Thursday, 31 December 2009

Pre-budget report is due next Wednesday

There is already speculation that announcements will be made about tax increases, necessary to balance the books (and halve the deficit over 4 years). Talk is about raising VAT within the next 18 months to at least 20% - already VAT is reverting back to 17.5% from January 1, 2010. Fiscal experts predict that such an increase will bring in about £9bn additional revenues per annum. There is also speculation that Mr Darling may increase capital gains tax to 20%.

New tax-free fuel rates for company cars

HMRC have announced the new fuel rates payable to employees without generating a taxable benefit, applicable to employees when they pay for fuel in company cars out of personal funds. It makes sad reading as these compensatory rates are totally insufficient, meaning the employee pays tax on reimbursements of costs when paid back at higher rates. These rates took effect from 1 December 2009.

The rates are as follows:

Engine sizePetrolDieselLPG
1400cc or less11p11p7p
1401cc to 2000cc14p11p8p
Over 2000cc20p14p12p

Extension of new disclosure opportunity deadline

HMRC have extended the deadline for notification of a liability to disclose an overseas tax liability from 30 November 2009 to 4 January 2010. The rest of the timetable for making disclosure is unaffected by this extension.

Repayment of overseas VAT to UK-registered traders

An online VAT refund system will be used for all claims submitted from 1 January 2010. This will replace the current paper-based process. UK businesses will submit claims for VAT incurred in other EU member states through the HMRC website, rather than direct to the member state of refund as at present. It is already possible to register and enrol to use the new service but refund claims will have to wait until 1 January.