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February questions and answers
Newsletter issue - February 2018.
Q. I own several properties jointly with my son. Most of them are rented out, but my son has lived in one of them for five years. My son is now considering buying a house on his own and this will become his main residence. Will he have to pay the higher stamp duty land tax charge on the purchase?
A. Broadly, if the value of your son's share of the rental property is more than £40,000, he will be liable to the higher rate of SDLT when he purchases a new property.
Further information can be found in the HMRC guidance on the higher rates of SDLT applicable to the purchase of additional residential properties, which was published in November 2016; and on the GOV.uk website at https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property.
Q. I am the sole director and 100% shareholder of a company. Can the company claim capital allowances for the cost of setting up a website?
A. Expenditure on setting up a website is generally treated as expenditure on computer software. According to HMRC guidance (Business Income Manual: BIM35815), 'the cost of a web site is analogous to that of a shop window. The cost of constructing the window is capital; the cost of changing the display from time to time is revenue'.
Computer software acquired with hardware (e.g. an operating system) and accounted for as part of the cost of the hardware will qualify as plant in the main capital allowances pool.
Other computer software qualifies for capital allowances under CAA 2001, s 71. However, from 1 April 2002, new expenditure on software will initially qualify for relief as an intangible asset (under CTA 2009, Part 8) provided it is incurred by a company. If the company wishes to exempt such expenditure from CTA 2009, it must make an irrevocable election within two years of the end of the accounting period in which the expenditure was incurred. This means that companies can effectively choose between capital allowances (under CAA 2001, s 71) and amortisation (under CTA 2009 Part 8). Where amortisation is charged in the accounts, the advisability of making an election will depend on the period in which the policy is used (i.e. the period over which the expenditure is written-off).
Q. What should we pay employees who are on jury service?
A. There is no statutory entitlement for an employee to be paid by his employer during jury service. However, if the contract of employment has a clause covering such a situation, the employer must follow the terms of the contract.
Whilst on jury service, the employee is entitled to claim allowances from the court to cover travel and subsistence costs. In addition, a financial loss allowance may be claimed in respect of any loss of net earnings suffered as a result of attending the court.
The maximum financial loss allowance depends upon the number of hours served. These amounts are reviewed annually and are currently as follows:
- First 10 days: 4 hours or under each day - £32.47
- First 10 days: Over 4 hours each day - £64.95
- Day 11 to day 200: 4 hours or under each day - £64.95
- Day 11 to day 200: Over 4 hours each day - £129.91
- After day 201: 4 hours or under each day - £114.03
- After day 201: Over 4 hours - £228.06
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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