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Tax update – week ended 20 August 2010

25th August 2010

Update 1. Employers lending cycles to employees

The HMRC ordinarily taxes loans of cars, equipment etc. as a “benefit in kind”. Essentially the benefit of this loan is considered part of the employee’s wages. This is generally subject to income tax (20%/40%) and national insurance both for employers (12.8% national insurance) and employees (11% national insurance)

Lending a cycle (and helmet) to an employee is exempt from this under certain conditions.

1. Generally available to all employees

There is now an exception – if there is a salary sacrifice scheme (i.e. the employee forsakes some salary in return for the bike loan) this may push the employee under the national minimum wage threshhold then it could be seen as “not available to all employees”.

The good news is that HMRC still treats the loan scheme as a tax free benefit for those that qualify.

2. Not automatic purchase at the end of the loan.

If the employee automatically purchases the cycle at the end of the loan the scheme loses its exemption.

Also, if the employee buys the cycle for under market value the difference is taxable and subject to national insurance as per normal.

Market value is considered below – very detailed!

Cycle to work guide

Cycle to work/ salary sacrifice

HMRC view on automatic cycle transfer

HMRC view on market value of second hand cycles.

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Update 2: LLP’s at Companies House

LLP’s have been in existence for ten years, yet until recently all filing at Companies House had do be paper-based.

Now, the following returns can be made electronically:

· Annual return (form LLAR01)

· Change of members (LLAP01/2, LLACH01/2, LLTM01)

· Change of accounting date (LLAA01)

· Change of registered office (LLAD01)

· Location of records (LLAD03, LLAD04)

The advantages

1. Saving time and postage costs

2. Ability to join the Companies House “proof” Scheme whereby fraudsters are prevented from illegally changing details of an LLP.

The bad news:

It is still impossible to file LLP accounts online.
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“This information is taken from Mark Lee’s weekly practical tax newsletter, published by the Tax Advice Network”