Q: I am looking to employee an au pair from France to look after my two children. I have looked into child tax credits previously and it seemed that I was previously unable to receive tax credit assistance for childcare provided by au pairs. Is this still the case?
A: Provided the aupair is registered with the Childcare Approval Scheme (CAS) in England and you as the employer meet the other conditions, you are, with effect from April 2005, eligible to receive Working Tax Credit to help with the cost.
To qualify to receive tax credits the care must be provided by a carer registered with the Childcare Approval Scheme (CAS), in the child's own home or, for children aged over 7, on other domestic premises. If your approved childcarer is a relative, you can still claim tax credit help if the care takes place away from your child’s home and the carer also cares for a child who is unrelated. You cannot claim if your childcarer is a relative who cares for your child in your child’s home, even if the relative is registered or approved.
The only exception is if your relation is a registered child minder, or an approved child minder caring solely for children aged over 7, and is looking after other children who are not related, and you do not live in their home.
The process for registering the childcarer for the CAS for one usually takes approximately 6 weeks and cost £96. For further information and advice on how to register your childcarer with the CAS, together with details of the other benefits provided by the scheme talk to your nearest TaxAssist Account.
Business FAQ
Q: I am currently looking to purchase a new vehicle for my sole trader business. I have heard that there is an increased rate of Capital Allowances available if I bought a certain type of vehicle. Is this true?
A: Yes, there is an increased rate of 100% First Year Allowances available on electric cars or cars with C02 emissions of not more than 120g/km. The other conditions to qualify for this increased rate are that the car is "unused and not second hand" and is first registered on or after 17 April 2002 and the expenditure is incurred between 17 April 2002 and 31 March 2008.
New cars are "unused and not second hand." A car is unused and not second hand even if it has been driven a limited number of miles for the purposes of testing, delivery, test driven by a potential purchaser or used as a demonstration car.
Your TaxAssist Account will be able to provide you with further information on the make and model of vehicles that qualify for this allowance.
Business FAQ
Q: I have been called for jury service, which will last for approximately 2 weeks. As I am a self employed sole trader with no employees, do I have any entitlement to claim for the loss of my earnings, as I will need to close my business for this period?
A: Irrespective of whether your are self employed or employed, all jurors are entitled to claim a maximum daily allowance for loss of earnings over the period of jury service, which is dependant on the number of hours and period you will be acting as a juror. You may also be entitled to claim a daily allowance for subsistence and travel costs.
As you are self employed, you will have to provide the court with some evidence of the loss of your earnings, and you may need consult your accountant on this. Details of the rates payable can be obtained from the Crown Court where you have been asked to attend, or on the www.hmcourts-service.gov.uk website.
Your TaxAssist accountant will be able to provide you with further information on the tax implications of this allowance.
VAT FAQ
Q: I have noticed that there are a number of errors on the 4 Vat returns I completed for my Limited Companies previous VAT period. Due to these errors, I will have additional VAT to pay. How do I rectify the situation and will there be any penalties or interest to pay on this?
A: If the net errors total less than £2,000 you have the choice of using two methods to disclose the errors without being charged interest or penalties. You can voluntarily disclose these errors either by contact your local VAT Business Advice Centre in writing or by adjusting your VAT account and including the value of that adjustment in the next VAT return for the current period.
If the net errors total more than £2,000, you must inform your local VAT Business Advice Centre in writing of the errors. If you use this method, you must not make adjustment for the same errors on a later VAT return. Customs may also charge interest on any under declarations you disclose in this way.
Tax FAQ
Q: I am going to work abroad for two years and rather than sell my house I am going to rent it out. I have not engaged an agent to act for me as I know the tenant, and they will be paying the rent directly to me whilst I am abroad. Are there tax implications I should be aware of on this rental income?
A: If a tenant pays rent of more than £100 a week (£5,200 per annum) to a non-resident landlord they must deduct basic rate tax from the landlord’s UK rental income and pay the tax to the Inland Revenue’s Accounts Office, Cumbernauld. Tenants who pay rent of £100 a week or less do not have to operate the scheme unless they are told to do so by the Inland Revenue. When working out the amount to tax, the tenant can take off tax deductible expenses.
However, you can apply as the landlord on form NRL1 to the Centre for Non Residents for approval to receive your rental income gross. This is usually given if your tax affairs are up to date or you do not expect to be liable to UK income tax for the tax year. You will still however need to include this information on a UK self assessment tax return if you are sent one. For further information on the landlords and tenants responsibility see the information on www.hmrc.gov.uk/cnr website or contact your local tax assist accountant.
Employer FAQ
Q: I have recently employed a number of new employees and am looking to take all my staff away on a team building exercise so they can create a better working relationship. Can I reclaim the VAT incurred on the costs for this event?
A: Where an employer provides entertainment such as staff parties, team building exercises, staff outings and similar events for the benefit of employees to reward them for good work or to maintain and improve staff morale, they are not blocked from input tax recovery under the business entertainment rules, as it provides the event wholly for business purposes.
However, there are 2 exceptions to the general rule. These are where:
The entertainment is provided only for directors or partners of a business, the VAT incurred cannot be recovered as the goods or services purchased are not used for a business purpose.
However, where directors and partners of the business attend staff parties together with other employees, the vat is not blocked from recovery.
Employees acting as hosts to non-employees incur costs that are for the sole purpose of entertaining a non-employee, the tax is blocked under the business entertainment rules.
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By TaxAssist Direct Ltd. Both answers and advice are offered strictly on the basis that no legal liability is created thereby. Personal circumstances may vary and TaxAssist Direct Ltd advises that individuals seek personal professional advice in all situations.
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