EIS carry back rules relaxed

From 6^th April 2009 the rules regarding the carry back of income tax relief for investments into Enterprise Investment Schemes (EIS) have been relaxed. Previously only up to half of the investment made (with an overall maximum of £50,000) prior to 6^th October in a tax year could be carried back. These restrictions have been removed and the full investment, up to the maximum in any one year of £500,000, can be carried back.

For investments made on or after 22^nd April 2009 into EIS, Corporate Venturing Scheme (CVS), or Venture Capital Trust (VCT) the funds need to employed for the purposes of a qualifying activity within two years of the issue of shares or if later within two years of trade commencing. The time limits were previously much tighter.

Financial advice should always be sought to ensure the right investments are made for your circumstances and the risks you wish to take.

Tip: If you are setting up a new business and introducing funds, consider whether it can be set up under the EIS rules and you enjoy the same tax breaks as for an EIS investment. Care would be needed but the tax savings could be substantial.

Stamp Duty on residential property extended to 31^st December 2009

The Chancellor announced a "holiday" from Stamp Duty Land Tax in September 2008 for homes costing £175,000 or less. This holiday was to be applied until 2^nd September 2009. In the Budget the Chancellor has extended the period of this Stamp Duty Land Tax holiday for residential properties up to £175,000 until 31^st December 2009.

VAT Registration and Deregistration Limits Increase

From 1^st May 2009 the threshold for registering for VAT will increase to £68,000 and the deregistration limit to £66,000.

Tip: Consider using the flat rate VAT scheme if your business has few costs and turnover is less than £150,000 per year. The calculations of what VAT is due are much simpler and in some cases can provide a tax saving.

New VAT fuel scale rates for taxing private use on fuel provided will apply for returns beginning on or after 1^st May 2009. The scale charge for a particular vehicle is determined by its CO₂ emissions figure.

Tip: Instead of paying for fuel, consider paying a flat rate mileage allowance to employees for business journeys, whether they use their own car or are provided with a company car. Providing the rates used are within HMRC guidelines then the employee will not suffer any tax. The business can reclaim input VAT based upon the fraction 3/23 of the gross mileage payments made. As the mileage allowances will not be paid for private journeys then no VAT fuel scale charges would apply.