Advisory Fuel Rates from 1st September 2018

New Rates: HMRC has updated its advisory fuel rates (AFRs). These apply from 1^st  September 2018. 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.
 

ENGINE SIZE	PETROL P/MILE	LPG P/MILE	DIESEL P/MILE
Up to 1,400 cc	12p (11p)	7p (7p)	-
Up to 1,600 cc	-	-	10p (10p)
1,401 cc to 2,000 cc	15p (14p)	9p (9p)	-
1,601 cc to 2,000 cc	-	-	12p (11p)
Over 2,000 cc	22p (22p)	13p (14p)	13p (13p)

 

Entertaining costs – getting the VAT back

HMRC doesn’t allow VAT to be reclaimed on the cost of entertaining customers, suppliers etc. However this is not a strictly black and white rule. Below are some situations where you are allowed to reclaim VAT:-

As you probably know, HMRC’s rules block businesses from obtaining tax relief for most types of entertaining costs. This block covers income and corporation tax plus VAT. However the rules for these three taxes differ. In the case of income and corporation tax expenses are only allowable if they relate “wholly and exclusively” to the business. VAT on the other hand can be apportioned between allowable and non-allowable.

So for example if an employee takes a customer for lunch, you’re entitled to reclaim the VAT on the part of the cost which relates to your employee’s meal. But this can only be claimed if it is deemed to be a working lunch and not entertainment.

A different rule applies where the expense relates solely to your employees. If you pay for entertainment for one or more as a perk, for example a reward for work, this counts as an expense of employment and so VAT can be reclaimed on the related costs.

For more information or to discuss the rules further please contact either Graham Beeley or Ray Callingham at our Mansfield office 01623 645705

XERO software MTD certification

We are pleased to announce that Kim Worrall has now attained her Making Tax Digital accreditation with Xero