Chartered Accountants of Poynton, Cheshire |
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Company VansThere has been a big change to the taxable benefit due on vans. Where an employer provides a van for an employee, which they can use for private journeys, the taxable benefit from 6 April 2007 becomes £3000 per annum. This taxable benefit is not levied if the private use is merely incidental. HMRC have given some guidance on what is incidental but this is not exhaustive so we will be pleased to advise on the situation if you are providing vans that can also be used for private journeys. Filing onlineEvery year, employers are required to send details of the salaries, tax and National Insurance deducted from their employees. These year-end returns have to be submitted by 19 May 2007 to avoid a fine. These documents can be submitted on-line via the internet. Appletons can assist you in this process. If you are a small business - defined by HMRC as having fewer than 50 employees - and you file your P35 online, HMRC will pay you £100 tax-free for doing so. You usually claim this back by reducing your next monthly PAYE payment. Tax TipWhen you buy new equipment for your business, ask whether it is energy or water efficient. Check the list on www.eca.gov.uk to see if you could get a 100% deduction fo the cost in the year of purchase. |
Business ExpensesIt is often a point of concern to clients who run their own business that not all their expenses are allowed by HM Revenue and Customs. The general rule is that an expense must be 'wholly and exclusively' incurred in running that business for it to be allowed. This is wide and loosely drafted concept with no strict definition in law. Many expanses are straightforward – for example, goods bought for resale, employees' salaries, advertising and so on will be allowed, as long as they are incurred 'wholly and exclusively' in the running of the business. Items never allowed by HM Revenue and CustomsOver the years, HM Revenue and Customs (HMRC) have drawn up a list of items that are never allowed as expenses of the business. For instance, customer entertaining expenditure is never allowed, so the cost of taking a customer out to a business lunch is not deductible in working out the taxable profits. Some of the common items not allowed by HMRC include:
Depreciation and capital allowancesDepreciation is the 'wear and tear' on long-term assets such as cars, computers and machinery, and it is shown as an expense in the company's accounts. HMRC do not like the way accountants calculate this and insist that their own rules are used. HMRC call depreciation capital allowances. This means that allowance is made for the wear and tear of these assets but the amounts worked out by accountants and HMRC will differ. Grey areasThere is a whole range of expenses that have specific rules and should be handled with a great deal of care. These include legal costs, repairs and leases. For instance, legal costs are only allowed if they are of a 'revenue' nature such as recovery of bad or doubtful debts. The legal costs of buying a property, however, would not be allowed as this is or a 'capital nature'. Repairs are generally allowed unless they are of a capital nature. This is a very difficult area and you will need the help of an accountant to determine the correcttreatment. If your business is about to incur significant expenditure and you are unsure of its tax treatment, simply call us here at Appletons! We will pleased to advise you. Putting it on expensesMany businesses will incur entertaining expenses as part of their day-to-day running costs. Most such expenditure will include an element of VAT so the question is whether businesses can claim back that VAT on their VAT returns. more... 
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