Archive for December, 2010

VAT RATE CHANGE

Friday, December 17th, 2010

On 4 January 2011 the standard rate of VAT increases from the present 17.5% to 20%.

For those of you who may have missed our previous notices about this change and its effects, you may like to download HMRC’s comprehensive guide on the change that can be found at:

http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-rise-guidance.pdf

Readers should also re-examine their use of special VAT schemes. It’s by no means a certainty but there may be circumstances when your present choice of special scheme may no longer be appropriate.

The schemes include:

1. Cash Accounting
2. Flat Rate Scheme
3. Annual Accounting

And of course there are opportunities to combine the benefits…

If you need assistance with changes to your accounting software when the rate changes in January 2011, or if you would like a review of your VAT special scheme strategy, please call.

FURNISHED HOLIDAY LETTING- NEW RULES

Friday, December 17th, 2010

The expected changes to the Furnished Holiday Lets (FHL) tax rules were published on 9 December 2010. They are:

From April 2011

Loss relief will be restricted. From April 2011 property owners will not be able to transfer losses against other income sources. Losses will only be available to carry forward and set off against profits from the same property letting source.

From April 2012

  1. To qualify for FHL status, property must be available for letting for 210 days (previously 140 days), and actually let for 105 days (previously 70 days).
  2. The present treatment of capital allowances and capital gains tax is to remain unchanged.
  3. To reduce uncertainty, property businesses that meet the revised occupancy rules in one year may elect to be treated as if they met the rules in the following two years as long as certain criteria are met.

In summary it would appear that 2010-11 is the last tax year that FHL property businesses can set off FHL losses against other income. And from April 2012 property owners who wish to continue to benefit from the remaining tax perks must up their occupancy!

Property owners affected by these changes should contact us as soon as possible to ensure current year’s reliefs are maximised.