Help to Save scheme

The Help to Save scheme for people on low incomes was officially launched in September 2018 and since then over 80,000 people have signed up. The scheme allows those in work entitled to Working Tax Credit and in receipt of Working Tax Credits or Child Tax Credits to save up to £50 a month for two years and receive a 50% government bonus.


The scheme is also open to UK residents who are claiming Universal Credit and have a household or individual income of at least £542.88 for their last monthly assessment period. Payments from Universal Credit are not considered to be part of household income.


Payments under the scheme can be made by standing order on a weekly, fortnightly, or monthly basis and one-off payments by debit card are also possible. Account holders will then be able to continue saving under the scheme for a further 2 years and receive another bonus. This could see those on low incomes receive a bonus of up to £1,200 on maximum savings of £2,400 for 4 years from the date the account is opened. After the 4 years the Help to Save account will be closed and savers will not be able to reopen it or open another Help to Save account. The account balances are expected to be rolled over into successor accounts.


There are no limits on how the savings can be spent but it is advised that the money will be saved for urgent costs. Money paid into the account can be withdrawn at any time, but this could affect the size of the bonus payment. HMRC has also launched a new tool in the HMRC app that lets savers set their own savings goals and personal reminders, to keep on track and maximise bonuses using the scheme.

New advisory fuel rates published

Advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. The rates can be used by employers who reimburse employees for business travel in their company cars or where employees are required to repay the cost of fuel used for private travel. HMRC accepts there is no taxable profit and no Class 1A National Insurance on reimbursed travel expenses where employers pay a rate per mile for business travel no higher than the published advisory fuel rates.


Employees can also use the advisory fuel rates to repay the cost of fuel used for private travel. In this case, HMRC will accept there’s no fuel benefit charge. The advisory rates are not binding. Accordingly, if an employer can demonstrate that employees cover the full cost of private fuel by repaying at a lower rate per mile, this would be accepted.


The latest advisory fuel rates became effective on 1 March 2019. Fuel rates are reviewed four times a year with changes taking effect on 1 March, 1 June, 1 September and 1 December. You can use the previous rates for up to 1 month from the date the new rates apply.


The rates are as follows:


Petrol
Engine size 1400cc or less             11p per mile
Engine size 1401cc to 2000cc        14p per mile
Over 2000cc                                21p per mile


LPG
Engine size 1400cc or less              7p per mile
Engine size 1401 to 2000cc             8p per mile
Over 2000cc                                13p per mile


Diesel
1600cc or less                             10p per mile
1601cc to 2000cc                        11p per mile
Over 2000cc                               13p per mile


Hybrid cars are treated as either petrol or diesel cars for this purpose.


Advisory Electricity Rate


HMRC now accepts that if you pay up to 4p per mile when reimbursing your employees for business travel in a fully electric company car, there is no profit. While electricity is not considered a fuel for tax and NIC purposes, the Advisory Electricity Rate will be published quarterly alongside the other advisory fuel rates.

Claim EU VAT refunds before Brexit

The VAT paid in other EU countries is often recoverable by VAT- registered businesses in the UK, who bought goods or services for business use. The exact rules that govern the amount of VAT refundable depends on the other countries’ rules for claiming input tax. It is important to note that VAT incurred in foreign countries can never be reclaimed on a domestic UK VAT return. There are a number of conditions which must be met in order for a claim to qualify.


Claims must be made electronically via the tax authority in which the claimant is established i.e. a claim from a UK company to any other EU country must be submitted electronically to HMRC. The deadline for the submission of a refund request for expenses incurred in other EU member, states during the 2018 calendar year is usually 30 September 2019.


However, HMRC’s guidance has been updated to make it clear that in the event the UK leaves the EU without a deal, the existing electronic process for making a claim will no longer be available to UK businesses. If you want to use the EU VAT refund electronic system to submit a refund claim for 2018, you’ll need to do so by 5pm on 29 March 2019. If there is a no deal Brexit, then claims submitted after that date will not be forwarded to the relevant EU member state.


Going forward, if there is a no deal Brexit, UK businesses will need to apply for VAT refunds from EU member states using the same existing process for businesses based outside the EU. This will apply to any outstanding claims for 2018 and for 2019.

Correcting errors on VAT returns

Where an error on a VAT return is discovered, VAT registered businesses have a duty to correct the error as soon as possible.


As a general rule, you can use a current VAT return to make an adjustment to a past VAT return. However, in order to be able to do so, there are three important conditions that must be met:



  1. The error must be below the reporting threshold.

  2. The error must not be deliberate.

  3. The error can only relate to an accounting period that ended less than 4 years ago.

Under the reporting threshold rule, taxpayers can make an adjustment on their next VAT return if the net value of the errors is £10,000 or less. The threshold is extended if the net value of errors found on previous returns is between £10,000 and £50,000, but does not exceed 1% of the box 6 (net outputs) VAT return declaration figure for the return period in which the errors are discovered.


VAT errors of a net value that exceed the limits for correction on a current return or that were deliberate should be notified to HMRC using form VAT 652 (or providing the same information in letter format), and should be submitted to HMRC’s VAT Error Correction team. HMRC can also charge penalties and interest if an error is due to careless or dishonest behaviour.

Company tax deductions for charitable donations

There are special rules in place when a limited company gives to a charity. This can include Corporation Tax relief for qualifying donations made to registered charities or community amateur sports clubs (CASC), as well as Capital Allowances for giving away equipment that has been used by a company.


However, the rules are different if the company is given something in return for making a donation, such as tickets for an event.
















Donation amount   Maximum value of benefit that is acceptable
Up to £100   25% of the donation
£101 – £1,000   £25
£1,001 and over   5% of the donation (up to a maximum of £2,500)


These rules apply to benefits given to any person or company connected with your company, including close relatives.


Charity sponsorship payments are different from donations because the company gets something related to the business in return. A company can deduct sponsorship payments from its business profits before it pays tax by treating them as business expenses.


Payments qualify as business expenses if the charity:



  • publicly supports the company’s goods or services

  • has links from their website to the company’s

  • permits them to sell their goods or services at the charity’s events or premises

  • allows the company to use their logo in company’s printed material.

What is a Company Voluntary Arrangement?

A Company Voluntary Arrangement or CVA is a special arrangement that allows a company with debt problems or that is insolvent to reach a voluntary agreement to pay its business creditors over a fixed period of time. The arrangement is similar to the more well-known Individual Voluntary Arrangement (IVA) that can be used by a sole-trader or self-employed person who is unable to pay their debts.


An application for a CVA can only be made with the agreement of all directors of the company in question or all of the partners of a limited liability partnership (LLP). A CVA can only be realised by using an insolvency practitioner who would be responsible for setting up the arrangement and administering it.


Once an insolvency practitioner has been appointed, the following steps will take place:



  1. The insolvency practitioner will work out an ‘arrangement’ covering the amount of debt the company can pay and a payment schedule. They must do this within a month of being appointed.

  2. The insolvency practitioner will write to creditors about the arrangement and invite them to vote on it.

  3. To get a CVA, it must be approved by creditors who are owed at least 75% of the overall debt.

If the agreement is approved and the company does not meet the terms of the CVA, then any of the creditors can apply to have the business wound up.

Tax if selling online

Many people supplement their income by selling services online. This is often described as the ‘sharing economy’ or the ‘peer-to-peer economy’ and usually involves renting out something using specialist websites or apps. This could include renting out your house (using websites such as AirBNB) or personal equipment (such as power tools).


You can also raise income from using specialist online marketplaces to find customers to whom you can provide services as a freelancer. The income raised from these kind of ventures is usually (but not always) supplemental to someone’s main income but this is not always the case. However, HMRC is clear that in most cases this is taxable income and Income Tax is payable subject to the usual rules.


There is no Income Tax to pay if you occasionally sell personal possessions online, and there are reliefs from Capital Gains Tax for small gains (usually under £6,000) for selling personal possessions. However, there are separate rules if HMRC deems your activities a fully-fledged business.


Tax tips


There are also two £1,000 tax exemptions for sundry property and trading income. The £1,000 exemptions from tax apply to:



  • Individuals who make up to £1,000 from self-employment, casual services or hiring personal equipment. This is known as the trading allowance.

  • The first £1,000 of miscellaneous income for income from property. For example, from renting a driveway. This is known as the property allowance.

If you are uncertain whether your online selling may be subject to a tax charge, please call for an opinion. Better safe than sorry.

Job related expenses you may be able to claim

If you are an employee and use your own money to buy things you need for your job, you can sometimes claim tax relief for the associated costs. It is usually only possible to claim tax relief for the cost of items used solely for your work.


There is no tax relief available if your employer pays you back in full for an item you have bought for your work. In addition, you cannot claim tax relief if your employer has provided you with a suitable item, but you want a different or upgraded model. For example, you are provided with a mobile phone for your work, but you want to use a newer and more advanced model and pay for this yourself.


A claim for valid purchases can be made against receipts or as a ‘flat rate deduction’. The flat rate deductions are set amounts that HMRC has agreed are typically spent each year by employees in different occupations. They range from £60 to £140 depending on listed occupations. If your occupation isn’t listed, you may still be able to claim a standard annual amount of £60 in tax relief.


This means that if you are a basic rate taxpayer then you could claim back £12 (20% x £60), and if you are a higher rate taxpayer £24 (40% x £60) per year. Claims can usually be backdated for up to 4 years. If you work in one of the listed occupations, you could claim back even more.


Tax tip


You may also be able to claim tax relief for using your own vehicle and for travel expenses, professional fees and for buying equipment to use as part of your employment. The rules can be complex and we can help you crunch the numbers to see what tax relief may be available.

National Insurance if you go abroad

If you move abroad it can often be advantageous to continue paying your UK National Insurance Contributions (NICs) in order to preserve your entitlement to the State Pension and other benefits. If you are working in the European Economic Area (EEA) the rules depend on your situation. The EEA includes all EU countries as well as Iceland, Liechtenstein and Norway. The same rules apply in Switzerland.


The rules are as follows:



  • If you work for an employer in the EEA. You’ll normally pay social security contributions in the EEA country you work in instead of NICs. This means you’ll be covered by that country’s social security laws and may be entitled to benefits there, but your entitlement to benefits in the UK (for example State Pension) may be affected as there’ll be a gap in your NICs.

  • If your UK employer sends you to work in the EEA. You might be able to carry on paying NICs if you’re abroad for up to 2 years. This means you won’t have to pay social security contributions abroad. There is a special form which your employer must complete to notify HMRC.

  • There are special rules if you are self-employed or working in two or more EEA countries (including the UK).

  • Some countries have a Reciprocal Agreement (RA) or Double Contribution Convention with the UK. These countries include the USA and Japan. You will usually pay social security contributions in that country instead of NICs.

  • For all other countries, you can usually continue paying NICs for the first 52 weeks you’re abroad if you meet the qualifying conditions.

Of course, depending on what transpires with Brexit, the rules for other EU countries could be open to change.

New compensation limits announced

The Employment Rights (Increase of Limits) Order 2019 has been laid before Parliament and will come into force from 6 April 2019. The Order increases the limits applying to certain awards of employment tribunals and to other amounts payable under employment legislation. The main changes are:



  • Maximum amount of a “week’s pay” which is used for the purposes of calculating statutory redundancy payments, the unfair dismissal basic or additional award and payments to employees in the event of insolvency – increases from £508 to £525.

  • Limit on the amount of the unfair dismissal compensatory award – increases from £83,682 to £86,444 (there is an additional cap of one year’s gross salary on the unfair dismissal compensatory award).

  • Limit on the daily amount of statutory guarantee payment – increases from £28.00 to £29.00.

The increases apply where the event giving rise to the entitlement to compensation or other payment occurs on or after 6 April 2019. The appropriate date is determined differently depending on the type of claim brought. In unfair dismissal claims, this date is the effective date of termination of employment. Where the appropriate date falls before 6 April 2019, the old limits will continue to apply.


The increases reflect an increase of 3.3% in the retail prices index from September 2017 to September 2018.


The Order does not apply to Northern Ireland, which sets its own increases.