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Company cars and vans

A tax charge may arise if an employee is able to use a company car or van for private use. A further charge will arise if you provide the fuel for any private use. The taxable amounts that will apply for 2022/23 have now been announced. Company cars Where an employee has a company car, if that car is available for their private use, they are taxed on the benefit of that private use. The amount that is charged to tax is a percentage (the appropriate percentage) of the car’s list price and any optional accessories (as reduced for any ... Read more

Seasonal gifts to employees

Christmas is a time of giving, and you may wish to give your employees a small token of your appreciation for their work during the year. To prevent the gift being accompanied by an unwanted tax liability, you can take advantage of the trivial benefits exemption to keep the gift tax-free. Scope of the exemption Where you provide an employee with a low-cost benefit, the employee is not taxed on the provision of that benefit as long as the following conditions are met: the benefit is not cash or a cash voucher; the cost of the benefit is not more ... Read more

Keeping the Christmas party tax-free

If you are holding a Christmas party for staff this year, you may want to take advantage of the tax exemption for annual parties and functions to prevent your employees from suffering a benefit-in-kind tax charge. Keeping the Christmas party tax-free will also mean that there is no Class 1A National Insurance for you to pay either. The exemption applies to both in-person and virtual events. Nature of the exemption The availability of the tax exemption is contingent on the associated conditions being met. These are as follows: the event is an annual event or similar annual function; the event ... Read more

New MTD timetable

Making Tax Digital (MTD) is a Government initiative that aims to provide the UK with one of the most digitally advanced tax administrations in the world. Under MTD, taxpayers are required to keep electronic records and report to HMRC digitally. MTD is being implemented in stages. However, the timeline has recently been revised, delaying the start date of MTD for Income Tax by one year. MTD for VAT If you are a VAT-registered business with turnover above the VAT registration threshold of £85,000 a year, you will already be within MTD for VAT. If your turnover is below this level, ... Read more

Paying employees early at Christmas

Under Real Time Information (RTI), you must report payments made to employees and associated deductions to HMRC on a Full Payment Submission (FPS) at or before the time at which you make the payment to your employee. However, special rules apply which modify this rule if you pay your employees earlier than usual over the Christmas period. This may be the case if you shut down over Christmas and New Year. Use your normal payday Even if you pay your employees earlier than usual in December, you should use the normal payday as the payment date on the FPS, and ... Read more

File your tax return by 30 December 2021 to have underpayments coded out

File your tax return by 30 December 2021 to have underpayments coded out The deadline for filing your 2020/21 self-assessment tax return is midnight on 31 January 2022. However, if you have underpaid tax and you are employed and would prefer HMRC to collect that underpayment through your tax code, you will need to file your return online by midnight on 30 December 2021. You can also have an underpayment coded out if you filed a paper return by 31 October 2021. Paying tax through your tax code If you owe tax for 2020/21, rather than paying the underpaid tax ... Read more

Tax checks for licence renewal applications

From 4 April 2022, applicants applying to renew certain licences will need to pass a tax check before their licence application can be considered. Initially, the requirement will only apply in England and Wales. However, the Government have consulted on extending the requirements to Scotland and Northern Ireland from 2023. Licences affected Tax conditionality (the need to pass a tax check before a licence is renewed) will apply to licences to: drive taxi and private hire vehicles (such as mini cabs); operate a private hire vehicle business; carry on the business of a scrap metal dealer on a site; and ... Read more

New VAT rate for hospitality and leisure

New VAT rate for hospitality and leisure To help the hospitality and leisure industries recover from the impact of the COVID-19 pandemic and associated lockdowns, a reduced rate of VAT of 5% applied from 15 July 2020 until 30 September 2021. This rate has now come to an end, and a new reduced rate of 12.5% applies from 1 October 2021 until 31 March 2022. The rate of VAT applicable to this sector will return to the standard rate of 20% from 1 April 2022. Supplies benefitting from the reduced rate You are able to take advantage of the reduced ... Read more

AIA transitional limit extended

The Annual Investment Allowance (AIA) is a capital allowance that enables you to claim an immediate deduction against your profits for qualifying capital expenditure up to the available limit. The AIA limit was temporarily increased from £200,000 to £1 million from 1 January 2019 to 31 December 2021. It was due to return to its permanent level of £200,000 from 1 January 2022. However, the Chancellor announced in his Autumn Budget that the temporary limit will be extended until 31 March 2023. Take advantage of the higher limit The announcement allows more time to take advantage of the higher temporary ... Read more

Budget highlights

The Chancellor presented his Autumn Budget and Spending Review on 27 October 2021. Some of the highlights are discussed below. Income tax rates and thresholds The rates and thresholds applying for 2022/23 were confirmed. Personal allowance As previously announced, the personal allowance remains at £12,570 for 2022/23. The allowance is reduced by £1 for every £2 by which adjusted net income exceeds £100,000. This means that where income exceeds £125,140, the personal allowance is lost in its entirety. Rates and bands The basic rate remains at 20%, the higher rate remains at 40% and the additional rate remains at 45%. ... Read more