Q: My kids are about to start attending a nursery whilst I am at work. Can I claim the cost of nursery fees?
A: If you are self-employed these are not a tax allowable expense, sorry, but do claim for additional Tax Credits. If you are an employee , a businesses can contract directly with a commercial nursery or childminder, or provide you with childcare vouchers. In both cases the first £55 per week of the cost to you will be exempt from tax and Class 1A NICs. Take care with the interaction of childcare vouchers and tax credits, as you may not be better off, so check first.
Q: Q. My wife and I acquired a cottage in 2002 and let it as furnished holiday lettings from 2005. We ceased advertising the property this year and it is now on the market. Will we get the lower 10% rate of capital gains tax on any profit we make on the property sale?
A. Yes, as long as the property is sold within three years of the date the holiday lettings business ceased you should both qualify for entrepreneurs’ relief on the gain. This relief gives you the lower 10% rate of CGT after deduction of your annual exemption, for gains of up to £10 million per person.
Q. I’ve always prepared the accounts for my own company and submitted them to Companies House and the Tax Office with no problems. However, this year the Taxman sent back my company’s accounts and tax return saying they were in the wrong format. What have I done wrong?
A. Company accounts for periods ending after 31 March 2010 that are sent to the Tax Office on or after 1 April 2011 must be submitted online in iXBRL format.
Q: I’m approaching retirement and planning my finances. Is a state pension tax-free?
A: Contrary to what people may think, state pensions are not tax-free, but the money you receive is paid ‘gross’, which means you get it without any tax being deducted. If your total income from all sources, including state pension, is greater than your tax-free allowance, tax is due on your state pension and this will normally be deducted from any private pension or earnings you might have which are paid through the PAYE system. If you have no PAYE income, you’ll have to complete a tax return and pay any tax due directly to HMRC.