October 2019 News Update – featuring additional news developments from our newsletter series.
Welcome to October News Update – This month finds the IFS publish new policy ideas on road tax, new guidance issued by HMRC for home workers and homeworking expenses, and much more…
The IFS Propose New Taxes To Take Account Of Electric Cars
The Institute of Fiscal Studies, the doyen of economic policy thinktank excellence, has announced new research into taxation on motoring. At present, HM Government gets £40Bn a year – around 5% of the Government’s entire expenditure – thanks to motor vehicle and associated taxes. But with the rise of hybrid and electric cars a new model is needed.
“A system of road pricing where charges vary by time and location is the best way to incorporate the costs of congestion into the prices paid by drivers. Such systems are technologically feasible and are used in a number of cities worldwide. Failing that – or, better, as a steppingstone towards it – the government could introduce a flat-rate tax per kilometre driven, which would at least continue to raise revenue and discourage driving once alternatively fuelled vehicles replace petrol and diesel ones.
In the meantime, with conventionally fuelled cars still common, the government should move to monthly indexation of fuel duties in line with the Consumer Prices Index. There is no case for the recurrent ritual of the past eight years, when planned inflation uprating of fuel duties has been repeatedly cancelled for one more year while assumed to recommence thereafter. But to tackle the harm that driving does, now and in the future, the government should look beyond the existing set of taxes.”
Changes for Homeworker Expenses – New Guidance Issued
Do any of your employees work from home? As more and more people opt for flexible home-working roles, businesses now have more tax-based regulatory hurdles. However, the benefits and expenses associated with homeworking have changed. New guidance has been issued by the HMRC outlining what costs employees can be except from and new reporting guides:
“As an employer providing homeworking expenses for your employees, you have certain tax, National Insurance and reporting obligations.
Homeworking expenses include:
- equipment, services or supplies you provide to employees who work from home (for example computers, office furniture, internet access, pens and paper)
- additional household expenses, such as gas or electricity charges, for employees who need to work from home
If you cover the cost of additional household expenses for an employee who works from home, you do not have to report or pay anything if all the following apply:
- they need to work from home, either because equipment they need is not available at your workplace, or their work means they have to live too far away from your workplace to travel there every day
- the amount you give them is not more than their additional household expenses
- the amount you give them is not more than the current weekly limit (£4).”
Chocolate Giant Cadburys Somehow Paid £271k In UK Tax On £1.7Bn Sales?
As a small business owner, you’ll be pleased to hear that Cadbury’s parent company – Swiss-based Modelez – generated sales of £1.7Billion in the UK last year. However, they only paid £271,000 in tax to HMRC. The company that makes Oreo, Kenco Coffee and Cadbury’s Dairy Milk paid a lower tax in percentage terms than microbusinesses in the UK.
“Mondelez UK, which makes the brand’s favourites such as Fudge, posted profits of just £35million for 2018, according to Companies House documents.
But the firm — which also owns Kenco and Oreo — handed over dividends of £200million to its parent firm in tax haven Switzerland.
Robert Palmer, of Tax Justice UK, said: “We need to end clever wheezes that companies like Cadbury’s can use to slash tax bills.”
Harry Fone, of the TaxPayers’ Alliance, added: “Armies of lawyers and accountants for multinational companies are able to exploit loopholes to reduce tax bills.”
New Brexit Guidance for Accountants
As the threat of no-deal Brexit continues apace, HMRC have announced new guidance for a no-deal Brexit. The guidance notice is aimed at agents – or accountants as you know them by. The information is tailored to the technical aspects of exporting, VISA information and more. However, there is one element that is of interest to business. There are grants available for businesses filling out customs declarations. By providing SMEs with financial support for training and IT improvements.
“Grants for businesses completing customs declarations £16m in new government funding is now available to help businesses train staff in making customs declarations, and to help businesses who support others who trade goods to invest in IT.
This will ensure that trade with the EU continues as smoothly as possible after Brexit on 31 October. Customs agents currently help businesses who trade outside the EU. This funding will help increase the capacity of the sector as businesses trading with the EU consider whether to get an expert to complete customs documentation for them after Brexit.
More than 3,000 agents have already been trained as part of an £8 million investment earlier this year, which has also been used to develop new online learning products for customs staff such as an electronic learning package and a new UK Customs Academy, launched on 12 August.
This second wave of government grants will go further, with the additional £16 million to be invested to help ensure businesses have all the support they need to get ready for Brexit. Businesses based in, or with a branch in, the UK can apply for funding ahead of the UK leaving the EU. Grants can be used to support training costs for businesses who complete customs declarations, or who intend to in the future.