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August 2014

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August’s Tax Tips & MYOB News
Welcome to our newsletter designed to bring you tax tips and news about MYOB and Acclivity.

Temporary Office in Singapore!
Please note that Simple Accounting will be operating from Singapore from August 13th to September 30th. We will still be available to answer your enquiries. Ideally please email in the first instance. We can then always set up a skype call if needed.

Please contact us for advice.
We’re here to help!
August 2014
· Company Cars can be tax efficient
· Maximising Statutory Maternity Pay
· Tax Assist have moved
· EC Sales Lists
· August Questions and Answers
· August Key Tax Dates
Company Cars can be tax efficient  top
We’ve just been looking at the tax effects of a company car.  This not a normal piece of tax planning.  Usually we advise people to run a car personally and then either claim 45p per mile from their company, or claim a proportion of the costs from their unincorporated business.  However if you are a higher rate tax payer and have exhausted the other easy tax planning techniques (eg. dividends up to your basic rate tax band, employ your spouse, and maximize expense reclaims) then a company car might be for you.

Say you wish to lease a cheapish new car costing £21.5k and leasing at some £3.8kpa incl VAT.  Add servicing, tyres, insurance and tax and this becomes (say) £5.8kpa.  Your choice is to pay this personally, from after tax income, or take it as a company perk, and let the company make the tax payments. 

Based on CO2 banding the personal Benefit in Kind (BiK) could be 22% of £21.5k list price – say £4.7kpa.  You suffer taxes at 40% and the company pays 12.8% Employer NI on the BiK of £4.7k.  These figures are £1880 and £602 respectively.  Meanwhile your company gets some input VAT back on the lease costs (£313) and recovers corporation tax on the costs of £5.8k and the Employer NI at 20% (£1220).  The taxes paid are £2481 and recovered are £1532. 
Thus the company provides you with a benefit worth (to you) £5.8k at a cost of £6.8k.  This is a loss of only 14% in net taxes.  Is only 14% a good deal?

The deal is good only depending on what else you do with the company’s money.  You could pay it to yourself.  If your company makes a profit and it pays you £10,000 dividend, then it counts as extra 22.5% tax for a higher rate taxpayer.  This is 32.5% extra tax, but you have a 10% tax credit with the dividend.  It works out that you receive £7500 net for every £10000 dividend paid by the company. Thus 75% is transferred –the tax loss is 25%.  It can therefore be cheaper all round for you to take a company car.

So provided:
  • The CO2 emissions keep the BiK to 20% or lower
  • You do not want to take to option of a second hand car.
  • You expect to be a 40% taxpayer on the whole of the service period
  • Your co can get cheap leasing costing, say, 20% or less of the full purchase price of the car pa.
  • You can get cheap servicing and insurance through the co costing no more than another £2kpa
…then you would be better off running the car through the company than paying yourself a dividend and financing it personally.

Moreover you can get further tax relief if you are careful.  You have the opportunity to receive a further £1500 fuel allowances on proved business miles of 10,000 miles pa with no tax lost, and with the Co receiving £300pa CT relief.

There are some further opportunities.  Think about:
  • Pool Cars (zero personal tax)
  • Zero emissions cars (v low personal tax benefits)
  • Vans (low personal tax benefits)

Look at our website for more advice (note: you need to login to view this page – logins are initially set as your email address and the password, ‘accountant’.

You can get Company Car BiK rates and lease financing calculations from:

If you would like us to consider the calculations for a company car for you, please drop us an email.
Maximising Statutory Maternity Pay top
Tax Assist  have moved top
Paying Statutory Maternity pay (SMP) is not optional. It must be paid if your employee qualifies, but the good news is that a small business can recover 103% of the SMP paid from HMRC. A business that pays less than £45,000 of class 1 NICs in one tax year it is defined as “small” for this purpose.

In a family business there may be scope for maximising the SMP payable for the first six weeks of maternity leave, and hence getting the Government to refund that SMP with a bit extra to cover the employer’s NICs due. Let’s see how this could work. Read More
For those of you who use Tax Assist (York) for your payroll, please note that they have moved. Their new address is:
63-65 Heworth Road, Heworth, York YO31 0AA.

Their email and telephone number remain the same:; 01904 414411.

But please also note that while Georgina is on maternity leave, the contact for payroll is Hayden Watson. 

EC Sales Lists top
August Questions and Answers top
If your business is VAT registered and you sell goods or services into other European countries you must generally also submit an additional form to the Government called an EC Sales List (ESL also known as form VAT101). There are no payments to be made or reclaimed with the ESL, as you do on your quarterly VAT return form, but you must submit the ESL on time or HMRC will charge a penalty for late submission.

If you export goods worth more than £35,000 per year you will need to complete a monthly ESL, otherwise it’s a quarterly task. However, where your total turnover is less than £106,500 and you export less than £11,000 you can ask HMRC for permission to submit just one ESL per year.

HMRC should send you an ESL form to complete if you have filled in box 8 on your VAT return. Don’t ignore it, as the deadline for returning the form is just 14 days from the end of the quarter. If you chose to complete an online version of the ESL you have 21 days from the end of the quarter. These deadlines are much shorter than that for your quarterly VAT return. Read More
Q. In July 2011 I sold a property which had been used for my business. I planned to reinvest the proceeds in another property, but that acquisition never happened. I know I should now pay Capital Gains Tax on the gain made in July 2011. How do I go about doing that?Answer

Q. I work as a self-employed courier for a large courier company who operates self-billing for VAT purposes and pays me monthly. I have just registered for VAT which has been back-dated to 1 May 2014. What should I do to collect the VAT due for May, June and July? Answer

Q. My personal service company is about take on an IT servicing contract in Belgium. The customer will pay me a rate for every day I attend their premises, on top of my fee for the whole contract. This ‘per diem’ rate is less than HMRC’s benchmark rate for expenses when working in Belgium. Can it be paid directly to me personally or should it be paid to my personal service company?Answer
August Key Tax Dates top
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/8/2014

Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.
About Us top
Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Solar Accounts, Quickbooks or Clearbooks. We offer a range of accountancy services despite being specialists.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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