Tax Breaks for Going Green

Do you know that you can pay less tax by making more environmentally friendly choices? The government has put forward a few tax incentives for taxpayers to choose to go green. These tax incentives include tax breaks for choosing low emission cars, the cycle to work scheme, etc. This article will also cover how the Government has made the tax system more helpful for our environment and human health.

Low Emission Cars for Employees

The lower the CO2 (carbon dioxide) emission level, the lower the tax charge on the company care benefit.

If you hire an employee and provide them a company car, it will be used for both business and personal use. The employee will be due an income tax charge on the personal use of the car.

If you are providing a high-emission car, it is not beneficial for you because the employee gets a higher tax charge. But if you provide a low-emission car or an electric car, where the carbon dioxide emissions are under 75g per kilometre, the employee will get less tax charge. If you are the director of the company, the same rule will apply to you.

Low Emission Car for Business Tax Benefit

When you buy a company asset you can get tax relief by claiming capital allowance. In most cases, you may not receive the full amount of capital allowance if you purchase a business car. For example, purchasing a car for £20,000, during the first year you can only write down 18% of the value of the car as capital allowance. On the other hand, if you do purchase a low-emission car with a higher cost, you will get 100% of the capital allowance (i.e. First Year Allowance) during the year you purchased the car.

Fuel Scale Charge 

This applies to you if you are a VAT registered business. You might be able to reclaim the VAT you paid whenever you have purchased fuel on your business journey. But due to the personal element use of the car, the Government put a ‘reverse VAT charge’ to restrict you from reclaiming the full amount of the VAT on the fuel costs. This is called Fuel Scale Charge and the level of charge depends on the CO2 emission of the car.

For example, if you have spent on fuel this quarter and the total VAT paid is £200, and the CO2 emission of the car is 120g/km, you will only get £140 fuel scale charge. This means you can reclaim the difference which is £60 and that is what you will get back from the government.

If your car has higher emissions, then the charge will be higher. If the fuel scale charge is £393 (CO2 emission is 190g/kg) then you need to pay back an extra £193. The government wants people to use low-emission cars, so it is a tax incentive.

Cycle to Work Scheme

The government has also introduced another tax incentive that is called the Cycle to Work Scheme. This enables you to provide to your employees a certain amount of bicycle vouchers per year, which is tax free, to encourage them to cycle to work instead of driving or using public transport. This means you are encouraging your employees to live a more active lifestyle and effectively when people drive less then there will be less carbon dioxide emissions which is more environmentally friendly.

How the Tax System Can Be More Helpful for Our Environment and Human Health – here are a few thoughts

  1. Levying more tax on animal products

51% or more of the global greenhouse-gas emissions are caused by animal agriculture.

At the moment, there is 0% rate VAT on raw food such as meat, fish, vegetables and fruit which are fit for human consumption. When we consume food that is in its raw form we believe it is good which is true but it is causing more and more pollution. As farmers want to produce a lot of meat, they mass produce the meat by mass feeding the livestock. Effectively, the more animals you produce will produce more carbon dioxide. There are certain animals where once they produce gas, it is 25 times more powerful than carbon dioxide.

When farmers are producing meat, they will require more land, energy and water. As they are taking up a lot of land, when the animals produce a lot of waste it is not good for the land as well. Fish farming is also very commercialised and it creates a lot of pollution in the ocean. The fish are fed different nutrients but it is not as nutritious as before and it is destroying the oceans system.

  1. Making all processed and unhealthy foods all VAT-able

Most people know processed food is not good for our health, but not all processed food is levied on VAT. For example, ready to eat meals are 0% rated. Microwave meals are not good for our health, the plastic packaging is not good for the environment and in order to preserve the food more oil is added to the food.

The government should encourage people to be environmentally friendly and encourage people to consume more raw vegetables rather than meat. Consuming raw vegetables and fruit is better for our health as we need most of the nutrients from them. The government could also think of more tax incentives to encourage people to be healthier.

If you find this content useful, we do provide tailored professional advice on your personal or business tax matters. If you are interested, please direct message the author of this article so we can arrange a chat.

Tax incentives that encourage you live a healthier lifestyle​

“Tax is there to encourage people to behave a certain way.” That is what I’ve learnt from Rich Dad Poor Dad concept (Tax-free wealth). 
There are currently tax breaks available that encourage people to make healthier lifestyle choices. Here are some tax breaks that government uses to incentives people to live a healthier lifestyle.
Tax incentives related to health for employees and company directors 
Cycle to work scheme
If you have a business and employ people, you can use the shame to give your employees bicycle vouchers tax-free for them to cycle to work, instead of using public transport. In this way, you can encourage them being more active, so they can be more productive at work and help boost the business profitability.
On-site gym or health programmes for employees
Similarly, if you invest in health facilities in your workplace, or hire fitness instructors for your employees to help boost their well-being and productivity, those are effectively part of your payroll costs (employee welfare), so that those are tax-deductible for your businesses. For employees, such on-site fitness facilities that are accessible for all employees are tax-free benefit.
However, you may also provide other benefits such as usual gym membership, health insurance, etc, those are taxable benefit for your employees.
Glasses/Contact Lenses/Eye tests
If you require employees to perform work primarily require lots of screens, glasses, contact lenses, and eye tests are tax-free benefit for your employees, as those are necessary for them to perform the duty of work. Some may be required for health and safety reasons. So it pays to look after your employee’s wellbeing.
Value added tax and duties
Duties and VAT on drugs, alcohol and cigarettes
Those are known as killers for our health. The government is levying duties and VAT to make them more expensive, so that prevent people from purchasing them.
Zero-rated VAT for food in raw and whole form
Currently VAT is charged at 20% if that is standard rate. However, the VAT is at 0% if the food is in raw and whole form. That include raw vegetables, fruit and meat which are healthier and more nutritious to our body than processed foods.
Healthcare services are exempt from VAT
Healthcare services that primary purpose is to restore human health is exempt from VAT, as the Government want it to be affordable. Even if we have free healthcare system in the UK, the private healthcare services (e.g. dental treatment, etc) are exempt from VAT.
Why it is important to have our tax system designed to encourage people to live a healthier lifestyle? 
It costs the NHS more than £11bn per year to treat the diseases that are caused by poor lifestyle choices (Public Health England). Those include chronic deceases like diabetes, obesity, or even cancer. 85% of the chronic diseases are preventable by healthier lifestyle choices.
On the other hand, there is recent news on the press about junior doctors’ contract, and nurses pay-cut. I’ve even heard the news about junior doctors committing suicide, due to the pressure they are facing from work and financially. Doctors are the profession who suppose to save other people’s lives, but who is there to save their lives?
Is the public really short of funds to pay doctors’ wages? Our current healthcare system is more of disease care, rather than healthcare. If tax is there to regulate people to behave a certain way, how can the tax system help encourage more people live healthier? 
Incentive system: VAT and duties
As we mentioned above that the duties and VAT are levied on cigarettes, drugs, etc as they are bad for our health. However, I’ve always been health conscious myself about the food/products that I put in my body. My recent research also shown that refined sugar is as bad as drugs, and even poisonous. And those are leading causes of diseases like diabetes, obesity, etc. But products that are high in refined sugar are not levied taxes/duties the same way as drugs.
Why wouldn’t the Government consider levying duties/taxes on refined sugar or other unhealthy products, rather than trying to regulate healthcare professionals’ pay?
More tax breaks for healthy lifestyle? 
A few years ago, we’ve heard about a petition for ‘Run to work scheme’. That was intended to work similarly to cycle to work scheme that business owners can get tax breaks when they encourage their employees to run to work. However, this didn’t get reinforced.
Currently, there are tax breaks to incentive employers to provide hybrid/low emission car for employees as these are more environmental friendly. Why wouldn’t we have more of the similar tax incentives for healthy lifestyle?
I believe that we need more of these schemes so that people can be incentivised to exercise more, make healthier life choices so that they can add more value to the organisation or the society.
How making better lifestyle choices can make healthcare system more efficient
Thomas Eddison said ‘The doctor of the future will give no medicine, but will interest her or his patients in the care of the human frame, in a proper diet, and in the cause and prevention of disease.
If more people are incentivised to look after their own health, how much less it will cost for NHS to treat the chronic diseases? Then it will free up more money that focus on what healthcare meant to be:
– Prevention of disease
– Better education in schools for proper diet and healthy lifestyle
– Doctors’ welfare so allow them to look after themselves first, then they can look after others better
– Projects/public facilities that can help enhance people’s lifestyle in general.
We all need to pay the fair share of tax. As a tax accountant, I’ve been helping people reduce their tax burden. I know people are complaining how much taxes are deducted from their pay cheque. However, would it be more empowering to know that the money we pay into the system is there to enhance people’s health?

The Art of Utilising Business Losses to Minimise Tax

What to do if the business is making a loss? This is a guidance on how to use business losses to offset other taxable income to save tax. There are slightly different rules between incurring losses as a sole trader and as a company. And there are rule changes for corporation tax loss which was brought forward from April 2017.

Business Losses as a Sole Trader

If you are in transition from being employed to a business owner, you might have a salary job to make sure you have the sufficient financial support as well as building your business on the side at the same time. If your side business is making a loss but you have a full-time/part-time job and tax is being deducted before you get paid, you can use your business loss to offset your salaried income. This enables you to get some tax back.

You can even decide how much loss you want to offset for the current year and carry back some to the previous year so that your personal allowance (currently £11,000) will not be wasted. For example, if you currently earn £10,000 which is under the tax-free threshold for personal tax, then you have a business that is making £2,000 loss, if you are offsetting the current year there is no benefit to you, as your first £11,000 income is tax-free anyway. However, if your previous year’s income is £30,000 and you paid tax on it then you can use that £2,000 to offset previous years which allows you to get some tax back. If you do not have anything to offset to the previous or current year then you can carry forward and if it becomes profitable in the second year you are able to offset the second year’s profit. Either way, you can always get some tax relief from your losses.

The income related to a sole trader includes capital gain. If you do have capital gain, there is an allowance of roughly £11,000 per year. When you use the allowance to offset capital gain, you need to make sure you do not waste the annual allowance. For you as a person, you have a tax-free allowance for both income tax as well as your capital gain.

Business Losses as a Ltd Company

A limited company is a separate person than you. If the company is making a loss, the loss cannot be used to offset your personal income. This is one of the reasons why people find it beneficial to first set up their business as a sole trader.

A limited company does not have any allowance. If you do incur loss but at the same time the company is running two different kinds of business activities where one is profitable and one is making a loss. You are able to use the current year loss to offset other income; this includes the interest from your business savings.

If there is nothing else left for you to offset, you need to consider carrying it back to the previous year. If you do have a trading history and you were making some profits before then you can carry it back to the previous year to offset that. Once you make a declaration on the corporation tax, you will get a tax refund from the government. The remaining unused losses will be brought forward for the future years.

If you are in your final year of trading and have some losses, you can use that loss to offset your previous 3 years profits then you will get some tax back that you have paid.

Corporation Tax Losses Rule Change Post April 2017

  • If the losses are incurred before April 2017, you can only use it to offset the future profit of the same trade.
  • If the losses are incurred after April 2017, you can use it to offset any profits. But the trade-off is that for carry forward losses, companies will be able only to use the losses to offset against up to 50% of the profit. Each company will be entitled to £5 million annual allowance. That means most small businesses will not be affected.

The Best Order to Consider Loss Relief to Get the Tax Relief Quicker

  1. Offset current year first – so that you get immediate tax relief from current year
  2. Carry back to previous years – so that you get tax refund from previous year’s taxed that you’ve already paid
  3. Bring forward to the future years – so you get tax relief if your business is profitable the next year

For sole traders, always remember to consider your tax-free allowances when utilising the losses, so that you can make sure your tax-free allowance won’t be wasted and you can maximise the tax relief you are entitled.

If you find this content useful, we do provide tailored professional advice on your personal or business tax matters. If you are interested, please direct message the author of this article so we can arrange a chat.

Health is Wealth: Looking After Your Health for Busy Professionals

‘Health is the Ultimate Wealth!’

It costs the NHS more than £11 billion a year to treat the diseases that are related to poor lifestyle choices! (Public Health England)

When we are thriving to build wealth, it is easy to forget that ‘Health is the Ultimate Wealth!’

However, the good news is, most of the chronic diseases can be prevented by healthy lifestyle choices. When you are healthier, as a medical professional, you are more productive at work, have more positive energy that can impact other people’s lives, and help more people be healthier and happier.

You are good enough to look after your health no matter what profession you are in as long as you prioritise it.

Tips to Prioritise Your Health and Plan Effectively

  1. Prepare Your Meals in Advance – Instead of cooking every day you could try to cook your food in bulk. This can be handy if you are a busy professional. It will enable you to fit in a quick and easy meal within your busy lifestyle and save you money. You will also be able to control what is going into that meal. There are a lot of healthy alternative food options out there that you can use to help.
  2. Scheduling and Planning – You can try to do something health-related as soon as you get out of bed. This will allow you to create a morning routine that you will eventually get used to and once you are, it will become a part of your lifestyle naturally.
  3. Preparing for Your Morning Routine – The first thing that you need to take into account is that your health starts with your mind. If your mind is not in a healthy place in the morning then it is really difficult to pick that up later on in the day. For example, if the first thing you do when you wake up is go through social media, whatever you may see whether it be positive or negative, it will stay in your mind the whole day.

Having a routine that takes you away from that is very important. Once your alarm goes off in the morning you could try to not check your notifications but instead, take some time to yourself. You could spend some time writing down things that you are really grateful for. This will instantly put you in a positive frame of mind as soon as you wake up because it is making you think about things that are making you happy.

You can then write down some things about affirmations. Affirmations are statements that you say to yourself that help you believe them. For example, if you are working towards your weight goal and you want to be healthier, you will write down, ‘I’m so grateful and happy that I can now fit into that dress.’

Lastly, you can then write down your intentions for the day. It is better to keep them basic so that you do not disappoint yourself. It could be anything small such as calling a family member on the day or messaging a friend. Fitting in a workout or exercise routine within this will also help. It is important to remember to always reward yourself consistently.

Creating a Lasting Habit and Sticking to It

This is something that a lot of people struggle with. It will always feel really unnatural when you first start off because it is not a habit just yet as you are not used to doing it. However, if you keep pushing yourself then you will overcome the hardest bit and afterwards everything will start to become more natural for you.

Once you have an everyday routine you will find it will be very difficult to go back to how you were. An important tip to take into account is to be prepared for the growing pains. If you can handle the difficult stages then things will pick up for you and everything will become easier. It is fine to challenge yourself because if you do not do this you will not grow as a person.

Healthy Snacks Ideas

  • Protein Ice Cream – The ingredients you need to use to make this is yoghurt, ice cubes, soy protein and then all you have to do is blend it then put it in the freezer for about 10 minutes.
  • A healthy alternative to KFC – All you need to do is get some chicken breasts, marinate them, add seasoning, crush up some cornflakes and roll the chicken breasts in them to coat it. You will then need to bake it.

Finally, why am I talking about this? Imagine more people start looking after their health, the costs of treating those diseases can decrease, so free up more money to invest in disease prevention, doctors’ welfare so they can be healthier first then look after more people, or even other things to enhance people’s lifestyle.

This is written just out of passion, if you have any thoughts or feedback on this topic, we’d love to hear from you.