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December 2017

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To December’s Tax Tips & MYOB News,

Christmas parties and gifts
Have you planned your Christmas party yet? HMRC allows your company to spend up to £150 (in total) per staff member on annual parties. This could be, for example, split between a summer and a Christmas Party.

You don’t need to report to the HMRC is as long as it is:
£150 or less per head, annual and open to all your employees.

And why not give Christmas gifts to your staff?  Your company doesn’t have to pay tax/NI if all the following apply:

 – it costs the company £50 or less to provide (the limit for directors is effectively £300).
– it isn’t cash
– it isn’t a reward for their work or performance
– it isn’t in the terms of their contract

This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or report it to HMRC.
December 2017
· Capital Allowance Planning
·MYOB/ AccountEdge Training Courses – February 2018
· Abolition of Class 2 NICs Delayed
· Employment status case turned on right of substitution
· December questions and answers
· December key tax dates
Capital Allowance Planning
We have recently been involved with some capital allowance planning for a company that might spend more than £200k capital expenditure in a single year.  Each tax computation that accompanies your company accounts.  This includes capital allowances that are calculated at specific rates as determined by the tax legislation. For example, on plant and machinery, small businesses are entitled to claim 100% of the cost in the year you purchase up to £200,000 per annum. This is called ‘Annual Investment Allowance’ (AIA).  You get the full 100% tax relief in the year in which you purchase the item.  This is even if that’s contracted and billed on the last day of the year. The new asset must also be brought into use in the business. So if you are approaching the end of the year, by buying just one day earlier, you get the full 100% relief one year earlier. 

Meanwhile if you exceed the £200,000 AIA limit, only 18% can be claimed and then the remaining balance is then written down by 18% each year.  We should try and avoid this.

However the AIA year is not your accounting period.  Amazingly it is a calendar year.  (Trust the HMRC to make this complicated).  This means that the ideal expenditure on capital should be up to £200k before Dec 2017 and up to £200k for Jan to Dec next year, 2018.  We don’t want the expenditure to be delayed.  So if the capital equipment cost was only £100k before Dec and as much as £300k before Dec next year, we would be wasting about £16k of tax because we breached the £200k AIA limit in the second year. 
Now you can only claim AIA in the accounting period you bought the item.  The date you bought it is:
  • when you signed the contract, if payment is due within less than 4 months
  • when payment’s due, if the payment is due more than 4 months later.
If you buy something under a hire purchase contract you can claim for the payments you haven’t made yet when you start using the item. You can also claim tax relief on the interest installments, but only as they are paid.  In short we want up to £200k of the capital expenditure to be incurred earlier than the end of December. 

We can claim for plant and machinery. In a building project for an operational building we can also claim for ‘Integral features’ and ‘fixtures’: Integral features are:
  • lifts, escalators and moving walkways
  • space and water heating systems
  • air-conditioning and air cooling systems
  • hot and cold water systems (but not toilet and kitchen facilities)
  • electrical systems, including lighting systems
  • external solar shading
You can claim for fixtures, for example:
  • fitted kitchens
  • bathroom suites
  • fire alarm and CCTV systems.
Therefore if you are preparing for a large project of this nature:
1. Bring forward expenditure to the earliest accounting period in which you can legitimately claim
2. Make sure that you space the expenditure so that the £200k limit in any one calendar year is not exceeded.
MYOB/AccountEdge Training Courses – February 2018
Abolition of Class 2 NICs delayed top
Would you and your colleagues benefit from training in MYOB and AccountEdge? Are you considering moving to Acclivity AccountEdge?

We are planning to run a series of training courses in February 2018:
 – only £120+VAT for full day including lunch
 – free place for Business Companion clients
 – hands-on practical training in MYOB,
 – Mamut & Acclivity AccountEge.
Options for Making Tax Digital (MTD)
 – Courses will be tailored to the attendees.

We are planning to run courses in the week beginning February 19th 2018 in Manchester and Lewes if you’d like a place.

Other Venues in UK & Ireland
Would you like us to run another course near you?  If so, please with details and we will try and set one up near you.
On 2 November 2017, the Government announced a one year delay to the abolition of Class 2 National Insurance Contributions (NICs). Class 2 NICs will now be abolished from 6 April 2019 rather than 6 April 2018.

The delay will allow time for the government to engage with interested parties and Parliamentarians with concerns relating to the impact of the abolition of Class 2 NICs on self-employed individuals with low profits.
Read More

Employment status case turned on right of substitution top
Employment status tax cases often make the headlines in the professional press and the recent case involving Deliveroo riders was no exception. The meal delivery firm won the case in the Central Arbitration Committee (CAC), confirming that its riders are not ‘workers’. This is the latest challenge to the employment status of ‘gig economy’ workers.

In this case, the Independent Workers Union of Great Britain (IWGB) sought to argue that riders were workers, so that they could claim union recognition, thus affording them certain collective rights regarding the minimum wage entitlement, holiday and sick pay, and pension contributions.

The CAC rejected the claim that the riders were ‘workers’, hinging the case on the riders’ ‘ability to turn down a job both before and after accepting it’.
Read More
December questions and answers top
December key tax dates top
Q. My wife and I jointly owned a property that we originally lived in for many years, although it has been rented out for the last 10 years. My wife has recently died and I am now the sole owner of that property. I intend to sell it and give the proceeds to my two children (both aged in their 40’s). Will there be capital gains tax on the sale proceeds? Answer

Q. I am a sole trader and registered for VAT. The business pays for the fuel in my car, which I use for both business and private mileage. How do I account for VAT on the fuel using HMRC’s fuel scale charges? Answer

Q. I have not yet paid my self-assessment payment on account, which was due on 31 July 2017. Will I be charged a penalty for paying late? Answer
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/12/2017

30 – Deadline for 2016/17 self-assessment online returns to be filed if you are an employee and want tax underpaid to be collected by adjustment to your 2018/19 PAYE code (for underpayments of up to £3,000 only)
Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

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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.

‘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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