VAT on new houses make a loss, so ensure you consider to London. Will my Child Tax
Q: I am a small builder and have all of them carefully. Credit & Working Tax Credit
just completed a new house.It This measure is particularly rates increase, as my cost of
is proving difficult to sell in the welcome for small businesses such living has increased dramatically,
current economic climate andI am as yours that have been affected by and I am paying childcaretwo
thinking of renting it out in order the credit crunch in the current tax small childrenI need all the
to cover the bank interest.When I year. It will be especially beneficial financial help that is available?
eventually sell will the sale still be if in the previous you were a higher A: The rate of tax
at zero rate? rate taxpayer in the any of these creditsaredependent on your level of
A: The first sale of a new residential years you can receive up to a 40% earnings, which means you wouldn’t
property will always be zero rated tax refund for the losses you have receive an increase (or decrease)
whether or nothas been let out made in 2008/09. on the statutory rate depending on
previously.However your proposed It is best to seek professional advice where in the country you live.
course of action does raise another on the revisions introduced, as they However, you didyou are also
possible problem. As residential can establish which loss relief claim incurringexpenses, which
letting is exempt from VAT, then is most tax efficient, and which presumbably has increased in costs
there may be cause for concern option provides you with the greatest from your recent. Thisresult in a
that some of the VAT reclaimed tax refund. greater payment of Working Tax
relating to the new build falls Credit to meet the childcare costs
under the partial exemption rules. State Pension Credit For Low for your two children, soyou let
would strongly advise you to take Paid Employment the Tax Credits helpline know that
professional advice on this. Q: I have recently left full time your circumstances have changed as
employment and taken a part time soon as possible, as they will only
Extension of Loss Reliefs for job as I am nearing state pension backdate amounts for 3 months.
Traders age. I have worked out that I will
Q: I noticed in the recent Pre actually earn slightly less than Pre Budget 2008 changes
Budget Report a section about the National Insurance£105 per Q: Icash accounting in a small
loss reliefs being extended. I week and consequently I will business turning over about
run my own small construction not pay anyNational Insurance £130,000 net of VAT per annum.
business and like most people contributions through may wages. Apart from the reduction in
in the property industry I have Will this affect my entitlement to the standard rate of VAT from
struggled to find any new work in apension? 17.5% to 15% are there any other
the last few months after making A: If you earn more than the Lower changes that may affect me?
substantial profits in the previous Earnings Limit then you will get A: There was a change to the Flat
years. Is this loss relief measure a notional credit towards your Rate scheme whereby the limit to
going to help me? secondary state pension even though join is set at no more than £150,000
A: Yes, this measure will help all you have not made any National of taxable turnover (which is all of
small businesses who make a loss Insurance contributions. For this to your VATsales except for exempt
in the 2008/09 tax year.Pre Budget be effective your employer must supplies).This ischange from the old
Report last month extended the report your earnings at the end of method of including an additional
currentyear period for which current the tax year on the employers end of test to ensure that your total business
trading losses from businesses can year return form P35 and form P14. income (which includes exempt
be carried back against previous You should ensure that you get a supplies)does not exceed£187,500.
years profits for a period of three P60 from your employer showing
years, with losses being carried back your earnings at the end of the year, Trevor Morris runs TaxAssist
against the later year first. as this will prove that your earnings Accountants at 73 Lowther
The proposal applies to losses have been declared to the HMRC, Street, Whitehaven. If you have
arising in the 2008/09 tax year, and and mean that you receive a notional any questions please call Trevor
extends the loss relief available credit for state pension purposes. on 01946-592500 or e-mail
against general income so that trevormorris@taxassist.co.uk
any excess may be carried back Tax Credits Available to the Self or just pop in—we are opposite
against trading profits in2006/07 Employed TopShop.
and 2005/06 tax years. There are Q: I started my own business
otheravailable to you should you recently after relocating my family
14 info@thewestcumbriaguide.co.uk www.thewestcumbriaguide.co.uk
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