The View from No 50
K P Bonney & Co
Chartered Accountants and
Chartered Tax Advisers
Ilkley LS29 6JA
Tel: 01943 870933
Fax: 01943 870925
2008 was a bad year for shares.
At the start of the year the FTSE 100 stood at 6,456. At the time of writing it stands at 3,870.
It follows that right now many investors are nursing sizable losses.
Can the tax system offer a silver lining?
Yes, it can for those in the right circumstances.
Have you subscribed for shares in an unquoted trading company? Has the company gone into liquidation or ceased to trade and are the shares worthless? If so, you could make a ‘negligible value’ claim. The loss you have suffered on your shares can then be offset against your income and / or against your gains. You might also have some flexibility as to the year in which you claim your relief. You could get yourself a welcome tax refund.
Have you already made taxable gains in 2008/09? Have you suffered a fall in the value of your quoted shares, unit trust or OEICs? If so, you could dispose of some or all of your loss making investments and offset the losses against the gains. This will reduce your capital gains tax liability.
Our Advice: Just a word of warning. Allow thirty days to elapse before buying back any of the loss making shares. If you must buy them back within this period of time get your spouse to buy them or buy them through your ISA.
If you would like us to review your circumstances please get in touch.
EVERY LITTLE HELPS
In these difficult times hanging on to your (or somebody else’s) money for as long as possible all helps to keep your business afloat.
How would you like to hang on to the VAT which you pay over to HMRC for another twelve days or so?
If you file your VAT return online and you arrange to pay over the VAT by direct debit you are given up to twelve extra days to pay. So, for example, we shall not be paying over the VAT on our January return until 11 March.
One other advantage of filing your VAT return online is that you are given an extra seven days in which to file.
HMRC is doing its bit to nudge businesses in the direction of online filing. It no longer issues prepaid envelopes!
To find out more about filing your VAT return online visit
Our Advice: We like this. We are already using it for our own and our clients’ returns.
AND FINES INCREASED
House has shortened the deadline for filing accounts. For accounting periods beginning on or after
House has also increased the fines for late filing. With effect from
Length of delay Fine
Not more than 1 month £150
Not more than 3 months £375
Not more than 6 months £750
More than six months £1,500
Our Advice: Filing late can have a serious impact on your bank balance. Be aware of the deadlines and observe them.
HOW TO SAVE NEARLY 50% ON A HEALTH CHECK
How often do you hear employees grumbling that self employed people get all the tax breaks? Well, if you look around you will find that employed people actually qualify for tax breaks which are not available to self employed people.
Examples include child care vouchers, bikes, meals and refreshments, mobile phones and health check ups.
You can even enjoy these benefits if you work through your own ‘one man company’. And the savings through arranging perks like these through your company can be significant.
Suppose, for example, you are a one man company and you decide your company will contract for and pay for an annual health check for each of its employees (in practice that’s just you). The cost of a check up is £250. Your personal rate of tax is 41% and your company’s rate of corporation tax is 21%.
The cost of the check up to the company is £250. But after corporation tax relief the cost to the company is only £197.
Now, suppose you make the arrangements personally instead of through your company. You pay the £250 out of your own pocket. Of course you qualify for no tax relief on your payment. In fact, as you pay for the cost of the check up out of your post tax earnings, you have to earn £423 to receive £250 net. And to pay you £423 your employer has to pay national insurance contributions of £54. After corporation tax relief the cost to the company is £377. That is £180 more expensive than a company arrangement.
In other words you can get 47.7% off a health check up if you organise it in the right way.
Our Advice: Employees have plenty of tax breaks. It is important to set things up correctly. There is a big difference between doing things the efficient way and doing them the inefficient way.
TAX DEDUCTIBLE FEES AND SUBSRIPTIONS
Continuing with the theme of tax breaks for employees…
Do you pay employment related membership fees or subscriptions to a professional body? If so, you might be able to claim tax relief for them.
fees and subscriptions are deductible if the professional body appears on the
Here is the link.
A LONG JOURNEY HOME
A footballer and his agent are sitting next to each other on a long
flight from the
This catches the agent’s attention, and he sees no end to this torment unless he plays, so he agrees to the game.
The footballer asks the first question. 'What's the distance from the earth to the moon?’ The agent doesn't say a word, reaches into his pocket and pays the footballer £10. Now it's the agent’s turn. He asks the footballer, 'What goes up a hill with three legs and comes down with four?’ Having asked the question he turns round and goes back to sleep.
The footballer looks puzzled. He takes out his laptop and searches all his references. He logs on to the web and carries out lots of searches but he gets nowhere. Frustrated, he sends emails to all his colleagues and friends. It is all at no avail.
After an hour he wakes the agent and hands him £100. The agent politely takes the £100 and turns away to get back to sleep. The footballer, more than a little miffed, shakes the agent and asks, ‘Well, so what is the answer?’ Without a word the agent reaches into his wallet, hands the footballer £10 and goes back to sleep.
Copyright: K P Bonney & Co LLP 2009. All rights reserved. No part of this publication may be produced, stored in a retrieval system, or transmitted in any form or by any means, electronic mechanical, photocopying, recording or otherwise without prior written permission of the publishers. Disclaimer: The publishers have taken all due care in the preparation of this publication. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or the publisher.
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