The Fizz! Blog

Tax relief for subsistence for the chop?

HMRC are consulting on "how the tax treatment of travel and subsistence expenses could be simplified or improved".  Essentially the plan for this simplification is probably just to stop employees/directors getting tax relief for subsistence when working away from their usual workplace, meaning the tax bills of those who are somewhat itinerant going up a bit.

This seems harsh on the face of it, but there is a logic to it.  The rules really relate back to the days when it was expected that most employees would be fed in a work canteen - the ability to reimburse those who were working away tax-free was just supposed to level the playing field.  These days, not that many employees get to eat for free in the canteen.

If you've strong feelings about it, you can give HMRC your thoughts!  We don't, so we won't, but there's more detail here:

https://www.gov.uk/government/consultations/travel-and-subsistence-review

You almost certainly don't want your company to pay for your private fuel

When an employee or director has the use of a company car, they pay tax in return for the privilege.  If the company also pays for all the fuel they use for their private motoring, they pay some more tax in return for that privilege too.

There was a time where it might be desirable to have your private fuel paid for, if you used the car for lots of personal mileage.  These days, it's very unlikely - the tax that most people would pay would far outweigh the benefit of having their private fuel paid for.

The tax cost is based on a standard figure (£22,100 at present), times a multiplier based upon the car's emissions figure, times the marginal tax rate that the recipient is paying.  A fairly normal car could have a multiplier of say 29%.  That means that a higher rate taxpayer would pay tax of £22,100 x 29% x 40%, which is £2,564 - over £200 a month.  For the majority of drivers, that's more than the private fuel used would cost.

If you really hate record-keeping, then by all means have the company pay for everything and take the tax hit.  For most people, though, it's going to better to pay for all fuel themselves, and claim the business part from their company.

www.fizzhq.com

UK CGT on houses & flats sold by Non Residents - an important change

As of this year, people who aren't resident in the UK have to pay Capital Gains Tax on any profit on the sale of residential property in the UK.  At first your instinct is to think about oligarchs owning London flats, but actually a lot of people will be affected on a much smaller scale - think of all the UK expats on the Costa del Sol who still own their home back here.

Initially the amount of tax itself probably won't be a massive issue, because the charge will only apply to the bit of the gain that arises from 6th April 2015 - that won't be an awful lot, yet.  There are a couple of issues that are going to be tricky, though.

First, many (actually, most, probably) of the people affected won't realise they're affected.  Maybe the conveyancing solicitor will point it out, but maybe not.

Second, there's some admin that has to be done.  A return needs to be made to HMRC within 30 days of the sale.  Maybe the conveyancing solicitor will point it out, but maybe not.  If the seller (assuming they're an indivual) isn't within the Self Assessment system, then the tax has to be paid withing 30 days too - but it can only be done once that return has been processed and a reference number issued.  So actually the return will need to be done very early in the 30 day window.

This is probably going to be a slow burner - it'll catch a lot of people out over time.  We'll wait and see how forgiving HMRC will be - and how diligent conveyancers will be in pointing out their clients' obligations.

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If you take money from a private pension whilst still contributing to another...

It's possible (and often perfectly desirable) to draw money from a private pension whilst continuing to contribute to another one (or more).  With the new relaxed regime on dipping into  pensions, it'll become very common.

If you do that, there's a legal requirement that you tell the pension company (or companies) that you're still contributing to about it.  The fines for failing to do this bit of admin properly within three months are ridiculously high - £300, then a further £60 a day!  So if it applies to you, make sure you do it!

www.fizzhq.com

HMRC's National Minimum Wage campaign (a genuine amnesty)

HMRC conduct campaigns from time to time, and they're currently focussing on employers who aren't complying with the National Minimum Wage.  Apparently they're looking particularly closely at the hair and beauty industry, where they know there to be a particularly poor record of compliance, but actually it appears to be open to all employers:

https://www.gov.uk/nmwcampaign

Quite often the word "amnesty" is misused in connection with these campaigns - you can still be fined, just than usual.  This time it's a genuine amnesty, unusually - there won't be penalties or "naming and shaming".    Of course, it won't be directly relevant to anyone reading this, but perhaps you know someone that it could help!

www.fizzhq.com