Tax relief for travel costs

If you are an employee and have to travel from your normal workplace to a temporary workplace, you can claim tax relief for the travel costs. This mostly applies to consultants who have their own companies, but could apply to others, such as temporary workers who habitually move about a lot and people seconded from one part of the organisation to another.

· The definition of a ‘temporary workplace’ is fairly generous, being any place that you expect to be working (other than your normal workplace) for less than 2 years.

However, as soon as you expect to be there for more than 2 years, the allowance ceases. Therefore, if you have a one year placement which is renewed a few days late, if the renewal is for another year this will take you just over the 2 years, losing all tax relief on the second year’s travel.

Therefore, if you work on relatively long term ‘temporary’ placements, consider making the renewal period shorter, to end just inside the second year. This will maximise tax (and possible NIC) relief on travel costs.

Keeping tax records

All tax-payers (not only businesses) must keep records to back up the information shown on their tax returns. These must be retained for a minimum period, as follows:-

Individuals: 22 months from the end of the tax year concerned.

Self-employed and partnerships: 70 months from the end of the tax year in which the accounts year end falls.

Limited companies: 6 years from the end of the accounting year.

Failure to preserve your tax records for the required time could result in a penalty of up to £3,000.

Pensions - last chance to Carry-forward

The maximum you can invest in a personal pension in any tax year is linked to your age and your income. If you do not invest the maximum, you can carry forward the unused relief. This is useful for people who do not have the cash-flow to invest for some years and then wish to make up the shortfall in their pension provision. However, all that is about to stop.

The 2000/01 tax year is the last year for which you can use up earlier years’ relief. As you are allowed to make a contribution for 2000/01 up to
31 January 2002, that is the last date for using up the relief.

Therefore, if you are sitting on a lump sum and would like to use this to boost your pension provision, now is the time to act. Call us for further information.

Employment disputes

With ever stronger rights being given to employees, many employers fear raising disciplinary matters with their staff, for fear of finding themselves in a Tribunal.

The result is often that a bad situation simply gets worse. Neither side knows where they stand and the business suffers as a result.

Breakdown in communication is often at the root of employment problems, which can start as a simple misunderstanding and mushroom into a fully fledged dispute.

As a qualified mediator, Tony Marshall is experienced in advising both employers and employees on such matters. If you see the signs of an impending dispute, call us at an early stage – it could avoid a small problem growing into a large one.

Tax surcharges

Most people expect to pay interest on tax paid late. However, some are caught out by the 5% surcharge rule.

This is a flat rate 5% of the unpaid tax, applied to any amount due for the tax year ended 5 April 2001, still owing after 28 February 2002.

Therefore, delaying payment by a few days can cost you dearly.

If you are really late, there is a further 5% charged on the balance still unpaid at 31 July 2002.

This rule applies each year, so beware…

Investment Authority

On 1 December 2001, the Financial Services Authority took over regulation of all mainstream investment activities.

As from that date, Marshall Roche investment activities are authorised by the FSA.

Marshall Roche

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