On the 16th December 2013 Dr Samad Samadian v HMRC had his appeal on Travel heard by The honourable Mr Justice Sales and it was decided to uphold the previous decision of the First Tier Tribunal.
After an enquiry lasting more than seven years and three tribunal hearings, the First-tier Tribunal led by Judge Kevin Poole acknowledged Dr Samad Samadian had a dedicated office in his home which was necessary for his professional activity.
However, the panel did not accept that the home office could be treated as the starting point for calculating private practice business mileage involving habitual journeys.
So in summary:
Home to Hospitals – Disallowed
Hospital to Hospital – Disallowed as Business Expenses (but could be allowed against Employment)
Visits to Patients – Allowed
Now would be a good time to check your tavel mileage claims to makesure they are valid.
The Government wants to help working families and currently if you are an employee your employer can help with childcare and could for example buy childcare vouchers of up to £55 per week, the vouchers would be a tax free benefit to the employee. However, if you’re self employed you aren’t an employee so the rules don’t apply.
So recently there has been a consultation on what should be be done in the future.
The key proposals are:
New Scheme to go live in Autumn 2015
Working Families will open Voucher Accounts (self employed or employed)
As parents pay in the government tops up the account with 20p for every 80p paid in
Top up capped at £1,200
To be eligible all parent must work and not receive tax credits or be an additional rate tax payer
·HMRC have an Exemption (not an allowance) of £150.
available to employees generally or
available to employees generally at one location, where the employer has more than one location.
·If the employer provides two or more annual parties or functions, no charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate.
The figure of £150 is not an allowance. For functions that are outside the scope of the exemption (see example at EIM21691) directors and employees, except those in an excluded employment, are chargeable on the full cost per head, not just the excess over £150, in respect of:
any members of their family and household who attend as guests.
The cost of the function includes VAT and the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. Divide the total cost of each function by the total number of people (including non-employees) who attend in order to arrive at the cost per head.
Christmas Gifts from suppliers to employees
Certain gifts from third parties are tax free if all these conditions are satisfied:
• the gift consists of goods or a voucher or token only capable of being used to obtain goods, and
• the person making the gift is not your employer or a person connected with your employer, and
• the gift is not made either in recognition of the performance of particular services in the course of your employment or in anticipation of particular
services which are to be performed, and
• the gift has not been directly or indirectly procured by your employer or by a person connected with your employer, and
• the gift cost the donor £250 or less, and
• the total cost of all gifts made by the same donor to you, or to members of your family or household, during the tax year is £250 or less.
Some other gifts are not taxable. If you earn at a rate of less than £8,500 a year and you are not a director, a gift to mark a personal occasion, such as
a wedding present, which is not a reward of your employment, is not taxable. If you earn at a rate of £8,500 a year or more, or you are a director,
any gift from your employer is taxable unless your employer is an individual and makes the gift in the course of family, domestic or personal relationships.
Seasonal gifts from Employer to Employee
An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits. . For an employer with a large number of employees the total cost of providing a gift to each employee may be considerable, but where the gift to each employee is a trivial benefit, this principle applies regardless of the total cost to the employer and the number of employees concerned. If a benefit is trivial it should not be included in a PSA (EIM21861).
If the gift extends beyond one of the items mentioned above, for example from a bottle or two to a case of wine, or from a turkey to a Christmas hamper, you will need to consider the contents and cost before being able to determine whether the benefit is trivial.
PAYE Settlement Agreement (PSA)
For practical purposes it may be that small cash and money’s worth benefits can be included in a PSA.
PAYE Settlement Agreements (PSA’s) are requested by Employers and subject to agreement with HMRC. Under this agreement the employer will be responsible for accounting for any tax and national insurance liabilities arising. Any items covered by a PSA will not need to be shown on forms P35 and P11D at the end of the tax year.
Making a profit and generating cash is vital to all businesses and a key way to improve profit is to reduce overheads, here are a few ideas:
Re-think your office/premises requirements – Premises are big cost for most businesses, could you operate in a smaller space and sub-let part of your offices? could you work from home?
Telecommute – Technology effectively reduces distance, so there is no need to require administrative people or specialists to be physically located together. Use VOIP, Skype and Video Conferencing.
Cars – Company Cars can be expensive, time consuming to manage and emotive, why not consider car allowances
Staff – Generally the biggest overhead is people, consider outsourcing rather than having the fixed overhead of in house staff
Shop around – Are you getting the best deals on Stationery, Printing, Insurance, Light & Heat…..
Students – Students, apprentices and interns are eager to learn and will be less expensive then experienced employees
Refinance Debt – Could you reduce the cost of borrowing? could you borrow from your Self Invested Pension Plan?
Paper – Sorting, filing, and finding files requires time and space. Purchase a scanner and scan all important papers and keep them in well organised electronic files to save space and administrative costs.
Go Green – Reducing waste and saving energy will save money too
Buy Second Hand – Second hand office furniture is plentiful and its cheaper than buying new
You are entitled to plan your tax affairs in a way that makes sure you do not pay more tax than you have to. There are many legitimate ways in which you can save tax, or example by saving in a tax-free ISA (Individual Savings Account), making donations to charity through Gift Aid, claiming capital allowances on assets used in your business or paying into a pension scheme.
Here are 10 ways to pay less tax:
Choose the right business structure for your business – most businesses start out as sole traders but once they start making profits convert to limited companies, this is because sole traders pay income tax starting at 20% and national insurance class 2, £2.70 per week and class 4, 9% on profits between £7,755 and £41,450, whereas, in a company a you could pay the tax and NI free salary of £7,748 and then pay dividends from profits after corporation tax of 20%
Employ your family – Children can legally work from the age of 13 which means they can perform activities which are relevant and justifiable in your business. Each member of your family has a tax free allowance of £9,440 (2013/14).
Avoid earning more than £100,000 – Once you earn over £100,000 you start to lose your personal allowance, when earnings are above £118,880 all of your allowance of £9,440 will have been lost
Pay into your Pension – Currently you can pay £50,000 per year into to your pension
Pay Dividends – Generally directors will take a low directors fee and the rest of their income in Dividends