Furnished Holiday Lettings – an update!

Furnished Holiday Lettings - All change (for now)!

The change to the favourable tax treatment of furnished holiday lettings (FHL) has been dropped from the 2010 Finance Bill. The reason – to get the legislation passed in time to dissolve Parliament ready for the general election.

However this is not the end of the story!

Labour finance ministers have stated that should Labour win an outright majority at the election the changes would be re-introduced in the next Finance Bill (which will be produced immediately after the general election).

What is not clear is both the Conservatives view on the changes (i.e what will happen should they win the election) or; when the legislation would become effective if Labour do win the election (i.e will then make a retrospective change, backdating the legislation to 6 April 2010 as was first wanted or will there be a 1 year reprieve for the favourable rules with the changes starting on 6 April 2011).

Those with FHL’s should keep a careful eye on the outcome of the election.


The above is provided as a guide only. Crump Pearce & Co Limited cannot be held responsible for any loss caused as a result of reading this information and professional advice should be sought before any action is taken.

Tim Pearce FCCA
Crump Pearce & Co Ltd

43 Merstow Green
Evesham
Worcs
WR11 4BB
01386 49999

hello@crumppearce.co.uk
http://www.crumppearce.co.uk/

Spouse or Civil Partner Tax Saving

SAVING TAX BY TRANSFERRING INCOME TO YOUR SPOUSE OR CIVIL PARTNER

This article was written for and included in our March 2010 edition of Business Focus Newsletter.

This has long been an option where your spouse or civil partner is paying income tax at a lower (or higher) rate than you are. With the new top rate of 50% about to come in on income over £150,000 the saving can be greater than ever, and it is an annual tax saving rather than merely one-off.

If assets are owned generating income of, say, £5,000 the tax saving each year could be as much as £2,500 where your spouse has no income at present, or £1,000 if you pay tax at 40% and your spouse is a basic rate taxpayer.

Not surprisingly there is some anti-avoidance legislation which serves to still tax you on the income if the gift is not outright and instead there are some conditions attached or you could benefit from the gift. However, HMRC are relaxed about you receiving an indirect benefit in the following circumstances where you may feel you want to have a degree of protection:

Placing funds into an account with joint beneficial ownership can provide a degree of protection by arranging for withdrawal only if you are a signatory. The income is then taxed 50:50. HMRC accepts this provided it is a straightforward gift.

Converting property from sole into joint ownership is also acceptable provided it is a straightforward gift. The property could be owned 90:10 in favour of you but with the income taxed 50:50.

Crediting the income from the asset transferred into a joint account. This is not likely to be regarded as taxable on you even though you will be receiving some benefit, provided it was not a condition of the gift being made.

Using the income from the asset transferred to meet your family’s household or holiday expenses is also likely to be acceptable with the same proviso.

Where you run a business as a limited company you could pass some shares to your spouse or civil partner and with care the dividends they receive on their shares will be taxed on them rather than you. If you have not already considered this please talk to us for up to date information on this tax saving idea.


The above article is meant as reference only and should not be relied on in any way. Crump Pearce & Co can not be held responsible for any loss made as a result of reading or acting on the information contained within this article.

Crump Pearce & Co Limited
Chartered Certified Accountants

43 Merstow Green
Evesham
Worcs
WR11 4BB

www.crumppearce.co.uk
01386 49999

Company Car and Van Changes

This article was first published in our April 2010 E-Newsletter

From 6 April 2010 the taxable benefit charged for the use of company cars and fuel for those vehicles is increasing. If you drive a petrol-powered car with CO2 emissions of 160g/km the taxable benefit of driving that car will increase from 20% to 21% of it's list price.

The tax position for those who have free fuel with their vehicles is even worse. The value of the fuel-benefit for all company cars is based on a fixed value which is increasing from £16,900 to £18,000. This value is multiplied by the percentage used to calculate the car benefit. For example the taxable benefit of having free fuel for a petrol car with emissions of 160g/km will increase from £3,380 to £3,780.

Company van drivers are also hit by the rise in the fuel benefit. Currently where free fuel is provided in a company van, and the van is used for some non-business journeys, the driver is taxed on £500 per year for the use of that fuel. From 6 April 2010 the van driver will be taxed on £550 per year for use of the fuel.

You can reduce these high tax charges by switching to a low emissions car. Where the CO2 emissions are 120g/km or less the car benefit for petrol cars is just 10% of the list price, and half that amount where CO2 emissions are 75g/km or less. We could only find one car with emissions in that bottom category: Toyota plug-in Prius, which has an official CO2 emissions rating of only 67g/km.

If your vehicle has zero emissions such as an electric car or van, there is no tax charge at all from 6 April 2010. What's more, when your business buys a new electric vehicle it can write-off the full cost for tax purposes in the year of acquisition.


Crump Pearce & Co
Chartered Certified Accounants

43 Merstow Green
Evesham
Worcs
WR11 4BB

01386 49999
http://www.crumppearce.co.uk/

hello@crumppearce.co.uk