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Revised advisory fuel rates 1 March 2013

Posted by: edwinsmith on February 27th, 2013

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 18p


Engine size Diesel
1600cc or less 13p
1601cc to 2000cc 15p
Over 2000cc 18p


The changes this quarter are the reduction of 1p for LPG engines sizes of 1400cc or less and 1401 to 2000cc and an increase of 1p per mile for diesel engines of 1600cc or less. There are no changes to the petrol rates.

The new rates will be effective from1 March 2013. 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 May 2013 and any changes made will be effective from 1 June 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:

  1. Reimbursement to employees of fuel used for business travel in a company car
  2. Repayment by employees of fuel used for personal travel in a company car
  3. 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, PAYE, VAT

Employed and self employed? Are you paying too much national insurance?

Posted by: edwinsmith on February 26th, 2013

If you are employed and also have a self employment you can avoid overpaying national insurance contributions by deferring some of your class 2 and/or class 4 national insurance contributions. 

You can apply to defer class 2 contributions if you expect to pay

  1. Both class 1 and 2 contributions in a tax year
  2. Class 1 contributions on weekly employment earnings of at least £797 in 2013/14 for the whole tax year, (£817 in 2012/13)

You may be able to defer your Class 4 National Insurance contributions if you can show that you're likely to pay too much in Class 1, Class 2 and Class 4 contributions. However, you will still have to pay class 4 contributions at the rate of 2% on any profits over the lower profits limit £7,755 in 2013/4, ( £7,605 in 2012/13).

Deferment applications should be done before the beginning of the tax year to which they relate. HMRC will accept late applications until the end of the tax year to which they relate. However, applications received AFTER the end of the tax year will only be considered for deferral of class 4 contributions. You have to re-apply for each tax year that you want to defer contributions and renewals for 2013/14 are currently being sent out. By 5 April 2013 you should submit your 2012/13 and 2013/14 applications.

You can obtain form CA72B for 2012/13 on HMRC website to complete. If your self employed earnings are lower than the small earnings exception limit of £5,595 you should complete form CF10.

If you require further help please contact us

Capital expenditure and the 2013 Annual Investment Allowance

Posted by: edwinsmith on February 15th, 2013

The Annual Investment Allowance, AIA, was reduced on1 April 2012 for and 6 April 2012 for income tax from £100,000 to £25,000. The draft Finance Bill 2013 includes a measure to increase the AIA from 1 January 2013 for two years to 31 December 2014 to £250,000. The AIA enables small and medium size businesses to claim full tax relief on most plant and machinery. 

There are now two changes within a year so the transitional rules for businesses with a chargeable period that spans both dates above are complex. If your business is in this category then please contact us for more information. If your accounting period ended after 6 April 2012 and on or before 31 December 2012 please see our earlier article on how the changes in April 2012 affected your allowance. 

To determine the amount of the AIA available to a business, two calculations need to be performed. Firstly, a calculation to evaluate the overall maximum AIA that may be claimed for the whole period and secondly to evaluate any cap for expenditure incurred in each of the notional periods that the accounting period is divided into to take account of the different amounts of AIA. 

For periods ending on 31 December 2012, the transitional rules mentioned in our earlier article will apply. For businesses with a year end of 31 December 2013 the AIA will be £250,000. For businesses with an accounting periods ending in 2013 other than 31 December, the accounting period will be divided into two or three notional periods to make up the chargeable year:-

  1. Firstly, a notional accounting period beginning before1 April 2012and ending on 31 March 2012 / 5 April 2012 – period A
  2. Secondly, a notional period commencing on1 April 2012/6 April 2012 and ending on31 December 2012– period B
  3. Thirdly, a notional period commencing on1 January 2013 through to the end of the accounting period – period C 


For accounting periods divided into two notional periods, the maximum AIA will be calculated by taking the number of months in period B at the AIA rate of £25,000 and adding the number of months in period C at the AIA rate of £250,000. A cap will then apply for period B such that the maximum AIA is calculated as if the 2013 rate was not introduced, so that the rate of £25,000 applied for the whole period. There is no cap for period C other than the overall maximum.

For example a company with an accounting year end of 31 March 2013 will have a maximum available allowance of £81,250 (£18,750 for period B and £62,500 for period C). For any capital expenditure incurred in the nine months to 31 December 2012the allowance will be capped at £25,000. There is no cap for period C, the three months to 31 March 2013, subject to the overall maximum of £81,250. So a business which has purchased equipment costing £30,000 in the nine months to 3 1 December 2012 will only be able to claim an allowance of £25,000 for that period but will be able to incur capital expenditure of £56,250 in the three months to31 March 2013 if they wish to use their maximum AIA of £81,250 in full. 

These rules are based on the draft 2013 bill which has yet to receive Royal Assent so there may be some changes yet. The transitional rules for when the AIA reduces from 1 January 2015 will also be complex when the chargeable period straddles 31 December 2014and we will write another article on this at the beginning of 2014 assuming the reduction is not delayed to a later date. If you would like further information please contact us.

Filed under: Self Assessment, Tax

Pension payments before 5 April 2013?

Posted by: edwinsmith on February 8th, 2013

From 6 April 2011 the rules changed on tax relief on pension savings. The annual allowance, which is the maximum amount of pension saving that benefits from tax relief each year per individual, became £50,000 (£40,000 net of basic rate tax). If you have been saving in a registered pension scheme since 6 April 2008 and your pension savings were less than £50,000 per annum in any of the tax years since then, then you will have an unused annual allowance to carry forward from that year/years. Unused allowances can only be carried forward for three years so the unused allowance from 2009/10 will not be carried forward after 5 April 2013.  There is a strict order in which you use up your annual allowance. You use the current tax year annual allowance first, then use your unused annual allowance from earlier years, using the earliest tax year first.Hence, to use any unused allowance of 2009/10 you must have pension savings in excess of £50,000 for the current year. The annual allowance is set to reduce in 2014/15 from £50,000 to £40,000 together with the lifetime allowance.

If however, you have not been a member of a registered pension scheme in earlier years then you will not have unused annual allowance to carry forward.

Any member can make contributions up to the ‘basic amount’ of £3,600 (£2,880 net of basic rate tax). Contributions above this amount on which a member can claim relief in any tax year is subject to the member not exceeding the lifetime allowance, currently £1.5 million, and is the lower of:

  1. the amount of the individual’s relevant UK earnings (broadly salary, self employment and other earned income) that are chargeable to income tax for the tax year, and
  2. the annual allowance, currently £50,000 (£40,000 net of basic rate tax).

If you are self-employed, contributed into a pension scheme in 2011/12 and have made no contributions so far in the current tax year, then your payments on account for 2012/13 are based on your 2011/12 position. If your 2012/13 total income is similar to 2011/12 and you do not make a pension contribution by 5 April 2013 then you may have a large balancing payment of tax due by 31 January 2014 together with a higher payment on account for 2014/15.

Your pension savings in a tax year is the total of the increase in value for each scheme of which you are a member.

For personal pensions, the increase in value is the amount you have contributed in the period, grossed up to cover the basic rate tax added by HM Revenue & Customs (HMRC), for example if you pay £500 a month into a personal pension, this is grossed up to £625 a month and your pension savings for that scheme will be £7,500.

For workplace pension schemes, the value of contributions made by your employer is also included in your pension savings. Where the scheme is a money purchase/defined contribution scheme, the increase in value for the period is the gross amount you have contributed out of your pay together with amounts contributed by your employer. For defined benefits schemes, the amount of your pension savings is the increase in the value of your promised benefits over the pension input period ending in the tax year. The valuation is based on a notional ‘capital ‘ value broadly based on 16 times the amount of annual pension achieved to date and any additional separate lump sum . Your pension scheme administrator will be able to provide you with a pension savings statement if you think your savings will be over the £50,000 allowance.

Please note that your payment should be received by your pension saving scheme by 5 April to obtain tax relief in 2012/13.

There are a number of wrinkles in the general situation set out above that may apply in particular unusual situations, so you should always check with us before making decisions.

Filed under: PAYE, Self Assessment, Tax

Dates and deadlines: February 2013

Posted by: edwinsmith on February 1st, 2013

1 February: Late filing penalty of £100 issued for self assessment tax returns unfiled at 31 January 2013 relating to 2011/12, interest to start accumulating on tax unpaid for 2011/12.

1 February: Corporation tax payment for a company not within the instalment regulations: year ending 30 April 2012

2 February: Submission of form P46 (car) for changes in quarter to 5 January 2013

5 February: End of month 10 for PAYE

7 February: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 31 December 2012

11 February: Direct debit VAT payment will be taken: quarter ended 31 December 2012

19 February: CIS monthly return deadline: month ended 5 February 2013

19 February: Cheque payments due for PAYE/NI, student loan and CIS: month ended 5 February 2013

22 February: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 February 2013

28 February: First surcharge of 5% applies for self assessment tax unpaid for 2011/12 after this date

28 February: Company tax return CT600 due to HMRC: years ending 29 February 2012

28 February: Company accounts (Private Limited Co) due to be filed: years ending 31 May 2012

28 February: Company accounts (Public Companies) due to be filed: years ending 31 August 2012

28 February: Direct Selling Campaign disclosure and tax payment due

1 March 2013: Corporation tax payment for company not within the instalment regulations: years ending 31 May 2012

Filed under: Dates and deadlines