Are you thinking of buying a new car ?

If you are thinking about treating yourself to a new car in the near future there are a few things regarding the tax treatment of cars that are about to change from 1st April 2013 that you should be aware of.

Writing Down Allowances
On 1st April 2009 there was a fundamental change relating to the capital allowances that you could claim in respect of cars bought after this date. For cars bought before April 2009 you were entitled to claim a writing-down allowance of 20% of the tax written down value of the car subject to a maximum of £3,000 each year. If the car was subsequently sold for a price below the tax written down value it was permitted to claim the difference as additional capital allowances, referred to as a ‘balancing allowance’.  Under the present capital allowances regime there is no £3,000 restriction but the writing down allowance has been reduced to 18% for cars with CO2 emissions below 160g/km and only 8% for cars with CO2 emissions exceeding 160g/km.  It is no longer possible to obtain a balancing allowance on the disposal of a car unless you are a sole trader or a partner and there is a private use adjustment or your trade has ceased.  If these circumstances do not apply, it is particularly advantageous to opt for a car with CO2 emissions below 160g/km as the 18% writing down allowance ensures significantly greater tax relief on the ownership of a car than that achieved under the 8% rate.  However, from 1st April 2013 this threshold is being significantly reduced from 160g/km to 130g/km and many cars that historically qualified for the 18% writing down allowance will be relegated into the 8% rate.  If you looking to buy a car after 1st April 2013 therefore, it is important that you consider the official manufacturers CO2 emission rating so that you are aware of the level of tax relief it will attract.  If the car you are particularly keen on buying has CO2 emissions which fall into the range 130-160g/km then it may be beneficial to consider purchasing it prior to the end of March 2013 to ensure that it still qualifies for the higher 18% rate of writing down allowance.

Leased Vehicles
If you lease a car there will be a disallowance of 15% of the lease payments for cars with CO2 emissions exceeding 160g/km. Similarly, this threshold is to be reduced to 130g/km for vehicles leased from April 2013.

First Year Allowances on Qualifying Low Emission Cars (Qualecs)
Under the current capital allowances regime you are permitted to claim 100% first year allowances on cars with CO2 emissions that do not exceed 110g/km. This threshold is also being significantly reduced to 95g/km from 1st April 2013 and from this date onwards will only apply to cars bought from new, whereas at present the 100% first year allowance is claimable in respect of second-hand car purchases. Again, if you are looking at purchasing a car with CO2 emissions between 95-110g/km or a second-hand car with CO2 emissions below 95g/km it may be worth considering making the purchase before the end of next month.

Notable Qualecs which will qualify for the 100% first year allowances after 1st April 2013 include the Ford Fiesta 1.6TDCi 95 Edge Econetic, the VW Polo 1.2TDi 75 Bluemotion and the Nissan Micra 1.2 DIG-S Visia. Alternatively, if you are looking for a family car with a bit more ‘oomph’, the Chevrolet Volt 1.4 Range Extender can manage 0-60mph in a respectable 9.0 seconds with an excellent fuel economy of £3 per 100 miles!

Buying a Van Instead?
Before you put down the deposit on your new car it may be worth considering the possibility of getting yourself a van instead. Vans with a payload exceeding one tonne (including double cab pick-ups such as the Nissan Navarra and Mitsubishi Animal) fall under different capital allowances rules to cars and will continue to attract 100% first year allowances irrespective of their CO2 emissions.

If you are contemplating buying a new car and want some advice before you make your decision give us a call at DEB Chartered Accountants.

Real Time Information for PAYE from 6th April 2013

It is fast approaching the time for HMRC’s latest attempt to make life easier for us – or is that easier for them!

From 6th April 2013 all businesses with less than 5000 employees will have to report their weekly or monthly payroll details online to HMRC each pay period.  The preparation of paper documents will no longer be allowed.

With the advent of the new Universal Tax Credit, HMRC wants to have full current information about all employees, even those paid below the National Insurance and tax thresholds, to ensure that the benefits are paid correctly.  They will know whether higher paid employees are eligible to receive family allowance payments.  They will also be in a position to ensure that employers are paying over to them the correct amounts of tax and National Insurance each month as it arises.  We anticipate that they will shortly be expecting to take these payments directly from employers’ bank accounts by direct debit, as they currently do with VAT.  Penalties for late payment already exist, monthly penalties for late submission of the information are probably not far behind.

HMRC suggest that employers should prepare for RTI immediately, so that everything is in place by 6th April 2013.

  •  Software will be needed to process your payroll. Some packages may be free of charge.  If you have software it needs to be updated to a version with RTI functionality. Alternatively you need to find a payroll provider to do the job for you. (DEB Chartered Accountants provide payroll services to many of our clients and would be happy to help if you wish)
  •  Check that your employee data is complete and correct. You will need to check, and if necessary, update the data for all your employees. Name, date of birth, National Insurance number and gender are all crucial.You should also have a complete current address.  This applies to all employees, even temporary, seasonal, casual or irregularly paid employees.The verified data should all be entered on to your system in advance of your first submission.
  •  You should register with HMRC for PAYE online.  They will then provide you with login details and passwords which your new system will require
  •  Collect additional information about your employees.Information will be requested about the number of hours your employee works each week.  If an employee is paid irregularly, say just once annually, you will need to set an irregular payment indicator so that HMRC does not think that the employee has left your employment when they miss a pay cycle.

When the new system starts, you will have to report all payroll information electronically, via your payroll system, at the time of processing each weekly or monthly cycle.  There will be no facility for reporting by email or by filling a from on HMRC’s website.

If you feel that your business requires any assistance with any of the above issues then please do not hesitate to contact us at DEB Chartered Accountants.