Managed Service Companies
The Finance Bill will introduce a statutory definition of a ‘managed service company’ (MSC). Income received by individuals providing their services through MSCs will be deemed to be employment income where it is not already treated as such. From 6 April 2007, MSCs will have to operate and account for PAYE and Class 1 NICs on all payments received by individuals providing their services through such companies. Where an MSC incurs a PAYE/Class 1 NIC debt, and that debt cannot be recovered from the company, HMRC may transfer the debt to ‘specified persons’ from 6 August 2007. These will primarily be the MSC’s director and the person who provided the company, but may also include ‘persons who encourage, facilitate or are otherwise actively involved in individuals’ provision of their services through MSCs’.

Company Car and Fuel Benefits
The tax benefit of a company car, made available for an employee’s private use, is calculated by applying the appropriate percentage to the list price of the car. That percentage ranges from 15% (additional 3% for diesel) to 35% according to the car’s CO2 emissions.

From 6 April 2008, cars capable of running on high-blend bioethanol E85 fuel (an 85% blend of bioethanol) will attract a 2% discount from the appropriate percentage.

The tax benefit of fuel provided for private use in a company car is computed by applying the appropriate percentage to a set figure of £14,400, frozen for 2007/08.

Car and Car Fuel Benefits: Legislating ESC A104
The existing HMRC Extra-Statutory Concession (ESC) A104 is to be given statutory effect for 2007/08 onwards. ESC A104 was introduced in July 2004 to remove an anomaly whereby an employee on less than £8,500 per annum could incur a double tax charge if provided with car and car fuel benefits via an employer credit card or non-cash voucher. The new legislation will have the same effect as the concession.

Homes Abroad
The Government plans to legislate in 2008 to ensure that individuals who have bought a home abroad, for occupation or letting, through a company will be exempt from tax on any potential benefit in kind for private use of the property.