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The Chartered Instiute of TaxationSage Accountant Partner

Business Taxation

Tax Tips and FAQs - below you will find a list of all our Tips and FAQs - click to see the full text and/or answer. You can also select specific sections to filter the information by using the menu options.

Cars
Capital allowances
Integral features
Research & Development (R&D)
Bad debt
Obsolete stock
Salaries for family members
Entertaining
Donations to charity
Gift Aid
Tax Tip & FAQ Home

Cars

For cars purchased after 6 April 2009 (1 April 2009 for companies) capital allowances are calculated according to CO2 emissions.  Cars with emissions under 160 gm/km qualify for 20% allowance and those with emissions over 160 gm/km receive a 10% allowance per annum. 

 100% first year allowance is available on cars with CO2 emissions of less than 110 gm/km until 31 March 2013.  (e.g. VW Golf 1.6 TDI Bluemotion, BMW 320d EfficientDynamics ).  

100% first year allowance is available on zero-emissions (electric) goods vehicles from 6 April 2010 to 5 April 2015.


Capital allowances

The Annual Investment Allowance (AIA) gives a 100% tax deduction for the first £100,000 of expenditure on qualifying plant and machinery (including vans).  AIA will be reduced to £25,000 from April 2012. 

 Expenditure on new assets above this amount attracts a capital allowance of 20%

 The annual rate of allowance for other types of expenditure is 20%.  The writing down allowance will be reduced to 18% from April 2012.


Integral features

Capital allowances can be claimed at 10% for expenditure on integral features of a building -  for example electrical and cold water systems. 


Research & Development (R&D)

Expenditure on R&D by small and medium sized businesses may subject to certain conditions claim tax relief on 175% of the amount of that expenditure


Bad debt

A provision against specific bad debtors is allowable for tax purposes.  Invoices can be credited after 6 months and the VAT reclaimed. 


Obsolete stock

Old and obsolete stock can be written off and is an allowable tax deduction. 


Salaries for family members

A salary can be paid to other family members working in the business up to the National Insurance Limit (£110 per week for 2010/11) and only suffer basic rate tax (if already employed).  If they are not employed elsewhere no tax will be deducted.  This will be tax deductible for your business.


Entertaining

The entertaining of customers is not allowable for tax purposes, but staff entertaining is. 


Donations to charity

Donations to local charities in return for some service (e.g. advertising or sponsorship) are allowable deductions for your business.  


Gift Aid

Higher rate tax payers who make donations under gift aid are entitled to additional tax relief of 20%. 


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