David Cutter Chartered Accountants

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Tax Facts

Budget 2008

Introduction

Personal Taxation

Employee Taxation

Investment Reliefs

Capital Gains Tax

Trusts

National Insurance Contributions

Tax Credits

Inheritance Tax

Business Tax

Corporation Tax

Value Added Tax

Stamp Duty

Insurance Premium Tax

Back

Value Added Tax

Rates of tax
The standard rate of VAT is 17.5%, or 7/47 of the consideration received for making a supply. This rate changed to 15% on 1 December 2008 for an interim period of 1 year. A lower rate of 5% (or 1/21 of the gross receipt) applies to some supplies such as domestic fuel and power, installation of energy saving materials in houses, and some conversions of residential property. A zero rate applies to a range of supplies including most food, books, new houses, and children's clothes. Certain other supplies are exempt, which means no tax is charged to the customer, but the supplier cannot recover VAT on costs. These include many land-related supplies, insurance, finance, education, health and welfare, and non-profit sports clubs.

Thresholds
An unregistered business must register if it has made £67,000 of taxable supplies in the last 12 months, up to any month end, or if it expects to make £67,000 of taxable supplies in the next 30 days. A registered business can deregister if it can satisfy HMRC that taxable supplies in the next year will not exceed £65,000. Small businesses with taxable turnover of up to £150,000 can opt to use the 'flat-rate scheme'. A single rate, which varies with the type of business, is applied to all receipts, and no VAT is claimed on costs. The single rate is lower than 7/47 to compensate for lost input tax. Small businesses with taxable turnover of up to £1.35m can enter the cash accounting scheme (only paying VAT to HMRC when customers have paid). The annual accounting scheme (filing a single VAT return each year instead of one every three months) is also available with turnover up to £1.35m.

Scale charge for private use of fuel paid for by business
Where a business buys car fuel and allows it to be used for private motoring, it has to account for output tax on the supply. There is a scale rate based on the CO2 emissions rating of the car. It will be necessary to find the exact charge on the HMRC table. Example rates for a 3-month period are: * up to 120g/km: £20.55 VAT * 135g/km: £30.83 VAT * 235g/km or more: £71.94 VAT

Returns and payments
Most VAT returns are prepared for three-month periods, and they are due (with any payment) by the end of the following month.

email: info@davidcutter.co.uk
Tel: 0121-550-8525 Fax: 0121-585-7341

2 Lyttleton Court | Birmingham Street | Halesowen | West Midlands | B63 3HN

DIRECTORS:	PAUL CUTTER BA(Hons), ACA
	KATE JONES BA(Hons), FCCA, ACA

DAVID CUTTER & CO IS A TRADING NAME OF CUTTER & CO LIMITED

COMPANY NUMBER: 07252989

A MEMBER OF THE INSTITUTE OF CHARTERED ACCOUNTANTS IN ENGLAND AND WALES