One of the better issues to have arisen out of the budget I believe. For companies who carry out their own qualifying "research and development" work, the amount of tax credit relief you can receive from the government going forward will be increased.
You may know that certain very tax efficient small cars (Qualifying Low Emission Cars "QUALECS") qualify for 100% tax relief in the year in which a company purchases the vehicle. You may also know that generally it is not tax efficient to have a company vehicle!
With the Coalition Government in place, there have been several changes to tax and employment legislation and it's important that businesses know the current lie of the land. I am positive that these seminars will help business owners understand how they can operate tax efficiently and maximise profit.
I have just been reading details of the new 'education' initiative by HMRC. The scheme is designed to help new business owners by talking them through the main things they need to be aware of and direct them to the relevant page on their online help.
Hundreds of mumpreneurs attended the popular BusinessMums Summit at the Thistle Hotel in Brighton. They visited the Spofforths stand and showed great interest in our range of business support services.
Businesses can claim an annual investment allowance – AIA - for capital expenditure incurred on most items of plant and machinery. However, there is a planned reduction in the AIA - to £25,000 from 1 April 2012 (6 April for unincorporated businesses) and many businesses could have to wait over 25 years to benefit from a full tax relief on new plant.
I have just read that the Office of Tax Simplification (OTS) has completed its review of tax advantaged employee share schemes. The OTS has spent its time considering the special tax reliefs available for government approved share schemes such as Save As You Earn (SAYE) and the Enterprise Management Incentive (EMI) scheme. As a result of their review they have recommended introducing a self-certification process, merging the EMI with another scheme called Company Share Option Plans (CSOP) and harmonising definitions, time limits and modifying certain conditions.
Chancellor George Osborne delivered his third Budget this afternoon and Spofforths is now busy providing media across Surrey and Sussex with comment and analysis. Bryan Elkins, Head of our Tax Consultancy team, is taking part in a number of local radio and newspaper interviews. He will discuss what the Budget means for the average household and businesses.
In his budget the Chancellor announced the introduction of a new cash basis for calculating tax for small unincorporated businesses with a turnover less than the VAT registration threshold of £77,000. Although no details are currently available, the scheme, which is intended to be voluntary, will be introduced in April 2013.
Following the budget announcement on a cash basis accounting method for smaller businesses I have today seen a copy of the consultation document in relation to this. The proposals are that businesses with turnover of less than £77,000 will be eligible to account for their income based on the money received, not invoiced. Once they start using this method of accounting they will be able to continue until their total receipts exceed £150,000 in a tax year. Partnerships will be allowed to use this basis also and where an individual has multiple businesses, the cash basis would only apply if all of their businesses were eligible.
Comments on the proposed simplified expenses has also been included in this consultation. Standard mileage rates for business use of cars or motorcycles, flat rate expenses for use of home as office and also a flat rate adjustment for personal use of a business premises have all been included.
We would like to congratulate our client Turbosound on winning a 2012 Queen’s Award for Innovation, recognised for the development of two acoustic design innovations at the heart of the company’s ground-breaking Flashline loudspeaker system. Five arena-sized systems have been shipped and are already in use on concert tours around the world. This is the third Queen's Award that Turbosound has won in its 30 year history, alongside the Export Achievement Awards granted in 1987 and 1997.
HM Revenue & Customs have recently launched a Business Tax dashboard on their website which allows business owners to access HMRCs information more easily. The Business Tax dashboard brings together information from different tax portals. This will include Corporation Tax or Self-Assessment, VAT (if registered) and PAYE (if an employer). The information will include the amount of tax owed as well as the status of any payments or penalties. It will also allow you to amend contact details, including an email address and will be updated each weekend to reflect payments and returns that have reached HMRC within the last 5 working days.
If you are a personal service company you may be interested to know that HMRC are due to release a new 'business entities test' shortly. This new tool can be used to assess whether or not your company is likely to be at risk of the IR35 rules. By answering a small number of indicative questions you score points and the total score will be reflect whether or not your company is considered to be at a low ,medium or high risk.
I am proud to announce that Spofforths will be sponsoring the GP Practice of the Year category at The News Best of Health Awards 2012. The Awards ceremony, hosted by TV presenter Fred Dinenage, will be held at Guildhall, Portsmouth on 21 September. This award is a wonderful way to say thank you to a GP Practice which has made a huge difference to one patient or the local community.
Following on from my blog last week, HM Revenue & Customs have now released their risk assessment questions in relation to IR35. There are 12 tests ranging from business premises to billing with points being attributed to you based on your answers. The guidance published by HMRC does not confirm whether or not your are caught by the rules governing IR35 but will give an opinion as to whether or not your business is at risk to the legislation. The publication has been heavily criticised by several business groups due to the lack of clarity and fairness in dealing with the issues.h
Following the recent release of the IR35 risk tests issued by HM Revenue & Customs HMRC have been writing to personal service company contractors warning them that they may face investigation under the IR35 tax rule. Where you do not consider yourself subject to the legislation HMRC are asking you to provide evidence and explain how the conclusion has been reached. It is thought that the letters have, so far, been sent to the 'high risk' companies but it is probable that the correspondence will be directed to all relevant companies over time.
The October edition of Sussex Life is now in print and features our Tax Consultant, Jo White, who looks at some key issues that charity treasurers might face. Jo was asked to produce the case study style feature that is sure to benefit those who seek specialist charity advice. You can read the full article which appears on page 277 by clicking here.
Enterprise Management Incentive schemes (EMI) are a great way to reward, retain and incentivise key members by giving them the opportunity to buy shares in their employing company in a very tax efficient way. Under the scheme an employee is given an option to buy shares in the future at a fixed price. Assuming certain conditions are satisfied, it has always been the case that any uplift in value is liable to Capital Gains Tax rather than Income Tax (which would be the case without the EMI scheme), at lower rates of tax.
HMRC have confirmed that they are to pursue a cross-tax single compliance process (SCP) for enquiries into SME businesses. The new framework has already been through a pilot testing phase in the past year and HMRC have been working with a small committee of investigators and tax agents since March to refine the process. It would seem that the introduction of this scheme has already resulted in more direct tax enquiries being concluded quickly with 86% of customers being ‘extremely positive about their experience’.
HMRC launched a consultation in July in respect of company loans to shareholders and/ or directors. Currently when a close company loans money to its participators and the loan remains outstanding at the accounting end date, a temporary tax known as s455 is payable equal to 25% of the loan balance. This tax is repayable 9 months and 1 day after the end of the accounting period in which the loan is repaid. Only recently have there been changes to the rules as to when the s455 tax is recoverable which essentially restricts when a repayment is made.
From April 2014 every business, charity and CASC (Community Amateur Sports Club) will be entitled to an annual “employment allowance” of £2,000 to reduce their Employer’s Class 1 National Insurance Contributions liability.
New associated company rules will be introduced from April 2015, following the main rate and small profits rate of corporation tax being unified. The simpler rules will be based on 51% group membership which should bring significant simplification to current complex rules.
These costs are recognised as a real barrier to business. The government will cap the increase in business rates at 2% for 1 year from 1 April 2014. A 50% business rates relief for 18 months for businesses that move into retail premises that have been empty for a year or more when they move into empty premises between 1 April 2014 and 31 March 2016.
The proposed changes to simplify rules on such loans (“loans to participators”) for companies are no longer to be made. This was something that was expected to be introduced following earlier consultation.
Consultation to take place on limited corporation tax relief for commercial theatre productions to be introduced from April 2015. Also, a targeted tax relief for theatres investing in new works or touring to regional theatres.
Partnerships Review – Provisions will be introduced to counter the use of LLPs to disguise employment relationships and the tax-motivated allocation of business profits to corporate partners, which are generally taxed at lower rates than individuals. New rules will also be introduced to clarify and rationalise the taxation of corporate partners where loan relationships and derivative contracts are held by a partnership.
For businesses making supplies of telecommunications, broadcasting and e-services across the EU, major changes to the place of supply rules and the introduction of the VAT Mini One Stop Shop (MOSS) will take effect from 1 January 2015. Although this is some time away, preparatory steps need to be taken with businesses being well advised to update their customer procedures during 2014 so as not to be caught out come 1 January 2015.
Individuals can ask for Gift Aid donations to be treated as being paid in the previous tax year. If they have made gift aid donations in 2013/14 already, or make them before 31 January 2014, the amounts can be carried back to relieve higher rate (or additional rate) taxed income in the previous tax year. Specifically, additional rate taxpayers with taxable income in excess of £150,000 should consider a carry back since the top rate of tax dropped from 50% in 2012/13 to 45% in 2013/14 so the same gift can generate greater tax savings through carry back.
When acting for a client it has always been our policy to register as their agents with HMRC. This ensures that where they have any questions relating to the individuals/ businesses tax affairs they will, in the most part, liaise with us direct, taking the stress away from our clients.
The UK Government has proposed to close its Patent Box tax scheme to new entrants in June 2016, and shut it down completely five years later, following pressure from other EU countries who were concerned companies would move to the UK.
With technology changing the way a business structure its IT systems has evolved. The use of Cloud based software and systems means businesses no longer need IT equipment such as servers, however it may mean that the office computers and such need upgrading to keep up to date with the technological advances.
Significant changes to the tax treatment of company dividends were announced in the Summer Budget, which will particularly affect owner-managed companies where income is extracted in the form of dividends.