Gary Perrens from Tax Assist Sudbury answers this month's accountancy questions
What is the wear and tear allowance?
The wear and tear allowance is the relief available to landlords in respect of the cost of replacing assets used within the properties they let. It is only available on residential property that is let furnished.
Since April 2013, landlords of unfurnished residential property are unlikely to be able to claim any tax relief at all for replacing items such as cookers, sinks, baths etc. However, repairing such assets is allowable whether the property is let furnished or not.
The wear and tear allowance is claimed rather than any actual expenditure incurred. It is calculated by taking 10% of the “net rent” received. “Net rent” means you must deduct any charges and services that would normally be borne by the tenant, but are instead being paid for by the landlord. So if the landlord pays for council tax or water rates, these must be deducted from the rent received before applying the 10%.
Provided you continue to meet specific conditions, landlords get the allowance year-after-year; irrespective of what they spend. If expenditure is significant then the allowance may not fully compensate the landlord, but generally the allowance is in the landlord’s favour most years.
To find out more about the wear and tear allowance and what needs to be done in order to qualify for it, please contact your local TaxAssist Accountant . They will ensure that you are obtaining as much tax relief as possible and have your property portfolio structured in the most tax efficient and suitable manner.
Am I right in thinking that I will soon be able to transfer my personal allowance to my husband?
In Budget 2014, it was announced that from April 2015 a spouse or civil partner may transfer up to £1,050 of their personal allowance to their spouse/civil partner, provided that the recipient of the transfer is not liable to income tax above the basic rate.
Therefore, the use of this measure is restricted, but it can provide a benefit where one spouse or civil partner has an income less than their personal allowance (this will be £10,500 for the majority of people in 2015/16).
At the date of publishing, no announcement had been made as to how the election would be made. But the lead proposal put forward is that one party will apply on-line to transfer the allowance to their spouse or civil partner and HMRC will notify the recipient about the subsequent change to their tax code.
I’m looking at changing my company car. Is there anything I should be aware of?
There are a number of changes that company car drivers should be aware of:
There will no longer be a 0% rate for zero emission cars. Instead, they will trigger a rate of 5% from April 2015
For cars with emissions between 51 and 75g/km, they will see a rise in their appropriate percentage from 5% to 9%
There will be a minimum of a 2% increase to the appropriate percentage for cars with CO2 emissions exceeding 75g/km
There will be an increase in the cap for the maximum appropriate percentage from 35% to 37%
Looking ahead, from 6 April 2016 there will no longer be a 3% increase in the appropriate percentage for diesel cars.
From the type of vehicle, to ownership, to who pays for the running costs; there is lots to consider when shopping around for your next company car. To avoid any mishaps, speak with your local TaxAssist Accountant to make sure you make the right choice and are fully aware of the tax implications.
I have a modest income consisting of the state pension, a private pension and some bank interest. I think I heard there were some changes announced that might affect me. Can you tell me more about them please?
The government announced at Budget 2014 that from April 2015, it would replace the 10% ‘starting-rate’ of tax for savings income with a new 0% rate.
Furthermore, the amount of savings income that the new 0% rate applies to is increased from £2,880 to £5,000.
This means that if your total income (things like wages, pension, benefits and savings income) is less than £15,600, you will be eligible to register with your bank or building society to receive some or all of your savings income tax-free.
I like to give my employees gifts and I was just wondering what the consequences are for 2015/16.
Employers are normally required to report all so-called ‘Benefits in kind’ and relevant expenses provided to employees on forms P11D or form P9D depending on the level of their earnings. This means there could be tax consequences for the employee and National Insurance to pay for the employer- not to mention the potential reporting requirements for both parties.
However, in Budget 2014 the Chancellor announced a statutory exemption for certain “trivial” benefits. In order to qualify for the exemption, the benefit must meet 4 main conditions:
The change removes the reporting requirements and the tax and National Insurance obligations.
Benefits in Kind and expenses can be a complicated area. If you would like to discuss your circumstances in more detail, we can put you in touch with your local TaxAssist Accountant.
I’ve just gone self employed. How do I go about paying my stamp?
The self employed pay 2 types of National Insurance:
In the past, Class 2 National Insurance has typically been collected from taxpayers via Direct Debit. But from April 2015, Class 2 National Insurance will become an annual charge and will be collected via the tax return and the Self Assessment regime.
As your business is just starting out, I would recommend that you seek advice on your affairs. This can make sure you’re claiming everything you’re entitled to and making the most of all the tax planning opportunities you have available.
And crucially this year, if your profits fall below the small earnings level, Class 2 will not fall due. This could lead to gaps in National Insurance records which will have an impact when claiming some state benefits such as the state pension.
If you'd like to discuss this in more detail, please contact Gary on 01787 699 141
Member since: 17th March 2014
Hello! I'm Penny from thebestof Sudbury, shouting about the best local businesses from Hadleigh through the Clare. When I'm not doing that, you'll find me knitting socks or tending to my 6 chickens