Posted By Andre Spiteri,.Posted in Small Business.Tagged
Phishing scams are on the rise, and small businesses are bearing the brunt it. A Federation of Small Business survey found UK SMEs suffer seven million cyber-attacks a year at a cost of £5.26 billion. And the vast majority of these attacks — 89 percent — are phishing scams.
Posted By Andre Spiteri,.Posted in Self Employed.Tagged
UK drivers spend a lot of time on the road. According to the latest government statistics, British vehicles rack up 324 billion miles a year.
Luckily, if the drive is for business purposes, you can claim tax back from HMRC. With this in mind, here’s a definitive look at the UK’s business mileage-allowance rates for 2019. We’ll also show you how to calculate your mileage deduction.
The latest business mileage rates, or Approved Mileage Allowance Payments (AMAP) are:
| Type of Vehicle | First 10,000 Miles | Above 10,000 Miles |
|---|---|---|
| Cars and Vans | 45p | 25p |
| Motorcycles | 24p | 24p |
| Bikes | 20p | 20p |
You can also claim an extra 5p per mile if you have a passenger with you on a business drive.
The rates apply for any business journeys you make between 6 April 2018 and 5 April 2019. They’re identical to the rates that applied during 2017-18. In fact, the last time AMAP rates changed was in April 2012, when the AMAP rate for the first 10,000 car and van miles rose from 40p per mile to 45p per mile.
You can claim a business mileage allowance using AMAP rates if you:
A journey counts as business travel if:
The following DO NOT count as business journeys:
With that out of the way, let’s take a more in-depth look at AMAP rates.
AMAP rates cover the cost of running and maintaining your vehicle. This includes:
AMAP rates DON’T cover:
You can claim tax back on these expenses in addition to the AMAP rate if you can show you’ve made them ‘wholly and exclusively’ for business purposes. This means:
To calculate your business mileage deduction, you’ll need to keep a log of all your journeys (MileIQ makes this super easy).
Once you have this information in hand, calculating your business mileage deduction is very straightforward.
Let’s say you’re self-employed. Your total taxable profit (your income after deducting allowable expenses) is £40,000.
You’ve travelled 14,000 miles by car. 3,000 were personal journeys and the remaining 11,000 were business-related.
So, you’d calculate your mileage deduction as follows:
Now, let’s say you’re an employee. You’ve racked up 10,000 in business mileage on your personal car. Your boss reimburses you at a rate of 35p per mile.
In this case, you can claim tax back on the difference, which is 10p per mile.
This means you can deduct £1,000 from your taxes (10,000 multiplied by 10p).
Claiming your mileage deduction is easy. If you’re self-employed, include the mileage deduction in your self assessment tax return. If you’re employed, you can claim using Form P87. Do note, however, that you’ll have to file a self assessment tax return if you’re claiming more than £2,500.
HMRC’s business mileage rates don’t apply to company cars. A company car is a vehicle that:
HMRC considers a company car to be a benefit-in-kind. This means you can’t claim a mileage deduction on your tax return. Instead, you actually pay tax on the car.
The amount of tax you pay on your company car depends on:
The company car tax rates (also known as BiK rates) for 2018-19 are:
| CO2 Emissions | % of P11D - Petrol | % of P11D - Diesel |
|---|---|---|
| 0 - 50 | 13 | 16 |
| 51 - 75 | 16 | 19 |
| 76 - 94 | 19 | 22 |
| 95 - 99 | 20 | 23 |
| 100 - 104 | 21 | 24 |
| 105 - 109 | 22 | 25 |
| 110 - 114 | 23 | 26 |
| 115 - 119 | 24 | 27 |
| 120 - 124 | 25 | 28 |
| 125 - 129 | 26 | 29 |
| 130 - 134 | 27 | 30 |
| 135 - 139 | 28 | 31 |
| 140 - 144 | 29 | 32 |
| 145 - 149 | 30 | 33 |
| 150 - 154 | 31 | 34 |
| 155 - 159 | 32 | 35 |
| 160 - 164 | 33 | 36 |
| 165 - 169 | 34 | 37 |
| 170 - 174 | 35 | 37 |
| 175 - 179 | 36 | 37 |
| 180+ | 37 | 37 |
Let’s say your boss gives you a company car with a P11D value of £15,000. It has a petrol engine and emits 75 grams of CO2 per kilometre. You pay tax at the basic rate of 20 percent.
To find out the tax due, you’d do the following:
Well, yes you can. While you can’t use AMAP rates, you can claim tax back on the fuel you burn on business journeys using HMRC’s advisory fuel rates.
HMRC updates the advisory fuel rates every quarter. However, you can use the old rates for up to a month after they’re updated.
The latest advisory fuel rates, which kicked in on 1 December 2018, are:
| Engine Size | Petrol - amount per mile |
|---|---|
| 1400cc or less | 12 pence |
| 1401cc to 2000cc | 15 pence |
| Over 2000cc | 22 pence |
| Engine Size | Diesel - amount per mile |
|---|---|
| 1600cc or less | 10 pence |
| 1601cc to 2000cc | 12 pence |
| Over 2000cc | 14 pence |
These are treated the same as vehicles with petrol or diesel engines
4p per mile
To claim tax back on your company car fuel using advisory fuel rates you must:
As with claiming tax back on business mileage using the AMAP rates, claiming tax back on fuel using advisory fuel rates is fairly straightforward.
Let’s say you have a Vauxhall Corsa with a 1.4 petrol engine. You rack up 13,000 miles, of which 10,000 are business miles and the rest are personal journeys.
Based on the latest fuel advisory rates, you could claim 10,000 miles at 12p per mile, that is £1,200.
Now, let’s say your boss reimburses you for fuel at a rate of 6p per mile. This means you can claim tax back at a rate of 6p per mile, that is £600.
All clear?
Great.
And don’t forget to keep detailed records of your mileage. You never know when HMRC will ask to see them!
Posted By Andre Spiteri,.Posted in Taxes.Tagged
Here’s a look at the new UK income tax rates for 2019-20. We’ll also explain how these changes will affect your tax bill.
The government announces changes to income tax in the autumn budget. The most significant changes announced in the latest one — the Autumn Budget 2018 — were:
The new income tax rates and thresholds for 2019-20 are:
| Tax Rate (Band) | Taxable Income | Tax Rate |
|---|---|---|
| Personal allowance | Up to £12,500 | 0% |
| Basic rate | £12,501 to £50,000 | 20% |
| Higher rate | £50,001 to £150,000 | 40% |
| Additional rate | Over £150,000 | 45% |
This means that the minimum income you have to earn in a year to start paying tax in the UK will now be £12,500. Similarly, the basic tax rate of 20 percent, which currently applies if you earn up to £46,350 a year, has been extended.
The government planned to make these increases in 2020-21, but decided to put them in place a year earlier. Chancellor Philip Hammond explained that the decision was a result of “the improvements we have delivered in the public finances.”
On the downside, the income tax thresholds will stay the same in 2020-21. The next revisions are planned for 2021-22, when the thresholds will increase in line with inflation.
The new rates apply only in England, Wales and Northern Ireland. Scotland sets its own income tax rates and thresholds.
We’ll deal with Scotland’s income tax rates for 2019-20 in a minute. First, let’s have a look at how your tax bill will change as from 6 April 2019 if you live in another part of the UK.
The current tax brackets in England, Wales and Northern Ireland are:
| Tax Rate (Band) | Taxable Income | Tax Rate |
|---|---|---|
| Personal allowance | Up to £11,850 | 0% |
| Basic rate | £11,851 to £46,350 | 20% |
| Higher rate | £46,351 to £150,000 | 40% |
| Additional rate | Over £150,000 | 45% |
So how does this compare with the income tax rates that’ll kick in on 6 April 2019?
Well:
All in all, the government reckons 32 million people will have a lower tax bill as a result of these changes. Pretty good right?
Let’s crunch some numbers so you can get a better idea.
Let’s say you’re a sole trader. Your total income after deducting allowable expenses is £20,000 a year
Here’s how much tax you’d pay under the current income tax rules and how much you’ll pay in 2019-20.
Under the current thresholds:
Under the income tax thresholds for 2019-20:
This means you’ll be getting an extra £130 a year in your pocket in 2019-20.
Now, let’s say your income after deducting allowable expenses is £50,000.
Under the current income tax rates:
Under the income tax thresholds for 2019-20:
That’s £860 less than you’d pay this year.
As we explained above, Scotland’s tax rates and thresholds are slightly different to the rest of the UK. The following table shows the income tax rates for 2019-20:
| Band | Taxable Income | Sottish Tax Rate |
|---|---|---|
| Personal Allowance | Up to £12,500 | 0% |
| Starter Rate | £12,500 to £14,549 | 19% |
| Basic Rate | £14,549 to £24,944 | 20% |
| Intermediate Rate | £24,944 to £43,430 | 21% |
| Higher Rate | £43,431 to £150,000 | 41% |
| Top Rate | over £150,000 | 46% |
If you make more than £100,000 a year, your personal allowance goes down by £1 for every £2 you make. So, if you earn £101,000 a year, your tax-free personal allowance would go down by £250, making it £12,250.
The main changes to the Scottish income tax rates in 2019-20 are:
The main difference between Scotland’s income tax rates and those in the rest of the UK is that Scotland has five tax bands to the rest of the UK’s three.
The end result of this difference is that higher-income earners pay more tax in Scotland than they do in the rest of the UK. By contrast, Scottish lower-income earners pay less tax.
In our first example above, an income of £20,000 a year in 2019-20 would result in a tax bill of £1,500 if you live in England, Wales or Northern Ireland.
By contrast, under the Scottish tax system you’d pay tax as follows:
This is £20.49 a year less tax than you’d pay in England, Wales or Northern Ireland.
In our second example, an income of £50,000 a year would result in a tax liability of £7,500 in 2019-20.
By contrast, in Scotland:
That’s £1544.07 more than you’d pay in England, Wales or Northern Ireland.
Like income tax rates, National Insurance thresholds are also changing as from 6 April 2019. And this will affect the way you calculate your tax return.
Here’s a look at the new National Insurance thresholds and rates for employees and the self-employed and how they compare with 2018-19 rates.
| Rate | 2019-20 Threshold | 2018-19 Threshold |
|---|---|---|
| 12% | £8,632 to £50,000 | £8,424 to £46,384 |
| 2% | Over £50,000 | Over £46,384 |
If you’re a higher-income earner, the widening of the National Insurance threshold means you’ll pay more NI in 2019-20. And this might eat up some of the savings you’ll make on income tax.
Case in point, if you have a yearly salary of £50,000, you’ll pay £4,964.16. This is a £336.64 increase over your 2018-19 tax bill.
That said, seeing as you’ll save £860 on income tax, you’ll still be better off.
| Type | 2019-20 Rate | 2018/19 Rate |
|---|---|---|
| Class 2 | £3.00 per week | £2.95 per week |
| Class 4 | 9% on profits between £8,632 to £50,000 | 9% on profits between £8,424 to £46,350 |
| Class 4 | 2% on profits over £50,000 | 2% on profits over £46,350 |
The government recently announced it has decided to scrap plans to abolish Class 2 National Insurance. Instead, 2019-20 will see it rise by 5p a week.
The government has also adjusted the Class 4 National Insurance thresholds to bring them in line with the new income tax bands.
Revised income tax and National Insurance rates aside, the government has also increased the Annual Investment Allowance from £200,000 to £1 million.
The Annual Investment Allowance allows you to deduct from your income the full value of plant and machinery you use in your business. Which means you pay less tax.
The increase is temporary. It’ll only last for two years, after which the Annual Investment Allowance will go back down to £200,000. So if you were thinking of making a big investment to help your business grow, now’s the time to do it.
And there you have it. That’s a rundown of the most important income tax changes you should know about as we approach the 2019-20 tax year.
Here’s to a successful 2019.
One in which you reach new heights and, hopefully, pay less tax.
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