Readers may be forgiven for finding the recent rash of announcements by HMRC, regarding possible changes to tax legislation, rather confusing.

On 8th September, we were informed that the remaining sections of the March 2017 finance bill, that were deferred due to the May election, were back in circulation and being dealt with by the appropriate committees and debates. Eventually, they will find their way onto the statute books unless amended by the parliamentary processes.

Changes reintroduced include:

• Ability to reimburse employers for certain benefits and avoid a tax charge.
• A reduction in the money purchase pension allowance, once crystallised, from £10,000 to £4,000.
• A reduction in the tax-free dividend allowance, from £5,000 to £2,000; effective from 6 April 2018.

In all there are seventy-two clauses and eighteen schedules.

It was then announced the government will publish its next Budget on Wednesday 22 November 2017. The November Budget will include further legislation to introduce digitisation of business tax.

It will be interesting to see how the political realities – a much slimmer majority in parliament – affect the progress of these changes in the coming weeks.

There are two options if you use a car in your self-employed business for business and private purposes.

You can buy the car through your business, claim a capital allowance, and write off the costs of running the car as a business expense, and in both instances, you will need to adjust your claims to eliminate any private use. In practical terms, this will mean recording your total and private mileage (or business mileage) and reducing the capital allowance and expenses claims accordingly.

Alternatively, you could keep a written record of your business mileage and claim expenses from your business using the approved flat rates. Presently, these are:

• The first 10,000 business miles at 45p per mile,
• Over 10,000 business miles at 25p per mile.

For example, if your business mileage for a year amounted to 12,000 miles you could claim up to £5,000 (10,000 miles at 45p and 2,000 miles at 25p). This amount would be a legitimate business cost for tax purposes and is a tax-free receipt that you can use to defray the actual purchase and running costs that you will be paying personally, outside the business.

This simplified method for claiming relief for the use of your car can only be used if you are not claiming capital allowances for the vehicle or charging any actual running costs to your business.

Also, you do not have to use the simplified method for all your business vehicles, you can pick and choose. Once you have elected to use the simplified claims process you must continue to do so for as long as you use the vehicle in your business.

This simplified option for the use of a car does not affect your ability to claim other travel costs, train fares etc., or parking costs.

To decide which may be the best choice for your business you will need to consider the car purchase price, annual running costs, and your estimated business and private mileage. Please call if you would like our help with the calculations.