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May questions and answers

Q. My company owns a car which is used during the day by various employees for business travel only. However, since there is no overnight parking facility at our business premises, one of my employees takes the car home each night and parks it outside his house. He does not use the car privately. Am I correct in assuming that no taxable benefit arises?

A. Unfortunately not. To qualify for exemption under the pool car rules, the vehicle must not normally be kept overnight on or near the residence of…

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Making Tax Digital –  Gone But Not Forgotten

The much-scrutinised Making Tax Digital (MTD) programme has been dropped from the Government’s Finance Bill 2017 in the run-up to the General Election, in a move that is likely to please some small business owners. However, nobody doubts that MTD will return in the next Parliament.

In some ways this action is simply a political technicality being played out. These are the last few days of Parliament before dissolution, prior to the imminent General Election, so Public Bills must be passed or scrapped – they cannot simply be…

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Making Tax Digital Should Be Xero Hassle

While there have been a few bumps in the road on the way to Making Tax Digital (MTD) its introduction is proceeding apace and it is something all businesses need to take on board.

The new system shouldn’t hold too many fears for business owners. However, all accountants have those clients who arrive at the door once a year with a carrier bag full of receipts and a sheepish look on their face. These business owners will need to adjust their approach to accounting, since MTD will compel…

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April key tax dates

5 – End of 2016/17 tax year. Last day to use up your annual exemptions for capital gains tax, inheritance tax and ISA’s

6 – Start of the 207/18 tax year

14 – Return and payment of CT61 tax due for quarter to 31 March 2017

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/4/2017 or quarter 4 of 2016/17 for small employers. Interest will run on any unpaid PAYE/NIC for the tax year 2016/17

30 – Additional daily penalties of £10 per day up to a maximum of £900 for failing to…

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April questions and answers

Q. I have recently become aware that one of my employees has been selling my stock and pocketing the cash. As the money has never gone in the till, do I have to account for VAT on it?

A. The VAT treatment depends on whether or not you’ve actually supplied the goods, what happened to them, who was responsible for them at the time and if you’ve issued a VAT invoice.

Generally, where goods are stolen, no supply is made by the business, and so no output tax is due. However,…

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Changes to company carry-forward of losses confirmed

Initially announced at the time of the 2016 Budget and following a period of consultation, Finance Bill 2017 contains provisions to reform the tax treatment of certain types of carried-forward loss for corporation tax purposes with effect from 1 April 2017.

Losses arising from 1 April 2017, when carried forward, will have increased flexibility and can be set against the total taxable profits of a company and its group members (referred to as the ‘loss relaxation’).

For all carried-forward losses, whenever they arose, companies will be able only to use the losses…

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Increase in the cash basis threshold

As announced at the 2017 Spring Budget, the threshold for traders using the cash basis for accounting purposes is increasing from 6 April 2017. This change forms part of the Government’s initiative for simplifying tax paid by unincorporated businesses and runs alongside the Making Tax Digital project.

Under the cash basis, small businesses are taxed on the basis of the cash that passes through their books, rather than being asked to spend their time doing calculations designed for big businesses. General partnerships may use the cash basis – as long…

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Registration for tax-free childcare opens

The long-awaited tax-free childcare scheme launches on 28 April 2017 and will be rolled out during the course of the year. In conjunction with this, the government’s new Childcare Choices website is now operative, allowing parents to find out about available support. The website includes a childcare calculator for parents to compare all the government’s childcare offers and check what works best for their families, including the new 30-hour free childcare offer, tax-free childcare or universal credit. Through the website, parents can also pre-register for email alerts that will notify…

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Change to Class 4 NIC rate reversed

The Government has confirmed that the proposed increase in the rate of Class 4 National Insurance Contributions, paid by the self-employed on profits from a business, will not now take effect from April 2018. The Chancellor of the Exchequer, Philip Hammond, had announced that the rate would rise from 9% to 10% from 6 April 2018, and again to 11% from April 2019.

In a letter to MPs informing them of the decision, Mr Hammond said ‘however difficult the fiscal challenges we face, the tax lock and spending ring-fence commitments…

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Apprenticeship Levy

The new Apprenticeship Levy takes effect from 6 April 2017. Although the levy affects employers in all sectors, it will only be paid on annual pay bills in excess of £3 million – this means that, according to government estimates, less than 2% of UK employers will pay it. However, from 1 May 2017, changes are also being made to the way that apprenticeships are funded in England. The changes are designed to make it easier for employers of all sizes to navigate and choose the apprenticeship training they…

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