Van or Car?

Should I buy a van or car?I am a small business owner and I am planning to change some of the business’ vehicles this year. Some of my mates have been telling me vans are the best option. Are they right, and if so, can you explain why?

Spencer, Heckmondwike

The advice from your friends is actually pretty sensible. Vans have a number of advantages for tax purposes:

• More relaxed rules with regards to avoiding benefit in kind charges
• Lower benefit in kind charges- both for the provision of the vehicle and fuel
• Any input VAT suffered on its purchase can usually be reclaimed
• Vans should qualify for the Annual Investment Allowance for Capital Allowances purposes

Defining a van can be tricky, as there are different criteria for different areas of tax, but try to stick to the following conditions:

• A vehicle that is not commonly used as a private vehicle and is unsuitable for such use
• A vehicle primarily suited for the transportation of goods- no rear seats/ windows,
• Has a maximum legal laden weight of 3,500kg

Discussing this with an accountant before you make any purchases, could prevent you from losing tax relief and being unable to reclaim VAT. So if you would like to discuss your vehicle purchases in more depth, please feel free to contact your local TaxAssist Accountant.

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

Business gifts

Business giftsWhat are the tax implications of sending my customers and suppliers Christmas presents? Do you have any ideas what I can buy them without losing out on the VAT and the expenses being disallowed for tax purposes?

Eleanor, Bexhill

A business gift is made in the course of your business. You do not need to account for the VAT on business gifts, provided that gifts to the same period in any twelve month period do not exceed £50.

For tax purposes, ‘small gifts’ may not be disallowed, provided they meet the following conditions:

• They carry a conspicuous advert for the trader (and the advert is on the gift itself- not just the wrapping)
• The gift is not food, drink, tobacco or a token/ voucher exchangeable for goods
• The cost of the gift (together with any other such gifts to the same person in the relevant tax period) does not exceed £50.

So you could give items such as branded diaries, clothing, bags, calendars, mouse mats etc. Whilst these aren’t particularly lavish, it will ensure that your costs are tax efficient.

If you wish to discuss gifts further, please feel free to contact your local TaxAssist Accountant.

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

Christmas presents - Vouchers

Christmas presents - vouchersI would like to buy some vouchers in bulk for my employees. They will be worth £50 in store; but I am only paying £40. Do they get taxed, and if so, on which value?

Dylan, Northwich 

The value of a non-cash voucher for tax and National Insurance purposes is generally the cost to the employer but it can include other associated costs such as costs of selecting the store or other “after sales” expenses.

In your case, £40 will be the value to use. You will need to include this as earnings for Class 1 National Insurance purposes in the pay period in which the employees receive the vouchers- not when you pay for them. You will then also need to include the cost of the vouchers on forms P9D or P11D for tax purposes.

It is best practice to forewarn your employees of the tax and National Insurance liability arising on their gifts.

Alternatively, you can pay for their tax liabilities using a PAYE Settlement Agreement (PSA). This would also avoid the need to declare the vouchers on forms P9D or P11D.

If you would like to discuss your staff gifts further, please feel free to contact your local TaxAssist Accountant.

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

Buying Christmas presents overseas

Buying Christmas presents overseasI am thinking of having some Christmas presents sent over from Asia, and I just wondered if there were any tax issues I should be aware of.

Ryan , Chorley

There are a few limits you ought to be aware of with regards to bringing goods into the UK from outside the EU:

• You can bring goods (excluding tobacco and alcohol) worth up to £390 in from non-EU countries via commercial sea or air transport without paying VAT or duty (excluding tobacco and alcohol)
• You can bring goods (excluding tobacco and alcohol) worth up to £270 in from non-EU countries via any other transport without paying VAT or duty

Please note the allowances above are per person and cannot be combined if you are travelling as a couple or group. Furthermore, if the package exceeds the allowance, the duty is charged on the full value of the item; not just on the amount in excess of the limit.

• Should you buy goods over the internet or by mail order worth over £15 from outside the EU, you will have to pay VAT. If the package is worth over £135, duty may also be due

For more detailed information, please feel free to discuss this with your local TaxAssist Accountant.

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

Separate bank account

Separate bank accountI have just started my own business- can you tell me if I should open a business bank account please?

Louise, Aberdeen

Assuming you are not operating a company, you are not legally obliged to open a separate business bank account. However, if you use a personal bank account to put the business transactions through, HM Revenue & Customs will have access to your personal accounts if they were to launch an enquiry into your affairs.

If you operate a company, you must open a separate business bank account for it- in the name of the company.

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