UK Tax Questions Answered by Shrewsbury Accountant No. 37

UK Tax Questions Answered by Shrewsbury Accountant

As there hasn’t been a lot happening in the world of tax or at HMRC over the last couple of weeks, I thought you might find some of the recent questions asked by clients and readers of the Blog, of interest and hopefully of some help. This week’s selection:

1. Can I claim for my loan repayments?
2. Summer shindig
3. Beyond the pall
4. Christmas raffle
5. Pin Money
6. Advice form ‘my mate down the pub’

Can I claim for my loan repayments?

I am a small builder and took out a personal loan last year to buy a business van, exclusively used for business use. I am aware that I can write off the £15k value of the van via Capital Allowances, but can I also claim for the £554 monthly repayments on the associated £15k loan?

Answer

You haven’t said, but I’m presuming that you’re a sole trader; in which case you are correct that capital allowances can be claimed. However, regarding the monthly payments, only the interest element is claimable. I would also make the point, that if the van is parked on your drive as opposed to business premises, there will have to be some private use declared

Summer Shindig

I run a small business, with 10 employees, plus my wife and me. We didn’t have our normal Christmas party in early December because of the pandemic, so we’re having a summer party instead. I am aware of the £150 per head allowance, including partners, which I calculate as a total budget of £3,300. Inflation has caused prices to have shot up recently and the best quote I’ve received is for £3,650. As this means that the allowance is exceeded by around £16 per head, I thought that if everyone contributes £16, I can still claim the £150 allowance.

Answer

Sorry to disappoint you, but the answer is no, as the £150 is an exemption and not an allowance. This means that if it’s exceeded, even by a small amount the total cost is disallowed by HMRC. I’d get another quote if I were you or ask your employees to pay for one of the elements separately, for example, the taxi home.

Beyond the pall

My uncle ran a small undertaking business, 1 hearse and 2 regular employees on PAYE. He recently had to abruptly retire because of a heart condition and has given the business to me. I’ve since discovered that he uses up to 4 pallbearers at a funeral (paid £30 in cash each). This looks a little dodgy to me, but can very low-level casual labour be ignored re the taxman?

Answer

Any wages are potentially taxable, even occasional casuals, but presuming they supply their own dark clothes, white gloves etcetera and are responsible for getting them cleaned; then I would consider £30 to be a reasonable amount as a cleaning/wear&tear/travel allowance, but make sure you record it as such in your records and also ensure that they sign for the payment.

Christmas raffle

My company wants to do a raffle at Christmas, purely for our 40 employees and their partners. There will be at least a dozen prizes given as vouchers that can be exchanged for services – like a meal for 2 at a local restaurant or gym passes. Participation in the raffle will be purely voluntary and all proceeds donated to charity. I have read much guidance and think that these could be treated as Benefits in Kind, am I right?

Answer

Luckily for you and your fellow employees, no you are not. To be taxable, the prize must come by reason of the employment, but in your proposal, the prize doesn’t come by reason of the employment it comes by reason of having bought a ticket, the purchase of which is open to non-employees, namely partners

Pin money

I am a housewife and I do a bit of buying and selling on eBay; my turnover averages £5kpa and my average annual profit averages £1,500, which I consider pin money. Last week I had a penalty notice from HMRC stating that it was issued as they were aware that I was running a business, had not notified them and had not completed a Tax Return. The £1,500 profit is my only income, surely this is unfair.

Answer

I agree and what’s more HMRC are wrong. The only possible applicable penalty legislation is Sch 41 of the 2008 Finance act under ‘failure to notify’, but as the penalties are tax-geared there can’t be any in this case. Write back and make your circumstances clear which should end the matter.

Advice from ‘my mate down the pub’

One of our employees who has been told by his mate in the pub that his employer can provide him with prescription safety glasses without him incurring a benefit in kind. As an employer in an industrial setting, we do provide employees with appropriate PPE and comply with H&S legislation. Having checked the H&S Guidance Notes, there’s no reference to safety glasses. Any help would be appreciated before I tell him his mate down the pub is wrong.

Answer

The worst-case scenario is that safety glasses may be considered a trivial benefit, but I very much doubt HMRC would be that bothered as who would want to use safety glasses outside work. I would consider providing them but inform your employee that officially, they shouldn’t leave the premises.