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Business Motoring – Tax Aspects
This factsheet focuses on the current tax position of business motoring, a core consideration of many businesses. The aim is to provide a clear explanation of the tax deductions available on different types of vehicle expenditure in a variety of business scenarios.
Capital Allowances
The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However tax relief is available on certain capital expenditure in the form of capital allowances.
Companies - Tax Saving Opportunities
Due to the ever-changing tax legislation and commercial factors affecting your company, it is advisable to carry out an annual review of your company's tax position. Pre-year end tax planning is important as the current year's results can normally be predicted with some accuracy and time still exists to carry out any appropriate action. We outline below some of the areas where advance planning may produce tax savings. For further advice, please do not hesitate to contact us.
Construction Industry Scheme
The Construction Industry Scheme (CIS) sets out special rules for tax and national insurance (NI) for those working in the construction industry. Businesses in the construction industry are known as ‘contractors’ and ‘subcontractors’. They may be companies, partnerships or self employed individuals. The CIS applies to construction work and also jobs such as alterations, repairs, decorating and demolition.
Corporation Tax Quarterly Instalment Payments
Under corporation tax self-assessment, large companies are required to pay their corporation tax in four quarterly instalment payments. These payments are based on the company’s estimate of its current year tax liability. Note that the overwhelming majority of companies are not within the quarterly payment regime and pay their corporation tax nine months and one day after the end of their accounting period. We highlight below the main areas to consider if your company is affected by the quarterly instalments system.
Corporation Tax Self Assessment
Corporation Tax Self Assessment (CTSA) was introduced in 1999. It completed the self-assessment reforms introduced for individuals some years earlier by extending the principles of self-assessment to company tax returns.
Franchising
Franchising is becoming increasingly popular in Britain with an annual turnover of around £11.8 billion. The business community now takes franchising very seriously and it is accepted across a range of sectors. The advantages of owning your own business are obvious, but so too are the risks. The franchisee is taking less of a risk than starting his or her own business. Fewer than one in ten franchises fail. This is because they are operating under an established and proven business model and supplying or producing a tested brand name.
Incorporation
This factsheet calculates the position for 2010/11 using the current rates of tax and NI. The government has proposed changes to the rates of tax and NI for 2011/12 which will impact on the potential tax savings. In addition we consider other relevant factors including potential disadvantages.
IR35 Personal Service Companies
The ‘IR35’ rules are designed to prevent the avoidance of tax and national insurance contributions (NICs) through the use of personal service companies and partnerships. The rules do not stop individuals selling their services through either their own personal companies or a partnership. However, they do seek to remove any possible tax advantages from doing so.
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