Most business owners will already be aware that a capital allowance can be claimed on plant that is used in the business itself, e.g. manufacturing equipment, computers, photocopiers etc, however, it is much less common knowledge that capital allowances can also be claimed on certain fixtures within a business premises.

Things like toilets, water systems, air conditioning, lifts and other electrical fixtures can all be subject to tax relief in the form of a capital allowance, provided they are used in the business. In some cases it is also possible to claim for improvements to a building. Claiming for capital allowances in this way can be a complex process; the amount spent on the building will need to be divided accurately between the various parts, so detailed analysis is always required.

Currently there is no deadline for a capital allowance claim, and it has been commonplace for claims to arise many years after a property is purchased. This can result in significant personal or corporation tax refunds or savings, as a result of claiming allowances you never realised were available.

The deduction available will depend on the type of building, the date the claim is finally made and the fixtures it contains; it can be anywhere from 8 per cent annually to a 100 per cent write off in the year the premises is purchased. The cost of the fixtures does not need to be deducted from the base for capital gains purposes, so it is a win win situation for business owners.

Making a capital allowance claim on fixtures remains an attractive, efficient and non-contentious form of tax planning for owners of commercial properties.  Legislative changes will be included in the Finance Bill 2012 that will impact all commercial property owners and property investors, and so we would recommend that you take action to consider these changes as soon as possible.

At Houghton Stone we are combining our tax and business expertise with one of the south west’s leading firms to carry out the detailed analysis that is required to make the claim with HMRC; get in touch today if you require our assistance with a capital allowance claim or any other related issue.

19 February 2012 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2012.

19 February 2012 – CIS tax deducted for the month ended 5 February 2012 is payable by today.

1 March 2012 – Due date for corporation tax due for the year ended 31 May 2011.

19 March 2012 – PAYE and NIC deductions due for month ended 5 March 2012. (If you pay your tax electronically the due date is 22 March 2012).

19 March 2012 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2012.

19 March 2012 – CIS tax deducted for the month ended 5 March 2012 is payable by today.

19 February 2012 – PAYE and NIC deductions due for month ended 5 February 2012. (If you pay your tax electronically the due date is 22 February 2012).

Many individuals who did not file their 2010-11 self-assessment return on time may not realise that they will incur late filing penalties even if they owe no tax for 2010-11.

And the days of a single £100 fine are long gone. The new fines consist of £100 initial charge for being one day overdue, a £10 for every day over three months late (maximum £900) and an additional fee of £300 or 5 per cent of the tax owed if the return is more than 6 months late.

As you can see the minimum penalty for filing 6 months late is £1,300 even if all your tax due is paid on time or you are due a tax repayment.

Late payment:

If you are late in settling your self-assessment liabilities a penalty calculated as 5% of tax unpaid at 30 days, 6 months and 12 months will be added to your debt. Additionally interest will be due until the debt is cleared.

Individuals receive an email and are requested to part with personal details of their bank or credit card accounts in order to facilitate the supposed tax refund.

HMRC will only ever contact you about these matters by post. Currently they do not use telephone calls, emails or external companies.

You can check the advice published at www.hmrc.gov.uk/security/index.htm to see if the email you have received is listed. If you do receive a suspicious email:

• Forward the email to HMRC at phishing@hmrc.gsi.gov.uk and then delete it from your hard drive.
• Do not click on any website addresses, attachments or other links in the email.
• Follow advice from www.getsafeonline.co.uk.
• If you have inadvertently provided details of your bank or credit card accounts call your bank or card provider immediately.

Investing in new or second hand equipment:

If you make a purchase of qualifying equipment before 6 April 2012 you should be able to write off 100% of the cost against your profit for 2011-12. The current limit is £100,000. The bad news is that from 6 April 2012 this £100,000 limit is being reduced to just £25,000. (There are complications if your trading year end straddles the tax year end. In this case the amount of tax relief you can claim may be reduced.) Accordingly if you are contemplating a significant equipment purchase it would be worth your while to see if savings in tax can be made if you purchase before 6 April 2012.

Employees provided with private fuel:

If you have company car users and the company pays for business and private fuel both the company and the employee will suffer a tax charge. These charges can be eliminated entirely if the employee refunds the private element to the employer. The simplest way to do this is provide a log of private mileage and multiply this by HMRC approved fuel rates.

Annual tax allowances – capital gains tax:

You are entitled to tax free gains up to £10,600 during 2011-12. If you have made no chargeable disposals so far this tax year you have until 5 April 2012 to take advantage of this allowance. If you don’t use it, it will be lost. Take a look at your share portfolio and see if you are sitting on any gains that you would be willing to realise. Take care not to buy back shares disposed of as they will likely be caught under the ‘Bed & Breakfast’ rules.

Annual gift allowance – inheritance tax:

Have you taken advantage of the £3,000 annual gift allowance? And last year’s if not utilised?

Dividends:

If you take regular dividends from your company you may want to consider the timing of the dividends you receive in March and April 2012. Dividends voted and paid on or before 5 April 2012 will be taxed in 2011-12, dividends voted and paid on 6 April 2012, a day later, will form part of your income for 2012-13. Everyone’s circumstances will be different but this is a planning exercise that is well worth thinking about. This should enable you to see if you can achieve an overall reduction in tax, or second best, be able to defer tax payments due for a year.

This is by no means an exhaustive list, if you have not considered these or any other tax planning options we would be more than happy to discuss the value of applying them before the 5 April 2012 cut-off date.

If your answer to any of these questions is Yes, then you may be one of the estimated 425,000 UK tax payers that are failing to claim higher rate relief on workplace pension contributions.

You may for instance assume that your payroll department are dealing with this for you. Or, that the Government automatically channels any refunds due into your pension pot. This is not always the case.

If you pay ‘net’ contributions the tax office will top-up your fund for the standard rate tax paid of 20%. The remaining 20% tax relief, (if you pay tax at 40%) or 30%, (if you pay tax at 50%) has to be claimed from HMRC direct.

Which pension schemes are affected?

Most money purchase pension arrangements are affected, including:

• Personal pension plans (including Self Invested Personal Pensions – SIPPS)
• Workplace ‘contract based schemes’ including group personal pensions, group stakeholder schemes and group SIPPS.

The following schemes are not affected:

• All final salary schemes
• Money purchase schemes that operate through a salary sacrifice arrangement in which case pension contributions are made before tax is deducted.
• Schemes where contributions are deducted from taxable pay.

If you are not sure what sort of pension you have check with your pension provider or employer.

How do I make a claim?

You need to make a claim in writing to HMRC as soon as possible. Claims can be backdated for up to four years. We would, of course, be delighted to do this for you. You will need to provide details of the gross and net contributions you have made in the period of your claim.

Social lending is an online phenomenon which has appeared in the last few years and now its potential is beginning to get noticed. Also known as peer to peer or person to person lending, it is a type of transaction which bypasses traditional financial lending institutions.

How it Works

Borrowers and lenders both visit the site and create an account. A borrower requests a loan, which can be accepted or rejected by lenders; the full amount will be raised from all of the people who have approved the loan. The idea is to minimise fees and other charges that would be levied by a bank and allow the market to set the going rate, providing a better deal for both sides.

The social networking effect   – where both lenders and borrowers can vouch for each other, rate each other and introduce new business partners – helps to ensure a low rate of non-payment and allows lenders to know exactly where the money they invested has gone.

Lenders can offer any amount from just £10 up to £25,000 or even more if they are willing to spend £380 on a consumer credit licence. Rates are set by the lender based on the perceived level of risk associated with the borrower, so it functions like a miniature version of the corporate bond market.

The service provider deals with the admin side of getting the money to the borrower and ensuring everything is protected. They will typically charge an approval fee to borrowers as well as around 1 per cent to lenders in an annual fee for providing various services including debt collection assistance and credit scoring of potential borrowers.

The Risks

Most reputable social lending platforms carry out a similar level of credit checking to most high street banks and turn away anyone with a bad credit history or without a regular income. Lending can be split between multiple borrowers to further reduce risk and in the event of a default the social lending company will chase the debt just like a bank would.

Social lending platforms are not regulated by the FSA, so money invested in one is not protected by the compensation scheme that bails out savers should their bank collapse. Any money earned through a social lending platform is taxable.

These platforms are able to bring cheap credit to consumers en masse at a time when many banks simply refuse to do this, and they open up the lucrative market for unsecured consumer debt to private investors for the first time, so it’s little wonder that market leaders Zopa have seen a 140 per cent increase in business over the past year.

Like so many of the internet’s revolutions, social lending is still very much in its infancy, but it is an innovative idea with excellent potential benefits for both consumers and investors.

Fix Your Mortgage

The Bank of England’s rock bottom interest rate has led to some great mortgage deals appearing on the market. The cheapest rate currently on offer comes from Norwich & Peterborough, who will lend at a rate of 3.99 per cent over 10 years to anyone who has 25 per cent deposit or equity in their property.

Deals such as this can provide excellent financial security for those with a mortgage, however, it’s important to be sure that you’ll want to stay put for the duration, as they are often accompanied by high exit penalties and even charges for early repayment.

Pick the Right Shares

A second recession isn’t bad news for everyone, potential investors should remember this and buy wisely, looking at how the country responds to the struggling economy and choosing businesses likely to weather the storm. In recent years, for example, smart investors have seen excellent returns putting money into take away franchises at a time when fewer people can afford to eat out, or in public transport when cars have become too expensive for many people to run.

Invest at the Right Time

Looking to make a profit once the recovery kicks in again? Well don’t wait around too long. Equity

markets tend to recovery whilst other areas are still falling back. By the time corporate profits and economic growth start to pick up all the real money will already have been made.

What to actually invest in is still anybody’s guess at this stage, diversification is advisable as issues and solutions arising from the Eurozone are highly unpredictable.

Get Euros While They’re Cheap

Currency markets have been all over the place recently, thanks to continuing turmoil arising from the Eurozone. Prepaid cards, onto which euros can be transferred, can be obtained from various companies.

Once money is put on the card it stays at the exchange rate on the day it was transferred, so those who are willing and able to give a bit of attention to the currency market could make significant savings.

Rent out Your Spare Room

The slow moving economy has left many people struggling to buy their own, which means that demand for rooms, as well as price, is high. The government’s rent a room scheme allows landlords to receive up £4250 in rent payments completely tax free.

This drop can be explained in a number of ways and does not necessarily represent a decline in new loans going to consumer, banks may have ‘cleared out’ some loans, writing debts they are unlikely ever to recover, or sold off loan portfolios to other organisations.

It could also mean that Britons have paid back an unusually high amount of their loans, which seems unlikely so soon after Christmas, the biggest spending period of the year.

Mortgage/re-mortgage approvals went up marginally in an encouraging December, however, the relatively steady number and value of these approvals reflects the housing markets continued sluggishness and confirms that the economy has not yet fully recovered from the financial crisis.

In spite of this rise, confidence on the whole remains severely low, thanks largely to the announcement of a 0.2 per cent shrink in GDP last month. The survey, conducted by market researchers GfK NOP said that the ‘ray of light’ provided by the inflation figures as well as a continuation of the festive mood after Christmas could have helped to buoy this month’s figures.

The survey of 2000 people aged 16 and over revealed that hopes for the future economy as well as perceptions of personal finance have improved significantly over the past year.

Nick Moon, director of GfK NOP said in a statement that: “We should treat this month’s modest improvement with caution, consumer confidence remains seriously depressed. Another rise in February could be a sign that the gloom is dispelling, until then we should treat January’s news as good, but not great.”

Moon also pointed out that the Olympics later this year were likely to provide a short term boost, as was the case with the Royal Wedding last year.