Property losses- do I need a tax return?I have a Buy to Let property, but because of the size of the mortgage, I do not make any profit from it. I am employed and have never submitted a tax return before- do I need to now?

Mollie, Canvey Island

Although you have no income to tax from your property, you would probably benefit from informing HM Revenue & Customs (HMRC) of the losses, which you can do by submitting a tax return.

This will allow you to then carry forward the losses and offset them against future profits you make from the property. So it could save you tax in the long-term!

Please note, you are obliged to submit a tax return if your gross rents (i.e. the income from the property before deducting any expenses) be over £10,000 per annum. This is irrespective of whether the property is profitable or not.

If you would like some assistance in registering with HMRC and completing your tax return, please feel free to get in touch with your local TaxAssist Accountant.

We provide tax and accountancy services in Canvey Island and throughout the UK - http://www.taxassist.co.uk

CIS Tax RefundI own a small company in construction and some of our customers have been deducting CIS tax from our payments. How do I go about reclaiming this?

Sam, Ilford

If you have employees from which you have deducted PAYE and National Insurance (NICs), you may offset the CIS deducted by your customers from the amount you are due to pay to HM Revenue & Customs (HMRC) each month/ quarter. HMRC offer Form CIS132 to keep a record of how much CIS deductions have been offset.

Please note, if your CIS deductions exceed the amount of PAYE and NICs due, you cannot claim a refund. You must instead carry forward the surplus to the next payment you are due to make to HMRC.

You will need to enter the total CIS deductions taken on the P35 Employer Annual Return too, which is due at the end of the tax year by the following 19 May. HMRC will repay the company any balance of deductions that your company was not able to offset during the year.

Please note, only companies can use the P35 to recover CIS deductions taken from payments; not individual subcontractors or partnerships.

If you don’t feel confident dealing with, please feel free to get in touch with your local TaxAssist Accountant who would be happy to help you with this.

We provide tax and accountancy services in Ilford and throughout the UK - http://www.taxassist.co.uk

PAYE refundI was put on an emergency tax code because my old employer has been slow to provide me with my P45. How do I go about getting the correct tax code and get my tax refunded?

Isobel, Altrincham

You should obtain your P45 from your old employer as soon as possible. Your new employer can then complete their sections and send the appropriate part off to HM Revenue & Customs (HMRC). Once HMRC have processed the form, they should issue you with a new tax code.

Unless the tax year in which there is an issue has finished or you’re unemployed again, it’s unlikely that you need to physically request a refund. Using your new tax code, your new employer should correct your tax deductions moving forward and will also refund any overpaid tax. So you should see an increase in your net pay when your new tax code comes through.

Feel free to contact your local TaxAssist Accountant if you would like to discuss this further.

We provide tax and accountancy services in Altrincham and throughout the UK - http://www.taxassist.co.uk

Laura, Maldon

A SSAS is a type of pension scheme and stands for 'Small Self-Administered Scheme'. All of the Scheme members are usually shareholder-directors or key staff. They are formed by a trust deed and rules, and allow employers and members more control over the scheme’s assets.

For a small business a SSAS can represent the ideal pension’s vehicle, particularly as the scheme can make loans or borrow to purchase assets such as commercial property- subject to certain conditions set by HM Revenue & Customs summarised below:

• The loan should not exceed 50% of the net market value of the scheme's assets
• The loan should be secured against assets of an equal value by way of a first charge
• The loan's terms should be no longer than 5 years
• Interest of at least 1% above bank base rate should be charged on the loan

You should seek professional advice when considering pension planning. Your local TaxAssist Accountant would be happy to recommend a local financial advisor.

We provide tax and accountancy services in Maldon and throughout the UK - http://www.taxassist.co.uk

Furnish Holiday lets - a hot potato?I have a small portfolio of furnished holiday lets, and I am aware that the tax treatment of them is now far less favourable. Ought I consider selling them?

Elliot, Bolton

Let’s remind ourselves of the changes that have taken place with regards to Furnished Holiday Lettings (FHLs):

1. The treatment of properties in the European Economic Area (EEA)

From 2009/10, properties in the EEA in addition to the UK have qualified as FHLs. UK properties are treated as one ‘business’ and those in the EEA as another.

2. The period for which a property must be available for let and is actually let

• Availability test – during the tax year, the accommodation is available for let to the public for at least 140 days, but this will increase to 210 days from 2012/13
• Occupancy test - during the tax year, the accommodation is actually let to the public for at least 70 days, but this will increase to 105 days from 2012/13
• Pattern of occupancy – the property must not be let for periods of “longer term occupation” for more than 155 days during the tax year. A “longer term occupation” is a letting to the same person for longer than 31 consecutive days

3. The offset of losses

Any losses made may only be offset against profits from other properties in the same FHL business or carried forward to utilise against from the same FHL business. So you could not offset losses from the UK FHLs against profits from the EEA FHLs, because these are separate businesses. Prior to April 2011, you were able to utilise FHL losses against other income.

One of the main advantages of FHL status is the availability of the various business capital gains tax reliefs, in particular Entrepreneur’s Relief. If you are unlikely to achieve the new 105 day letting condition, then you may wish to consider selling your portfolio whilst the properties still qualify as FHLs. BUT, it should be noted that Entrepreneur’s Relief continues to be available against the disposal of the property within 36 months of the date that the trade ceased, so you should not need to make a decision immediately.

You would be advised to seek professional advice before making any decisions though, as the tax and impact on your income could be significant. Your local TaxAssist Accountant would be happy to discuss this with you.

We provide tax and accountancy services in Bolton and throughout the UK - http://www.taxassist.co.uk

SEIS - is it right for us?My brother and I have set up a company together and are the only director/ shareholders. The business is going really well- but our growth is restricted by our working capital. But with little experience between the two of us, we are struggling to obtain finance from the banks. I’ve heard about a scheme to encourage investment in small private companies- can you tell me more?

Seb, Sutton

The Chancellor announced the Seed Enterprise Investment Scheme (SEIS) in the last Autumn Statement. Its purpose is to encourage investment in ‘small’, UK, trading companies that are under two years old. ‘Small’ is defined as having 25 or less employees and gross assets of under £200,000.

The Scheme works by offering private investors tax relief of up to 50% on investments up to a maximum of £100,000 per annum, and there are also some capital gains tax concessions. The company is restricted to obtaining only £150,000 of investment via the Scheme.

The investment is made in exchange for shares that must be held for at least three years; otherwise there is a claw-back of the tax relief. The investor cannot be an employee of the company, unless they are a director. Furthermore, they cannot have an interest of more than 30% in the company.

SEIS may be right for you, but please note that the investors will be shareholders so you ought to think carefully about the impact on your degree of control of the company and your share of the dividends.

Your local TaxAssist Accountant would be happy to discuss this with you in more detail.

We provide tax and accountancy services in Sutton and throughout the UK - http://www.taxassist.co.uk

Timing of equipment purchasesMy business has not done very well this year, but I’ve just landed a big contract, so I think we’ll see bumper profits next year. I’m going to have to buy more equipment though, as I’ll have to take on extra staff. I think I’m right in saying that I’ll get tax relief for the equipment in the year that I buy it. So should I put off buying it until my bumper year, to keep profits down?

Tyler, Prestatyn

You are quite right- capital allowances (tax relief for equipment, vans, computers etc) are typically awarded in the year of purchase or the year the asset is brought into use.

You have a few options and they have very different consequences:

• Buy equipment in the poorer year and start using it – capital allowances awarded in poorer year
• Buy equipment in the poorer year and start using it – capital allowances awarded immediately, but you can opt to carry the expenditure over to the bumper year
• Buy equipment in the poorer year and do not use it until the bumper year – capital allowances awarded in the bumper year
• Buy equipment in the bumper year – capital allowances awarded in the bumper year

However, you should be aware that the maximum relief available on capital expenditure is dramatically reducing from £100,000 to just £25,000 from April 2012. Relief will still be available on expenditure above £25,000 but only at 18% per annum on a reducing balance basis; rather than the 100% you are expecting. Therefore, you must bear this in mind if you are planning to defer the expenditure and you are planning to spend over £25,000.

Your local TaxAssist Accountant would be happy to discuss this with you in more detail and calculate the estimated tax implications of the various options.

We provide tax and accountancy services in Prestatyn and throughout the UK - http://www.taxassist.co.uk

Should the business pay us rent?My wife and I own a commercial property personally, but our company operates from it. Is there any tax advantage in the company paying us rent?

George, Sidcup

However, you are likely to forego some of your Entrepreneur’s Relief on the sale of the property. Entrepreneur’s Relief reduces the rate of Capital Gains Tax payable from 28% to just 10% on gains arising on the sale of business assets- provided certain criteria are met.

You would be advised to seek professional advice before charging the company rent, as the long-term implications on your capital gains tax position could be significant. Your local TaxAssist Accountant would be happy to discuss this with you further.

We provide tax and accountancy services in Sidcup and throughout the UK - http://www.taxassist.co.uk