HMRC closes tax loophole for pick-up trucks

The tax loophole that allows drivers of pick-up trucks to save thousands of pounds each year is set to be closed. From July, pick-up trucks such as the Ford Ranger and Nissan Navara will be reclassified as cars rather than vans, eliminating the significant benefit-in-kind (BIK) tax breaks they currently enjoy. Currently, pick-ups weighing over one tonne are classified as commercial vehicles, resulting in lower tax rates. However, under the planned changes, pick-ups will lose their commercial status and be classified as cars. This means that tax will be calculated based on the cost and carbon dioxide emissions of the vehicle, resulting in much higher charges for gas-guzzling pick-ups meaning that the increased costs for affected businesses would be significant. The changes come after a court case brought against HM Revenue & Customs by Coca-Cola, which claimed that certain pick-up trucks should be taxed as commercial vehicles for BIK purposes. The Court of Appeal ruled in favour of HMRC’s decision to tax the vehicles as private cars, leading to the rule change.

The Daily Telegraph  

RAISE VAT THRESHOLD TO £100,000, SAYS FSB

The government should raise the turnover threshold for VAT from £85,000 to £100,000, according to the Federation of Small Businesses (FSB).

The business group said that this would give firms stepping into the VAT-paying ring crucial breathing space. It would also be an incentive to grow their turnover without fear of having to charge customers an extra 20% overnight, the FSB added.

The FSB also suggested bringing in a smoothing mechanism to ease the transition for small firms, owner-managed companies and some of the self-employed who go just over the threshold.

At the moment, thousands of small firms keep their turnover just below the £85,000 threshold, according to the Office for Budget Responsibility (OBR).

The OBR said that hundreds of millions of pounds of potential economic activity could be lost due to this ‘bunching’ just below the threshold.

Tina McKenzie, FSB’s Policy Chair, said:

‘VAT compliance flattens small firms by stifling their growth and emptying their coffers. It’s crying out for a modern makeover to match today’s economic landscape.

‘We can’t let it squash the ambitions of small businesses, strivers, and budding entrepreneurs.

‘The flaws in our current system are glaringly obvious. We are at a breaking point – a drastic overhaul of VAT is needed.

‘Raising the threshold to reflect inflation, introducing a buffer to soften the blow for those just over the limit and demystifying the rules to save small business owners from a VAT-induced headache could unlock hundreds of millions in extra economic activity.’

Internet link: FSB website

BUSINESSES SAY HYBRID WORKING IS HERE TO STAY

Less than 30% of firms expect their workforce to fully return to the workplace over the next five years, according to research by the British Chambers of Commerce (BCC).

The survey of over 1,000 businesses found just 27% of respondents predict their employees will be fully physically present in the workplace over the next five years. In addition, 47% anticipate their staff will be mostly in-person, 16% expect mostly remote and 8% fully remote.

The research found a clear divide between different sectors. Only 17% of B2B services organisations expect fully in-person working, while the figure for manufacturers is 38% and B2C services 37%.

Jane Gratton, Deputy Director of Public Policy at the BCC, said:

‘Our data shows that hybrid working is now part of the fabric of the modern workplace. This flexibility is valued by employers and their teams. Less than 30% of firms expect staff to be working fully in-person over the next five years.

‘Flexible working makes good business sense. In a tight labour market where employers are competing for skilled workers, hybrid working and flexible working more generally have become important parts of staff benefit packages.’

Internet link: BCC website