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Basic PAYE tools update June 2012

Posted by: edwinsmith on June 20th, 2012

An update has been issued for the Basic PAYE tools 2012 package which is produced by HMRC.

Regular users of the Basic PAYE tools software should have the software set up to automatically check for updates and so no action is necessary as the software will prompt you to download the update when you next use the software. If you have automatic updates switched off, you can still check for updates manually - select 'Options' then 'Automatic Update Settings' then 'Check for Updates now'.

If you have not used the software for some time, then previous versions may need to be installed first and a data transfer may be required.

New users can download the software from the HMRC website.

For additional assistance please contact us.

Filed under: PAYE, Tax

Selling your Olympic Torch and the tax implications

Posted by: edwinsmith on June 15th, 2012

If you were lucky enough to be chosen to be a torch bearer, then you may be interested to hear the tax implications of selling your Olympic torch.

If you sell your Olympic torch for more than £6,000 then the disposal will be treated as a chargeable gain. Therefore, you may need to pay capital gains tax (CGT) depending on whether you have any other gains in the tax year. The personal exemption limit for capital gains for 2012/13 is £10,600.

If the torch is sold for less than £6,000 then you will not be chargeable to CGT on your proceeds and as long as the disposal is not considered as part of a trade then there will be no other tax implications. Generally people who sell a few personal items for cash are not considered as trading. However if it was considered part of a trade then the profit on the disposal would be charged to income tax rather that CGT.

Charity implications

If you do incur CGT on the disposal of your torch then there is no exemption from CGT even if you donate the money you receive on selling the torch to charity. Depending on your tax circumstances donations of money to charities under gift aid will enable the charity to reclaim £25 from HMRC for every £100 donated.

If you give the torch to charity for them to keep or sell themselves then there is no charge to CGT.

For full details on tax implications see HM Revenue & Customs: Selling your Olympic torch.

Please contact us for further advice.

Filed under: Tax

Revised advisory fuel rates 1 June 2012

Posted by: edwinsmith on June 7th, 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 19p
     
Engine size Diesel  
1600cc or less 12p  
1401cc to 2000cc 15p  
Over 2000cc 18p  
       

The changes this quarter is the increase of 1p per mile in LPG for all engines sizes  and reductions of 1p in diesel for engines sizes of 1600cc or less and over 2000cc.

The new rates will be effective from 1 June 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 August 2012 and any changes made will be effective from 1 September 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

Employer provided Smart Phones – Changes in tax implications

Posted by: edwinsmith on May 31st, 2012

HMRC have changed their guidance on smart phones which now fall within the meaning of ‘mobile phone’ for tax purposes where an employer provides a mobile phone to an employee.

Smart phones include Blackberry, iPhones and many Android devices.

Previously, smart phones were considered to be PDA’s (Personal digital assistants) as they combined the functions of a mobile phone with many of the functions associated with a computer. This meant that smart phones used to be treated for tax purposes in a similar way to a computer provided to staff. From 2006/07 it meant staff provided with a smart phone should have paid a benefit in kind if the device wasn’t solely for business use (insignificant private use would be allowed).

HMRC now has new guidance on mobile phones including smart phones which can be found in P11d Guide 2011/12 (480) which states in chapter 22.5, “Where apparatus is clearly designed or adapted for the primary purpose of transmitting and receiving spoken messages and is used in connection with a public communications service, the fact that it can also be used for other functions will not prevent it from falling within the meaning of mobile phone”.

Please refer to our previous guidance on Mobile phones and PDAs – When are they tax free?.

It should be noted that there are many types of devices with telephone functionality that cannot qualify as a mobile phone. The definition does not cover devices that the primary purpose is other than transmitting or receiving spoken messages, even if it can also be used in this way. Examples of devices that do not fall within the definition of mobile phones include satellite navigation devices, tablets and laptop computers.

Please contact us for any further advice

Filed under: PAYE, Tax

Tax relief for expenses of employment

Posted by: edwinsmith on May 25th, 2012

Reimbursed expenses on P11d forms

Employees (earning over £8,500 including benefits) and directors will be receiving copy p11d forms completed by the employer for benefits and expenses paid in the year to 5 April 2012. Expenses covered by a dispensation do not need to be included on the P11 d form (see below for more information on dispensations).

Where an individual’s P11d form includes reimbursed expenses then a claim should be made for any expenses that were incurred for the purposes of the business. The claim can be made separately to HMRC or as part of completing a self assessment tax return.

Claims for business expenses can only claimed where the expenses is wholly, exclusively and necessarily for business purposes.

The claim must be made in order to prevent tax being charged on the expenses. The claim may be made by letter to HMRC.

The tax charge will come about from a PAYE code being issued that show taxable benefits (including expenses) but no corresponding claim for business expenses. The claim for business expenses should result in a correct PAYE code.

Business expenses paid for by employee

Where expenses are incurred by an employee but not reimbursed by the company then tax relief can be claimed on these expenses either by letter if less than £1,500 or by using form P87  if over £1,000 but less than £2,500. HMRC will ask you to complete a tax return if claiming expenses exceeding £2,500.

Expenses cannot be claimed where the employer has reimbursed the expenses and has an agreed dispensation with HMRC not to report these expenses.

Dispensations

Employers should consider applying for a dispensation to HMRC where routine expense payments such as travelling and subsistence are reimbursed to employees.

This saves the employer time when completing the P11d forms and also saves the employee making any necessary expenses claims.  Please refer to our previous article for further information.    

Please contact us if you require any assistance with your forms or payment.

Filed under: PAYE, Tax

HMRC’s e-marketplaces campaign

Posted by: edwinsmith on April 16th, 2012

HMRC have announced their latest campaign to target rule breakers and home in on tax evaders - the e-marketplaces campaign.  This campaign is for people who are trading online through an online marketplace, sometimes referred to as an online auction or online market to sell goods and services as a trade or as a business but are not paying the right amount of tax.

An e-marketplace is an online market, or online shop, where buyers and sellers trade with each other over the internet. They might buy and sell goods or services, or a combination of both. A separate company, a 'third party', runs most e-marketplace websites. They let you advertise or auction your goods or services on their website, and usually charge a fee for this service - either for using their site, the amount you sell your goods or services for, or both.

The campaign is not for people who only sell a few of their personal items. They are unlikely to need to pay tax as they are not trading. Further guidenance about whether people are trading or not can be obtained on the HMRC website at  http://www.hmrc.gov.uk/campaigns/emarket.htm.

If you trade online and you have not disclosed all your income, you can use the e-Markets Disclosure Facility (e-MDF) to enable any unreported income to be declared and the related tax paid. By making a disclosure under the e-MDF you may benefit as follows:

  • you may only have to pay for a maximum of six tax years
  • you can tell HMRC how much penalty you should pay
  • you may be able to pay what you owe by instalments

If you owe tax in respect of anything else such as capital gains or rental income you can use the e-MDF to tell HMRC about that too and make a full disclosure.

If you wish to use the e-MDF to bring your affairs up to date you will need to tell HMRC by 14 June 2012 that you intend to make a disclosure and follow this up with a full disclosure and payment of the tax liability by 14 September 2012.If you think that you have not paid the correct amount of tax or would like advice please contact us.

Filed under: HMRC campaigns, Tax

New Guidance on Gift Aid declarations for Charities

Posted by: edwinsmith on March 30th, 2012

HMRC published revised guidance on Gift Aid declarations on 24 February 2012. This was to ensure that the donor pays enough tax to cover all their charitable donations and not just the donations made to the particular charity at the time. This has been the case but the mandatory information on the new model gift aid declaration form ensures that the donor is making an informed declaration and understands the consequences if they have not paid enough tax to cover the declarations e.g. donor pays income tax or capital gains tax in the relevant tax year at least equal to all the tax that charities etc will reclaim in that tax year on the donors charitable gifts.

Charities do not need to change their existing gift aid forms immediately and HMRC will continue to accept Gift Aid claims on donations made using old HMRC model declaration forms until 31 December 2012.

Full details of the new guidance on gift aid declarations can be found on the HMRC website.

The HMRC website also has details of the new model forms.

Please contact us for more details.

Filed under: Tax

Electricians’ Tax Safe Plan Campaign

Posted by: edwinsmith on March 9th, 2012

HMRC have announced their latest campaign to target rule breakers and home in on tax evaders - the Electricians’ Tax Safe Plan (ETSP) campaign.  If you are an electrician and you've not yet told HMRC that you have started working for yourself or you've not disclosed all your income, you can use the ETSP to enable any unreported income to be declared and the related tax paid to. By making a disclosure under the ETSP you may benefit as follows:

  • you may only have to pay for a maximum of six tax years
  • you can tell HMRC how much penalty you should pay
  • you may be able to pay what you owe by instalments

If you owe tax in respect of anything else such as capital gains or rental income you can use the ETSP to tell HMRC about that too and make a full disclosure.

Under the ETSP an electrician is anyone who installs, maintains and tests electrical systems, equipment and appliances under stringent safety regulations.

If you wish to use the plan to bring your affairs up to date you will need to tell HMRC by 15 May 2012 that you intend to make a disclosure and follow this up with a full disclosure and payment of the tax liability by 14 August 2012.

If you think that you have not paid the correct amount of tax or would like advice please contact us.

Filed under: HMRC campaigns, Tax

Inheritance Tax Reminder

Posted by: edwinsmith on February 29th, 2012

Just a reminder of the current rates and reliefs. If you did not use your annual exemption of £3,000 in 2010/11 then this carries forward for one year only to add to the 2011/12 exemption of £3,000 available.

You should keep a record of your gifts with the relief available.

If you would like some further advice then please contact us.

 

Rates

 

2011-12
Nil rate band *

£325,000
Rate of tax on excess on death

40%
Lifetime rates on excess

20%
Spouse exemption limit for overseas domiciled spouse/civil partner

£55,000
Reliefs

 
Annual exemption per donor

£3,000
Small gifts per donee

£250
Regular gifts out of excess income

 
Gifts in consideration of marriage by:

 
Parent

£5,000
Grandparent

£2,500
Remote ancestor

£2,500
Party to the marriage

£2,500
Other person

£1,000
 

 
* Potentially increased if you are a surviving spouse or civil  partner

 
 

Potentially exempt transfers
Gifts to individuals and trusts for the disabled that are not chargeable transfers are potentially exempt transfers. No inheritance tax is payable on a potentially exempt transfer but if death occurs within 7 years, it becomes a chargeable transfer at the date of the gift and tax is calculated at the full death rates applying at the date of death after applying the available nil rate band with the excess subject to taper relief below.
 
Reduced charge on gifts within seven years of death
Years before death

0-3

3-4

4-5

5-6

6-7
% of death charge

100

80

60

40

20
Filed under: Tax

Flat Rate Expenses for Employees and Tax relief for specialist tools and clothing

Posted by: edwinsmith on February 29th, 2012

As an employee you may be able to get tax relief if you spend money on any tools or specialist clothing you need to perform your job and your employer doesn’t reimburse you. You can go back several years and the time limit depends on whether you have previously submitted self assessment tax returns (see link – on ‘how to claim’ below).

Specialist clothing and Tools

As a general rule an employee can’t get tax relief for the cost of clothing they wear to work but there are certain exceptions dependent on the industry sector e.g. where you require protective clothing (building trade) or your job requires a specific uniform like a nurse or fire fighter. See HM Revenue & Customs: Tax relief for specialist tools or clothing for full details.

If you must pay for the cost of replacing, repairing or cleaning the specialist clothing then you are entitled to relief but you cannot claim the initial cost of buying this clothing.

If as an employee you have to buy – out of your own money – the tools you need to be able to do your own work then you are entitled to tax relief e.g.  As a hairdresser your employer might require you to provide your own scissors or a plumber your own tools. The tax relief also applies to the cost of maintaining and replacing tools.

Flat Rate expenses

If you have to spend money on tools or specialist clothing for your job you may be entitled either tax relief for the actual amounts you spend or a ‘flat rate deduction’.

Flat rate deductions are amounts that have been agreed with HM Revenue & Customs (HMRC). The deductions cover what's typically spent each year by employees in different trades. For example, someone working in the clothing industry can get a deduction of £60 each year or stone mason £120. You'll also benefit from less paperwork - you won't have to keep a record of all the individual amounts you spend. Follow the link below to see a table of agreed flat rate expense deductions Flat rate expense deductions .

If your industry is not listed on the table, you can still claim a standard amount of £60 for the laundry costs of uniforms or protective clothing.

How to claim tax relief

If you do not complete a self assessment tax return then you will need to contact HMRC by letter or phone and provide HMRC with various details about your employment, expenses being claimed for, industry sector, occupation etc. See HM Revenue & Customs: How to get allowances and reliefs - employees or directors for full details on making a claim and time limits for getting tax relief.

Please contact us if you require any assistance.

Filed under: PAYE, Tax
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