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Business Newsletters - Budget 2008
VAT
Thresholds
The VAT registration limits increase with effect from 1 April 2008 as follows:
- the threshold for compulsory registration is £67,000
- the threshold for voluntary deregistration is £65,000.
Car fuel scale charges
Where an employee is provided with free fuel along with a company car, an income tax benefit in kind arises based on the CO2 emissions of the car. In addition the employer has to pay a VAT car fuel scale charge. Revised tables have been issued for use from the start of the next VAT accounting period beginning on or after on 1 May 2008.
Reduced rate for smoking cessation products
A reduced 5% VAT rate for ‘over the counter’ sales
of smoking cessation products was introduced from 1 July 2007
for a period of one year. The government has announced that the
5% reduced rate will continue to apply.
Smoking cessation products dispensed on prescription continue
to be zero rated.
Option to tax land and buildings
The government will simplify the rules relating to the option
to tax land and buildings. It will also make changes to enable
taxpayers to revoke an option to tax after 20 years. The earliest
date an option to tax will be revocable will be 1 August 2009.
The government also proposes to make changes to improve the practical
administration of the option to tax.
Claims
The government will introduce rules to enable eligible businesses to make claims for over declared output VAT or under declared input VAT which accrued before the introduction in 1996 and 1997 of the three year time limit for claims. Claims will need to be made by 31 March 2009.
Errors
The error correction regulations for VAT permit the inclusion of errors below £2,000 on the next return submitted. Errors exceeding £2,000 have to be separately notified to HMRC. The de minimis limit will be increased to the greater of £10,000 or 1% of turnover, subject to an upper limit of £50,000. This measure will take effect for accounting periods commencing on or after 1 July 2008. The change also applies to other indirect taxes.
