December 2019 Fuel Rates

HMRC have announced new fuel rates for journeys on or after 1st December 2019. For one month from the date of change, either the old rates or the new rates can be used. Hybrid cars are treated as either petrol or diesel cars for this purpose.

The rates can also be used for VAT recovery purposes, but employers will need to keep supporting invoices/receipts to cover the VAT reclaimed. In addition, the rate for full electric cars is 4p per mile, and electricity is not a fuel for company car fuel benefit purposes.

The new rates based on engine size are :

Petrol       :   1,400cc or less 12p; 1,401cc to 2,000cc 14p; over 2,000cc 21p

Diesel      :   1,600cc or less   9p; 1,601cc to 2,000cc 11p; over 2,000cc 14p

LPG         :    1,400cc or less  8p; 1,401cc to 2,000cc  9p; over 2,000cc 14p

Revised CEST Tool Launched

HMRC has updated its check employment status for tax ( CEST ) tool recently. This tool will check whether the IR35 intermediaries legislation applies to a particular engagement in both the public and private sectors.

Around 30 new questions have been updated or included. Up until now, only 85% of cases gave an answer. The updates will hopefully increase this number.

CEST is the only device which produces a result which HMRC will stand by. This is, however, on the caveat that the information which is input is both accurate and the tool is used in accordance with the guidance.

We would strongly recommend that any contractor who is concerned that IR35 may apply to them, should use the tool and if the answer shows that the contract is outside of IR35, then the results be printed off and stored as part of the official records.

Office Closure

Our offices will be closed on Friday 6th December from 11:00am, as we are having our staff Christmas function on that day. Our offices will re open on Monday 9th December at 9:00am.

We would like to take this opportunity to wish all our clients, both past and present, along with our associates, advisers, and introducers a very merry Christmas and a wonderful and healthy new year.

September 2019 fuel rates

HMRC have announced new fuel rates which apply to all journeys on or after 1st September 2019. For one month from this date, either the old rates or the new rates can be used. Hybrid cars, for this purpose, are treated as either petrol or diesel.

These amounts can also be used for VAT recovery purposes, but the employer must retain receipts.

In addition, the advisory rate for a full electric car is 4p per mile, and electricity is not a fuel for car fuel taxable benefit purposes.

The new rates are :

 

Petrol       :    1,400cc or less 12p; 1,401cc to 2,000cc 14p; over 2,000cc 21p

LPG         :    1,400cc or less   8p; 1,401cc to 2,000cc 10p; over 2,000cc 14p

Diesel      :     1,600cc or less 10p; 1,601cc to 2,000cc 11p; over 2,000cc 14p

Grant funding for brexit costs

HMRC have recently announced that a £16m fund is available for businesses to cover certain costs associated with Brexit. The grants cover both IT costs and training costs, relating to the completion of Customs declarations for imports/exports from/to the EU.

A business is eligible to claim up to 200,000 euros for IT costs, and up to £250 per person for in house training or £2,250 per course. Eligible businesses must have a UK establishment and a good tax record, with 250 or fewer employees and annual turnover less than 50m euros.

Applications should only be made when a business is prepared, but the opportunity for funding closes on 31st January 2020 at the latest.

If you feel that a claim may be made by your business then applications are made online at www.customsintermediarygrant.co.uk

Domestic Reverse Charge and VAT

The introduction of the domestic reverse charge for construction services has been delayed for 12 months until 1st October 2020.

HMRC made the change after industry representatives raised concerns that some businesses were just not ready. They have stated that where genuine errors occur because some businesses have already made changes to their invoicing, and these changes cannot easily be changed back again, then the change of date will be taken into account by HMRC. Also, if businesses had opted for monthly VAT returns on the back of the change in legislation, then this can be reversed on HMRC website.

So, in summary, it is as you were…………………until next year.

Tax Payable on Sale of Private Residence

It has long been part of the capital gains tax exemptions/reliefs that no capital gains tax would be payable on the sale of a persons sole/main private residence. This principal private residence exemption also included the final 36 months of ownership as deemed occupation, and therefore also exempt from charge, up until a few years ago. This final period of deemed occupation was then reduced to 18 months.

From 6th April 2020 the final period exemption will be shortened further from the 18 months down to only 9 months ( although the 36 month exemption period will continue to be available to disabled persons or those in a care home ). In addition to this reduced period, lettings relief will only apply when the owner of the property is in shared occupancy with the tenant.

It becomes more possible therefore that a chargeable gain could arise where an individual has to sell their home, before they can buy a new one. Any capital gains tax on disposal would also need to be paid within 30 days of completion. A failure to disclose the tax due, and the failure to pay the tax by the due date, would potentially lead to additional penalty costs.

Anyone selling their principal private residence after 5th April 2020 should be conscious of these changes to the exemption.

Private Sector Off Payroll Workers

Off payroll working rules were introduced a couple of years ago with regards the public sector. For off payroll workers you should think contractors/freelancers/IR35. The long awaited ” private sector IR35 ” legislation has now been released in draft form. This new legislation is expected to come into force from April 2020.

The new proposals will apply to private sector engagements where the ” end client ” is a medium or large business, as defined by the Companies Act. The end client is the person/organisation that receives the services of the personal service company ( PSC ) worker, at the end of the supply chain.

The end client now becomes the decision maker as to whether IR35 applies to the engagement or not. They must produce a Status Determination Statement ( SDS ), which provides a conclusion as to whether IR35 applies to the engagement, and the reasoning behind this conclusion. The SDS is then given to the PSC worker, and also the party directly below it in the supply chain. The SDS can then be further passed down the supply chain.

Whichever party is ultimately left ultimately holding the SDS will take responsibility as the ” fee payer ” which is essentially the party responsible for ensuring the correct tax treatment is applied to the PSC. The fee payer would typically be the party closest to the PSC in the supply chain ( i.e the party physically paying the PSC ).

This is complicated legislation, and it still appears to have many unanswered questions that could come out of it. The government has committed to providing further guidance during 2019, and has also accepted that HMRC’s check employment status indicator tool ( CEST ) is woefully inadequate at providing an accurate decision.

As further updates become available, we will post this information on our website, but all contractors/freelancers can expect a shift in attitudes as to their status from next April, as was seen in the public sector previously. This would then increase their tax burdens, and effectively reduce their take home pay!!!!!

 

NHS Pensions

There has been a lot of talk in the media recently about the pension contribution allowances, both annual and lifetime, and especially how they are adversely affecting certain professions such as the medical profession. As the annual allowance begins to be tapered off above earnings of £150,000 those in the health sector especially are facing the choice of either paying additional income tax bills on the overfunding, or having their NHS pension fund affected.

In a lot of cases, the additional income tax charges are coming as a surprise and shock to the individuals concerned. So much so that within the health sector, it is becoming increasingly concerning that doctors are refusing to work overtime on the grounds that the additional income is creating these penal tax charges.

Good news ( hopefully ) is however on the horizon. The government has recently confirmed that it will consult on proposals to offer senior clinicians a new pensions option. This would allow them to build their NHS pension more gradually over their career by making steadier contributions towards their pension, without facing regular and significant tax charges.

As news develops we will continue to update you on our news section.

 

June 2019 Fuel Rates

HMRC have announced new advisory fuel rates for company cars, which apply to journeys on or after 1st June 2019. For the one month of June, either the old rates or the new rates can be used.

Hybrid cars, for this purpose, are treated as either petrol or diesel cars, and the amounts can also be used for VAT purposes, as long as the employer retains adequate receipts. The advisory fuel rate for fully electric cars is 4p per mile.

The new rates are :

Petrol    :     engine size 1,400cc or less 12p ; 1,401cc to 2,000cc 15p ; over 2,000cc 22p

Diesel    :     engine size 1,600cc or less 10p; 1,601cc to 2,000cc 12p ; over 2,000cc 14p

LPG      :      engine size 1,400cc or less  8p ; 1,401cc to 2,000cc  9p  ; over 2,000cc 14p