September 2013 - FAQS Accounts & Tax

Q: I am a high earner and my wife is in receipt of the Child Benefit for our children. We intend to keep receiving Child Benefit in spite of the High Income Child Benefit Charge. How do I go about getting a tax return and when do I need to file it by?
A: From 7^th January 2013, you may be liable to a new tax charge if you, or your partner, have an individual income of more than £50,000 and one of you is receiving Child Benefit. It may also apply if someone else receives Child Benefit for a child that lives with you.
If you intend to keep receiving the Child Benefit, you need to register with HM Revenue & Customs (HMRC) for Self Assessment by 5^th October 2013. The easiest way to do this is online at HMRC’s website www.hmrc.gov.uk but there is still a paper form to use if you’d prefer.
Your tax return will cover the year ended 5^th April 2013 but you only need to declare the amount of Child Benefit you, or your partner, are entitled to receive for the period 7^th January 2013 to 5^th April 2013.
This tax return needs to be submitted to HMRC by 31^st October 2013 if you file it on paper; or 31^st January 2014 if you file it online. Any tax arising must be settled by 31^st January 2014.
If you would like any assistance in dealing with your tax affairs, please do not hesitate to contact us.
Category: Tax credits

National Minimum Wage: increase?
Q: I believe in the past, the National Minimum Wage normally changes about this time this year. Is there an increase soon?
A: You’re absolutely right; there is typically a change to the National Minimum Wages (NMW) annually on 1st October.
The rates are due to on 1st October 2013 to:

• £6.31 – the main rate for workers aged 21 and over
• £5.03 – 18-20 year old rate
• £3.72 – the 16-17 year old rate for workers above school leaving age but under 18
• £2.68 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

Last year, only the over 21s and Apprentices saw an increase in the NMW. But this year, all of the rates have increased.
Category: PAYE, NIC & Benefits In Kind

Private mileage in company cars
Q: My employee has a company car, and historically, he has always had a benefit for the car itself and the fuel- because he doesn’t reimburse me for any fuel he uses for private journeys. Is there any way we can reduce his benefits in kind, because they’re costing him a lot on tax now.
A: This may sound a bit extreme, but you could discuss the company no longer paying for his fuel. Whilst this may sound expensive for him, if you sit down and do the calculations, you may actually find he is better off this way- particularly if you intend to increase his salary as a result of him losing his fuel benefit.
He could then charge the company for any business mileage he does, using the advisory fuel rates.
The other alternative is that the company continues to pay for all of his fuel, but the company charges the employee for all of his private mileage- again using the advisory fuel rates.
In either case, the fuel benefit could be reduced down to nil if you can meet all of the requirements.
Please note that due to the frequently changing fuel prices, HM Revenue & Customs regularly updates the advisory fuel rates, so always check their website for the latest figures here:
http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm
Your local TaxAssist Accountant would be happy to discuss this in more detail and calculate the differences between each option for you.
Category: PAYE, NIC & Benefits In Kind

Invoices and late VAT registration
Q: I registered for VAT a bit late and must now go back and invoice my customers for VAT. Do I have to charge VAT on top of the invoices I originally issued; or is it already included?
A: Assuming you have already received your VAT registration details from HMRC, you may now begin to issue your customers with proper VAT invoices.
But it is actually up to you whether you charge the VAT on top of the original invoice you’ve already issued; or choose to suffer the VAT yourselves by deeming it to have been included in the original invoice.
However, there is something you should bear in mind. If you are dealing with other VAT-registered businesses, they won’t mind you charging them for the additional VAT because they’ll be able to get it back from HMRC on their next VAT return. But if your customers are members of the public or someone else that can’t recover the VAT, they won’t be too happy to receive this unforeseen bill.
Your local TaxAssist Accountant would be happy to manage your VAT affairs and returns for you. Contact us for more information and to be put in touch with your local office.
Category: Value Added Tax (VAT)

Offsetting trading losses
Q: If, whilst employed and paying tax, I set up as a sole trader as well, can I offset any trading losses against the PAYE I pay?
A: As long as you are genuinely in business to earn a profit then yes, you can offset your losses against current year income or against past or future profits of the trade itself.
You should only claim relief for your loss if you ran your trade commercially for profit. If it was more of a hobby, you should only use the losses against future profits from your self-employment; HMRC will not like you to use to loss against your employment income.
Assuming your business was run on a commercial basis, you can offset your losses in several ways:

• other income for the same year or the previous year
• gains for the same year or the previous year - if your other income is used up
• other income in the previous three years if your business started within the past four years
• profits from the business in later years
• profits for the business in the previous three years if your business has ceased

In order to declare the loss and subsequently make use of it, you will need to register for Self Assessment with HMRC and complete a tax return.
Utilising losses is a complex area. I would encourage you to approach a professional for advice, such as your local TaxAssist Accountant. Please contact us if you would be like to put in touch with your local office to discuss this further.
Category: Starting a Business

Ceased employment and student loans
Q: I recently received a letter from the Student Loans Company querying my employment status. But my circumstances have not changes- I am still employed. What should I do?
A: This sounds like a known issue with HMRC’s systems; a very small number of students' employments have been incorrectly ceased.
This has prompted HMRC's systems to automatically inform the Student Loans Company (SLC) that those individuals had left their employment. As a result, SLC have issued letters to these borrowers, querying their employment status.
HMRC’s advice is to respond to the SLC saying you have not ceased employment or changed employer.
HMRC are now in the process of correcting their systems and are due to complete this within the next few weeks.
Category: PAYE, NIC & Benefits In Kind

Disclaimer – advice shared in this column is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this column, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.