The expenses and benefits regime was fundamentally reformed from 6 April 2016, with the abolition of the £8,500 threshold and the concept of a `lower paid employee’. Since that date, the benefits code in its entirety has applied to all employees regardless of their earnings rate (subject to a limited exception for certain lower paid ministers of religion). Also from 6 April 2016 employers have been able to deal with the tax on most benefits in kind through the payroll in a process known as payrolling, as long as they registered to do so with HMRC before the start of the tax year in question. Further, the statutory exemption qualifying for paid and reimbursed expenses replaced the dispensation regime for 2016/17 onwards. These changes will impact on the reporting of benefits for the 2016/17 year end.
News & Updates
The Government’s Childcare Choices website is now up and running in preparation for the launch of the new tax-free childcare scheme on 28 April 2017. The scheme is to be rolled out gradually throughout 2017, with parents of children under 2 being invited to join the scheme first. Under the scheme, parents with children under the age of 12 (or under the age of 17 where the child has disabilities) can open an online account and pay in funds which can be used to pay for childcare provided by a registered childcare provider. For every £8 deposited by the parents, the Government will add another £2, up to a maximum of £2,000 per child per year (£4,000 where the child is disabled). To benefit from the scheme, parents must be in work and earn at least £120 per week (although each parent must have income of £100,000 or less). The self-employed are also able to join.
Since 1 April 2016 a stamp duty land tax supplement has been payable on the purchase of second and subsequent residential properties costing more than £40,000. Generally, the supplement is not payable where the main residence is replaced, even if the purchaser ends up with more than one residential property after the purchases has completed. However, where the new main residence is purchased before the former main residence is sold, the supplement is payable initially. However, as long as the sale of the old main residence is completed within three years of the purchase of the new home, the supplement can be reclaimed.
When an individual, or a company, makes a loan to a trading business, and that loan is not repaid, the lender can claim a capital loss for the irrecoverable amount under TCGA 1992, s 253. If the funds were provided as a subscription for shares, which have become worthless, the shareholder can make a negligible value claim under TCGA 1992, s 24(2), which also creates a capital loss.
As part of his 2016 Budget, George Osborne announced two new flat rate allowances of £1,000 each, which apply to sundry trading and property income from 6 April 2017. Unfortunately, there is very little guidance about these new allowances on gov.uk. We have linked to what there is below.
Many small businesses, who were only VAT registered in order to take advantage of the flat rate scheme (FRS), will have deregistered from VAT last week. It makes sense to submit the final VAT return for those businesses as soon as possible, so that the final VAT debt is known and can budgeted for.