Minerva Accountants Bristol and Somerset
Fully digital Xero accountants taking the hassle out of your business
Company cars used to be an expensive perk but electric vehicles are now worth considering. For the 2023/24 tax year the P11D benefit in kind is just 2% of the taxable list price.
This means that you will pay tax on just 2% of the list price of the car.
If you have a penchant for expensive, less environmentally friendly, vehicles you might benefit from operating as a sole trader or a partnership.
6 July is the deadline for employers (or their accountants) to submit P11D benefit in kind information to HMRC. Unfortunately we’ve spotted some benefits due on company vans that could have been avoided.
The van is exempt if it is only used for business journeys which are trips made as part of work or to a temporary workplace. As a surprisingly generous move ‘insignificant’ private journeys are exempt, for example making a slight detour to pick up a newspaper on the way to work.
What is NOT exempt is journeys between home and a permanent workplace such as a builder’s yard. Vans should be left in the yard overnight to avoid a benefit in kind.
Similarly company vans do not need to be declared if they are pool vans. In order to be classed as a pool van ALL of the following conditions must be met:
• available for use and used by more than 1 employee
• available to each employee because they need it to do their job
• not ordinarily used by 1 employee to the exclusion of others
• not normally kept at or near employees’ homes (this is the one that catches people out)
• used only for business journeys – limited private use is allowed, but only if it’s incidental to a business journey, for example driving home to allow an early start the next morning
Entertaining your employees is quite common at Christmas and other times of the year. It’s another tax free benefit for your team provided that certain conditions are met.
• It must be open to all employees
• It must be an annual event, such as a Christmas party or Summer barbecue
• It must cost less than £150 per person. If the cost is over £150 then the FULL AMOUNT becomes taxable and not just the part above £150.
• You can have more than one event per year to make up the £150 as long as the combined cost stays below this limit
The company must pay tax on overdrawn loan accounts if not repaid within 9 months of the year end (and there are clauses that stop you repaying and immediately withdrawing!)
If the amount is over £10,000 then the individual director will have to pay a tax on the ‘benefit in kind’ of a beneficial loan
So please check your management accounts before taking money out of the company and ensure that you leave enough in to pay VAT, corporation tax, and any other bills.
If you have put money into your limited company that has not yet been repaid then you can pay yourself interest on this loan. This can be a tax efficient way to take money out of the company BUT you would need a CT61 form completed for HMRC each quarter.
If you’re interested then please contact us for further information.
If, on the other hand, you have borrowed money from your company then you may face a higher tax charge and even a personal tax charge. We have software to help you plan your dividends.