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Chartered Accountants of Poynton, Cheshire

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Company Vans

There 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 online

Every 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 Tip

When 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.

Click here for more tips...
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Home > Businesses > Capital Allowances

Capital Allowances

Big changes are planned for the capital allowances that businesses can claim.

When a business buys an asset with an expected life of more than a year, such as a computer, they cannot claim the whole cost against taxable profits in the year of purchase. The cost must be spread over several years, using methods set out by HMRC.

The amount that you can claim is known as a capital allowance. From April 2008 the methods of calculating the capital allowance are expected to change.

Annual Investment Allowance (AIA)

From April 2008, all businesses will be granted an AIA on expenditure up to £50,000. This means that 100% of expenditure up to this amount will be allowed against the taxable profits.

So, if a business buys equipment worth £30,000, the whole of this amount is tax-deductible. However, if they spend, say £75,000, then £50,000 is allowed and the balance of £25,000 is subject to a lower rate of allowance of 20%. The claim would now be:

AIA

£50,000

Balance £25,000 x 20%

£5,000

Total claim

£55,000

 

The balance of £20,000 (£75,000 - £55,000) will be carried forward to future years, and the 20% rate will be applied. A rate of 10% is applied for plant and machinery integral to a building.

Groups and pre-March 2008 accounting periods

The £50,000 limit is split equally between companies where two or more are in a group or legally associated with each other.

If an accounting period straddles 31 March 2008 for companies (6 April 2008 for sole traders and partnerships), the £50,000 is applied pro-rata.
The AIA is, also, reduced or extended for short or longer accounting periods.

Does the AIA apply to cars?

No, the AIA does not apply to the purchase of cars.

The new capital allowances are designed to encourage investment by all businesses, so if you are considering the purchase of fixed assets, Appletons will be pleased to advise you on the tax consequences.