The Con-Lib Coalition Agreement – The detail so far

Date Added: 13 May 2010

The precise text of the agreement that has led to the coalition government is set out below in the form it was released. Our initial comments on this very outline agreement are also set out below. An emergency budget is set to take place within 50 days of the signing of the agreement and we will update with news of any further developments as they arise.

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A PARTY IS FOR LIFE, NOT JUST FOR CHRISTMAS

Date Added: 12 May 2010

Christmas parties

The £150 per head limit applies to annual events (not just at Christmas) that are open to staff generally. The total cost of the function (including VAT) is divided between the number of persons attending (staff, guests of staff, or guests of the employer). If the average cost per head exceeds £150, the whole cost is a taxable benefit. If more than one event is held during the year, the total needs to be looked at to ensure the £150 limit is not breached. Employers need to establish which events are the most tax effective to pay for.

IT BENEFIT UPDATE

Date Added: 04 May 2010

Mobile phones

A single mobile provided by the company on which an employee can make private calls is tax free, provided the contract is in the company's name. However, if the contract is in the employee's name, this exemption does not apply. The cost must be apportioned between business and private use. HMRC always insists that any basic bundled airtime package will always be private. Second phones are fully taxable.

At present, the strict rule is that BlackBerrys and PDAs are regarded as computers, with the corresponding rule that there is a proportionate benefit for any private use, unless this is insignificant. PAYE Inspectors sometimes use common sense when looking at these devices, but the strict interpretation can still be applied where the Inspector insists!

Broadband at home

If the contract is in the employer's name and private use is not significant, no benefit will arise. However, where the contract is in the individual's name (as is almost always the case), it is usually impossible to separate the business cost of the connection. Consequently the position is the same as for mobile phone packages. There is no identifiable cost that is exclusively for business use and any cost reimbursed or paid by the employer will be taxable. The only way round this is for a second dedicated business broadband connection to be used.

Company car tax – seeing red? Go Green

Date Added: 21 April 2010

Tax on company cars will increase again from April 2012. At present, cars emitting less than 120g/km attract a reduced tax charge of 10%. From April 2012, the 10% will apply to cars emitting no more than 99g/km, with increases of 1% for each 5g/km up to a maximum of 35%. Most company car drivers will see an increase in their tax charge as a result. The effect on a car presently qualifying for 10% at 120g/km is an increase to 15%. In line with policy since the CO2 based car tax rules were introduced, drivers of company cars need to continually move to greener engines to avoid their tax being increased.