One of the most significant changes announced in the Budget was the increase in the rate of capital gains tax and the extension of entrepreneurs’ relief. But the extension isn’t as generous as might first appear and will affect small and medium sized business owners if they aren’t aware of the tax planning opportunities available.
Continue Leave a Comment August 11, 2010
Yesterday’s Budget was the first decent budget for entrepreneurs and business owners for some time and it’s exactly what the country needs to help rebuild economic activity.
Continue Leave a Comment June 23, 2010
The weekend papers were full of news about the planned increases to capital gains tax (CGT) announced by the new government. Some commentators have argued that this change has been on the cards for some time, although during the Election campaigning it was only the Lib Dems that formally announced their intentions. Subsequently incorporated into the coalition’s policies, we can expect CGT rates for top earners to more than double for non business assets and the exemption threshold to be cut from £10,100 to between £1,000 and £2,000.
These changes will be painful, especially since for the past 2 years, the flat rate of 18% has been extremely generous. But given the poor state of the Treasury’s coffers, the disparity between income and capital tax rates cannot be sustainable.
Continue Leave a Comment May 27, 2010
Last week, the new Conservative LibDem coalition government was announced amid a flurry of guarded excitement and scepticism. The coalition has been quick to stamp out suggestions that their political differences will be too marked to produce effective financial policy and so far, the speed with which agreements have been reached is impressive and very positive in terms of their quality.
Continue Leave a Comment May 19, 2010
The current situation with a hung parliament offers a very interesting parallel to the question facing some entrepreneurs of adopting either a partnership or a limited company status. At a micro level, the issues facing partners within a business are very similar. There is no right or wrong approach, and each business needs to decide individually which structure to opt for. (Of course, this is only an issue where a business has more than one main contributor.)
In my experience, businesses tend to prefer operating as a partnership when there is a desire to retain the full involvement of all members in the decision making processes. It is sometimes felt that if authority is devolved to a particular board member to make decisions relating to certain aspects of the business, then the decision making powers of other key figures within the business will be diluted. And therein lies the challenge, both at a business and political level. But if a business is well governed, this isn’t necessarily the case.
The biggest disadvantage of the partnership structure is that decision-making is slower because each time, a consensus needs to be achieved. The downsides of this are a loss of spontaneity and the ability to capitalise quickly on opportunities. All too often, it’s the “being in the right place at the right time” scenario that has meant an entrepreneur has achieved great success.
And isn’t this exactly what is happening in Government right now? It has taken a number of days for the Tories and Lib Dems to strike a deal and form a coalition government. The view from business is pretty unanimous. They regard a hung parliament to be just about the worst thing that could have happened to the UK economy, just when it looked like the country was starting to climb slowly out of recession. Now we potentially have more uncertainty and no real direction – so let’s hope this new “partnership” Government can make some swift and effective decisions, otherwise, we can expect another Election in the coming months.
Lesley Stalker is Head of Tax at RJP
Leave a Comment May 11, 2010
I wrote this article for the EBA blog and thought I would post it now because it’s attracted some comments….a great tax planning opportunity for some….so read on if you are a business owner…..
There weren’t many announcements in last month’s Budget that we didn’t already know about, especially if you are one of those affected by the 50% tax rates. But there was one rather nice surprise in the form of doubled entrepreneurs’ relief.
Aside from the previously announced NI increase or so called “jobs tax”, one of the other controversial changes made by this Government was, in 2008, to abolish the taper relief previously introduced as an incentive for entrepreneurs. When entrepreneur’s relief was announced as a replacement, the £1m was considered rather a paltry amount. So, when in last month’s Budget, the lifetime limit on gains qualifying for entrepreneurs’ relief was increased from £1 million to £2 million for disposals made on or after 6 April 2010, it was welcomed as a positive measure.
This is especially true because it has been largely considered to be a vulnerable relief, and, in fact, most advisers anticipated wider changes to capital gains tax to better reflect income tax rates in the Budget. But this didn’t happen.
In view of this, many business owners will be seeking to trigger capital gains in order to utilise this relief sooner rather than later. And those who have already utilised the relief to its previous limit of £1m may have an opportunity to take a second bite of the cherry.
Whilst the outright sale of a business or company shares is the obvious way in which to trigger a qualifying capital gain, other things to consider are as follows:
• Incorporation of non-incorporated businesses – this may trigger a capital gain following the valuation of the goodwill of the business and subsequently, depending on taxation rates involved, could also provide a more flexible and beneficial means of managing personal income levels in the future;
• Sale of a number of shares or the granting of EMI options over personally held shares;
• Inheritance tax planning by considering gifting shares.
However it is important that steps are taken quickly to secure any tax planning opportunities that have arisen following this legislation. Should there be a change of Government after May 6th,, any capital gains tax related tax relief may be subject to change.”
Leave a Comment May 4, 2010
We predicted it would be a controversial pre-budget report and it lived up to expectations, with some headline measures that are clearly designed to win over the hearts and minds of Labour’s core supporters. But in spite of this, most observers would agree that overall, it was a pretty good result for Surrey’s business owners.
Continue Leave a Comment December 11, 2009
If ever there was a policy designed to score quick political points it’s the Lib Dem’s suggestion that people with a property over £1m should pay an extra tax of 0.5%. And if there was a move that is more demoralising to tens of thousands of hard working small business owners, I’d be surprised. However, the proposals do raise an interesting question as to the fairness of the tax system and especially the discrepancy between capital and income tax rates, writes Lesley Stalker.
Continue Leave a Comment September 26, 2009
We have become aware that there has been a small amendment by HMRC which has the effect of slightly increasing the contributions on which you can obtain 40% tax relief in the current year from £20,000 to £30,000 in certain circumstances.
Continue Leave a Comment September 8, 2009
There wasn’t much cheer in the Budget for small business owners, what with the new higher rate of tax introduced and the implications on pension contributions. But there are always opportunities for tax planning, which could help minimise your tax liabilities in the future. Here are some of the most worthwhile:
Continue Leave a Comment August 6, 2009
TAX Talk RSS Feed50% tax rate Accountancy Bookkeeping Budget Stuff capital allowances capital gains tax (cgt) company news company secretarial company structure Corporate Taxation CVA eis enquiries entrepreneurs relief exit strategy financial advice governance government Green taxes HMRC IHT insolvency investment jobs LLPs patent box Payroll Tax pensions Personal Taxation Pre-Budget Report (PBR) property R&D tax credits Share Schemes small business small business record checks tax planning tax relief Taxation Uncategorized VAT
