This month there are a couple of changes or expected changes. The first affects people with rental income and the other affecting people with a company car who pay for their own fuel.
In last year’s budget the Chancellor announced the introduction of a £1,000 tax free property allowance. This proposal was dropped in advance of the general election, but is expected to be introduced again in the November budget in the same terms. It will apply from last April as originally intended.
Provided only that it is introduced in this way the allowance cannot be used for letting income which is eligible for Rent-A-Room relief, even if that relief is not claimed. Also, it cannot be claimed where the restriction on tax deductible loan interest applies. Other than that, it applies to any form of letting income such as renting out your driveway for parking.
If the income is less that £1,000 in the tax year then the exemption applies automatically. There is no need to claim it. If income exceeds £1,000 then it will be possible to claim a deduction of £1,000 against that income instead of the actual costs incurred. Of course, this is a choice that will only be made if costs are lower than £1,000. The allowance is a per person and not per property, so can only be claimed once in the year.
The second change is that HMRC has updated its advisory fuel rates (AFRs), which can be used to claim back the cost of fuel purchased privately but used for eligible business travel in a company car, with effect from 1 September 2017. The rates are worked out using average pump prices over the previous quarter, which saw fuel prices reducing slightly. The trouble is that prices began to rise in late August and so the new AFR’s don’t reflect this. In fact, they have been reduced for some of cars.
To mitigate the effect of the new rates somewhat, you can continue to use the old rates (shown in brackets in the table below) until the end of September 2017. Alternatively, you can work out your own rates and use them instead. If you do, keep a good record of how you calculated them in case HMRC queries them.
| Engine size | Petrol per mile | LPG per mile | Diesel per mile |
| Up to 1,400cc | 11p (11p) | 7p (7p) | – |
| 1,401cc to 2,000cc | 13p (14p) | 8p (9p) | – |
| Up to 1,600cc | – | – | 9p (9p) |
| 1,601cc to 2,000cc | – | – | 11p (11p) |
| Over 2,000cc | 21p (21p) | 13p (14p) | 12p (13p) |
WatkinsonBlack have considerable experience in all areas of taxation and business services, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
