Many of the articles link back to the website of ACAS - the Advisory Conciliation and Arbitration Service - and we are grateful for their contribution to improved employment relations. We also acknowledge Farringdon and Cº for providing regular updates on such issues.
Advisory fuel rates for company cars
New company car advisory fuel rates have been published which took effect from 1 March 2017. The guidance states: 'You can use the previous rates for up to one month from the date the new rates apply'. The rates only apply to employees using a company car.
The advisory fuel rates for journeys undertaken on or after 1 March 2017 are:
Engine size Petrol 1400cc or less 11p 1401cc - 2000cc 14p Over 2000cc 22p
Engine size LPG 1400cc or less 7p 1401cc - 2000cc 9p Over 2000cc 14p
Engine size Diesel 1600cc or less 9p 1601cc - 2000cc 11p Over 2000cc 13p
Other points to be aware of about the advisory fuel rates:
- Employees driving employer provided cars are not entitled to use these rates to claim tax relief if employers reimburse them at lower rates. Such claims should be based on the actual costs incurred.
- The advisory rates are not binding where an employer can demonstrate that the cost of business travel in employer provided cars is higher than the guideline mileage rates. The higher cost would need to be agreed with HMRC.
If you would like to discuss your car policy, please contact us.
Internet link: GOV.UK AFR
Year end tax planning
With the end of the tax year looming there is still time to save tax for 2016/17. We have set out some points you may want to consider.
Make full use of your ISA allowance
ISAs can offer a useful tax free way to save, whether this is for your children's future, a first home or another purpose. Individuals may invest up to a limit of £15,240 for the 2016/17 tax year. A saver may only pay into a maximum of one Cash ISA, one Stocks and Shares ISA and one Innovative Finance ISA per year. Savers have until 5 April 2017 to make their 2016/17 ISA investment.
Take advantage of capital allowances
By making the most of capital allowances, businesses may be able to write off the costs of capital assets against taxable profits. The Annual Investment Allowance allows businesses to claim a deduction of up to £200,000 of the year's investment in plant and machinery (excluding cars). Businesses of any size and most business structures can make use of the AIA. However, there are provisions to prevent multiple claims.
Build a tax efficient retirement plan
Pension contributions must be paid on or before 5 April 2017 for them to be relieved against 2016/17 income. Annual contributions are limited to the greater of £3,600 (gross) or the amount of your UK relevant earnings may be eligible for tax relief. However, these will be subject to the annual allowance, which is generally £40,000. This is further reduced for those with net income over £110,000 and adjusted annual income (their income, plus both their own and their employer's pension contributions) over £150,000. For every £2 of adjusted income over this figure, a person's annual allowance is reduced by £1 (down to a minimum of £10,000).
This is only a selection of options that you may wish to consider as part of your tax planning strategy. For more information, and for advice on how we can help you to minimise your tax bill, please contact us.
Self assessment expense claims
HMRC have released a list of the most outlandish items which have been claimed as expenses. These include:
- Holiday flights to the Caribbean
- Luxury watches as Christmas gifts for staff - from a company with no employees
- International flights for dental treatment ahead of business meetings
- Pet food for a Shih Tzu 'guard dog'
- Armani jeans as protective clothing for painter and decorator
- Cost of regular Friday night 'bonding sessions' - running into thousands of pounds.
- Underwear - for personal use
- A garden shed for private use - plus the costs of the space it takes up in the garden
- Betting slips
- Caravan rental for the Easter weekend.
Ruth Owen, HMRC Director General of Customer Services, said:
'Year after year we receive a number of ludicrous expense claims, ranging from international holiday flights to expensive designer clothing, which we would never uphold. Why should the honest taxpayer pick up the bill for others? HMRC will only accept those claims which are genuine, such as legitimate travel expenses or the cost of tools for the job.'
For help with your tax affairs please do get in touch.
Internet link: GOV.UK news
Over £9.2 billion released by pension freedoms
Hundreds of thousands of savers have cashed in £9.2 billion from their pension pots since pension freedoms were introduced in April 2015.
In April 2015, the government introduced significant pension reforms giving people the ability to access their pensions savings how and when they want. Over 1.5 million payments have been made using pension freedoms, with 162,000 people accessing £1.56 billion flexibly from their pension pots over the last three months, according to HMRC figures.
The Economic Secretary to the Treasury, Simon Kirby, said:
'Giving people freedom over what they do with their hard-earned savings, whether it's buying an annuity or taking a cash lump sum, is the right thing to do. These figures show that people continue to take advantage of the choices on offer: choices only made available since the government's landmark pension freedoms were introduced in April 2015.
We are working with our partners, including Pension Wise, the regulators and pension firms, so that savers have the support they need to understand the options available to them.
The statistics show that in the first year of these new rules being available, more than 232,000 people have accessed £4.3 billion flexibly from their pension pots.'
What will the Spring Budget bring for business?
With two Budgets in 2017, and the Spring Budget scheduled for Wednesday 8 March 2017, the Confederation of British Industry (CBI) have written to the Chancellor Philip Hammond outlining what they would like to see in the Budget proposals.
The CBI's letter calls for the government to 'back businesses' growth ambitions' to help build prosperity across the UK, and to work alongside firms to 'prioritise stability' during periods of economic uncertainty.
The CBI has also urged the government to tackle the UK's 'outdated' business rates regime and limit its 'growing burden' on businesses.
Elsewhere, the Federation of Small Businesses (FSB) has advocated for a 'pro-business Budget' that supports self-employed individuals, urging the government to help more people start up in business.
We will keep you informed of pertinent Budget announcements.
Construction Industry - subcontractor verifications
HMRC have confirmed in the latest Employer Bulletin that changes will be made to the verification of subcontractors in the construction Industry Scheme (CIS) from 6 April 2017.
From 6 April 2017, contractors must use an approved method of electronic communication to verify their subcontractors. So from 6 April 2017 HMRC will no longer accept any telephone calls to verify subcontractors and from then contractors must verify subcontractors using:
- the free HMRC CIS online service, or
- commercial CIS software.
This change is one of a series made to CIS to increase HMRC efficiency and accuracy, and to reduce administration. HMRC are also reminding contractors that they have also introduced additional features of the online system including the ability to amend returns online, and the addition of an online message/alert service.
Contact us for help with CIS issues.
Internet link: Employer Bulletin
Providing services to a public sector - off payroll working
In the latest Employer Bulletin HMRC advise those providing services to a public sector client through their own limited company to ensure they are ready for the new rules which take effect from 6 April 2017.
The new rules for off payroll working, commonly referred to as IR35 or the Intermediaries legislation, take effect from 6 April 2017.
These changes mean individuals working through their intermediary in the public sector will no longer be responsible for deciding whether the intermediaries' legislation applies and then paying the appropriate tax and National Insurance contributions (NICs). This responsibility will instead move to the public authority client, agency, or third party that pays the worker's intermediary, and they will also now become responsible for making sure that, where the rules apply, the relevant income tax and NICs are deducted and reported through PAYE in real time.
The public authority client is required to tell any agency or third party its view as to whether the rules apply. HMRC have been consulting on these new rules and the legislation has yet to be finalised.
HMRC confirm that 'work is continuing on the development of the new Employment Status Service, and the online tool should be available for use in March. We have launched an off-payroll working in the public sector page on GOV.UK where you can find guidance for fee-payers, PSCs and public authorities to use, and links to material such as the technical note'.
If you have concerns in this area please contact us.