Chartered Accountants of Poynton, Cheshire |
|
Pension PaymentsThere have been considerable changes to the pension contribution rules over the last couple of years. In summary, these are as follows: • Any individual can make payments of £3600 per annum gross of tax, whether they have an income or not. • If an employer makes a contribution on behalf of an employee, this will be tax deductible in that employer's accounts as long as the payment is made 'wholly and exclusively1 for the purposes of the trade. • The maximum any individual can pay in any pension payment period (which is usually the same as the tax year) is normally £21,5000 and any contributions over this will be subject to income tax of 40%. There are some exceptions to this rule. • There is no longer a provision which allows excessive personal pension contributions to be carried back to the prior year. Some special rules remain in place for retirement annuity contributions. 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. Keep your income below the age allowance limitThere are many ways to save tax - all of them perfectly legal. For example, if you are over 65, keep your income below the £18,900 limit - at that limit the higher allowances are scaled back. Call us at Appletons Accountants and we'll tell you more! |
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. What is business entertainment?According to HM Customs and Excise (HMCE), entertainment expenditure:
HMCE also states that entertainment costs could include any of the following:
It is impossible to give you a complete list of all the situations that you could meet. The important thing is to apply the rules to each situation. Blocked VATAlthough there is VAT on the entertainment expenditure, HMCE will not allow traders to claim it back on their VAT returns, it is said to be blocked. For example, if a solicitor and her client have a meal at a restaurant that costs £58.75 including VAT, the restaurant will have to pay the VAT element (£8.75) to HMCE on their next VAT return. The solicitor cannot claim that VAT back on her tax return because she was entertaining a client. How does HMCE treat subsistence costs?Subsistence expenditure is incurred when an employer pays an employee for their expenses while away from work on company business, such as going on a business trip or attending a meeting. For example, if an employee is working away from home and has to stay overnight in a hotel, those subsistence costs will usually include VAT. The employer can normally claim back the VAT on the hotel and overnight costs. The important points here are:
If the employee takes a client out for a meal while they are working away from home, that meal would be an entertainment expense. However, because a non-employee is present, the employer cannot claim back the VAT. It is vital that businesses keep good records to show what expenditure was incurred and who attended each event (whether any non-employees were present). We at Appletons have many years experience helping our clients make the most of their entitlements in this area. If you need any advice on whether you can claim back VAT on any entertaining expenses, give us a call! |
Whilst all due care and attention is taken in preparing the articles which appear on this website, no liability can be accepted for any of its contents. It is designed to be of a general nature, and no action should be taken without our specific help tailored to your unique circumstances. |