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Month: August 2020

Taxation of electric vehicles (from 6 April 2021)

Written by admin on . Posted in Company Car Tax, Tax. No Comments on Taxation of electric vehicles (from 6 April 2021)

With the government announcing there will be no van benefit charge for fully electric company vans from 6 April 2021, you might be forgiven for thinking that having a company electric vehicle avoids any tax cost. However, this is not quite always the case.

You can currently be subject to a van benefit charge if you have the use of a company van which is also used privately. Unlike company cars, the definition of ‘private use’ for a company van does not include your normal commute to work.

Over recent tax years, the fully electric van benefit charge has been set at an increasing percentage of the full charge, and for 2020/21 it is 80% (£2,808) of the full amount. The exemption to be introduced from 6 April 2021 will apply in all circumstances.

Company cars

Although fully electric company cars escape any car benefit charge for the current tax year, the percentage charge will be set at 1% next year, increasing to 2% for 2022/23. This will still make fully electric company cars very tax effective.

For a higher rate taxpayer, the monthly tax cost of a Tesla Model S, for example, with a list price of £96,000 will be just £32 in 2021/22 and £64 a year later.

Fuel benefit

For benefit purposes, electricity is not treated as a fuel. This means there can be no fuel benefit for a fully electric vehicle, even if the employer installs a vehicle charging point at the employee’s home or provides a charge card to allow access to commercial or local authority charging points.

However, a benefit will arise if the employee charges their company car at home and is then reimbursed in excess of the 4p per mile advisory electricity rate for business travel. However, this advisory rate cannot be used for company vans.

Check here to see if tax is payable on the cost of charging an employee’s electric car.

Photo by Michael Marais on Unsplash

Expanding digital tax strategy

Written by admin on . Posted in Law, Tax. No Comments on Expanding digital tax strategy

Details of an ambitious ten-year strategy to create a tax system fit for the 21st century have been released alongside Finance Bill legislation. With the rapid growth of information and communications technologies, the aim is to have a fully integrated digital tax system able to support taxpayers across the whole range of their needs.

There are three elements to the government’s strategy, outlined in the July report.

Making tax digital

At present, making tax digital (MTD) applies to businesses with a turnover above the VAT threshold of £85,000. These businesses are required to keep digital records and to file VAT returns using online software.

Recently announced plans will see MTD extended:

  • From April 2022, the VAT filing requirements will apply regardless of turnover.
  • From April 2023, MTD will apply to all taxpayers filing self-assessment tax returns where their annual business or property income exceeds £10,000.

Once self-assessment taxpayers are included within MTD, HMRC will have access to up-to-date, real time business information which is no more than four months old.

HMRC intends to expand its MTD pilot service from April 2021 to allow businesses and landlords to test the service well in advance of the requirement to join. A consultation later this year will look at how MTD is to be extended to limited companies.

Payment of tax

Although the report makes it clear the extension of MTD to self-assessment taxpayers will not initially see any change to when tax is paid, it then considers what might happen in the longer term. Tax payments could be brought into line with the increasingly real-time nature of tax reporting, with the change making it easier for many taxpayers and businesses to manage their cash flow.

Tax administration

Various suggestions are made under this heading. One very useful proposal is for the government to go ahead with a simplified registration process, so that a business need only register once with HMRC for all taxes.

With HMRC having had to quickly develop additional online systems and help for taxpayers during the Covid-19 pandemic, moving towards a more integrated, real time approach should make such interventions easier to manage in future. Help and support for MTD can be found on the .GOV site.

Photo by Scott Graham on Unsplash

Capital gains tax review new on the agenda

Written by admin on . Posted in Capital Gains Tax, Tax. No Comments on Capital gains tax review new on the agenda

The Chancellor has asked the Office of Tax Simplification to review capital gains tax (CGT).

Within a week of giving his Summer Statement, the Chancellor wrote to the Office of Tax Simplification (OTS) asking it to “undertake a review of CGT and aspects of the taxation of chargeable gains in relation to individuals and smaller businesses”.  The request was unexpected and prompted some press speculation that Rishi Sunak was beginning his hunt for extra tax revenue after the unprecedented spending on Covid-19.

CGT is certainly an interesting place to start:

  • The latest data from HMRC show that there were fewer than 300,000 CGT payers in 2017/18.
  • Nearly two thirds of the tax raised in that year came from 3% of CGT payers who made gains of £1 million or more.
  • Over half of the CGT payers either paid no income tax, or paid it only at the basic rate, as the graph below shows.

The main reason why CGT payers are such a rare breed is the annual exemption. For 2020/21 this allows up to £12,300 of net gains to be realised before any tax becomes payable. Even then, the maximum tax rate is 20% (28% for residential property).

At the last election, both the Labour Party and the Liberal Democrats called for gains to be taxed at full income tax rates and for the exemption to be cut to just £1,000 or abolished. The Conservative manifesto made no comment – CGT was not one of the taxes for which a rate freeze was promised.

Neither Mr Sunak nor the OTS has put any date on when the review might be published. However, the OTS has asked for all comments to be in by 12 October, so government proposals might emerge in the Autumn Budget, particularly if that Budget appears later in the year. There is a precedent for changing CGT rates part way through a tax year – as then Chancellor George Osborne did in 2010. With this in mind, a wise precaution could be to review your portfolio and consider whether you wish to realise any gains in the next few months, while the current generous CGT regime is in place.

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Remote witnessing of Wills in the era of COVID-19

Written by admin on . Posted in Lasting Will & Testaments, Law. No Comments on Remote witnessing of Wills in the era of COVID-19

At a point during the early days of the pandemic, this author, being of a certain age, weight, and ethnic group, took the decision to get his affairs in order – the Coronavirus intensely on the rampage through the country between March and late April. Having discussed update details with my lawyer, and upon concluding on the content and then came the hard part. How does one execute the document? The lockdown and a consequence of social distancing meant this was nigh on impossible

Thoughts went to anecdotal evidence of people turning up outside the homes of friends nominated to act as witnesses: the plan being to sign the Will in their presence then pass the document through the window or under the door for their signature. Apparently, some brave souls actually stepped out of their homes to use car bonnets to both witness the testator’s signature to the Will as well as to add their signatures to same. These challenges were prerequisites of The Wills Act of 1837 which requires two witnesses to be physically present at the moment the testator signs the Will.

In response to the difficulties presented by the pandemic, a major overhaul of probate justice will soon take place in the UK when the Ministry of Justice introduces new rules permitting the ‘remote’ signing of Wills. In an historical move, the government has introduced a statutory instrument allowing testators’ signatures to be witnessed using video conferencing software.

In practice, the new legislation will allow for the testators to apply a signature to the Will and then post the document out to the witness who in turn will sign their signatures via a video link – with the proviso that the online capturing of the signing must ensure it includes the physical act of the witness signing the document. The testator is also required to keep a record of the act of the witnesses’ signing the Will.

The legislation will be laid before Parliament in September and will be retroactive, applying to Wills witnessed virtually dating back to 31 January this year. For further information on video witnessing of Will during the pandemic, click here You can also find practical guidance on making wills using video conference by clicking this link.

Photo by Melinda Gimpel on Unsplash

Update on Coronavirus and my services

Written by admin on . Posted in COVID-19. No Comments on Update on Coronavirus and my services

The global COVID-19 pandemic may be with us for a while yet and as such, I would like to take the opportunity to assure my clients (and potential clients) that as my practice is cloud-based, there will be no disruption to my 0delivery of services to you.

My trusted practice management software and my cloud based systems mean I can work anytime, anyplace, anywhere.

Like you, I would prefer a physical meeting, however, that may not yet be possible. In the meantime, I am set up for video meetings via e Zoom, MicrosoftTeams, Skype, Google Meet or GoToWebinar.

If urgent advice is required, please click here and book a fixed fee consultation with me.

Photo by Martin Sanchez on Unsplash

Business rates review back on the table

Written by admin on . Posted in Business Rates, Tax. No Comments on Business rates review back on the table

The government committed to undertake a fundamental review of business rates in England at the Spring Budget. It has now issued a call for evidence, with views on reliefs and the ‘multiplier sort’ by 18 September. Although fundamental reform is for the longer term, the intention is to have some improvements in place for April 2021.

High street retailers were already struggling against online competition prior to the Covid-19 crisis, but months of closure and reduced sales have exacerbated the impact of business rates, with online competitors having much lower bills. The review will look at these issues and concerns around complexity, rigidity and how the regime could be improved and made fairer.

The next revaluation of business property was scheduled for 1 April 2021. This was then put back by a year, but will now not take place until 1 April 2023. In the meantime, however, the government intends to introduce some intermediary changes.

Reliefs

Business rates reliefs can be complex and often poorly targeted. Small business rate relief, for example, is based on rateable value, taking no account of the actual size of a business or how profitable it might be.

  • There is significant regional variation in eligibility.
  • Landlords may negate any benefit by increasing the rent for eligible properties.

The government review will look at how reliefs can be targeted more effectively, made robust against abuse, and whether their administration can be simplified.

The multiplier

A business rates bill consists of a property’s rateable value calculated by a multiplier.

  • Businesses have raised concerns about the level of this multiplier and the rate at which it has been increased.
  • There is also criticism that business rates are unresponsive to changes in the property market.

One option being considered is the introduction of additional multipliers that vary by geography, property value, or property type.

Longer term

An online sales tax has been suggested as a possible replacement for business rates. Such a tax, however, would be unlikely to raise comparable revenue, so is more likely to run alongside business rates.

Details of the various business rates reliefs can be found here.

Photo by Adeolu Eletu on Unsplash