Here is September’s tranche of questions I’ve received; the first one being very topical
- VW Emissions
- Working abroad
- Property gift to grandson
- Tax relief on gazebos
- Tax relief on cars used as taxis
- VAT on charities
I have an Audi diesel car and as VW has rigged its emissions could I be retrospectively penalised by HMRC if the emission levels are increased (which is a no-brainer) in terms of over claimed capital allowances and underpaid car benefit?
Please can you give me some guidance on my situation? I work as a freelancer on a salary of £25K and my company is asking me to word abroad for up to 3 years in China, with the incentive of doubling my salary whilst abroad. I would be back in the UK for approximately 30 days a year on holiday and I would not be working during this time in the UK.
Firstly, am I right in thinking that I will not have to pay any UK Income tax on my salary as I would be working full time abroad for 48 / 49 weeks of the year and secondly, if I don’t have to pay any tax (as detailed above), could HMRC view this as some form of tax evasion? Any advice would be much appreciated.
Rest assured, HMRC will not see it as tax evasion if you don’t pay UK tax on employment income whilst you are resident and employed for extended periods overseas. But this doesn’t mean you don’t pay any tax, as your income is taxable in China, so you should seek expert advice on the tax rules and rates in China
Property gift to grandson
I’m planning to go into rented warden controlled accommodation and wish to gift the freehold of my main residence to my grandson; is there any CGT on this gift and any reliefs to mitigate it if there is? (I’m not receiving any money from my grandson).
In principle, there is CGT on a gift, even though no cash has changed hands. You also ask if there are any allowances from HMRC. Well, I can certainly confirm that the annual exemption amount of £11,100 would apply, but there’s also a whole raft of rules about how you calculate the gain on which tax is payable and I would need more information before advising you further.
Tax relief on gazebos
I am a drumming teacher and have had a number of complaints from neighbours about the noise (and from my wife I might add!), I’ve looked at a gazebo type wooden insulated one room small building with triple glazing that would fit neatly at the bottom of my garden and cut the noise by at least 75%. Can I claim this against my tax as in my opinion; it is only being bought for a business reason?
In my opinion, providing that the gazebo is clearly set up as a practice room for drum lessons, it will be eligible for capital allowances and could potentially qualify for the annual exemption allowance, which would enable you to write off the full cost in one tax year.
Tax relief on cars used as taxis
I am a private hire taxi driver and have been claiming 8% capital allowance on my car each year and the balance brought forward from last year is £10,302 (I have another car for domestic use). The gear box on the taxi has just gone and the engine has been damaged and it’ll cost nearly £8,000 to repair, so the car is going to be scrapped. Is there any way I can claim more than the 8% allowed each year by the taxman, which will take forever. Also, my new hybrid car will cost £19,970. Can you give me any advice?
Tax relief on cars is somewhat complicated, however in your case you have the choice of claiming the whole of the £10,132 as a balancing allowance, assuming that you have made sufficient Net Profit and won’t lose any of your Personal Allowance for 2015/16. Alternatively you can leave the car in its ‘pool’ and continue to claim 8% per annum until the pool is exhausted.
I have good news about your new hybrid car. You haven’t told me its level of emissions, but if they’re less than 75g/km you have the option of writing off 100% of the car’s value in one year. If as I suspect, they fall into the 75g/km but not in excess of 130g/km category, you’re allowed to claim 18% per annum.
VAT on charities
We are a small commercial arm subsidiary of a charity that runs training courses. We are VAT registered and therefore charge VAT on our training course invoices. We have received emails from charities / NGOs that are saying we shouldn’t charge them VAT on our invoices. Is this true and if so, what evidence do need to not charge VAT to them?
Any help is appreciated. Thanks
A trading subsidiary will not be covered by any exemption unless the company is itself set up as non-profit. But there are other variables which should be considered: the nature of the training, the location of customers (UK or overseas). Most training delivered by a trading company is taxable, with any possible exemption dependant on the nature of the training and by the status of the provider.
HMRC Notice 701/30 chapter 4 refers to the status issue: https://www.gov.uk/government/publications/vat-notice-70130-education-an… – do read that chapter, to see whether it applies to your trading company.
If any of you would like more detailed information on any aspect of UK Tax Returns, send me an e-mail and I’ll be pleased to advise further.