High -income child-benefit charge

With effect from 2024-25, the threshold increased from £50,000 to £60,000.

100% refund where higher earner's income is £80,000 or more.

The government intends to move to a system based on household rather than individual income by April‌‌‌ 2026.

If your income is over the threshold you can choose to either:

get Child Benefit payments and pay any tax charge at the end of each tax year
opt out of getting payments and not pay the tax charge.

If you choose to opt out of getting Child Benefit payments, you should still fill in the Child Benefit claim form. You need to state on the form that you do not want to get payments.

In conclusion if you need to pay the tax charge, you must register for Self- Assessment and submit a tax return each tax year.

Claiming back the Cost of Living while working from home

An alternative method to work out your actual costs and claims for those. Following the principle of "wholly and exclusively", additional costs incurred can be calculated by a reasonable method. Such methods include counting the number of rooms in your house, or measuring the square area, then working out the area used for business and multiplying it by the percentage of time spent working at home.

Let's take an example. You have 4 rooms in your house, one of which you use only as an office. Your electricity bill for the year is £800. Assuming all the rooms in your house use equal amounts of electricity, you can claim £200 as allowance expenses (£800 divided by 4). If you work four days a week from home, you could claim £ 114.29 (£200 divided by 7 multiplied by 4).

You may also be able to claim a proportion of your costs for things like:

Heating (use a space and time calculation as above)
Council Tax (just use a space calculation)
Mortage interest or rent (just use a space calculation)
internet and telephone (as a percentage of business use)

The first method is quick but will not probably cover all of your additional costs. The second method involves more calculations and collection of evidence in the form of invoices if you claim for all cost types but should allow a higher claim to be made.

To make a claim, complete HMRC Form P87 and send it to HMRC or make an online claim (you will need to register for the Government Gateway). Those who are already registered for self -assessment can claim through their tax return.

Personal use of the Company car and vice versa.

One of the most asked questions is about using your company car privately.

If you have a company car and you want to use it for making personal trips, including for commuting to work and from work, then you have to pay company car tax. It's a little bit frustrating but these are the rules. Using your company car is considered "Benefit in Kind". The tax you will have to pay depends on the company car's value to you and is based on the list price of the car and type of fuel it uses.

The value of the car is reduced and the benefit in kind percentage respectively if:

it has low CO2 emissions

The best is to look into getting an electric car or potentially a hybrid car. These types of vehicles incur the lowest possible tax charge as their CO2 emissions are zero or low in the case of hybrid vehicles.

you have it part-time
you pay something towards its costs.

Alternatively, if you don't want to pay company car tax you will need to stop using your vehicles for private journeys.

And vice versa, if you are using your personal car for business journeys, you may be able to claim tax relief on the approved mileage rate. This covers the cost of owning and running your vehicle. You cannot claim separately for things like:

fuel
electricity
road tax
MOTs
repair

To work out how much you can claim for each tax year you'll need to keep records of the dates and mileage of your business journeys for each vehicle type you've used.

You can claim 45 pence per mile for the first 10,000 miles, and 25 pence per mile thereafter.

Motorcycles -24 pence per mile

Bicycles - 20 pence per mile.

P.S. When you are informed you know how to deal with :)

Construction Industry Scheme (CIS)

@ Can you give me some background on the Construction Industry Scheme (CIS)?

The CIS is a system that is designed to try and eliminate tax evasion within the building and construction arena. Under the CIS arrangements, "building contractors" are obliged to deduct money - in effect withholding taxes- from the invoices that they receive from their subcontractors and transfer these payments to HMRC. These transfers from the contactor represent an advance payment of the tax (and NICs) due for that subcontractor.

In simple terms, building contractors are obliged to register for the scheme and account for deductions on the invoices they receive from subcontractors. Subcontractors do not have to register, but the deductions are taken from their payments at a higher rate if they're not registered (30% rather than the regular 20 %). For CIS purposes, a building contractor includes directly self-employed people, business partnerships or limited companies.

@ So, who is a building contractor?

You a contractor, if you pay subcontractors to do construction work.
Your business does not do construction work, but you have spent more than £3 million on construction in the 12 months since you made your first payment.

For example, are all buy-to-let landlords automatically obliged to register as "building contractors" under CIS? Thankfully the answer is "No". Many smaller buy-to-let landlords would not be caught by the CIS arrangements. However, landlords can be liable to the CIS in some scenarios including:

a) Larger buy-to-let landlords would be liable if their spends are more than £3m on construction services in a 12-month period or £1m on average per annum over a rolling three-years period.

b) The buy-to-let landlord is also undertaking duties as building contractor and is paying subcontractors for building related work. This could be the case, for example, where a builder works as a regular self-employed builder but also has a few properties they have purchased and developed and now let out to tenants.

It should also be noted that-depending upon the exact arrangement which exist for any particular project- it is possible for someone in the building and construction industry to be both a building contractor and subcontractor at the same time. In such cases, the business would need to register as a contractor where it is hiring subcontractors and can choose to register as a subcontractor under CIS at the same time.

@ So, what is building related work per CIS regulations?

The building related work would include:

Site preparation
Demolition work and similar activity
Building work
Repair and maintenance work
Decorating of buildings
Post-building clear-up
Internal fittings and fixtures (lighting, gas, water lifts etc.)

Equally, it is worth noting that a number of areas, which might in some situations thought of as a building or construction services, are specifically outside the CIS regulations. These include architectural services, carpet fitting, scaffolding, hire and site-based activities which are clearly unrelated to construction.