4 JULY GENERAL ELECTION

Following Prime Minister Rishi Sunak’s announcement that a general election will take place on 4 July, all Government departments are now in a ‘period of sensitivity’ (previously known as ‘purdah’) and all business in the House of Commons and House of Lords has come to an end. 

With caution being exercised over making announcements or decisions that might have an effect on the election campaign, we are not expecting to hear anything in the next few weeks about the April 2025 plans for Furnished Holiday Lets (FHLs).  This leaves affected taxpayers unable to fully plan ahead, though it is understood that regardless of political power the existing regime will be abolished from April 2025 albeit with some of the technical details differing depending on which party comes out on top.

The Finance (No.2) Act 2024 received Royal Assent on 24^th May confirming some of the measures announced at the Spring Budget including increases to the thresholds for the high income child benefit charge and reducing the higher rate of capital gains tax from 28% to 24%.

REPORT EMPLOYEE BENEFITS ON FORM P11D BY 6 JULY

P11d forms for reporting expenses and benefits in kind provided to employees and directors in 2023/24 need to be submitted by 6 July 2024. These returns must be made online using PAYE Online for employers or commercial software as paper forms are no longer accepted.

Remember that reimbursed expenses no longer need to be reported where they are incurred wholly, exclusively and necessarily in the performance of the employee's duties. Dispensations from reporting are no longer required, although HMRC would expect internal controls to be in place to ensure that the expenses qualify.

Note also that trivial benefits of no more than £50 provided to employees need not be reported. This typically covers non-cash gifts to employees at Christmas and on their birthdays and can include gifts of food and alcohol. Again, the employer needs to keep a record of the benefit provided and the justification. It should not be provided as a reward for past or future service.

HMRC OFFICIAL RATE OF INTEREST REMAINS AT 2.25%

HMRC have announced that the official rate of interest will remain at 2.25% for 2024/25, despite the Bank of England Base Rate currently standing at 5.25%.

The official rate of interest is used to calculate the income tax charge on the benefit of employment related loans and the taxable benefit of some employment related living accommodation. These rates used to fluctuate in line with base rate, and changed several times a year, but in recent years HMRC has fixed the rate for the whole tax year making the calculation of the taxable benefit easier to compute. 

For those employers including beneficial loans on form P11d for 2023/24 the official rate to be used is 2.25%.  The charge applies where the amount of the loan exceeds £10,000.

NEW PLANNING LAWS REDUCE RED TAPE FOR FARMERS

New planning laws have come into force simplifying the conversion of unused farm buildings into new homes, farm shops, and gyms. These changes aim to help farmers diversify and expand their businesses without the burden of submitting planning applications.  Farmers can now repurpose agricultural buildings and land for various new uses, including outdoor sports facilities, larger farm shops, and training centres.

Permitted development rights already allow farmers to make some changes without needing planning permissions, but these have now been extended to provide greater freedoms. For instance, the number of homes that can be provided through converting agricultural buildings has doubled from five to ten, provided certain conditions like space and natural light are met. This initiative supports development of rural housing, enhancing the availability of homes in rural areas.

Key changes include:

• Doubling the allowable floorspace for converting agricultural buildings to commercial use from 500 to 1,000 square meters.

• Increasing the size of new buildings or extensions that can be built on larger farms (over 5 hectares) from 1,000 to 1,500 square meters, and for smaller farms from 1,000 to 1,250 square meters.
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• Doubling the number of homes that can be created from agricultural buildings from five to ten.

• Protecting important archaeological sites by restricting new developments near them.

ADVISORY FUEL RATE FOR COMPANY CARS

The table below set out the HMRC advisory fuel rates with effect from 1 June 2024.  Where there has been a change the previous rate is shown in brackets.

ADVISORY MILEAGE ALLOWANCE PAYMENT

For employees using their own cars for business purposes the Advisory Mileage Allowance Payment (AMAP) tax-free reimbursement rate continues to be 45 pence per mile (plus 5p per passenger) for the first 10,000 business miles, reducing to 25 pence a mile thereafter. Note that for National Insurance contribution purposes the employer can continue to reimburse at the 45p rate as the 10,000 threshold does not apply.

DIARY OF MAIN TAX EVENTS – June / July 2024

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Dawn, James, Claire, Rebecca, Elaine, Penn, Nat, Lucy, Becky, Steph & Janet.
Clarksons 01969 624999