VAN TAX INCREASE


The days of double cab pickups and Land Rover Discoverys being taxed as vans are over.



To qualfy for the lower rates as a benefit-in-kind they must now have a payload capacity of over 1 tonne.

ORDERING NEW STATIONARY?

In accordance with a new European Directive all invoices for the sale of goods must include the unit price with effect from 1 January 2004

So if you are ordering new invoice stationary in the future make sure any necessary column headings are modified accordingly.

GIFT RULES

You cannot have a tax deduction for any gifts of food, drink, tobacco or gift tokens, even if they cost very little. However, you can set the cost of small promotional items against your profits, as long as they carry a clear advertisement for your business. �Small� for tax purposes means worth less than �50. The �50 limit applies to the total value of gifts made to one person in a year.

You do not have to go to the expense of getting calendars specially produced or tankards engraved with your company logo, just get some stickers printed with the company details and apply them in a prominent place. If the customer removes the sticker afterwards thats up to him.

The VAT rules on business gifts are similar but not exactly the same as the tax rules. The rules will allow you to reclaim the VAT on all small gifts you make to customers including tobacco and alcohol. Small for the VAT purposes is �50 plus VAT ie �58.75.

SOLVE YOUR CUSTOMER'S PROBLEMS

Have you ever wondered why some businesses succeed while others fail? One of the principal features of a successful business is its problem-solving ability. Businesses that are started with the goal of making money have far less chance of long-term survival than those that were established to solve customers' problems.

Assume there are three or four competing ironmongers in your shopping area. Suppose that you need a special plumbing fitting for your house. Which shop would you stop at first?

Shop assistants can make all the difference. If a store does not carry the item you need, does the assistant offer to order it or to direct you to another local source? Sometimes that may mean sending you to their competitors. But the next time you need hardware, you will probably return to this shop because you will remember the person who solved your problem.

If there is one secret to staying competitive with large retailers and your other competitors, it is outstanding customer service and product knowledge. There has to be more than just lip service paid to a problem. A nice sounding company slogan is no substitute for going the extra distance to satisfy your customers.

Many business owners don't take the time to train their employees in customer service. This includes training your staff to be knowledgeable about your products and services. What business do you enjoy dealing with the most? Analyze what they do that keeps you coming back. Maybe you can employ elements of their customer service in your business.

One happy customer will produce more new business than any other form of advertising. The reverse side is that a disgruntled customer can spread negative advertising very quickly. Spend some time and money on developing the best customer service in your market area. The rewards will come back to you many times over.

TAP INTO THE BENEFITS OF A PENSION PLAN

Does your business offer a pension plan for employees? If not, consider setting one up. Changes in the tax law have made plans more attractive to both employers and employees. Plans have higher contribution limits than before. Plans for small businesses, including sole proprietors, can be set up with minimal cost and paperwork.

Consider the benefits.

A retirement plan may be beneficial for several reasons. It can help you to recruit employees, and it can be a valuable part of your overall compensation package. You can help your employees by giving them a tax-advantaged way to save for their retirement. A plan can also provide tax credits or deductions for your business. Finally, it can help you provide for your own retirement. To encourage retirement savings, last year's tax changes introduced the Stakeholder Pension and increased the amount employees can contribute to plans. In addition, employees 50 and older can make catch-up contributions. There is also a tax credit for lower-income employees who contribute to certain plans, despite having no earnings.

Understand your choices.

A variety of plans are available. At the simplest, you can help employees invest through payroll deductions.If your business doesn't provide some type of retirement plan, you may be missing out on a way to motivate and retain employees. Even in today's job market, that can be a significant competitive advantage. If you would like help in selecting a retirement plan for your business, please call our office. And visit the governments impartial website at http://www.pensionguide.gov.uk/

TAXFREE CLOTHES FOR EMPLOYEES

Normal Position

A tax charge can arise if an employer buys clothes for an employee. For P11d employees the cost to the employer of supplying the clothing (not its second-hand value) has to be entered on their individual annual return of benefits and expenses. This means the employee will pay income tax (but not NI) and the company will pay employer�s NI, on the value of the benefit. Where a P11d benefit arises the cost of the clothing should include VAT, even if it is recoverable by the employer.

Exceptions

There will be no income tax or NI liability where an item of clothing qualifies as protective or uniform. The basic principle is to determine whether clothing is �ordinary clothing� or whether the clothing worn is a type dictated by the nature of the employment? If the latter is true you might be able to avoid the tax charge.

The Taxman will accept that clothing is genuinely protective if it is �worn as a matter of physical necessity because of the nature of the job� (Taxman�s manual SE 32470). Overalls and protective gloves and boots would be included. The grey area is found when it comes to uniforms.

The Taxman�s test here is �whether someone wearing the clothing would be recognisable in the street as wearing a uniform� (SE 32475 with examples at SE 32476 and SE 32477). So the clothing you provide should be distinctive, not only to indicate to the general public who your staff are but also to portray a brand image. The Taxman will not accept smartness or �it�s in the company colours!� as the reason behind the claim.

How to make it a Uniform

Add something to what would otherwise be regarded as ordinary clothing. A permanent and conspicuous badge or logo embroidered onto a breastpocket or lapel would be the usual method, a removable badge would not. It must be sufficiently distinctive and associate the people with the company. There is no need for the clothing to be provided to everyone. The important thing is for there to be a business need, such as, you have staff that are interacting with the public all the time and so require special clothes.

The Taxman reserves the right to review each case on its own merits, so he will use the tactic of saying that the clothing is capable of being worn outside work and it will end up being your word against his. Your case will be strengthened if employees are told in writing that the clothing must be used for work purposes only. If there are no changing facilities at work then you can let employees wear the clothing for home to work travel. Before buying the clothing apply for a dispensation from the Taxman so that the cost of the uniform/protective clothing can be excluded from the employees P11d.