June sees the start of the holiday season with school half term and bank holidays on Thursday 2nd and Friday 4th June. Topically holiday lets are included in this month’s newsletter: some useful information on tax incentives and benefits. If you are thinking about employing students over the summer holidays there are a few considerations which we’ve outlined. You’ll see we have included an article on the financial implications of stock management, particularly relevant at the moment as material costs continue to soar. Our final piece is about the new advisory fuel rates that came into play in March this year. As ever we conclude with deadlines and diary dates you need to know about.
You will need to account for your holiday lets properties separately from any other rental properties and you will need to comply with the various FHL rules. They include:
There are also strict rules on occupancy. To secure the FHL tax benefits you will need to let your FHL for a certain, minimum number of days each year. The occupancy rules, set on a tax year basis, are:
Do not count any days when you let the property to friends or relatives at zero or reduced rates as this is not a commercial let.
Do not count longer-term lets of more than 31 days, unless the 31 days is exceeded because something unforeseen happens. For example, if the holidaymaker either: falls ill or has an accident and cannot leave on time or has to extend their holiday due to a delayed flight.
If you do not let your property for at least 105 days, you have two options (known as elections) that can help you reach the occupancy threshold.
If you employ students to manage your staff needs over the summer break period, you will need to add them to your payroll and apply PAYE and NIC rules.
Students should be advised that they will pay tax and NIC if:
Students can also apply for a possible tax refund if they work for part of a tax year.
Students who normally live and study in the UK but work abroad during the holidays will need to pay:
If your business processes materials or assembles goods for sale it will need to keep a stock of items to ensure that future sales can be met.
Ideally, stock levels should be kept to a minimum such that hard won cash reserves are not tied up unnecessarily. You will need to manage stocks to cover current production needs and consider supply issues - how long will it take to replace stock.
Innovation can throw a spanner in the best laid stock management plans. You may be left with redundant stock.
When prices are falling - in deflationary times - you will not want to hold excess stocks that could be replaced by lower cost items.
Alternatively, when prices are rising - in inflationary times - the opposite applies. You might benefit from investing in increasing stocks if prices for materials are rising, subject to redundancy issues. For example, if lower cost alternatives enter the market, you may be left with redundant stock or suffer reductions in your profit margins.
Maintaining stock levels is a constant play-off between working capital and profitability. Unfortunately, external factors - currently, inflation and supply delays - are playing havoc with stock management.
If you pay for the fuel used in your company car you are entitled to recover the cost of the fuel - for business journeys - based on agreed Advisory Fuel Rates (AFRs), from your employer.
If the agreement with your employer is that you pay for all the fuel costs and that none can be recovered from the employer, then you can claim for the recorded business miles at agreed AFR rates as an expense claim on your tax return or by calling HMRC.
The AFRs are updated quarterly to reflect changes in fuel prices. The rates from 1 March 2022 are:
You can use the previous rates for up to 1 month from the date the new rates apply:
These AFRs can also be used to calculate the value of private fuel costs if your employer does pay for your private fuel. It may be possible to reimburse your employer and avoid the Car Fuel Benefit charge.
1 June 2022 - Due date for corporation tax due for the year ended 31 August 2021.
19 June 2022 - PAYE and NIC deductions due for month ended 5 June 2022. (If you pay your tax electronically the due date is 22 June 2022).
19 June 2022 - Filing deadline for the CIS300 monthly return for the month ended 5 June 2022.
19 June 2022 - CIS tax deducted for the month ended 5 June 2022 is payable by today.
1 July 2022 - Due date for corporation tax due for the year ended 30 September 2021.
6 July 2022 - Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.
19 July 2022 - Pay Class 1A NICs (by the 22 July 2022 if paid electronically).
19 July 2022 - PAYE and NIC deductions due for month ended 5 July 2022. (If you pay your tax electronically the due date is 22 July 2022).
19 July 2022 - Filing deadline for the CIS300 monthly return for the month ended 5 July 2022.
19 July 2022 - CIS tax deducted for the month ended 5 July 2022 is payable by today.