Company car tax rises take effect

Company car tax rises take effect

The company car has continued to be an important benefit for many employees, despite increases in the taxable benefit rates in recent years.

However, April 2018 saw the introduction of further changes affecting employer-provided cars, which could have a significant impact on your business motoring costs.

Benefit-in-kind rates

Company cars are essentially taxed as a benefit-in-kind (BiK) by multiplying the list price of the car (including most accessories) by the ‘appropriate percentage’. This is set by reference to the car’s fuel type and level of CO2 emissions.

In 2017/18, a reduced BiK rate of 9% applied for vehicles emitting no more than 50 g/km of CO2, but from April 2018 these rates have started to increase significantly.

Cars with CO2 emissions of 0-50 g/km are now liable to a rate of 13%, with similar rises applying to cars with higher levels of emissions.

Diesel cars

April 2018 also saw an increase in the additional diesel car supplement, which has risen from 3% to 4%. The maximum cap of 37% still applies (unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard).

Capital allowances

Changes have also been made to the tax relief for business expenditure incurred on or after 1 April 2018. The 100% first year allowance for expenditure on cars now applies where emissions are less than 50 g/km, reduced from the previous level of 75 g/km. In addition, the limit for attracting an 18% writing down allowance has fallen from 130 g/km to 110 g/km.

Electric charging points

There is perhaps more welcome news for those employers providing charging points for electric or hybrid cars, as HMRC intends to exempt employer-provided electricity from being taxed as a BiK, to apply retrospectively from 6 April 2018.

Further changes to company cars are due to take effect in 2019 and beyond, including additional increases in the BiK rates and the introduction of a new range of bands for ultra-low emission vehicles (ULEVs).

We can help you to plan ahead and decide on the most tax-efficient option for your business motoring needs.

For more information, including the latest tax rates, visit the Tax Strategies area of our website.

Research suggests 70% of individuals ‘unaware of inheritance tax nil-rate band’

Research suggests 70% of individuals ‘unaware of inheritance tax nil-rate band’

Research carried out by Canada Life has suggested that a significant amount of individuals ‘do not know the threshold’ for the standard inheritance tax (IHT) nil-rate band. Canada Life found that 70% of those surveyed did not know the standard nil-rate band threshold, which currently sits at £325,000.

55% of those questioned do not know the rate at which assets above their available nil-rate band are taxed, the data also revealed.

Meanwhile, an additional 38% do not believe that their main home is liable for IHT. Canada Life has warned that many families in the UK could face ‘unexpectedly high’ tax bills as a result.

‘There is a disturbing lack of knowledge which will undoubtedly translate into unnecessarily high inheritance tax bills,’ said Karen Stacey, Head of Distribution Services at Canada Life.

‘Unless people learn more about taxes and actively plan the future of their estate, the government is in line for a large, ongoing and often unnecessary windfall.’

Meanwhile, Chancellor Philip Hammond has commissioned the Office of Tax Simplification (OTS) to review the UK’s IHT regime, and make suggestions as to ways in which the tax can be simplified.

In a letter to the Chair of the OTS, the Chancellor acknowledged that the IHT regime is ‘particularly complex’, and suggested that the review focus on the technical and administrative issues surrounding the tax.

Mr Hammond also said that the review should examine how existing gifts rules interact with the IHT system, and consider whether the current rules cause taxpayers to rethink their decisions when it comes to investments and transfers.

A ‘scoping document’ for the review into IHT will be agreed and published ‘in due course’, the OTS said.

As your accountants we can help you to plan to minimise the IHT due on your estate – please contact us for further advice.

Strategies for saving tax ahead of the 5 April year end

With the end of the 2017/18 tax year approaching, now may be the ideal time to think about strategies to help mitigate your tax liability. There are many different options to consider so do contact us for further advice.

Reducing your personal tax liability…

Are you making the most of your tax-free personal allowance (PA)? Individuals are entitled to their own PA, which is set at £11,500 in 2017/18. Therefore, if your spouse or partner has little or no income, you could stand to benefit by spreading your income more evenly to ensure that each PA is being fully utilised.

Some married couples may also be eligible to transfer 10% of their PA to their spouse under the Transferable Tax Allowance, or ‘Marriage Allowance’. It means £1,150 may be transferred in 2017/18, which could help to reduce a couple’s tax liability by up to £230 in this financial year. Certain rules apply.

And despite relatively low interest rates, for many individuals ISAs are still an attractive tax-free way to save. For 2017/18, the overall subscription limit for ISAs is £20,000, of which no more than £4,000 can be deposited into a Lifetime ISA. With a range of ISAs to choose from, you have until 5 April 2018 to make your 2017/18 ISA investment.

… and your business’s tax bill

Are you maximising claims for capital allowances? The majority of businesses are able to claim a 100% Annual Investment Allowance on the first £200,000 of expenditure on most types of plant and machinery (except cars). In many cases, a purchase made just before the end of the current accounting year will mean that the allowances are available a year earlier than if the purchase was made just after the year end.

Business owners may also wish to consider tax-efficient ways in which they can extract profit from their business. There are many ways to achieve this. Some may opt to take dividends instead of a salary or bonus, as these are paid free of national insurance contributions. Others may wish to talk to us about incorporating their business, while employer pension contributions can be another tax-efficient means of extracting profit.

As always, it is important to seek our advice before taking action. For more information on tax-saving strategies to implement ahead of the 5 April 2018, please visit the Hot Topics section of our website.

Recommended App – TAX READY

TAX READY

With cloud-based technology becoming a feature of everyday life, businesses are wise to implement good, modern software and apps where possible. The right apps can simplify your life and work; improving efficiency and profitability (time is money)!

So, continuing with our regular app recommendations, this month we’d like to recommend TAX READY – our very own, brand new app!

What is it?

Tax Ready is a smartphone app (available on Apple, Android and Windows devices). It has been designed with business owners and managers in mind; providing a range of useful tools to help with the operational aspects of running a business.

How much does it cost?

£0 – it’s free!

What are its features?

  • Tax calculators – there’s a calculator for almost everything but, as an example, the income tax and NI calculator enables you to work out the gross cost of employing a new staff member – or help your employees to understand their net pay.
  • Tax tables – quick access to up-to-date tax rates.
  • Key tax dates – keep track of deadlines and easily add them to your phone’s calendar (just one-click and the reminder’s there) .
  • News – regular news articles on a variety of useful topics.
  • Mileage and expense recording – keep track of your mileage and expense claims whilst on the move, then download them as a spreadsheet when required.

Why do we recommend it?

Although somewhat biased, we genuinely believe the app is a useful resource for our clients and contacts. We think it’s easy to navigate, has a fresh, modern design, and it’s free!

How do I get the app?

To add the app to your device, search ‘Tax Ready’ in your app store … then download and enjoy exploring the features.

 

 

 

Business Groups React to Taylor Review of Employment

Business groups have reacted to the recommendations of the Taylor Review into modern-day employment practices, which sets out the key principles for providing ‘fair and decent work for all’.

The review suggests that a national strategy is needed to help provide security in such areas as wages, quality of employment, education and training, working conditions, work-life balance and the ability to progress at work.

Recommendations for the government include implementing strategies to ensure that workers don’t get ‘stuck at the living wage minimum’, initiating a review focusing on providing employees with ‘good work’, and avoiding an increase in the non-wage costs involved in employing an individual, such as the Apprenticeship Levy.

The review also highlights the so-called ‘gig’ economy, recommending the creation of new ‘right to request’ guaranteed hours, and the introduction of the term ‘dependent contractor’ to replace the term ‘worker’, with the aim of capturing those who are currently classed as self-employed, but who work for firms which have a ‘controlling and supervisory’ relationship with their workers.

Business groups have given mixed reactions to the report’s findings, with many welcoming the focus on labour market flexibility, but also warning that some areas, including the plans to rewrite employment status tests, are a cause for concern.

Commenting on the report, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: ‘The world of work is changing, and it is only right that employment law and practice change with it. Matthew Taylor has rightly recognised that the UK’s flexible labour market is a great source of strength and competitive advantage, but has also recommended some common-sense changes where grey areas have emerged in recent years.’

However, the Trades Union Congress (TUC) warned that the review ‘is not the game-changer needed to end insecurity and exploitation at work’.

DIGITAL ENTERPRISE GRANTS… AVAILABLE SOON

ARTICLE SHARED FROM CRAVEN DISTRICT BUSINESS NEWS

The highly successful Digital Enterprise scheme is to open again in September 2017 with grants of up to £5,000 available for Craven businesses to invest in computer hardware, software, telephony and connectivity.

The first phase of the programme received unprecedented demand with almost 480 applications from across the Leeds City Region submitted during seven weeks.  The next phase of the voucher scheme from September 2017 will target those projects that demonstrate significant digital  transformation for a business as well as economic impacts such as job creation or increased turnover.

To support the voucher scheme a series of workshops and conferences will be launched in July 2017 for businesses to improve their understanding of digital topics including designing your ideal enterprise, customer service in a digital age, content and video marketing and designing your 2017-2018 social and digital marketing strategy.

For more information on the Digital Enterprise Programme and to sign up to notifications for when the programme opens again visitwww.digitalenterprise.co.uk

Recommended App – Zoom

ZoomLogoBlue_copyFollowing last month’s article (the first in our series of monthly app recommendations), our featured app for July is:

ZOOM

What is it?

Zoom is a video conferencing solution which can be used on your desktop, tablet or mobile. It can be used for 1 to 1 video meetings, conference calls or to host webinars.

How much does it cost?

The pricing structure is staggered for different requirements but the basic version is free.

Features

The free version enables 1 host (the person holding the meeting/the account holder) to have group video meetings with up to 100 participants, for up to 40 minutes. The host can arrange as many 1 to 1 meetings as they like (without a time limit)… The 40 minute limit only applies to group meetings of 3+.

Meeting attendees (i.e. people that the host has invited to join), don’t need a Zoom account to participate – they just need a meeting code or link to join.

If required, the meeting host can share their desktop/screen with attendees.

Why we recommend it

  • It’s quick and simple to install and use on any device. We’ve generally used it on the I Pad app – which is very intuitive and easy to navigate.
  • It has some very clever features. For example, in group meetings, the picture automatically switches to the person that is speaking (i.e. you don’t have lots of small faces on the screen at once – just the face of the person that is talking).
  • If the video link fails, or connectivity is poor for an attendee, they can dial into the meeting by telephone using a VOIP number that is generated for the meeting.
  • Scheduling meetings and inviting attendees is really easy and looks smart and professional.
  • The free version is great but the ‘small business’ version (£11.99 per month per host) also provides an affordable solution with great additional features.