February Question and Answer Corner

Newsletter issue - February 08.

Q. The Department of Work and Pensions has sent me a pension forecast which shows I've already paid enough national insurance contributions over the 44 years of my working life to receive the full state pension. Do I have to carry on paying class 2 NICs?

A. You must pay class 2 NICs if you are self-employed and have not yet achieved state retirement age, which is currently 65 for men and 60 for women. As you have already worked for 44 years you must be very close to the state retirement age. You don't have to pay class 2 NICs from the week you reach the state retirement age. Alternatively if your self-employed earnings are below the small earnings limit, (£4,635 for 2007/08) you can claim an exemption from paying NICs for the tax year.

Q. I have an order from a customer in Russia for a software licence. Do I have to charge VAT on that sale? Does it make any difference if I send the software on a CD or transfer it by email?

A. A licence to use computer software is always treated as a service even if it is supplied in a medium you can handle, such as a CD. So it doesn't make any difference to the VAT treatment if you supply the software on CD or by email. You should not charge VAT to your Russian customer as the supply of this service to a country outside the EU is outside the scope of VAT.

Q. My company is about to spend £60,000 on replacing asbestos roofs. Is there any special tax relief I can claim to help with these costs?

A. Land remediation relief applies for cleaning up contaminated land in the UK, which covers asbestos removal. If your company did not create the contamination by installing the asbestos in the first place, it can claim 150% of the costs of the clean up against its profits. If this extra deduction creates a loss, and the company can't relieve that loss against profits of the same or an earlier period, it can obtain a tax repayment of 16% of the loss from the Taxman.