We have prepared a "round up" of some of the new opportunities offered by the Finance Acts 2005 - so far we have had 2! There are also articles that include a "VAT warning" for publicans, new minimum wage rates, a possibility of overpayments of NIC contributions, and new rates to claim by company car drivers who pay for their own fuel.

Many people are asking just what has happened to the promised incentives for online filing of employers returns - £250 for each small business that filed on line for 2004-05?

Well, once again IT has got the better of the tax man, and they've had to delay making payments. 

On line employers returns (P35, P14, P60, etc) were sent to a electronic gateway which checked them.  They were then meant to be passed to a second computer for processing and detailed checking, at the end of which the incentive would be released.

Well, the gateway worked (most of the time) but the second system has been beleaguered with problems, and has only started processing returns submitted in April in the last week or so - so far we've had notification of two of our 400 or so employers returns being processed.

So, watch this space and hopefully we'll see a flood of approvals in the next month or so.

As a reminder, for every small business filing employers returns on line (employers returns, not Self Assessment returns or Corporation Tax returns),  an incentive is being paid as follows:

Tax year      Total £   

2004-05                 £250
2005-06                 £250
2006-07                 £150
2007-08                 £100
2008-09                  £75

Total over 5 years £825

In April 2006 there are major changes coming up to the pension regime - the so called “A day” changes.

We’ll be providing a briefing on these soon, but in the meantime please put the evening of 17 November in your diary for our evening seminar on the subject, in association with Butterfield Private Bank (incorporating Leopold Joseph).

The A day changes are quite wide ranging, and even if pensions are not normally your thing you should make time to appreciate whats happening and how it allows you flexibility in planning for the future.

Last month HMRC published details of the new Construction Industry Tax scheme applying from April 2006.  There are some major changes as the system moves to being paperless (or at least, less paper!). 

Don't forget to keep an eye on garbetts.com, our www site, where you can find a selection of tools and briefings to help you with your accounts and taxes.

Due to the general election earlier this year we have had to endure 2 Finance Acts and a whole host of tax law rewrites.

We have listed below some of the new legislation - particularly where this offers a new opportunity.

Trusts - New £500 income band trusts, and trusts for children and disabled beneficiaries will benefit from changes in the rates of tax charged.

Childcare Vouchers - Childcare vouchers can now be offered by employers up to £50 per week, tax and national insurance free to employees with children.

Computers and bicycles - Both items can now be provided by employers free of benefit in kind charges.

Capital Allowances on business premises - This will allow a useful 100% first year allowance for the costs of renovating and converting business premises. Property must be in disadvantaged area and have been vacant for one year. Relief will be clawed back if property is sold within 7 years. As this is a State Aid provision EU approval is required which may not be given until 2006.

Civil Partnerships from 5 December 2005 - Same sex couples can enter into a formal civil partnership from this date. This means they will be treated the same as married couples for tax purposes. Although this will generally advantage couples from an inheritance tax and capital gains tax point of view, there are planning concerns - particularly ownership and elections for a principal private residence and tax credits.

Anti avoidance - Included in both Finance Acts 2005 are a variety of measures to counter what the government considers to be tax avoidance schemes. Whilst the detail is beyond the scope of this short newsletter it does demonstrate the Inland Revenue's commitment to counter such "tax avoidance" arrangements.

The adult rate  (for workers aged 22 years and over) will increase from £4.85 per hour to £5.05 per hour.

The development rate (for workers aged 18-21 years) will increase from £4.10 to £4.25 per hour.
This development rate can be applied to new workers aged 22 and above with a new employer and who are receiving accredited training.

Guidance for payments to younger workers (generally minimum wage rate for 16-17 year olds is £3 per hour) and piece rate workers can be obtained from the wage helpline 0845 6000 678.

HMRC issued a news release on the 19 September 2005 in which they offered to help publicans.

"We will be working with individual pubs and the industry as a whole, to help Public Houses pay the right tax at the right time, and to provide information about the schemes we offer, which can simplify VAT matters."

They further advise:

"Thousands of pubs all over the country can expect to receive a letter from HMRC, giving some advice about the particular issues, problems and mistakes that VAT Officers come across when they visit
pubs.". So far so good!

And then:

"The letters and advice will be backed up by a programme of visits to pubs by VAT assurance officers, some of which will be without an appointment."

So beware, apart from the prospect of receiving written advice on VAT matters you may also get unsolicited visits!

And don't forget HMRC is now a combined government agency. If a VAT officer calls, and is unhappy with your VAT record keeping and compliance, it is more than likely that other departments will be advised and come calling. PAYE inspections and so on.

In the light of this "revelation" by HMRC it may well be of benefit if our publican clients arrange for us to take a look at their records in the first instance. Please call if you would like to organise a "VAT health check".

Indeed you can!

For readers of our newsletter who are not clients you should apply for a refund if your NIC contributions for 2004-2005 have exceeded:

Employed and/or self-employed

If your combined national insurance payments have exceeded £3,025.77. (This could comprise class 1, class 2 or class 4 contributions)

Self Employed only.

If your payments have exceeded £2,266.65. (This will be made up of class 2 and class 4 contributions only).

Losses in self employment are also losses for NIC purposes and should be taken into account when calculating a potential overpayment.

Claims are subject to a six year time limit. If you would like a quote for us to make the claim for you, please call for an appointment.

If you have the use of a company car but pay for your own fuel, the rates per mile advised by the tax office, increased from the 1 July 2005.

You can now claim the following rates per mile with the blessing of HMRC.

1400cc or less - petrol 10p, diesel 9p, LPG 7p.
1401cc to 2000cc - petrol 12p, diesel 9p, LPG 8p.
Over 2000cc's - petrol 16p, diesel 13p, LPG 10p.

Don't forget that if your employer does not reimburse you for business related fuel costs, you can make a claim on your tax return.

These rates are also accepted by HMRC for VAT purposes. Employers can still recover the deemed VAT input tax included in the petrol related mileage rate.

In England and Wales

Last month we reported on the Small Business Rate Relief for England and Wales.

Just to set the record straight there is no such relief available at present in Wales - the Welsh Assembly have voted against the adoption of the relief for the time being.

Apologies for the error, our comments under the heading England and Wales applied to England only.

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DISCLAIMER - PLEASE NOTE: The ideas shared with you in this email are intended to inform rather than advise. Taxpayers circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

1 October 2005 - Due date for corporation tax for the year ending 31 December 2004.

19 October 2005 - PAYE and NIC deductions due for month ending 5 October 2005. (If you pay your tax electronically the due date is 22 October 2005)

1 November 2005 - Due date for corporation tax for the year ending 31 January 2005.

19 November 2005 - PAYE and NIC deductions due for month ending 5 November 2005. (If you pay your tax electronically the due date is 22 November 2005)