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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

Bring your tax affairs up to date

Posted by: edwinsmith on July 27th, 2012

HMRC have introduced a Tax Return initiative to bring your tax affairs up to date where a Self Assessment tax return or notice was sent for 2009/10 or earlier and you have not yet submitted the tax return(s) HMRC guide to tax return initiative. 

In order to take part in the Tax Return initiative then you need to tell HMRC that you intend to do so. This can be done by completing an online form and sending it to HMRC either electronically or by post - tax return initiative form.  

You will need to complete and submit the late tax return(s) and pay the tax and National Insurance contributions owed (or claim any tax repayment that is due) before 2 October 2012. 

If you cannot afford to pay the full amount owed then HMRC may agree in some circumstances for you to spread the payments and there is a Tax Return Initiative helpline 0845 601 8818 that you can call for assistance in these matters. 

HMRC can charge a penalty up to 100% of the tax and NIC owed if a failure to file a return continues for more than 12 months.  HMRC will offer the best terms available  and by taking part in this campaign  HMRC  expects that most will not have to pay this penalty. 

The fixed penalties (£100 for these years and further £100 if still outstanding 6 months later) and any daily penalties that have been imposed will be unaffected by this campaign and interest and surcharges on tax paid late will still remain payable. 

HMRC is reviewing its records and identifying individuals who have failed to comply with obligations to submit their tax returns therefore where individuals do not take advantage of this opportunity then tax geared penalties will be charged and HMRC may also consider criminal investigation. 

Please contact us  if you require any assistance in bringing your tax affairs up to date.

Filed under: Tax

Renting out your home for the Olympic Games

Posted by: edwinsmith on July 20th, 2012

If are intending to rent out your accommodation during the 2012 Olympic and Paralympic games (as during other times) then you should check the tax implications of this income as follows. 

Letting furnished rooms in your home

If you rent out a furnished room in your home them you can take advantage of the rent a room scheme. You can receive up to £4,250 (£2,125) a year tax free if you rent out furnished accommodation in your only or main home. The tax free amount is ‘gross’ income – total receipts before taking away expenses. For further information see Direct Gov The Rent a Room scheme. 

Letting residential property

If you rent out your home and live elsewhere during the games then any profits you receive on letting your home are taxed as residential property lettings. The profit is your total rental income less allowable expenses and any allowances that may be available . The taxable profit from your property letting is added to your overall income. If your overall income is more than your personal allowances then you will pay tax on your property rental income (at income tax rate applicable to income threshold). For further information see Direct Gov Tax on rent from residential property lettings  

You will need to notify HMRC of this income as depending on circumstances you may need to complete a self assessment tax return if not already. 

If you own the home jointly then you should seek further advice as depending on the circumstances you may both have a share of the taxable profits from renting out your home. 

Please contact us if require further advise

Filed under: Tax

Furnished Holiday Lettings (FHL) – Change in occupancy thresholds for property to qualify as FHL

Posted by: edwinsmith on July 13th, 2012

Changes were introduced to the occupancy thresholds from April 2012 (1 April for Companies and 6 April 2012 for individuals) that have affected the conditions that a property will need to meet to qualify as a Furnished Holiday Letting (FHL) as detailed below.

  • The minimum period over which a qualifying property must be available for letting to the public in the relevant period is increased from 140 days to 210 days in a year with effect from April 2012.
  • The minimum period over which a qualifying property is actually let to the public in the relevant period is increased from 70 days to 105 days in a year with effect from April 2012. 

As FHL are treated as trade for some purposes they benefit from some tax advantages over other tax lettings such as. 

  • Capital allowances - furniture, furnishings etc (qualifying as plant and machinery) in let property as well as plant and machinery used out of the business (such as vans and tools).
  • Capital gains –Entrepreneurs relief, Business Asset Rollover relief, relief for gifts of business assets, and relief for gifts of business assets and relief for loans to traders.
  • Profits count as earnings for pension purposes. 

In order to help businesses meet the new occupancy thresholds and retain the tax advantages detailed above HMRC have introduced two elections.

  • Averaging election - is helpful where you have more than one FHL property.
  • ‘Period of grace’ election - allows you to treat a year as a qualifying FHL year where you genuinely intended to meet the occupancy threshold but were unable to meet it subject to certain conditions. 

For full details on FHL elections and other tax implications of FHL see HMRC - Furnished Holiday Letting Helpsheet 253.  

If you require further advice and assistance on meeting the new FHL requirements please contact us.

Filed under: Tax

Class 2 National Insurance Contributions due by 31 July 2012

Posted by: edwinsmith on July 9th, 2012

If you have not set up a direct debit for your Class 2 National Insurance contributions, a payment request should have been issued to you in April covering the 26 week liability from 9 October 2011 to 7 April 2012. The due date of payment for these contributions is 31 July 2012.

If you do not pay your Class 2 National Insurance contributions by the due date they may become due at a higher rate and adversely affect entitlement to contributory benefits. If you have not received a request for payment,  contact us for advice.

When making your payment to HMRC it is important that you ensure you are using the correct reference number. Your reference number is shown on the letter HMRC sends you and is made up of 18 digits - for example 110362020162306149. This reference is only an example and should not be used to make a payment (the first two characters are always '11' and the final character can be an 'X').

It is important that you show the reference with no gaps between the characters otherwise it could lead to delays in updating your account. You can check the number using HMRC's online checker tool.

Further information on how to pay your class 2 national insurance can be obtained at on the HMRC website.

Filed under: National insurance, Tax

HMRC Tax return initiative

Posted by: edwinsmith on July 4th, 2012

The latest initiative from HM Revenue and Customs (HMRC) was launched yesterday (3rd July). This is a time limited campaign where specific tax payers are being given the opportunity to come forward and pay up. Previous campaigns have targeted offshore investments, medical professionals, private tutors and coaches, plumbers, electricians, VAT defaulters and online traders.

Higher rate taxpayers who are behind with the submission of their self assessment tax returns are being given the opportunity to come forward and take advantage of better terms and lower penalties than if HMRC approaches them first. This initiative is aimed at taxpayers who pay tax at 40% and above who have outstanding Self Assessment returns for 2009/10 or earlier, although any individual with outstanding returns for these years can get up to date within the campaign.

You have until 2 October to tell HMRC that you wish to take part, submit  your completed returns and pay any tax and national insurance that you owe.

If you are not up to date by 2 October, HMRC will use its powers to pursue you, in which case penalties of up to 100% of the tax due could follow with potential criminal investigation.

There are many reasons why you may be behind but now is the time to get up to date and we can help you with this.

HOW TO TAKE PART

We would be pleased to guide you through the process and help you get up to date but should you wish to register and take part before contacting us for help, then further guidance and online registration is available here.

You will also need to complete the returns by 2 October but we are here to help.

Please contact us for a free consultation so that we can help you get straight with your tax affairs and keep you in order in the future.

Filed under: HMRC campaigns, Self Assessment, Tax

Renew your Tax Credits by 31 July 2012

Posted by: edwinsmith on June 29th, 2012

By the end of June 2012 everyone that had made a claim for tax credits in the tax year 2011/12 should have received a renewals pack.

If you don’t get your renewal pack by the end of June then you should contact the tax credit helpline. You can’t get a renewal pack online.

The renewal pack may include an Annual Review notice (TC603R) or an Annual Declaration form (TC602D or TC603D2) together with the Annual Review notice.

Annual Declaration form

If you've been sent an Annual Declaration (TC603D or TC603D2) and don't renew, the following will happen:

  • your payments will stop
  • you will have to pay back any overpayment from both the previous tax year and from the start of the new tax year
  • you'll get a statement from the Tax Credit Office about your tax credits payments
  • you have a further 30 days to provide the information asked for in the renewal pack
  • you will usually have to make a new tax credits claim if you don't provide the information   within 30 days

Annual Review Notice 

If you only receive an annual review notice then your claim will be renewed automatically but you will still need to tell the Tax Credit office straightaway if:

  • you have had any changes in circumstances
  • your income is different to what's shown in the Annual Review notice
  • there are mistakes or details missing from the notice

 

Tax credit claims should be renewed by 31 July 2012 and for further details see HM Revenue & Customs: Renewing your tax credits claim - the basics 

If you require any assistance regarding your tax credit renewal please contact us

Filed under: Tax
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