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May Questions and Answers

Newsletter issue - May 2014

Q. If a director takes a £25,000 loan from his company and agrees to pay interest at say 3.5%, does this need to be declared on the company's tax return or on a form P11D?

A. This must be shown on the company's corporation return if it has not been repaid to the company within nine months of the end of the accounting year in which this was made. This will generate a corporation tax charge equivalent to 25% of the outstanding amount. The amount of interest paid on the loan is irrelevant for the corporation tax charge.

However, if the loan is made for a fixed period at a fixed interest rate which is equal to, or higher than, the official rate of interest (now 3.25%), there is no benefit in kind charge for the director personally, and no need to report this on the form P11D.

Q. If my employer leases a car to me at the fair market value for such a lease, which I pay in full to the employing company, will I be taxed as if I had the use of a company car with no lease?

A. The law that taxes company cars was recently changed to ensure employees are always taxed on the provision of a company car, irrespective of how that car is provided. So although you lease the car from your employer you will still be subject to the benefit in kind charge, which is calculated as a percentage of the vehicle's list price when new. The percentage varies from 0% to 35% depending on the vehicle's CO2 emissions. Any amounts you pay to your employer for the personal use of the car reduce the benefit in kind charge, but you will not be better off using the leasing arrangement.

Q. My husband supports the IT and telecoms systems used by my company, which pays him £150 per week through the payroll for this work. Can the company also pay a small pension contribution on his behalf?

A. Yes your company can pay a pension contribution for your husband as he is an employee of the company, although as he earns less than the personal allowance (£10,000 per year) the company is not obliged to auto-enrol him in a pension scheme. The company can claim a tax deduction for his wages and pension contribution, as long as that total sum is not excessive for the work he does. You may want to get some comparable quotes for IT and telephone systems support to check you are paying a fair rate for the work he does.

 

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Dakins Property Services

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Choice Events Limited

All at Beauchamp Charles are very helpful, approachable and easy to talk to. They keep me informed with key dates; I can feel totally confident that I won't ever miss any deadlines! Whoever I deal with, always deal with matters professionally and efficiently and if they are unavailable they get back to me promptly.

FT leisure Ltd

I have worked with Beauchamp Charles as our management accountants for over 20 years and have never received anything less than exceptional service. Their approach is both professional and personal. Finances and particularly tax strategies are a minefield for small businesses; Beauchamp Charles have in-depth knowledge of these area, which is comforting. They pay very close attention to our business activities and have provided financial strategies that have helped our company develop.

Fredrick Thomas Electrical and Maintenance

We have used Beauchamp Charles since company formation back in 1998. Beauchamp Charles offers us a one to one service as they are small enough to offer this dedicated service and large enough to do the work and offer best advice. They get to know us as individuals and a business, always giving sound advice. Frederick Thomas Electrical are in a stronger place thanks to the service we get from them.

Barnes Walker Landscapes Limited

We are a small business and had employed the same accountancy firm for many years. Two years ago we took the decision to switch to Beauchamp Charles after several othe local businesses recommended them very highly to us. We have not been disappointed with the service they have provided to us over these last two years.