Tax Update Bulletin - June 2007

1) Benefit in kind – interest free loans and living accommodation rates

With effect from 6 April 2007 the Inland Revenue rates increased from 5% to 6.25%. This is the first time there has been a change since 6 April 2002. These rates normally apply where a director and higher paid employee has taken a loan from the company and not paid interest on that loan and where living accommodation is provided free of charge to directors and higher paid employees.


2) Landlords

There have been recent media reports about the H M Revenue & Customs approach to Landlords. The media has indicated that a clamp-down has been suggested by H M Revenue & Customs, but they have confirmed that there is much more of a light touch approach, to ensure that the correct amount of tax is paid, rather than a particular look at Landlords. However, should you receive an approach from H M Revenue & Customs please contact ourselves.

3) Class 1A National Insurance

A reminder that Class 1A National Insurance contributions needs to be paid by 19 July 2007 for relevant benefits declared by 5 July 2007, for the year to 5 April 2007, to avoid interest in overdue tax arising.

4) September filing of self assessment tax returns

If self assessment tax returns are filed with H M Revenue & Customs by 30 September 2007, then in certain circumstances this is beneficial, as underpayments up to £2,000 can be coded out against future earnings, rather than having to be paid on 31 January 2008. The returns must be filed by date 30 September 2007 for this to apply.