PAYE Questions and Answers

VAT-RELATED TERMS

 

Change in VAT rate    
The standard rate of VAT will be reduced temporarily from 17.5% to 15% for the thirteen month period 1 December 2008 to 31 December 2009. This change does not affect supplies chargeable at the 5% reduced rate or at the zero rate.   

Reduced percentages will apply for those businesses operating the Flat Rate Scheme during this period.   

 

 

New dwellings intended for sale or let    
A thorough knowledge of the partial exemption rules is essential to maximising recovery of VAT for those businesses which make both taxable and exempt supplies. Where sale of new dwellings is concerned, a change in circumstances resulting in property intended for sale subsequently being let, or vice versa, can have substantial input VAT recovery implications.   

In a recent example, a change of decision by a client such that a property originally intended for let was subsequently sold, lead to a VAT recovery in excess of £9,000 under the clawback/payback rules.   

 

Online filing of VAT returns     
From 2010, businesses with a turnover in excess of £100,000, together with all newly VAT-registered businesses, will be required to file VAT returns online rather than submitting a paper copy.   

Amongst other advantages, online filing gives businesses up to seven extra days to submit the VAT return and also to pay any VAT due.   

Opting to tax    
Substantial VAT savings can be made by those businesses making supplies of land and buildings with effective use of the option to tax regime. By choosing to charge VAT on their supplies, businesses may then reclaim input VAT which would generally otherwise not be recoverable.   

Registering for VAT     
The current VAT registration threshold is £67,000; businesses with a taxable turnover exceeding this in any twelve month period must register for VAT. Businesses with a turnover lower may than this may voluntarily register if it is advantageous to do so.   

 

PAYE-RELATED TERMS    

Online filing 
Businesses with over 50 employees are already required to submit the Employer Annual Return online; a further raft of PAYE forms will be subject to mandatory online filing with effect from 6 April 2009.   

Those businesses with fewer than 50 employees are not yet subject to mandatory online filing of the Employer Annual Return but those employers voluntarily doing so can benefit from the tax-free incentive of £75 being paid for online submission of the 2008-09 return.   

Payment of PAYE
Those employers whose total PAYE liability averages less than £1,500 per month may wish to take advantage of the quarterly payment option available to small employers.    

 

 

MISCELLANEOUS

 

Credit card payments
Carter Jonas has introduced a card facility to enable rental payments to be made by credit or debit card in circumstances where payment by bank transfer or cheque may not otherwise by appropriate.   

Non-Resident Landlord Scheme
The Non-Resident Landlord (NRL) Scheme relates to the taxation of UK rental income of persons whose ‘usual place of abode’ is outside the UK.   

Letting agents (and tenants, subject to a minimum rent) are obliged to deduct basic rate tax at source and pay this over to the Revenue on behalf of the landlord under such circumstances. Landlords may alternatively apply to the Revenue for approval to receive rental income without deduction of tax; if approval is granted all tax due is accounted for under Self Assessment. 

   

Find out more about the Non-Resident Landlord Scheme 

Tenants’ Deposits Scheme
The Tenancy Deposit Scheme came into force on 6 April 2007 and requires anyone – landlord or agent – who accepts the deposit for an Assured Shorthold Tenancy (AST) to belong to a designated scheme to protect it.     

 

Find out more about the Tenants’ Deposits Scheme