May 2009

Points to Ponder!

Welcome to our fifty first newsletter issued in May 2009, to keep you up to date with some of the changes in Income tax, National Insurance and VAT along with compliance regulations for businesses, plus other oddments that have caught our eye. If you would like a copy of any past newsletters, please call and we can either send or e-mail them to you.

The Highs and Lows of the Budget

High - The car-scrap scheme payout - £2,000 off the price of a new car if you trade in a car that is more than 10 years old, providing it is taxed and has a current MoT.
Low - the Government will pay £1,000 but this has to be matched by the dealer discounting £1,000 off the price. As most dealers have already dropped their prices, the discount may only mean £1,000.

Hidden lows - the taxpayer is funding this scheme. Most owners of old cars have them either because they are cherished, vintage or collectors' models, or because they can't afford a new one anyway. This may encourage some to take on more borrowing then they can afford - again. If more new cars are sold, small repair garages may lose trade as new cars have to be serviced while under guarantee by the manufacturer's designated workshops. Dealers won't tell you that you don't have to go back to them, as long as the mechanic servicing the car used the correct factory parts.
Personal - I have decided to trade in my reliable but scruffy 1993 Rover and toured the local dealers to decide what I should get? Their response has been varied and interesting but I'll update on this later.

High - The tax on income above £150,000 will go up to 50% from 40%.
Low - the number of people actually earning this level is a fairly small percentage. This increase will encourage them either to leave the country or make other arrangements for receiving their income.

High - statutory redundancy pay will rise from £350 to £380 per week.
Low - most redundancies happen when companies are forced to close because they have run out of money. In these cases, the taxpayer foots the bill.

Low- VAT will revert to 17.5% by December.
Hidden low - there was no indication of how soon this might happen.
Personal - this is another incentive to trade in the Rover.

High - the stamp duty tax holiday on the sale of properties up to £175,000 is extended to the end of the year.
Low - in this part of the country there are very few homes in this price range.

High - as a boost to construction, £500 million will be used to kick-start stalled housing projects.
Low - this is to go to local councils and for Armed Forces housing improvements, rather than as loans or incentives to general building.
Suggestion - start trying to get on your council's list of approved contractors or find out who the approved companies are and apply to them to be listed. As a start, see the section about Tendering for Council Work from last month's newsletter.

Usual Lows - the duty on alcohol and cigarettes has been increased and fuel will rise in September.

We are still reviewing the incoming news and will give a better update as soon as we can.

Recent items
Working Family Tax Credits are increasing divorces.
A recent survey shows that divorce rates have increased by 2% in low-income families to ensure maximum claims.

A Penny on a Pint.
Following a recent VAT case, HMRC won a ruling at the European Court of Justice that they can insist that retailers round up to the nearest penny, not down. The Wetherspoon chain of pubs was arguing the case but this ruling effectively means an extra penny on a pint.

Statements of Employment (speak to Sam in the Chessington Office, Gilders Road)
All employers should give their employees a contract or statement of employment. If you need help putting something together, please give Sam a call or drop in to Gilders Road.

Pay to Park
Under the Transport Act 2000, local authorities can charge firms that provide employees with private parking. The Department for Transport is asking for feedback as to how the Act should be enforced. I think it is disgraceful as, if we allow our staff to use the space we have out the back, we could be charged. Could this be extended to a charge for letting an employee leave his car on your drive while you go to work in the business' van?

Tendering for council work
At a recent Federation of Small Businesses meeting, we had a presentation from the Chief Procurement Officer for Tandridge, Mole Valley and Reigate and Banstead Councils. He is keen to support the FSB's "Keep Business Local" initiative. He has subsequently e-mailed us the slides from his presentation, so if anyone would like to approach the Council for work, please let us know, and we can forward the details. We would also be pleased to help with any applications you may want to submit.

Changes in Capital Allowances
Capital expenditure up to £50,000 per annum can be claimed in the year in which it is spent. The exception is for cars, which are still to be written off over their expected life. This does mean that any assets sold in later years will give rise to a taxable gain.

Don't lose your CIS deductions details - the Revenue will no longer help.

New penalties if you pay below the National Minimum wage.

Working tax credit
HMRC is currently encouraging workers to claim. An employee is eligible to claim, even if they don't have children, if they are 25 or over, work at least 30 hours a week and earn up to £12,865 per annum as a single person or £17,400 as a couple. A working parent or someone over 50 returning to work after a period on benefits or a disabled worker needs to only work 16 hours a week or more.

A request for records
Please could everyone bring their records in within two months of the end of their trading year, so if your year end was 30th September, we should have received your records by 30th November 2008, ready for your 2009 returns. As HMRC is trying to bring forward the submission date, we shall need records much quicker please. Deadlines for limited companies have already been reduced, so please don't put yourselves at risk of being fined.

New Business Payment Support Service
If you are having problems finding your tax money, you can contact the HMRC Support Service on 0845 302 1435, Monday to Friday between 8 am and 8 pm and at the weekend between 8 am and 4 pm.

New record keeping requirements
Under the new penalties regulations, the Revenue has issued the following statement - "from 1 April 2009 we will have the powers to dictate exactly what records we think you should keep and that our requirements will become the new regulations".

Making a will
Once you have made a will, please make sure your executor knows where it is.

Please call us if you would like more details about any of the above topics - we are here to help.