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Employers must plan ahead for EA restriction

The Employment Allowance (EA) is a valuable relief, particularly for small businesses as it potentially cuts the business’s national insurance contributions (NIC) bill by allowing a pre-set annual amount to be offset against PAYE NIC costs. The current limit is £3,000, and it is widely available to most employers. However, from April 2020 the allowance is being restricted to smaller businesses with an NIC bill of less than £100,000 in the previous tax year.

Current claims

Most employers with a liability to pay employer (secondary) NIC are eligible to claim…

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Tax cuts coming for zero emissions vehicles

Significant changes to the tax rules governing zero emissions company cars will take effect from 6 April 2020, potentially making an electric car a more attractive option.

The tax rules for calculating the taxable benefit arising on a car are not changing – this will still be calculated (broadly) using the car’s full manufacturer’s published UK list price multiplied by the ‘appropriate percentage’, which can be found by reference to the car’s CO2 emissions level. This calculation gives the taxable value of the…

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Parking for rent?

Finding a parking space in a town centre or near to the station is often frustratingly limited. So, if you have a driveway, field or land that can be utilised for parking, you may well have an excellent opportunity to earn some extra tax-free income.

Two new allowances – each set at £1,000 – were introduced from 6 April 2017, one for trading income and one for property income. The allowances are available in addition to the personal allowance.

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HMRC 2018-19 Annual report published

The National Audit Office has published a report on HMRC’s 2018-19 accounts. The report shows that HMRC raised £627.98bn of tax revenues during 2018-19, an increase of £22.1bn (3.6%) on 2017-18. Of this total, around £250bn was paid in PAYE and National Insurance.

Currently, around 5.7m small businesses represent more than 95% of businesses in the UK. These businesses paid £115bn in corporation tax, VAT and other taxes during 2018-19. Small businesses are defined as having a turnover below £10m and fewer…

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The correct way with directors’ NICs

In certain situations the non-cumulative nature for calculating employee Class 1 National Insurance Contributions (NICs) makes it possible to manipulate earnings to reduce the overall amount payable by taking advantage of the lower rate of primary Class 1 contributions payable once the upper earnings limit has been reached.

This means that that an employee who is paid £2,000 each month of the year will pay considerably more in primary contributions than someone who is paid £600 for 11 months and £23,400 for one month, even…

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HMRC consultation on Partial Exemption and Capital Goods Scheme

At Spring Statement 2019, the government announced that it would launch a call for evidence exploring ways to improve the operation of Partial Exemption (PE) and the Capital Goods Scheme (CGS), following the findings of the 2017 Office of Tax Simplification (OTS) VAT review.

HMRC have now published the consultation document covering both subjects. These are two areas of VAT which can involve a significant amount of administration for businesses, with complex calculations often being required for some businesses to determine the amount of input…

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Dividend allowance

Many family-owned companies allocate dividends towards the end of their financial year and/or the tax year, which means that the impact of the reduction in the dividend allowance from £5,000 to £2,000 from 6 April 2018 is only now starting to come to light. Many other taxpayers may not become aware of the change until they complete their 2018/19 tax return, which in most cases, will be due for submission to HMRC by 31 January 2020.

The amount of tax payable on a dividend will…

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Changes in accounting for VAT after prices are altered

HMRC have published Brief 6 (2019), which explains changes to the rules on accounting for VAT, where the amount paid changes after the VAT has been accounted for to HMRC from 1 September 2019.

The prices businesses charge for goods and services can be reduced after VAT has been accounted for on a supply, for example when a business delivers goods, some of which are faulty, and it agrees with its customer that the price should be reduced.

When this occurs a business normally…

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Tax-free childcare – don’t miss out!

HMRC are currently running a campaign to remind people that they could get up to £2,000 per child, per year, towards childcare costs.

Broadly, eligible parents/guardians may receive government top-ups of £2 for every £8 that they pay into a tax-free childcare account, up to a maximum of £2,000 per child (or £4,000 for disabled children). There is an overall maximum limit of £10,000. The scheme is open to all working parents across the UK with children under 12, or under 17 if disabled.

Under the scheme, the parent/guardian opens…

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HMRC clarify VAT zero-rating of transport of disabled passengers

HMRC have issued Brief 3 (2019), which aims to clarify that the Department’s policy on the scope of the VAT zero rate for transport services has not changed following the Upper Tribunal (UT) decision in Jigsaw Medical Services Ltd (2018) UKUT 0222.

In this case, the UT heard an appeal by HMRC against the First-tier Tribunal’s decision that emergency transport in a specially adapted ambulance was zero-rated, rather than being exempt.

This decision may be of interest to suppliers that provide transport services in emergency vehicles (ambulances), or in…

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