It’s (nearly) Christmas! That means gifts and spreading seasonal good cheer. As we look to get into the festive spirit, we wanted to share how your generosity this Christmastime can be tax-deductible.

Christmas parties
You are able to spend up to £150 per head, including VAT per year, in providing annual social functions to entertain staff.

However, it is worth noting that £150 is per head and not per member of staff. Your cost per head is worked out by dividing the overall cost by the number of people you have attending (including any other guests attending). When your employees’ partners or spouses attend an event, your budget can be £300 per couple.

Please note if the cost per head works out over budget, even if it’s £151, the full £151 is liable for tax and not just the £1 you’ve gone over.

Gifts to your employees
Gifts that you hand out to your employees are generally exempt from National Insurance and tax. But, this only applies if the gift is classed as trivial.

A trivial benefit or gift, must not exceed £50 in cost, and cannot be a reward for performance or part of your employees’ contract. It cannot be cash as HMRC will tax this as earnings (payroll tax). Classical gifts, including a bottle of wine or a box of chocolates, would be exempt from tax.

Gifts to your clients
Gifts to your customers are only eligible as a tax deduction if the total spent on each customer per year is no more than £50. The gift cannot be a conspicuous advert for your business and must not be food, drink or tobacco (unless they’re samples of your products).

Vouchers
Giving your employees cash vouchers, would result in the amounts being put through the payroll and subject to National Insurance and tax.

Non-cash vouchers up to £50 may be exempt under the trivial benefit rules.

Plan ahead
If you think you’ve missed out on some tax-deductible Christmas expenses, the only way to ensure you make next year’s tax-deductible is to plan ahead. If you need help with this An Accounting Gem are more than happy to help. Contact us today on 01473 744 700.

Merry Christmas!

You have probably heard that retailers in England can extend opening hours in December and January to help you make the most of the festive shopping season. In the announcement, government sources said:

From Wednesday 2nd December, as England returns to a system of tiered restrictions, all non-essential retail across England will be able to reopen, and planning rules limiting opening hours will be eased to allow shops to be open for longer Monday to Saturday.

We suggest you call your local council to see what restrictions on opening hours will still apply in your area, if any.

What else will you need to consider?

We have created a short checklist of issues that you may like to consider. You will want to make the most of this opportunity to boost sales during this critical period. We suggest you consider:

• Are you COVID secure? The government guidelines still apply.
• Do you have a pavement sign indicating you are open?
• Keep safe. Will you need to set up more hand sanitiser stations?
• Will you need to employ more staff?
• If you extend the hours of existing staff, make sure their contract(s) of employment do not set limits, amend if they do, but be wary of exceeding statutory limits.
• Do you need to make security arrangements if carrying the day’s takings home late at night?
• Is your check out area sneeze proof – have you set up screens to keep staff safe?
• In smaller premises do you need to consider a limit to the number of customers in your shop? This will encourage customers to feel safe and relaxed shoppers are more likely to buy.
• If a queue forms outside, make sure they have something interesting to view in your shop window.
• Finally, re-think your check-out counter/desk. Make sure you display a range of impulse buys to maximise sales.

We can help

If you need to bounce your ideas for maximising this opportunity to an objective third party – and one that has your best interests at heart – we are happy to oblige. Please get in touch on 01473 744 700 or email us at contactus@accountinggem.co.uk for more information.

If you are making claims under the extended furlough scheme from 1st November 2020, there have been changes in the claims process.

Perhaps the most significant is that claims need to be registered within 14 days of the relevant period’s end. In their revised guidance on this topic, HMRC says:

You can claim before, during, or after you process your payroll as long as your claim is submitted by the relevant claim deadline. You cannot submit your claim more than 14 days before your claim period end date.

When making your claim:

· You don’t have to wait until the end date of the claim period for a previous claim before making your next one

· You can make your claim more than 14 days in advance of the pay date (e.g., if you pay your employee in arrears)

If you do not finish your claim in one sitting, you can now save a draft. You must complete your claim within seven days of starting. The claims for periods from 1st July 2020 to 31st October 2020 must be submitted no later than 30th November 2020.

Your claims made from 1st November 2020, must be submitted by 11.59pm, 14 calendar days after the month you’re claiming for. If this time falls on the weekend or a bank holiday, then claims should be submitted on the next working day.

Claim for furlough days in	Claim must be submitted by
November 2020	14th December 2020
December 2020	14th January 2021
January 2021	15th February 2021
February 2021	15th March 2021
March 2021	14th April 2021

But what happens if you cannot submit a claim by the deadline?

HMRC accept that there may be circumstances when a claim cannot be made within the set time limits. They confirm that you may have a reasonable excuse if:

· Your partner or another close relative died shortly before the claim deadline

· You had an unexpected stay in hospital that prevented you from submitting

· You had a severe or life-threatening illness, including Coronavirus related illnesses, which prevented you from making your claim (and no one else could claim for you)

· A period of self-isolation prevented you from making your claim (and no one else could make the claim for you)

· Your computer or software failed just before or while you were preparing your online claim

· Service issues with HMRC online services prevented you from making your claim

· A fire, flood, or theft prevented you from making your claim

· Postal delays that you could not have predicted prevented you from making your claim

· Delays related to a disability you have prevented you from making your claim

· An HMRC error prevented you from making your claim

HMRC will not consider reasonable excuses in advance of a claim deadline.

If you have any questions regarding the points raised in this article, please contact us on 01473 744 700 or email us at contactus@accountinggem.co.uk, and we will be more than happy to help.

The Bounce Back Loan Scheme (BBLS) enables you to borrow between £2,000 and up to 25% of your turnover. The maximum loan available is £50,000.

The scheme is open to applications until 31st January 2021. If you already have a Bounce Back Loan but borrowed less than you were entitled to, you can top up your existing loan to your maximum amount. You must request the top-up by 31st January 2021.

For example :

Business turnover                              £50,000                                          £200,000

Maximum loan available  (25%)     £12,500                                           £50,000

BB Loan all ready taken                    £8,000                                            £35,000

Top – up available                         £4,500                                        £15,000

You can apply for a loan if your business:

• is based in the United Kingdom
• was established before 1st March 2020
• or has been adversely impacted by the coronavirus

If you have any questions, please contact us on 01473 744 700 or email us at contactus@accountinggem.co.uk, and we will be more than happy to help.

The Court of Appeal has made its final ruling on Payne, Garbett and Coca-Cola European Partners Great Britain Ltd v HMRC –  a case that forms the peak of a protracted debate over the difference between cars and vans.

The Court has concluded that the three types of modified crew-cab vehicles in question are cars rather than vans for tax benefit purposes, closing the book on the case in question, but not on the long-term repercussions of the ruling.

For employers in the UK the outcome of this case could have wide-ranging impact, as there are thousands of these multi-purpose vehicles currently being used by employees in the UK.

The Case

In the case of Coca-Cola v HMRC, it was brought into question whether three commercial vehicles owned by Coca-Cola should be classified as vans or cars for benefit-in-kind purposes.

The vehicles – a series 1 VW Kombi, a series 2 VW Kombi and a Vauxhall Vivaro – are based on a panel van design and are marketed for commercial use, and had been used by Coca-Cola as such. However, as these vehicles also feature additional seating and windows throughout, and each had been modified during manufacture, HMRC argued that they were cars.

In August 2017, the First Tier Tribunal (FTT) ruled that the two Volkswagen Combis, although originally classed as vans for tax purposes, were actually cars. The Vivaro was ruled to be a van, however, as it was “primarily suited to the conveyance of goods”.

After this ruling, appeals were lodged with the Upper Tribunal (UT) by both the plaintiff and respondent, with Coca-Cola disputing the Kombi decision, and HMRC the decision on the Vivaro.

The UT upheld the original decisions made at the FTT, wherein both parties appealed again.

In this final ruling, the Court of Appeal (CA) has ruled in favour of HMRC, and decreed that all three vehicles are multi-purpose vehicles, meaning that they should be taxed as cars.

Reactions

Many finance experts are disappointed with the decision, noting that HMRC has still not revised its outdated legislation in order to take into account the advent of ‘combi’ vehicles.

Speaking to Fleet News, company car tax expert Alastair Kendrick said: “This finding demonstrates that the legislation is out of date and not fit for purpose.

“It is disappointing that despite it being sometime since this case first appeared at the First Tier Tribunal that we have seen no guidance given to employers how they should treat these vehicles for P11D purposes.

“We now need to see how HMRC will react to this decision and whether they believe this gives them the right to challenge the tax treatment of all combi vehicles supplied to employees and more importantly whether they will decide to update their guidance in respect of double-cab vans – a far greater population of drivers.”

In looking at the Court of Appeal decision, it is important to be cognizant of HMRC’s guidance at EIM23110, which clearly states that for a vehicle to be classified as a van it must be primarily suited to the conveyance of goods.

Furthermore, the guidance stipulates that vehicles with side windows, and those that can be fitted with additional seating, are unlikely to meet the definition of a van. This in mind, the CA ruling is very much in line with existing legislation.

What Does This Mean For Employers?

The Court of Appeal decision is binding, as it is unlikely that this case will be deemed important enough for appeal to the Supreme Court. This means that employers are in a position where they must take stock of the vehicles that they own for company purposes and ensure that they take these changes into account when preparing P11D forms for 2020/21.

Some employers may wish to amend their procedures for choosing new multi-purpose vehicles for commercial use, to avoid confusion or difficulty in the future.

Tax Rates For Vans

HMRC offers a number of different tax options for vehicles, depending on how it is used by the business.

Vans used solely for work purposes do not have any P11D implications, and this applies to vehicles used for ‘insignificant private use’, such as one-off trips such as a doctor appointment on the way to work or picking up lunch between jobs.

HMRC views this kind of use as having no apparent ‘Benefit-in-Kind’, unlike company cars which are often used for substantially more than just commuting and work purposes.

Company car tax rates are much more complicated, as they depend on four main criteria. These include:

• Carbon dioxide (CO2) emissions

• P11D value

• Whether you pay Basic, Higher or Additional Rate tax

• How much the car is used and whether the employee makes a contribution or not.

Gov.uk has extensive information on working out company car tax here.

Company Van Tax Rates

For the 2020/21 tax year, the BiK tax rate for light commercial vehicles is £3,430. This includes vans, pick-ups and any other commercial vehicle that qualifies as a van for tax reasons.

Businesses may be able to get lower tax rates in a few special circumstances, including:

• If an employee is unable to use the van for more than 30 days consecutively

• If an employee pays you so that they can use the van privately

• If more than one employee is using the van (businesses may be able to divide the BiK rate between the number of employees using the van, or if the vehicle is a company vehicle with no specified guardian then there is no tax to be levied)

To work out the amount of company van tax you are likely to pay, you need to multiply your personal rate of tax, times the fixed BiK value. For a taxpayer that pays the 20% tax rate, this would work out as 20% x £3,430, which works out to £686 annually, or £57.17 per month.

Need More Help?

HMRC has created a list of car derived vans and vans with additional seating that shows whether they are classes as a commercial vehicle or a car for VAT purposes. If you have any doubt about your own company vehicles, this can help.

The friendly team at An Accounting Gem are also here to help with any questions you may have on this matter. You can get in touch on 01473 744 700 or email us at contactus@aag-accountants.co.uk to find out more. We are here to help you every step of the way.