especially important if your family circumstances have changed since the last will was executed.

If you are a client, ask your advisor about our ‘Die Tidily’ document which is a template document we have created to record important aspects of your financial affairs. The completed document may be useful to your executors in helping them deal with your affairs following your death.

Please contact us  for additional information

Filed under: Tax

Data Protection Act – Should you register

Posted by: edwinsmith on November 23rd, 2012

It is sometimes overlooked that organisations (data controllers) that use personal information about individuals should be registered under the Data Protection Act 1998 and there are legal obligations concerning the protection of personal information. Failure to notify the Information Commissioners Office (ICO) is a criminal offence.

As an example where organisations process personal information for the following purposes then registration will need to be made to ICO:

  • Accountancy and auditing
  • Legal services
  • Education
  • Provision of financial services and advice
  • Consultancy and advisory services
  • Health administration and provision of patient care
  • See guide detailed below for further examples


There are possible exemptions for notifying ICO (that include not-for-profit organisations) but data controllers must comply with the provisions of the 1998 Act even if they are exempt from the Act .

There are a number of data protection principles that cover the regulations for personal information. These principles include the security, accuracy and length of time information is kept.

For smaller organisations the registration fee is £35. For organisations with turnover of £25.9M and 250 or more members of staff the fee is £500.

There is an online Self assessment guide - notification which will help you comply with the Data Protection Act. The guide will lead you through a series of questions to confirm if you should register and provides a checklist to assist you take the necessary precautions with personal information. The registration can be completed online New Registration - Data Protection Act - ICO. 

Please contact us for if you have any questions.

Filed under: Company Secretarial

Christmas gifts and parties

Posted by: edwinsmith on November 16th, 2012

Just a reminder of the tax implications of Christmas parties and gifts - the implications for employees and employers can be found on our earlier news article tax on Christmas gifts and parties. 

Expenditure on business entertaining and gifts is not generally an allowable expense against profits for tax relief in a business. However, an employer can obtain tax relief on a staff entertainment event such as a Christmas party or sporting event so long as the entertaining is wholly and exclusively for the purposes of the trade and is not merely incidental to entertainment which is provided for customers or others who are not employees. ‘Employees’ is extended to include retired members of staff and the partners of existing and past employees. 

Whether or not the entertaining is incidental will depend on the nature of the occasion. If the employer would not have paid for the entertaining had the guest not been present, then the event is business entertainment and the entertainment of the employee is incidental to this. The total cost of the guest and the employee would not be allowed as a deduction against profits. 

Gifts tend to follow the same rules as business entertaining and are not allowable as a deduction against profits. One exception to this is small gifts carrying a conspicuous advertisement and which fulfil the following conditions:

  • The gift is not food, drink or tobacco, nor is it a token or voucher exchangeable for goods.
  • The cost of the gift (together with the cost of any other such gifts to the same recipient in the relevant tax period) does not exceed £50.

Examples of allowable gifts are diaries, pens and mouse mats with the advertisement on the gift itself, and not just on the wrapping.

The above is a summary of some of the rules on gifts and business entertainment. If you would like more information then please  contact us.

Filed under: Employers, PAYE, Tax

Child Benefit changes

Posted by: edwinsmith on November 8th, 2012

From 7 January 2013, the High Income Child Benefit charge will be introduced.  This will affect you if the following apply:

  • Either you or your partner have income over £50,000 (in a tax year), and
  • Either you or your partner is entitled to receive child benefit. 

You will also be affected if during a tax year you have an individual income of more than £50,000 and someone else is entitled to receive Child Benefit for a child who lives with you because they contribute at least an equivalent amount of Child Benefit towards the child's upkeep, for example pocket money or clothes.  NB: it doesn't matter if the child that is living with you is not your own child. 

If your household is affected, the person with the higher income may have to pay a tax charge based on the actual income and the child benefit received.  Therefore you may wish to either stop receiving the Child Benefit, or continue to receive Child Benefit and use the self assessment system to calculate the tax charge each year. 

If you choose to stop receiving your payments, this will not affect your entitlement to Child Benefit, and you should still complete a claim form if you have not already done so.  This is because Child Benefit:

  • can help you qualify for National Insurance credits that can protect your entitlement to State Pension
  • can help protect your entitlement to other benefits such as Guardian's Allowance
  • ensures your child is automatically issued with a National Insurance number before their 16th birthday

If you choose to continue receiving Child Benefit, the higher earner in the household will be subject to a tax charge each year equivalent to 1% of the Child Benefit received for every £100 of income over £50,000 in a tax year.  As such, households where the higher earner has income of £60,000 or more will receive a tax charge equal to 100% of the Child Benefit received. 


Your individual adjusted net income is £54,000. You are entitled to Child Benefit for two children of £438 for the period from 7 January 2013 to 5 April 2013.

Your tax charge will be worked out as follows:

Step one: income over £50,000 = £4,000

Step two: determine the percentage rate to be applied to the result from step one, so £4,000 ÷ 100 = 40 (%)

Step three: £438 x 40% = £175

'Your tax charge will be = £175 

To estimate the High Income Child Benefit charge applicable for your household click here 

A full guide on the changes introduced by the High Income Child Benefit charge can be found on the HMRC website

If you are unsure whether these changes will affect your household, or to speak to one of our qualified accountants contact us

VAT flat rate scheme – be aware of the pitfalls

Posted by: edwinsmith on November 2nd, 2012

Although there are benefits to the VAT flat rate scheme which is available to small businesses there are some pitfalls that can easily be overlooked. For further details on scheme HMRC - VAT Flat rate scheme for small businesses.

The main principle of the Flat Rate Scheme (FRS) is that the VAT paid to HMRC is based on a flat rate percentage (determined by type of business) being applied to the gross income of the VAT registered trader.

Gross income includes all business income (zero rated and exempt) unless it falls outside the scope of VAT. As land income is considered as business related under the VAT regulations then VAT could become payable on property rental income.

Therefore under the FRS it would be quite easy to overlook paying VAT on zero rated and exempt income related to the business such as property rental income and sale of business cars.

As an example a sole trader who has rental income (even if income separate to business such as income from a residential letting) then VAT would be payable on the rental income at the flat rate applicable. This would not apply to jointly owned properties in this scenario.

When assessing the advantages of using the FRS the effect of any zero rated/exempt exempt income should be considered.

Please contact us for further advice or assistance concerning the VAT Flat Rate Scheme.

Filed under: VAT

Dates and deadlines: November 2012

Posted by: edwinsmith on November 1st, 2012

1 November: Corporation tax payment for company not within the instalment regulations: year ending 31 January 2012

2 November: Submission of form P46 (car) for changes in quarter to 5 October 2012

5 November: End of month 7 for PAYE

7 November: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 30 September 2012

12 November: Direct debit VAT payment will be taken: quarter ended 30 September 2012

19 November: CIS monthly return deadline: month ended 5 November 2012

19 November: Cheque payments due for PAYE/NI, student loan and CIS: month ended 5 November 2012

22 November: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 November 2012

30 November: Company tax return CT600 due to HMRC: years ending 30 November 2011

30 November: Company accounts (Private Limited Co) due to be filed: years ending 29 February 2012

30 November: Company accounts (Public Companies) due to be filed: years ending 31 May 2012

1 December: Corporation tax payment for company not within the instalment regulations: years ending 29 February 2012