Tag: tax tip

Higher income child benefit charge (HICB)

If you are receiving child benefit this may be restricted from £50,000 and withdrawn completely from £60,000. With two cliff edges to avoid here are a few things that you can do to legitimately reduce your income.

1. Pensions. You (or your company) can pay up to £60,000 per year into your pension. This will save tax but can also reduce your income below the relevant limit. The downside is that this money is tied up until retirement.
2. Charitable donations. Most people give to charity throughout the year but do take care to giftaid it where you can. These donation can save you tax if you are a higher rate taxpayer and also be used to reduce your income below the relevant limit.

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