Monthly Archives: April 2020

COVID-19 – Lockdown and Company Cars

By | Blog | No Comments

As the UK responds to government guidelines of lockdown and essential travel only, many businesses and employees now find themselves paying tax on a company vehicle which is, at this time, rendered “non-essential” to their personal and working needs.

The reality that many employees may have a second, personal non-company vehicle, or where their food shop can be done on foot, many company vehicles are as a result not “turning a wheel”. Consequently, unnecessary tax is being paid on a benefit of no personal use.

There is, however, the option to remove this benefit charge from the employee during this period of time. By doing so, the employee is no longer faced with paying the relevant tax on their company vehicle for the period where the vehicle is not used.

Employers may also be aware, that the removal of this benefit results in the company no longer incurring Class 1A National Insurance during a period where the company vehicle is not required and not utilised.

Whilst the above actions are reasonable, it is important to highlight that HMRC will still require to see the appropriate practical measures have taken place in order to remove this company vehicle, from the employee, and thus satisfy the removal of the benefit charge on both the employee and the employer during this period of time.

For employees and employers looking to implement the above during the coronavirus crisis, there is a minimum period of time which this must be implemented for. The company vehicle must be removed from use for a period of no less than 30 days. Therefore, employees must be happy to have their company vehicle made wholly unavailable to them for at least 30 consecutive days. Any period of time which is shorter than this will be considered as a period of chargeable benefit by HMRC.

HMRC recommend the following actions take place in order to support the period of unavailability of at least 30 days:

  • Physical removal of the company vehicle from the employee and/or keys handed back to an individual at the company.
  • The employee should have no access to the vehicle. HMRC will accept that the vehicle is unavailable and that the employee is unable to gain access to the vehicle on the basis that they:
    1. Do not have access to the keys
    2. Do not have the power or authority over the individual who is holding the keys to hand them over
    3. Do not have the power to direct the person holding the keys to drive the employee to a location of the employee’s choice.
  • Written agreement between employee and employer, prohibiting private use, and reiterating that the vehicle will be made unavailable to the employee for the period of at least 30 days.
  • A log of the date that the vehicle was withdrawn from the employee and the date that the vehicle was returned and made available to the employee.
  • A log of where the vehicle has been kept during this time of unavailability. For example, confirmation that vehicle is in a locked parking site/business premises.

Where the company vehicle has not been physically returned to business premises, or a similar location

, it is recommended that odometer readings and the use of trackers are applied. HMRC will expect to see proof that the company vehicle has not been used privately during this period of time. Thus, odometer readings on the date where the keys are handed back to the company, and again on the date that the company vehicle is returned and made available to the employee, will assist in corroborating this.

For employees who are also provided with a fuel benefit, the treatment of this can be stopped in line with the company vehicle benefit charge.

We would recommend that you do speak to your adviser before implementing any changes with regards to your company vehicle benefits. HMRC have yet to release any guidance which would suggest a “softer approach” to the current benefit guidelines and thus it is important that recommended actions are followed as far as possible.

 

ICAS Appointment for Drummond Laurie

By | Blog | No Comments

With everything going on in the world at the minute we thought it would be nice to share some good news with you……..We are pleased to announce that our very own Margaret Bunyan has been successfully elected onto the Institute of Chartered Accountants of Scotland (ICAS) Council Board after being appointed into the Scotland East Electoral Area seat.

Margaret has worked in practice for over 13 years and has a vast amount of knowledge and experience on which to draw from. She is responsible for a diverse portfolio of clients, with a particular specialism within the agriculture sector. In addition to this Margaret is also our ICAS Counselling Member and therefore has responsibility for all of our CA and ACCA trainees.

ICAS are our governing body and the global professional body for Chartered Accountants. The ICAS Council oversees the effective management and direction of the Institute’s affairs, it’s an exciting appointment filled with opportunities and we are confident that Margaret will be able to make a very valuable contribution going forward.

Congratulations Margaret, we are very proud of you !

Important Budget Changes

By | Blog | No Comments

Drummond Laurie Chartered AccountantsWith everything going on in the world currently it would be easy to overlook some of the changes introduced in the budget announcement just over a month ago…..we would just like to draw your attention to two important changes you should be aware of now that we are entering another tax year!

Employment Allowance

The Employment Allowance allows certain businesses in the UK who employ workers to reduce their annual National Insurance (NI) bill by up to £4,000. New rules on the types of businesses eligible to claim the reduction are being introduced for the 2020/21 tax year.

Prior to April 2020, organisations simply answered a ‘Yes/No’ question to inform HMRC that they were claiming the Employment Allowance. From April 2020 employers must make extra checks to work out whether they are eligible, and submit a new claim for the EA each year.

Eligibility for Employment Allowance from 6th April 2020

From 6th April 2020, the Employment Allowance will apply to smaller businesses only. Businesses with an Employer NI bill of £100,000 or more in the previous tax year (2019/20) will not be able to claim the allowance. For the 2020/21 tax year, the Employment Allowance is increasing to £4,000 (was £3,000 in the 2019/20 tax year).

The complete eligibility criteria for Employment Allowance can be found on the gov.uk website or follow the link  HERE

National Insurance contribution thresholds to rise to £9,500 per year

Confirmation that the Government is increasing the threshold for when National Insurance becomes payable to £9,50

0 is good news, saving 31 million people across the UK up to £104 a year. This means those earning under £9,500 will pay no National Insurance whatsoever.

Even more welcome is the confirmation that those taken out of paying NI won’t lose out on credits towards their state pension. Anyone earning above the Lower Earnings Limit, which will increase with inflation from its current level of £6,136 will still be entitled to a year’s credit. This is important because people need at least 10 years’ credits to receive any state pension and 35 years to receive the full state pension which is expected to rise to £175.20 a week from April. Without this provision, people might have gained from paying less NI today only to suffer from a reduced state pension infuture.

MTD Digital Link Delay

By | Blog | No Comments

Drummond Laurie Chartered AccountantsThis may have gone unnoticed by most businesses but HMRC announced this week a one-year delay to its enforcement of rules specifying the digital transmission of transaction data through the Making Tax Digital (MTD) for VAT return filing process. This extends the soft landing period put in place for digital links when MTD was made mandatory for registered businesses above the VAT threshold.

Businesses now have until their first VAT return period starting on or after 1 April 2021 to put digital links in place.
Please contact your usual Drummond Laurie adviser or Julie McVicar if you have any questions on this matter.

Let's Get Started: Contact Us