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VAT on Sale of Van bought privately

The sale of the Van should be dealt with as a Standard Rated Sale for VAT purposes, but under the Second Hand Goods (Margin Scheme).

Example

Purchase price of Van 5,000

Sale Cost of Van 10,000

Profit on Van 5,000

VAT Payable on Profit 833.33 (Vat on 5,000 – Net to Gross)

 

 

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Tax reliefs can help businesses save money

Do you know that there are a range of tax reliefs/allowances that you may be able to claim that could help save your business money?

Whether you are thinking of investing or buying assets for your business, or simply thinking of employing someone, there may be a tax relief or allowance that you are entitled to.

See what reliefs/allowances you or your business could benefit from and whether you can claim by checking out the information on the BIS GREAT  website.

Buying an Art invesment through a company

If the artwork is kept at their home there will be a taxable benefit in kind, which needs to be declared on the annual form P11D.
Say the artwork cost £30,000:
Your client will pay income tax on 20% x £30,000 = £6,000 at their marginal rate, each year. The company must also pay class 1A NICs of 13.8% x £6,000 = £828 per year.

If the artwork is to be kept in a bank vault as a pure investment, there won’t be a benefit in kind charge for you. However, the business must pay the insurance and storage costs, for which there will be no tax deduction. There is also no tax deduction for the cost of buying the artwork as it is not an item used for the business.

If the company closes, any creditors will be able to access the value of that art, just as if it was cash. If the business is solvent when it closes holding significant investments, it may not qualify for entrepreneurs’ relief, which would otherwise reduce the tax you pay on any gain made on the liquidated asset of the company down to 10%.

Are you employing staff for the first time

There are 6 things you need to do when employing staff for the first time.

  1. Decide how much to pay someone – you must pay your employee at least the National Minimum Wage.
  2. Check if someone has the legal right to work in the UK. You may have to do other employment checks as well.
  3. Apply for a DBS check (formerly known as a CRB check) if you work in a field that requires one, eg with vulnerable people or security.
  4. Get employment insurance – you need employers’ liability insurance as soon as you become an employer.
  5. Send details of the job (including terms and conditions) in writing to your employee. You need to give your employee a written statement of employment if you’re employing someone for more than 1 month.
  6. Tell HM Revenue and Customs (HMRC) by registering as an employer – you can do this up to 4 weeks before you pay your new staff.

HMRC delays RTI penalties

From 6 October 2014, HMRC was due to include smaller employers in the penalty regime for late filing of Real Time Information (RTI) payroll returns for 2014-15.
HMRC have announced that this penalty process will be delayed for a number of smaller employers.
They will now start from:
  • 6 October 2014 for employers with 50 or more employees
  • 6 March 2015 for employers with fewer than 50 employees
The size of the late filing penalties depends on the number of employees within the PAYE scheme.
Number of employees   Penalty per PAYE scheme
1 to 9 £100
10 to 49 £200
50 to 249 £300
250 or more £400
HMRC will use the latest information available to determine the number of employees, and the size of the filing penalty for each period where a return is late.

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National Minimum Wage

The National Minimum Wage rates

The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. Find out what the current rates are and where to get help if you think you are being paid below the minimum wage rate.

New NMW rates from 1 October 2014

The following rates will apply from 1 October 2014:

  • £6.50 – the main rate for workers aged 21 and over
  • £5.13 – the 18-20 rate
  • £3.79 – the 16-17 rate for workers above school leaving age but under 18
  • £2.73 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

Current NMW rates

There are different levels of NMW, depending on your age and whether you are an apprentice. The current rates are:

  • £6.31 – the main rate for workers aged 21 and over
  • £5.03 – the 18-20 rate
  • £3.72 – the 16-17 rate for workers above school leaving age but under 18
  • £2.68 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

Claiming costs on a rental property

For periods before 6 April 2013 HMRC permitted a deduction for the cost of renewing carpets, curtains and white goods in all let residential properties on a concessionary basis. That concession was withdrawn with effect from 6 April 2013. The new rules now state that a wear and tear allowance (10% of the net rents) that covers furnishings and similar items, can only be claimed for fully furnished properties.

Your clients properties don’t count as fully furnished, even though they contain some white goods and carpets. HMRC will not accept claims for the cost of free-standing white goods in unfurnished residential properties. It will allow a deduction for the cost of replacing fixtures such as baths, toilets, integrated fitted ovens and hobs, as those costs can be classified as repairs. If your client replaces part of the fitted carpet they could claim that as a repair, but not the cost of putting new carpet down in the entire property.

Claiming travel costs

The first rule is that the cost of ordinary commuting cannot be claimed. This is defined as travel to a permanent workplace, which is somewhere attended regularly to perform the duties of the employment. Travel costs to a temporary workplace can be claimed, but the conditions that make a workplace ‘temporary’ must be met.

A place is not a temporary workplace if the employee attends for a continuous period of more than 24 months, or the attendance is expected to last more than 24 months. If your PSC takes on a contract that is expected to last say 36 months at one location, you can’t claim travel costs to that location, as your workplace is not a temporary workplace from the start of the contract.

Another definition of ‘temporary workplace’ is one which the worker attends to perform a task of limited duration or for some other temporary purpose. HMRC has a rule of thumb that if the worker is attending a place for 40% or more of his working time, that is a permanent workplace and travel costs to the location can’t be claimed.

If you work at your client’s office for say 15 hours per week out of a 40 hour normal working week, your client’s office is a temporary location even if the contract exceeds 24 months. Please discuss the matter of travel expenses with us before you take on a long contract, as the deductibility of the travel costs may tip the balance on whether the contract is worthwhile.