Autumn Statement Tax Summary

George Osborne did not have great tidings to impart when he presented his Autumn Statement to the House of Commons on 29 November 2011. The best he could offer the ordinary taxpayer was a freeze in road fuel duty until 1 August 2012, when it will increase by 3.02p per litre. Train and tube fares were due to rise by a whopping 8.2% next year, but this rise will be limited to (wait for it...) 6.2%.

Businesses who occupy small commercial premises receive some generosity with an extension to the business rates relief scheme to 1 April 2013 (already extended for a year to 1 October 2012). Different business rates relief schemes apply in England, Wales and Scotland so ask your local authority what relief applies to your building. Occupiers of larger business premises may be able to defer payment of up to 60% of the increase in business rates for up to two years.

Other key tax announcements for businesses and individuals were:

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November 2011 Tax Questions & Answers

Q. I left London on 5 May 2010 to work full time for a Danish company in Copenhagen. My own UK-based company ceased at that time, and I received a capital payment on 30 November 2010. As I received that money after I left the UK permanently, do I have to pay UK tax on the pay-out?

A. Unfortunately yes. Although you may be regarded as not resident in the UK for income tax purposes from 5 May 2010, you do have to pay UK capital gains tax on the gain made in November 2010. The tax year is not split for capital gains tax, as it can be for income tax. If you are resident in the UK in any part of the tax year, you are taxed in the UK on gains made in that tax year, even if the gain is made after you have left the UK permanently.

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Business Record Checks Update

The Taxman believes that a lot of businesses do not pay the right amount of tax because they don't accurately record their business income and expenditure. In other words their business records are not of a high enough standard to produce accurate accounts. We agree that many businesses do not keep perfect records but we work with business owners to help them retain the necessary documents, and use those records alongside a good understanding of the business, to produce a reasonable statement of profit or loss for the tax return.

Unfortunately the Taxman is not taking such a helpful approach. He is now sending out 120 tax officers to examine the un-sorted raw records held at thousands of businesses. If the tax officer (who is not a trained accountant), judges the business records to be inadequate the business owner could receive a penalty of up to £3,000.

Some businesses have been visited already as part of a training exercise for the tax officers. Following those 'test and learn' visits the tax officer may have made recommendations, but he won't have raised a penalty, unless there were absolutely no business records to examine.

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Splitting Businesses to Avoid VAT

Now that the standard rate of VAT has been raised to 20%, some business owners are increasingly tempted to split their businesses into different entities, so the part with non-business customers or both parts falls under the compulsory VAT registration threshold when split. This enables them not to register to have to charge VAT to those customers. The Taxman is watchful of this type of tax planning and where he believes they have been artificially separated to avoid VAT, he will direct that the businesses should be re-aggregated.

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October 2011 Tax Questions & Answers

Q. My cafe was badly damaged in the recent riots, but my loyal customers have collected £3,000 to help me open the business as quickly as possible. How should I treat this sum for tax purposes? Is it a personal gift, or a contribution to be set against my repair costs?

A. This gift from your customers should be treated as income for your business for income tax or corporation tax purposes. You are likely to have a lot of repair expenditure to set against your income for the current period, so you may well not have a profit to declare even after including the gift as income.

Q. I've received a tax refund for 2010/11, but I'm worried that it's not correct as I usually have tax to pay each year. Also I haven't even submitted my 2010/11 tax return yet.

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New Mileage Rates

Where your employees use a company car or van, but pay for the fuel themselves, the company can pay a fuel-only mileage rate for business journeys. This fuel-only rate is guaranteed to be tax free when it is equal to or less than the advisory fuel rates set by HMRC. These advisory fuel rates are now revised every quarter. The latest rates applicable from 1 September 2011 are shown below for different engine sizes, with the previous rates that applied from 1 June to 31 August 2011 shown in brackets.

Petrol & LPG Engines
1400cc or less: Petrol 15p (15p), LPG 11p (11p)
1401 to 2000cc: Petrol 18p (18p), LPG 12p (13p)
Over 2000cc: Petrol 26p (26p), LPG 18p (18p)

Diesel Engines
1600cc or less: 12p (12p)
1601 to 2000cc: 15p (15p)
Over 2000cc: 18p (18p)

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Tax Refund Scam Email

Today I received an email telling me that I was entitled to a tax refund of £268.50!    Of course this would be very nice, but as I make my living giving professional tax advice, I instantly knew that sadly this was just a scam.  I have seen many of these before, but this is the first that I have been sent directly as the target of a tax refund scam!  A copy of the email is below:

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Preferred Advisers for the Commonwealth Judo Championships 2012

I am very pleased to announce that Harries Watkins Jones are the preferred adviser to CJC2012 LTD a company formed to arrange and deliver the Commonwealth Judo Championships 2012.  The event will take place in Cardiff, commencing on the 22nd January 2012.  An exciting high profile event for Cardiff and Wales.   To find out more about the event, visit the official website. 


The Commonwealth Judo Association website stated, "The Commonwealth Judo Association are delighted to announce that the 2012 Commonwealth Judo Championships has been awarded to Wales. The Welsh Judo Association will host the event in January 2012 in the city of Cardiff. The CJA Bid Committee had a difficult decision to select from the two candidates, Wales and South Africa. South Africa will host the 2011 IJF World Junior Championships.

The Welsh Judo Association is busy identifying a management team to deliver a world class event and is working closely with the Welsh Assembly Government Major Events Unit, recently involved in delivering the Ryder Cup at Celtic Manor."

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Jointly Held Property Tax Savings

With the threshold for 40% tax reducing every year (£35,000 after deducting allowances for 2011/12), it makes sense to review who pays the higher rates of tax within a family. Can some assets be transferred to the partner who pays a lower tax rate to reduce tax?

For example a let property could be transferred from one spouse into the joint ownership of the married couple or civil partners, or entirely into the other spouse's name. Joint ownership has advantages, as on the eventual sale of the property up to two annual exemptions (£10,600 each for 2011/12) may be available to reduce the chargeable gain. Transfers between husband and wife or civil partners who are living together do not create a capital gains tax charge at the time of the transfer.

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Harries Watkins Jones Hits Number 1!

The Contractor Supermarket website has a chart of what it rates as the top 100 contractor accountants.  Customers assess accountants in relation to quality, service and satisfaction.  We are pleased to announce that today we have reached the position of number 1 in the chart! You can see the chart here.  We would like to thank everybody that voted for us.  We however are not complacent and are still working harder than ever to increase the quality of service that we provide to our clients.

If you are not a client of Harries Watkins Jones then visit our website to find out ways that we could help you.