Archive for August, 2009

BUYING A NEW CAR ? what can you claim ??

Thursday, August 27th, 2009

The competitive deals currently available on dealers’ forecourts are tempting a number of you to consider changing your car. The tax allowances on new cars changes dramatically on 6th April 2009 and CO2 emissions affect allowances greatly.

the rules can be summarised as:

                                                                                    2008/09                       2009/10

CO2 emissions of 110 g/km or less

First Year Allowance                                                   100%                           100% 

CO2 emissions of 111-160 g/km

Writing Down Allowance                                              25%                             20%

Annual Cap  – Maximum claimable                                £3000 pa                     £16,000

CO2 emissions of over 160 g/km  

Writing Down Allowance                                               25%                             10%

Annual Cap  – Maximum claimable                                £3000 pa                     £ 8,000

RULES ON CONTRACT HIRE 

These are also changed from 6th April 2009. This particularly affects expensive cars. For example – assuming a new car costing £20,000 with emissions of less than 160 g/km can be contract hired for £5,175 including VAT.  Should you buy or lease ?? Possible allowances are:

2008/09                       2009/10

Purchase the vehicle

Writing down allowance                        £3,000                         £4,000

Or

Contract hire for £5,175pa                              

Amount Deductible                               £3,870                         £4,838

(including VAT @ 15%)

 *Note that the writing down allowance will reduce in subsequent years in line with the written down value over the vehicle’s life.

It is complex. If you are interested in a new car, ascertain all your options then we can help you pick the best one. 

Topping-up you contributions for a State Pensions

Thursday, August 27th, 2009

The period for which National Insurance contributions will need to have been paid in order to secure a full State Pension will reduce in April 2010.

 

Meanwhile, the cost of buying extra years will increase from 6th April 2009 from £8.10 to £12.05 per week. So people expecting to retire before April 2010 with a contribution shortfall may benefit from making a top-up payment before 6th April 2009.

The first step is to get a benefits forecast from the Pension Service – Tel. 0845 300 0168

WHAT NO SELF-EMPLOYMENT ?

Thursday, August 6th, 2009

For many years taxation professionals and anyone who has engaged subcontract labour have been saying that it was the intention of H M Revenue & Customs (and Inland Revenue before it) to have all workers taxed under PAYE. Yet when this point has been put to officers of the department the response has always been that that was not the case. Their intention when undertaking a review of a workers employment status was merely to ensure that the correct employment status was used.Well, as far as the Construction Industry is concerned, that could all be about to change. The Treasury are of the view that there are between 200,000 and 400,000 workers who are working under terms and conditions which are akin to employment but are treated as self-employed and which costs the Treasury some £350m a year. As a result the Treasury issued a Consultation Document on 20 July 2009 in which it set out its proposals to counter what it calls ‘false self-employment’ in the industry.In essence, the proposals are to treat every individual worker engaged to undertake ‘construction operations’ as being in receipt of ‘employment income’ which will be subject to tax and national insurance contributions under PAYE. This will become the default position with only those workers who met one of three criteria being able to continue to be treated as self-employed and paid under CIS. The criteria are:

The subcontractor provides

• Plant and equipment – not just hand tools

• All materials

• Other workers for whom the subcontractor is responsible for paying

This will clearly see the end of self-employed labour-only subcontractors in the construction industry, at least as far as tax and national insurance is concerned.

It is made clear that these are only going to be ‘deeming’ provisions and that any decision to deduct tax and national insurance under PAYE will not confer employment rights on the worker.

Whilst there is no doubt that there have been cases where workers have been reclassified as employees it is a fact that H M Revenue & Customs have been far from successful at the Commissioners and, indeed, the new Tribunals when it has come to defending their view that workers should be reclassified. It would appear in many cases the workers were rightly classified as self-employed. These proposals would appear to be a case of toys being thrown out of the pram as if these proposals are applied to many of the well known tax cases over many years then the decisions that the worker was properly self-employed would be reversed.

Anyone who engages labour only subcontractors should read the Consultation Document, which can be found at:    
www.hm-treasury.gov.uk/consult_false_selfemployment_construction.htm and should consider taking up the issue with their accountant or federation. The consultation period finishes on 12 October 2009 and if the Treasury do not receive any negative feedback to the proposals it must be assumed that it will be brought forward into legislation.

CONTRIBUTED BY ANDREW SCRIVENS -CCH TAX CONSULTANT!