Monthly Archives: December 2012

Spreading Christmas Cheer Amongst Your Staff

It’s less than 2 weeks to Christmas! So we thought that you might appreciate a seasonal reminder of what you can and cannot do without tax or NIC to spread a little Christmas cheer amongst your staff.

Firstly you can give them a gift.  To be tax and NIC free, the gift must be ‘trivial’.  Helpfully, there is no definition of what this means.  HMRC guidance notes accept that things like a box of chocolates, a turkey or a couple of bottles of wine would qualify.

Cash payments and vouchers can never be classed as trivial benefits, no matter how small.  However, should you choose to give vouchers, you can still arrange to pay the tax and employers national insurance on behalf of your employee by a PAYE settlement arrangement – we can help you do that.

Staff annual functions (e.g. a dinner dance or Christmas party) are tax-free where the total cost per person attending is not more than £150 per year (including VAT). If you invite couples, that’s £150 each person.  Watch out though – if the cost goes over £150 then the whole lot is taxable.  Make sure you include things like taxi costs in your calculations to check whether you are under the limit.

For more information call Julie Walsh on 01254 679131 or email julie.walsh@pmm.co.uk

Capital Allowances and the Annual Investment Allowance (AIA)

From 1 January 2013, the Annual Investment Allowance (AIA) will increase ten-fold from £25,000 to £250,00 for two years, in a measure designed to encourage and support business investment in plant and machinery.

This means that if you are considering investing in plant and machinery soon, up to £250,000 could be deducted from your taxable profits, resulting in a considerable amount of tax relief. If you are about to spend a substantial sum now, give us a call because you may be best advised  to delay the planned investment until 1 January 2013 to take full advantage of the new increase in rates.

The transitional rules for accounting periods straddling 1 January are complex, so we recommend you speak to us before taking or refraining from action.

For more information contact Jane Parry on 01254 679131 or email jane.parry@pmm.co.uk

Autumn Statement 2012

George Osborne delivered his Autumn statement this afternoon. Below is a snapshot of the key measures affecting business.

Business tax

Main rate of corporation tax to reduce further to 21% on 1 April 2014 – thus virtually eliminating the differences in rates applying to large and small companies  (small companies rate remains at 20%).

Annual Investment Allowance for capital expenditure increases from £25,000 to £250,000 on 1 January 2013 for a 2 year period.  Anyone planning to spend substantial sums before then should take advice now.

Simplified cash accounting income tax scheme for small businesses to be introduced on 6 April 2013 as previously proposed  (applies to businesses with receipts of up to £77,000p.a) plus flat rate expenses scheme.

Small business rate relief temporary doubling extended for a further 12 months to April 2014.

No changes to draft Patent Box rules – due to come into effect April 2013.

Pensions
£50,000 annual contribution limit stays for now but reduces to £40,000 on 6 April 2014.

Lifetime limit reduces from £1.5m to £1.25m on 6 April 2014 – anyone with pension funds or substantial defined benefit schemes  approaching this amount should take advice about fixed protection.

Personal tax

Threshold at which 40% income tax rate applies set to increase below inflation over next 3 years to raise an extra £1bn of tax.

Personal allowance increases to £9,440 on 6 April 2013.

Planned reduction of 50% rate to 45% on 6 April 2013 confirmed to take effect.

No mention of any anti forestalling provisions to counter income deferral past 6 April 2013 to take advantage of the 5% reduction in the top rate of income tax.

ISA limits increase to £11,520 from 6 April 2013

Inheritance tax nil rate band to continue at £325,000 until 6 April 2015, when it will increase to £329,000.

Previously announced cap on income tax reliefs will come into effect on 6 April 2013 – anyone likely to be affected should take advice now.

Other measures

Planned 3p/litre fuel duty increase from 1 January 2013 to be cancelled and April 2013 increase deferred to September 2013.

General anti-abuse rule (GAAR) to come into effect from April 2013 as planned.

To read our detailed summary of the Autumn Statement visit out help sheet page.