Tax Tips

Pre-Letting Expenses

Question.   I have recently purchased a residential property in the ROI. The property was previously vacant, and I have spent a significant amount of money in preparing the property for first letting. Is there tax relief available on this expenditure or is not allowed as pre-letting?   Answer.   The Finance Act 207 introduced a new tax deduction for pre-letting expenses of a revenue nature incurred on a residential property, ...

Fuel Scale Charge

Question. I am the director of a limited company and regularly use my private car for business journeys. Can I reclaim VAT on the fuel purchased? Answer. Where a vehicle is used for both business and private purposes, provided the company does not pay a fixed rate under the Flat Rate Scheme, there a several ways a company could recover the VAT on fuel purchased. The company could ...

Minimising Tax

Question. I paid a lot of self-assessment tax in relation to my self-employment for the tax year 2017/18. A friend mentioned that I should make a pension contribution before 5 April 2019 to reduce my 2018/19 tax liability. Is there a limit on the amount I can contribute? Answer. You can get tax relief on private pension contributions worth up to 100% of your annual earnings. There is ...

Valid notice of enquiry

Question. I recently moved to a new house and changed tax advisors. HMRC have sent a notice of enquiry to my old address and my previous tax adviser. As the enquiry was not sent to my current address or my current tax adviser, is it possible that the enquiry could be cancelled? Answer. A notice of enquiry is a notice from HMRC outlining their intention ...

Annual Investment Allowance Budget Changes

Question.   I own a food processing business and considering a significant investment in equipment to upgrade my food production facility. What will the increase in the annual investment allowance in the recent budget mean for my business?   Answer.   Capital allowances can reduce a tax payer’s income tax (self-employment) or corporation tax liability (Company) by reducing the taxable profits. The Annual Investment Allowance (“AIA”) rate is currently 100% on ...

VAT Voucher Changes

Question.   I own a hair and beauty salon and have recently started to issue gift vouchers. I understand that the VAT treatment depends on the type of voucher, could you please clarify?   Answer.   Vouchers issued by the same business that will redeem them are known as retailer vouchers and can take three forms: Experience vouchers, which have no face value but entitle the bearer to redeem for a ...

Incorporation of Rental Business

Question.   I own a few rental properties and due to recent restrictions on mortgage interest I am thinking of transferring the properties into a Limited Company, will I get incorporation relief?   Answer.   It will be a question of whether your rental property portfolio is classed as a business or whether the rental properties are just held as investments. There must be a genuine business carried as this is ...

National Insurance Changes

Question.   I have several self-employed clients all of whom are subject to the Class 2 national insurance rules and currently pay contributions. I had been reading that Class 2 was to be abolished but now I have heard recently that this is not happening. Is this correct?   Answer.   Class 2 National Insurance Contributions are payable by the self-employed. The contributions are payable at a flat rate and entitle ...

Reminder to file your tax return

Question.   I have received a reminder from HM Revenue & Customs to file my 2017/18 tax return. I always file mine online in January. Why do they want it submitted earlier?   Answer.   The tax return filing deadline for manual tax returns is fast approaching on 31 October 2018, but there is an extended deadline for online submissions of 31 January 2019. These are, however, the very latest dates ...

Overdrawn Director’s Loan Account

Question.   I have an overdrawn director’s loan account in my limited company. What are the tax implications if I do not have the funds to pay this back?   Answer.   An overdrawn director’s loan account may create tax implications for both the company and its director.   When a director who owns at least 5% (or less and loan greater than £15,000) of the ordinary share capital of a company, is ...

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