UK Tax Questions Answered by Shrewsbury Accountant No.29

UK Tax Questions Answered by Shrewsbury Accountant

Recently my in-box has had quite a number of tax related questions so today I will share some of the more interesting questions with you.

Each question is from a Tax Blog reader which I hope will be helpful to you or at least you’ll find the answers interesting. The Topics today:

1. Is Pay-In-Lieu of notice pensionable?
2. Expenses on rental properties
3. Can I claim for my new kitchen?
4. Can I pay employees home to office mileage expenses?
5. Sorry, we’re experiencing technical difficulties

1. Is Pay-In-Lieu of notice pensionable?

I was given a six month notice of redundancy a few weeks ago, but my employer has now hold me I can leave at the end of the month and he’ll pay me the balance of the six months’ salary, but says he doesn’t have to pay the pension contributions. Is this correct, as I can’t get a definitive answer from the pension agency?

Answer

It all depends on your contract of employment. If it’s a box standard contract on the ACAS model, it will probably state that if you work the notice period, all benefits are paid as normal. However if the notice period is not worked, then the benefits stop on the last day of attendance.

So unless there are some special clauses in your contract that specifically clarify this point, you won’t get a top-up into your pension pot relating to the payment-in-lieu.

2. Expenses on rental properties

I own a large Victorian house divided into of 6 one-bedroom flats and as part of the Local Authority mandatory check on multi-occupied buildings, I’ve been advised that to comply with the law that I need to install smoke alarms in all flats plus 7 emergency lights on the stairwell, plus a fire escape. The total cost is just over £10k, but I cannot find anything on HMRC’s website that tells me if these works on my house are allowable as expenses against my tax. Please advise if I have a legal claim.

Answer

Assuming the Local Authority Fire Prevention Officer has confirmed his/her advice in writing; you have a legitimate claim against income for tax purposes.

3. Can I claim for my new kitchen?

I live in a country cottage with a huge garden given over to a variety of fruit trees and bushes, from which I made jams and preserves for the WI and village fetes. I am now single again, following a divorce, and am trying to expand my domestic operation into a commercial one and have had considerable success selling to farm shops and delicatessens. Unfortunately my expansion has stopped because of the lack of a commercial kitchen and equipment, but before I spend a lot of money, will the costs of the new kitchen be allowed as legitimate expenses by HMRC?

Answer

The quick answer is that it very much depends on precisely what you’re planning to do. If your current kitchen is merely being replaced with a new one, then the answer is no. However, if as part of the upgrade you install specialist fittings and cookers/equipment that are clearly commercial in nature then you will have at least a partial claim. But a word of caution; whilst HMRC may well accept the claim, as we are talking of business assets of significant value which should be operational for several years, they will expect any claim to be by Capital Allowances. The current rate allowed is 18% of the cost per annum.

4. Can I pay employees home to office mileage expenses?

I run a small limited company that installs TV/Satellite aerials and provides a service for setting up home hubs, smart TV’s etcetera and I only employ 4 staff, one in the office and three installers/engineers. We have two specialised vans with boom-type mounted platforms on their roofs which stay on our premises overnight. I also pay mileage for my engineers to bring their cars to work to be available for the none-aerial work, am I doing anything wrong.

Answer

You may be, but it all depends on where the engineers start and finish. If this is at the premises, then the home to office mileage payment is deemed to be a benefit, with obvious tax implications, if however these home visits are on the way to and from the premises, then you may well be okay, but whether or not it’s an expense of business or a taxable benefit to the employees will rest on the mileage log kept by the engineers.

5. Sorry, we’re experiencing technical difficulties

I am VAT registered and tried to register for Making Tax Digital before the end of April as required by HMRC, but can’t!! When I try I cannot get any further than the page that tells me: “Sorry, we’re experiencing technical difficulties”. I have been in contact with HMRC IT help desk, followed their instructions and am still unable to register. Having reported back to them with my problems, I’ve been waiting for a response for over two weeks. I have tried: several times, different internet host, a different computer, a computer in a different company; but still the same message. Before I tear out what’s left of my hair, do you know of any alternative options I can try?

Answer

Sorry, but no; you have done everything I would have tried, but I can tell you that at the same time as the launch of MTD their system had a major upgrade which I understand has compatibility issues with the old software. My advice is to write to them, detailing dates, who you spoke with and messages received and send it recorded delivery. The £1.90 cost will save you any potential fines when they eventually sort their system out and write to you because you’ve failed to register. I suspect however that as there are thousands in the same boat as you, you will eventually get a message advising you of a delay in the start date, possibly to September 2019.

If you would like more detailed information on some aspect of UK Tax, send me an e-mail and I’ll be pleased to advise further.