Friday, 23 December 2016

Advisory Fuel Rates from December 2016

New Rates: HMRC has updated its advisory fuel rates (AFRs). These apply from 1 December 2016. The table below shows the new AFRs with the previous figures in brackets. Only the rates for petrol cars or vans with cc above 1,400 have changed.

Private journeys. AFRs can be used to avoid tax charges where your business pays for fuel used in a company car which you use for private journeys, or where you pay for fuel used in your company care or van and an allowance is paid to cover any business travel.

Up to 1,400 cc
11p (11p)
7p (7p)
Up to 1,600 cc
9p (9p)
1,401 cc to 2,000 cc
14p (13p)
9p (9p)
1,601 cc to 2,000 cc
11p (11p)
Over 2,000 cc
21p (20p)
13p (13p)
13p (13p)

Sunday, 18 December 2016

VAT Flat Rate Scheme Update

Abuse of FRS
The government believes small businesses have been abusing the FRS by using it as the law intended, so it is changing the terms of the scheme to make is less attractive to use, and to reduce the cash advantage enjoyed by service-related businesses.

From 1 April 2017 a business will be required to use a FRS percentage of 16.5% if it is a "low cost trader". 16.5% of the gross turnover is equivalent to 19.8% of the net leaving almost no credit for VAT incurred on purchases.

Low cost trader 

This is a business whose expenditure on goods (not services) is less than 2% of its gross turnover, or if more than 2% of its turnover, the amount spent on goods is less than £1,000 per year. Any expenditure on; capital items, motor expenses, or food or drink for consumption by the business, is ignored when working out the 2% or £1,000 threshold.

This emphasis on 'goods' will discriminate against businesses who incur VAT on services such as: rent, software licences, IT support, digital journals, sub-contractors, telecoms etc. In VAT terms a service is anything which is intangible, or where the cost relates to a tangible asset it is the temporary use of that asset - such as hiring.


Please note our Mansfield office will close at 2.00 pm on Friday 23rd December for the Christmas holiday. The office will re-open on Tuesday 3rd January 2017 at 8.45 am.  

The Southwell office will close at 5pm on Thursday 22nd December and will re-open on Tuesday 3rd January 2017 at 9 am.

We would like to take this opportunity to wish all our clients a Very Merry Christmas and a Happy and Prosperous New Year.