Avoiding
tax charge for private fuel
05 Feb 2010
If you
are provided with a company car and your employer pays for your private
fuel you may want to consider the options set out below which may reduce
the overall tax cost of the arrangement.
At present
if you receive any free private fuel for your company car you will be
taxed as a benefit in kind according to a fixed rate calculation. For
the tax year to 5 April 2010 this is £16,900 multiplied by a percentage
based on CO2 emissions or in some cases the size of the engine. For
CO2 emissions in excess of 220 g/km this can be as much as 35%. For
a 40% rate tax payer this would add £2,366 (£16,900 x 35%
x 40%) to their annual tax bill.
Unless
your private motoring is exceptionally high this may be a tax cost that
is entirely avoidable at much lower cash cost.
For instance
HMRC allow you to reimburse your employer for your logged, personal
mileage at an agreed rate - the details of current rates are added as
a footnote to this article. If say your private mileage this tax year
was 2,000 you would need to repay £400 (2,000 miles x 20p). Or
you could pay the tax on the fuel benefit £2,366...
The key
point is that it is worth crunching the numbers to see if you would
be better off reimbursing your employer for private fuel rather than
accepting the tax charge.
This type
of arrangement also has benefits for the employer who will see a reduction
in Class 1A National Insurance contributions due to the elimination
of the car fuel benefit charges.
From the
1 December 2009 the advisory fuel rates are:(figures in brackets applied
from 1 July 2009)
Up to
and including 1,400 cc: petrol 11p (10p); diesel 11p (10p); LPG 7p (7p)
1,401
to 2,000 cc's: petrol 14p (12p); diesel 11p (11p; LPG 8p (8p)
Over 2,000
cc: petrol 20p (18p); diesel 14p (14p); LPG 12p (12p)
Use
of Home as Office
05 Jan 2010
For a
self employed individual, where part of the home is used by their business,
they may be able to claim a deduction for the costs relating to that
use. For our full article, click here
VAT - Reversion Of The Standard Rate To 17.5%
01 Jan 2010
The VAT rate reverts back to 17.5% with effect from 1st January 2010.
HMRC have produced an excellent guide to the change, available on their
website.
It is interesting to note, however, that HMRC have not as yet published
the rates for the Flat Rate Scheme which suggests that this will not
be a simple reversion to the pre-December '08 regime. We will update
you once these have been published.
Basic
rules
1.Retailers should start accounting for VAT at 17.5% with effect from
1st January, using the VAT fraction 7/47ths.
2. For all other businesses issuing VAT invoices after 1st January,
they should be at 17.5%, unless the goods/services were supplied before
the rate change. You can then choose to charge at 15%.
3. Refunds or credit notes should be dealt with at the same rate originally
declared or invoiced
4. Invoices issued for 12 months in advance, with monthly payments
plus VAT must show VAT at 15% for all monthly payments up to 31st
December 2009. All payments after that date must be at 17.5%
5. Sales of tickets to events (theatre, cinema, football season tickets)
before 1st January 2010 will attract VAT at 15%, even if the event
takes place after the rate change in 2010. The tax point is the receipt
of payment.
Remember
The increase in VAT will lead to changes to the Flat Rate Scheme percentages
and to the Fuel Scale Charges - all effective from 1st January 2010.
Those people, whose VAT returns span the change, will have to carry
out two separate
For
archived news from 2009 click here
