To view a copy of our August 2013 Edwin Smith newsletter please click here.
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Dates and deadlines for September 2013
Upcoming deadlines for businesses and individuals
1 September: Corporation tax payment for a company not within the instalment regulations: year ending 30 November 2012.
5 September: Property sales campaign tax due
5 September: End of month 5 for PAYE (RTI). All FPS (Full Payment Submissions) due if taking advantage of concession.
7 September: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 31 July 2013.
12 September: Direct debit VAT payment will be taken: quarter ended 31 July 2013.
19 September: CIS monthly return deadline: month ended 5 September 2013.
19 September: Cheque payments for PAYE/NI, student loan, CIS to be cleared into HMRC bank: month ended 5 September 2013.
20 September: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 September 2013.
30 September : Company tax return CT600 due to HMRC: years ending 30 September 2012.
30 September: Company accounts (Private Limited Co) due to be filed: years ending 31 December 2012.
30 September: Company accounts (Public Companies) due to be filed: years ending 31 March 2013.
1 October : Corporation tax payment for company not within the instalment regulations: years ending 31 December 2012.
Revised advisory fuel rates 1 September 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 ↑ | 11p ↓ |
| Over 2000cc | 26p ↑ | 16p ↓ |
| Engine size | Diesel |
| 1600cc or less | 12p ↔ |
| 1601cc to 2000cc | 15p ↑ |
| Over 2000cc | 18p ↔ |
The changes this quarter are highlighted in red above.
The new rates will be effective from 1 September 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 November 2013 and any changes made will be effective from 1 December 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.
PAYE RTI reconciliation problems
If you use the business tax dashboard and are an employer, then you will know that you can view your PAYE balance online. This should provide an accurate picture of your account. However, since the dashboard is not updated daily, it may provide an inaccurate picture.
HMRC have confirmed that at present, for real time submissions, updates will only be made twice a month, after the 6th and 19th for the tax month just ended. This means that larger employers may find it difficult to review their PAYE record and discrepancies may have arisen due to the time in which it takes HMRC to process the RTI data.
There have been a number of problems reported with employers being chased for underpayments and some being advised to reduce the next payment for overpaid PAYE.
For the system to work correctly, employers must also ensure that the correct payment references are used when making PAYE payments. More information about using the correct numbers can be found here.
HMRC has admitted that it is having some problems and as a result has set up a dedicated team to look why some PAYE schemes have experienced ongoing problems in reconciling what HMRC say is due and what has been paid.
If we run your payroll scheme, then contact us for advice. If not, then review your business tax dashboard to see if you can reconcile the submissions and the payments made, and certainly make contact with HMRC if you believe HMRC to be wrong.
If you employ a large number of staff this may prove difficult under the current circumstances, meaning you may need to wait for the dedicated team to review your account.
The Gift Aid Small Donations Scheme (GASDS)
HMRC have introduced a new scheme from 6 April 2013 for charities and Community Amateur Sports Clubs (CASCs) to claim top-up payments from HMRC on small cash donations of £20 or less. This is in addition to the Gift Aid scheme which has not changed. The Gift Aid Small Donations Scheme or GASDS could apply for example to cash collected in street collections or at religious ceremonies by charities or CASCs.
A charity or CASC will be able to use the scheme if it:
- is a charitable trust or a charitable company, recognised by HMRC as a charity for tax purposes or a CASC;
- makes claims under Gift Aid;
- has existed for at least the last two complete tax years (6 April - 5 April);
- has made a successful Gift Aid claim in at least two out of the last four tax years, without a gap of two or more tax years between those Gift Aid claims or since the last claim made; and
- has not incurred a penalty on a Gift Aid or GASDS claim made in the current or previous tax year.
Claims can only be made for small cash donations in notes or coins of up to £20 – donations by cheque, credit card, text or bank transfer do not count.
The amount a charity or CASC can claim depends on the amount claimed under Gift Aid and is subject to a maximum of £5,000 of donations which would produce a top-up payment of £1,250. For every £1 of Gift Aid donations that a charity or CASC claims on, they can claim on £10 of GASDS donations up to the maximum of £5,000. This is called ‘matching’. The top-up rate is based on the basic rate of tax income tax, currently 20%, and is calculated at 25% of the qualifying small donations up to the limit of £1,250.
GASDS is not a tax relief, so higher and additional rate taxpayers will not be able to claim tax relief on their GASDS donations.
More information can be obtained from HMRC.
If you require further help please contact us.
The Business Tax Dashboard
The business tax dashboard is a service provided by HMRC within your government gateway / online account. If you wish to use the service you will need to register for it from within your online account when you log in to either your corporation tax or self assessment service.
Once registered, it can be accessed straight away. From within the dashboard you can see on a single page, the tax position for the business related taxes you are registered for.
For each tax, you will be able to see the overall position and more detailed information such as payments made, interest on late payments, penalties incurred and direct debit plans.
You can use the dashboard to view information as follows:
- Corporation Tax - information for accounting periods from 1 October 1993 onwards
- Self Assessment - information for the tax year 1996-97 onwards
- PAYE for employers - information for the tax year 2010-11 onwards
- VAT - information for the current date and previous 15 months
Contact details can also be changed from the dashboard.
The system is updated overnight from Monday to Friday but the drawback is that the dashboard will only reflect returns and payments that have reached HMRC systems. HMRC have updated their guidance and have confirmed that for real time submissions, updates will be twice a month, after the 6th and 19th for the tax month just ended.
You can sign into your online account here.
Simplified expenses – flat rate deductions
From 2013/14, HMRC have introduced some flat rate expenses that can be taken advantage of by sole traders and business partnerships. These are for:-
- Business use of vehicles;
- Business use of home (covered in our article last month); and
- Private use of business premises.
The flat rate deduction can be used as an alternative to recording actual expenditure and apportioning the business element.
Business use of vehicles
The flat rate deduction is calculated using a flat rate per mile according to the following table:
| Vehicle type | 2013/2014 flat rate per mile |
| Cars and goods vehicles first 10,000 miles | 45p |
| Cars and goods vehicles after 10,000 miles | 25p |
| Motorcycles | 24p |
The above rates were previously available to small businesses below the VAT threshold but this has been extended to all sole trader and partnerships from 6th April 2013. If you use the flat rates you cannot claim capital allowances or running costs of the vehicle.
You will need to keep a record of your business mileage but will not be required to keep details of your actual running expenditure. You do not need to use the flat rate for all your vehicles but if you start to use it for a vehicle you must continue with the flat rate for that vehicle until it is no longer used in the business.
It would be advisable to review your estimate of the actual business allowances and costs of the vehicle and compare this with the allowance that would be given on the flat rate scheme to see which would give you the most allowance against your income.
Private use of business premises
Some businesses may use their business premises as their home, for example if they are running a guest house, B&B, or small care home. Instead of working out the split of the business and private use of the premises, for costs such as utilities, food, non-alcoholic drinks, household goods etc., you can use a flat rate deduction per month from the total costs for private use depending on the number of people using the business premises as a private home.
The monthly deductions from the total costs are as shown below:
| Number of people | 2013/14 flat rate per month |
| 1 | £350 |
| 2 | £500 |
| 3+ | £650 |
The flat rate does not cover mortgage interest, rent, council tax or rates so the business proportion of these expenses will still need to be calculated.
Please contact us if you have any queries or require any further advice.
Tax relief on wear and tear of furniture – let property
Dwelling houses that are let are excluded from claiming capital allowances on the cost of furniture and furnishings but there are some tax reliefs available to cover the cost of wear and tear of furniture, chattels (including white goods) etc if it is a furnished let property.
If letting a furnished property there are two alternative ways to claim tax relief for the cost of furniture: an annual wear and tear allowance; and the renewals basis – the replacement cost of an item. You need to decide which basis to use when calculating the expenses for the first period of let. Once chosen you cannot switch between the two methods. If you are a landlord with more than one furnished let property then the basis used on first letting will determine the treatment on your other properties. An outline of the alternative tax reliefs is detailed below.
Wear and tear allowance
The wear and tear allowance that may be claimed when calculating rental profits is 10% of rents received less any rates (or rent) paid. If rents received in tax year £10,000 and no rates paid then an allowance of £1,000 can be claimed. If rates paid of £1,000 then £900 may be claimed (£10,000 - £1,000 X10%).
You cannot claim repairs or replacement costs of furnishings. Therefore no deduction can be claimed on items replaced such as living room suite, beds, carpets, curtains, linen, crockery, cutlery, washing machine, cookers etc. This is not a definitive list and some judgement needs to be used on whether the item replaced could be classified under furniture, furnishings and chattels.
However the costs of replacement or repairs to integral parts of the building such as windows, kitchen and bathroom fittings can be claimed as a tax deductible expense. Care needs to be taken on whether the repair constitutes an improvement in which case it would be deemed a capital expense and therefore not deductible against rental profits but this area will be outlined in further detail in a later online article.
In order to claim the wear and tear allowance it is important that the conditions to be classified as a furnished property are met. The dwelling must have sufficient furniture, furnishings, and equipment for normal residential use and although no specific list of items are given for this purpose it should include bed, chairs, table, fridge and cooker.
Renewals basis
An alternative to wear and tear allowance is to claim the actual cost of renewing furniture, furnishings and chattels. The amount allowed is the actual cost of the replacement excluding any additions or improvements and after deducting the scrap value or sale price of the items replaced. The cost of the original items is not expenditure on renewals and is not allowable.
This relief, compared to wear and tear allowance, is more difficult to manage in terms of records to be kept and the relief is delayed until items are replaced. Tax relief tends to be obtained earlier using the wear and tear allowance but would be dependent on individual circumstances.
Please contact us if you require further advice concerning tax implications of let properties.
