In December last year draft proposals were put together to eliminate commonly controlled companies as “associates”. What does this mean? Practically, if you control a company and your spouse controls a second company, they would have been “associated” for tax purposes. This could have resulted in higher tax payments.
The Chancellor announced that instead of the main rate of Corporation Tax being reduced to 27% with effect from 1 April 2011, this will now be 26%. He has also stated that for 2012 the rate will be reduced further to 25%.
On 31 March I presented at the Morgan McKinley Finance Forum held in Gatwick. There were a wide range of businesses represented from owner-managed businesses up to multi-nationals. The main focus of the talk was announcements made in the Budget changing Corporation Tax and business tax.
The current rules to determine whether an individual is UK resident or not are very unclear and complicated. George Osborne announced on 23 March that the government would be looking to introduce a statutory definition of residence.
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.
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 have just released guidance on the new disincorporation relief which can be applied from 1 April 2013. The new relief is available to the shareholders of companies who want to transfer the business as a going concern, along with all of its assets into an unincorporated structure after this date.
I have just read that new car sales have accelerated to a new five year high. Whilst I am sure the tax benefits are not the only reason people are investing in new vehicles it may certainly be a factor. For business owners the purchase of new cars with low Co2 emissions means that they can benefit from 100% relief in the year of purchase against their businesses profits.
Since their introduction in 2000, LLPs have become increasingly popular as a vehicle for carrying on a wide variety of businesses. The LLP is a unique entity as it combines limited liability for its members with the tax treatment of a traditional partnership. Individual members are deemed to be self-employed and are taxed as such on their respective profit shares.
It is not uncommon that after a number of years the owners of a family business want to step away and let their children take control. Despite handing over the running of the business, sometimes the parents would like to access the profits which may have been accumulated in the company to be paid out to them if it can be done tax efficiently.
In a recent tax tribunal case, a dentist who had been in business for many years retired in September 2010. Having settled all his PAYE liabilities he phoned HMRC to check he'd done all that was required of him. He was assured that he had anything was up to date. He found out a year later that he had been misinformed by HMRC and that he was still obliged to file a PAYE Return for the 2010/11 Tax Year, which he duly did without delay the following month. He was then charged a penalty of £500 for its late submission.
With Budget Day on Wednesday the contents of the Chancellor’s speech are being kept securely under wraps. It is difficult to know whether “no news is good news” or as there hasn’t been much in the media may mean there are major changes which may be unpleasing to businesses and individuals afoot, with the government therefore seeking to forestall any moves to counteract the changes.
The current Corporation Tax rate is 20% across the board for all companies. It was previously announced that this will reduce to 18%. In today’s Budget a further reduction has been announced so that the rate will reduce to 17% from 2020, which will mean that the UK will have the lowest rate in the G20.
Some welcome amendments are to be introduced for companies making losses. Currently, many losses can only be carried forward and offset against future profits from the same trade or activity. The Government have recognised that this is outdated and for losses made after April 2017, those losses will able to be carried forward and offset against any profits made subsequently or can be offset against profits made within a group structure.