Let’s begin to understand costs and benefits of company cars and car allowance separately. But to understand how these costs and benefits work with your over all circumstances, you need a professional accountant advice so that you optimise your overall expenses and tax amount.

Benefits of Company Car Scheme:

With a company car, you will be saved from paying upfront a larger amount for car purchase. It usually comes with shining advantages of freedom from most administrative tasks of owning a car and buying and latter selling the car at personal will.

In most company car agreements repairs, MOTs and services are usually paid by the employer. Chances for additional savings are even greater if your agreement covers insurance and fuel costs. You can claim back cash for fuel used for company related travels. Company car mileage rates also vary as negotiated.

And the cherry on the top is, most companies will offer you a replacement new and latest car every three to five years; which translates to the benefit that you will have advance fuel saving and low emission technology in your car.

Costs of Company Car Scheme:

It all sounds amazing so far with all the benefits given above. But you need to look at the other side of the coin also.  While the insurance is cheaper on company cars, you may negotiate a cheaper one on personally owned car if you do a good survey. The road car tax will still be borne by you either way. But road car tax varies between car makes and models. With company car, you will have restricted or no choice of car make and model. Employers usually bother least for the company car road tax brackets since it will not be borne by them.

Employees receiving fuel benefits will also have to pay Car Fuel Benefit because benefit in kind is always calculated into salary equivalent for tax purposes. Company car tax brackets will depend on company car’s make and model, CO2 emissions and your current income tax brackets. You may find HMRC calculator of use. (https://www.gov.uk/expenses-and-benefits-company-cars/work-out-the-value)

There are some obvious restrictions with company car schemes. You cannot upgrade or install any modification in your cars. You will not be able to buy or sell at your own choice and you will never own the car. If you swap jobs, it could mean you are without a car!

Benefits of Car Allowances:

Normally the costs of company cars become the benefits of car allowances. But careful consideration should go into decision; company car or car allowance. It will be good to know what the exact cash value of the company car benefit is and does it cover leasing cost or leasing costs and tax, both.  Car allowance gives you freedom of choosing a car that will be your asset; regardless of whether you continue the same job or not.

For those who already have a car and covering its expenses, the allowance is like a cash boost in your salary. You can always use the money elsewhere. But most of the times, people who do not have a car or still want to buy a car, cash allowance can be used towards Personal Contract Purchase (PCP). The allowance will cover car instalments that will be your asset eventually.

With PCP, employees often charge employer the government set rates that allows fuel mileage rates and 45p per mile maintenance rate for a maximum of 10,000 annual miles. Ultimately actual benefits will depend on what is negotiated between employer and employee.

Costs of Car Allowance:

What can be disadvantages of car allowances? The obvious answer is the benefits of company car. Car maintenance and MOTs are to be paid out of your pocket as well as the car insurance and unexpected repairs. You will also pay tax on the allowance. There is always a risk on defaulting on monthly car installment.  You many never be able to buy the latest car models on your personal pockets.

Company Car or Car Allowance

Do you want to make an informed decision? Contact our London Accountants to book an appointment today! Our qualified tax experts provide tailored UK tax advice for both employees and companies. We work with our clients to analyse the value of benefits in kind in empirical tax scenarios.  We cater to a wide range of personal and company clients. We work with each client’s individual circumstances to see how we can claim tax relief on car tax, saving you hundreds of pounds each year. For company or business clients we also help them with treating either company cars or car allowance in annual accounts and outsource payroll services.

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As of 13^th January 2018, the taxman has stopped accepting self assessment payments paid from personal credit card. The infamous decision is the result of EU regulations that put restrictions on passing processing charges to the payers. HMRC believes that this would effect service levels and unfairly pass on the burden to other taxpayers.

But there are numerous other  options for paying self assessment bill. Let’s have a look at them:

DEBIT CARD OR CORPORATE CREDIT CARD:

You can make an online payment of your self assessment bill by using your debit card or a corporate credit card. However, you must know that there is a non refundable fee charge for using the corporate credit card option. You will fill in your 10 digit Unique Tax Reference with an additional “K” at the end. This will become your payment reference.

As a general rule, you will have to use a single card for a similar tax type. You cannot use multiple cards for the same type of tax payment. If you have to make an extra payment of the same tax type you will have to use the same card that you used for the first payment. However if you are making payment for a tax of different category,  you may use another card.

BANK TRANSFER:

Bank transfers usually take three working days. This is a widely used option because most tax payers use online or telephone banking or mobile banking applications. If you are using CHAPS payments, it may reach the same working day given you pay within bank processing time. Overseas payers should check with their respective banks because cross border payments can take longer time.

DIRECT DEBIT:

You can use direct debit on your HMRC online account to automatically dispatch payment for your convenience. You will need your unique tax reference number also to file self assessment. If you are paying self assessment tax through direct debit, you should leave a margin of three to five working days before 31^st January.

CHEQUE IN POST:

You can pay your self assessment bill by posting a check to HMRC at the following address-

HMRC

Direct

BX5 5BD

The cheque will be payable only with “HM Revenue and Customs Only” as payee. You will attach your paying in slip that comes with HMRC paper statement. It takes three bank days for cheque processing once HMRC receives it. So you must allow three days over and above the relevant postage time.

AT BANK OR BUILDING SOCIETY:

You can physically check in your bank or building society and make an over the counter payment through cheque or cash. You need to attach Paper statements from HMRC and retain paying-in slips that the taxman has sent  to you. If you pay over the counter, the payment is considered as received on the same day by HMRC.

You can even decide in advance how you will pay self assessment tax bill.  If you have an online HMRC account you can select budget payment plan that allows you to process direct debit payments at frequent intervals so that you can avoid a lump sum payment at the end of January. In this case your final payment will be adjusted for the difference with your actual payment due.

There is also a do-it-yourself version of budget payment plan in which you can move certain amount each month or each week into a dedicated savings account that can later be used to cover up your self assessment tax. You must remember the 3 to 5 working days margin will still need to be applied just like in normal direct debit tax payments.

For those paying through the PAYE system, they will have to pay their self assessment tax bill through a tax code. For this they will have to submit an online return before 30^th December and the payment of self assessment bill must be less than £3000. HMRC will take twelve equal instalments from their pension or salaries through the tax code.

Remember it is HMRC’s priority to recover as much tax debt as possible. So do not ignore tax payments and if for some reason you cannot pay self assessment tax, talk to HMRC representative to devise a payment plan as suited to your cash flows. Your express intention to pay even when you actually cannot can also save you from penalties and trouble.

The post HOW TO PAY SELF ASSESSMENT BILL appeared first on Blogs or News Offical Certax London.

You won’t have to pay any tax on your savings income if you do now make a total of £17,000 taxable income per year.

Depending on your income is how much tax-free allowance you would get. Here is a table to show you what category you fall in and what personal saving allowance you would get:

What saving income include:

• Income from company bonds or the government
• Accounts which has providers such as National Savings and Investments or credit unions
• Most types of purchased life annuity payments
• Bank and building society accounts
• Interest distributions from authorised unit trusts (but not dividend distributions), open-ended investment companies and investment trusts

If you have an Individual savings Account (ISA’s) and gain interest from that then it won’t go towards your Personal Saving Allowance as the interest is already tax-free.

If you have a National Savings and Investments account (NS&I) or any Fixed Interest Savings Certificates and Index-linked Saving Certificates or any prizes won from Premium Bonds then these won’t go towards your Personal Savings Allowance as they are all already tax-free.

As normal, HMRC will collect the interest tax by changing your tax code. Building societies will give HMRC the information that they need to collect the tax.

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