The View from No 50

 

 

 

 

September 2002

K P Bonney & Co 

Chartered Accountants and

Chartered Tax Advisers

50 Cleasby Road  Menston 

Ilkley LS29 6JA

Tel: 01943 870933 

Fax:  01943 870925 

www.kpbonney.co.uk

 

 

 


INHERITANCE TAX

 

Between April 1997 and April 2002 the inheritance tax nil rate band increased from £215,000 to £250,000 – an increase of 16%.  During the same period the Halifax House Price Index increased by 52%.

 

This difference in the rate of change means that more estates are now chargeable to inheritance tax and the tax yields more revenue for the government.

 

The good news is the impact of the tax can be reduced quite significantly by planning.  The main areas in which planning can be successful are lifetime giving, favoured investments and tax efficient wills.  As a last resort an insurance policy can be taken out to fund the liability.

 

Inheritance tax is now payable by families which do not consider themselves to be wealthy.  It is these families which can least afford to pay the tax. 

 

My Advice:  If you want to leave more of your estate to your family and less to the government contact me to discuss how you might achieve this.

 

 

NEW CAR FUEL BENEFITS FROM

APRIL 2003

 

At present the tax charge on directors and higher paid employees for the benefit in kind of being provided with car fuel for private use is based on scale rates according to engine size.  It was announced in the April 2002 Budget that there will be a new basis of calculating the fuel benefit from April 2003.

 

The new charge will be calculated by applying to the list price of the car a percentage based on the CO2 emissions of the car including a 3% addition for most diesel engines.

 

The percentage will be applied to a set figure for each year.  It has now been announced that for 2003/04 the set figure will be £14,400.  For example, a car with CO2 emissions of 195g/km will have a car benefit in 2003/04 of 23% of list price.  The private fuel benefit will therefore be £14,400 at 23% = £3,312.

 

For a car with high CO2 emissions the benefit will be £14,400 at 35% = £5,040.  This compares with a current maximum of £4,200 for 2002/03.

 

My advice:  This change is likely to result in yet another increase in tax for company car drivers.  Please contact me if you would like me to calculate the additional tax you will incur next year and to estimate whether you would be better off paying for your fuel privately.

 

 

WILL YOU QUALIFY FOR NEW
TAX CREDITS?

 

For those of us who have only just managed to get to grips with Working Families’ Tax Credit, Disabled Persons’ Tax Credit and Children’s Tax Credit, all of which have only been introduced over the last couple of years, the world is about to change once again.  From April 2003 these tax credits will disappear and will be replaced by Working Tax Credit and Child Tax Credit.

 

You will have to apply for the new tax credits and couples must make a joint application.

 

Working Tax Credit may be claimed by either employed or self employed people.  There is an element of Working Tax Credit to help towards the costs of childcare.  The Child Tax Credit is directed at those responsible for at least one child.  The amount of tax credits that you receive is also dependent on the level of your annual income.

 

Recognising that the calculations are quite complex, the Revenue has set up an area of its website entitled ‘Tax credits online’.  By clicking on the link ‘Do I qualify?’ you can insert some simple information into a tax credits calculator which will then display the figure of tax credit entitlement.

 

My advice:  If you think that you are unlikely to qualify for tax credits because of the size of your income, you may be pleasantly surprised.  Even if your joint earnings are £40-£50,000 you may still be able to claim.  If you have access to the internet, try out the calculator by going to

www.taxcredits.inlandrevenue.gov.uk/Home.aspx

 

 

HEALTH AND SAFETY GRANTS

FOR SMALL FIRMS

 

The Health and Safety Executive has announced the launch on a pilot basis of a small firms grant scheme.  The pilot scheme will operate until May 2003 in West Yorkshire, Essex and Devon and Cornwall, and will allow eligible firms to obtain grants of 50% up to a maximum of £1,000 towards the costs of implementing health and safety policies.

 

The grants will be available to use against health and safety training and advice and sessions provided by Business Link.

 

The grants will be useful to small firms and start up businesses in the affected areas.

 

The grant may only be used against training and mentoring provided by Business Link and their counsellors and trainers.

 

The qualifying criteria for small firms are:

 

·          Less than 10 employees, and either:

 

Turnover not exceeding £4.499 million, or

 

Balance sheet total not exceeding £3.213 million.

 

·          Not more than 25% of the share capital or voting rights may be owned by an entity which is not itself a small firm for these purposes.

 

My advice:  If you operate a business in a pilot scheme area you should contact your local Business Link for further information.  If the pilot schemes are successful, it is probable that the grants will be extended nationwide.

 

 

EMPLOYERS’ LIABILITY INSURANCE – MAKE SURE YOU HAVE COVER

 

Many employers are unaware that it is a legal requirement in the United Kingdom for an employer to take out Employers’ Liability insurance.  The purpose of this insurance is to provide funds for an employer to compensate members of the workforce for physical injury or disease.

 

There is an ever increasing number of accidents and injuries in the workplace, with a steady increase in recent years in computer related illnesses, back injuries and stress disorders.

 

You must take out cover even if you have only one employee and there are heavy penalties imposed by law if you do not have cover.  Do not confuse Employers’ Liability insurance with legislation and regulations which govern health and safety at work.  These rules are completely different and often only affect those businesses with five or more employees.

 

Employers should also note what constitutes an employee.  The key definition centres around control.  If the business has control over a person’s work and the way in which he or she carries out this work then that person will usually be classed as an employee, no matter where they work.  In other words you might still be required to take out Employers’ Liability insurance, even if a person works from home.  The rules will also apply irrespective of the number of hours an employee works each week.

 

The minimum cover required by law is £5 million but many insurers start their cover at a far higher threshold than the minimum requirement.  Whilst £5 million might be sufficient for many smaller businesses, be aware that we live in increasingly litigious times and there is a growing tendency for employees to bring actions against employers.  This trend is encouraged in many instances by organisations that offer a ‘no win – no fee’ package when representing an employee in an action against his or her employer.

 

My advice:  Make sure that you have at least the minimum legal cover if you employ staff.  Take expert advice as to how much cover you might reasonably need and which of your staff are legally defined as ‘employees’. 

 

 

MANAGERIAL SNIPPETS –

‘THINGS THEY NEVER SAID’

 

Barry Fry: ‘I’m happy with the squad I’ve got.’

Alex Ferguson: ‘We deserved to lose.  I have no complaints.’

George Graham: ‘I’m interested in the game – not the money.’

Jack Charlton: ‘Here – let me buy this round!’ or ‘Would you like a cigarette?’

Kevin Keegan: ‘Defence is the name of the game.’

Peter Reid: ‘The Board has said: “Spend, spend, spend!” ’

Howard Wilkinson: ‘I always look on the bright side.’

Harry Redknapp: ‘Foreign players have been the answer to my prayers.’

Martin O’Neill: ‘I’m lost for words.’

 

 

 

 

 

Copyright  Ó  K P Bonney & Co 2002.  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 publishers.

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