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Changes for the Companies Act, National
Insurance and Changes for Charities Act 2006
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Please
contact
us to
discuss any of the matters raised in this newsletter
Vans
The
annual benefit in kind scale charge that applies where there
is private use of an employer provided van increased from
£500 to £3,000 on 6 April 2007. The old £500
benefit also covered the provision of free fuel for private
as well as business motoring but this is now charged for separately
with a further benefit in kind of £500. The reduced
benefit of £350 for older vehicles no longer applies.
No benefit in kind charge arises if there is restricted private
use of the van. This means that the only private use allowed
is for ordinary commuting, which is to and from work. Any
other private use must be insignificant, eg an occasional
trip to the tip.
To qualify for no benefit in kind charge an employer's policy
restricting the private use should be set out in writing,
communicated and re-inforced periodically. We also strongly
suggest that a mileage log be maintained and subjected to
regular review to ensure that it can be demonstrated that
the employer's policy is being adhered to.
Where the employer has not put a policy in place to restrict
the private use of the vehicle it is still possible to take
action for the future. Otherwise, the employer's Class 1A
National Insurance Contributions (NIC) payable at 12.8% on
the value of most benefits in kind will increase significantly
as will the employees' personal tax liabilities. The employees
who have the use of the vans should have received new tax
codes for 2007/08 showing the increase in the value of the
benefit with the result that their tax code will have dropped
significantly.
If you are yet to be convinced, the following example may
help.
Example
An employee has unrestricted use of a van which is five
years old. He is provided with all the fuel for the vehicle
both for business and private use.
2006/07
Employee's tax - £350 x 22% = £77
Employer's NIC - £350 x 12.8% = £45
TOTAL TAX AND NIC FOR 2006/07 £122
2007/08
Based on the new van benefit and fuel charges of £3,000
and £500
Employee's tax - £3,500 x 22% = £770
Employer's NIC - £3,500 x 12.8% = £448
TOTAL TAX AND NIC FOR 2007/08 £1,218
Unless the employer can demonstrate that they have enforced
the policy of restricting the private use, then costs
for both employers and employees will have increased between
six and ten-fold. Given that the scale charge has increased
significantly, we expect HMRC compliance officers to pay
increasing attention to this in forthcoming years.
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At
Goldwyns,
we have the policy of providing excellence in Service and Assistance
to our clients, from partner level, down to the most junior
of our staff, and we regard our team as our most important asset.
More
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We
offer a comprehensive service to all types of businesses and
individuals, and have the benefit of membership of the UK200
Group of Practising Accountants, enabling direct access to
expertise in areas outside our normal work.
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 Regulated
to carry on audit work for a range of investment business
activities by the Institute of Chartered Accountants in England
and Wales
Goldwyns
| Rutland House | 90/92 Baxter Avenue | Southend on Sea |
Essex | SS2 6HZ |
Tel: 01702 351412 | Tel: 01702 353071 | Fax 01702 431453 | Web
www.Goldwyns.co.uk|
Email|
info@goldwyns.co.uk
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