What’s a Square Circular? Perhaps new (over the last year) clients and friends will be scratching their heads in wonder. Longstanding clients and friends will be nodding knowingly. It’s about time the Square Circular was once again doing the rounds (sorry!).
The Square Circular is when we used to give you interesting bits of information, usually about tax. We had a break to take stock. Should we deal with other matters besides tax? Should the Square Circular be e-mail only? Well, the one definite conclusion to emerge is that we have taken a break for too long. So, the cycle (sorry!) starts again.
J Morris & Co, Chartered Accountants, joined us a few months ago to help strengthen our small business unit, providing additional resources for bookkeeping, management accounting and fundraising advice for smaller businesses.
Since our last issue, we now have two new partners: John Evans, providing the support via J Morris & Co and Frank Atkinson, a very experienced practitioner from PwC giving support in the areas of business development, corporate finance and tax planning to owner managed businesses.
Visit our new and updated website at www.alexander.co.uk – a useful source of information for current issues affecting your business.
See our website for more detailed comment. In the meantime, here are a few tax headlines from Monday’s Pre-Budget Statement:
– Corporation tax – replacement of zero per cent rate and non-corporate distribution rate
with a single 19% rate
– Tax & NIC rates and thresholds – details for next year
– SIPPs investing in residential property – tax breaks for second homes end before they
– REITs – property investment vehicle for the future?
– Property planning gains – consultative process is a first step towards a tax charge on part of the increase in land value when planning permission is obtained
– Anti-avoidance – the screw tightens further!
– Leasing – new rules
– Research and development – improvements to be made.
If you want further information call 0161 832 4841.
DOES IT STILL HURT, THEN?
That massive tax bill that you had to pay two years ago or three years ago. Some people can shrug it off as soon as the ink on the cheque is dry and forget about it. With others it rankles. You’ll get even with the Taxman one day, won’t you?
We’re sure you know that it you make the right kind of investment you don’t have to wait. If you invest in a new trading partnership that suffers a loss and choose to set back your loss against profits of three years ago you can get your tax back. The kind of investment we’re talking about is one in a film partnership. More recently, people have also started to think about investment in Carbon Credits. It might sound esoteric but it’s not really. Such investments don’t even need to be disclosed under the anti-avoidance disclosure rules in the Finance Act 2004.
PREVENTION BETTER THAN CURE
The type of investment mentioned above can, of course, also be used against current year’s income so as to not have to pay so much tax in the first place. In addition to investments in films, there are currently popular marketed schemes which are more aggressive and have to be disclosed to HMRC, but can be very effective. Imagine the company of which you are a director choosing to pay you a bonus of £250k (that’s usually the minimum worthwhile), getting a full corporation tax deduction for it but you pay no income tax. Sounds too good to be true?
The downside is that a particular scheme may not work and you lose the fees which have been paid to the promoters of the scheme. Not for the fainthearted! But if you do think it’s worth ‘taking a punt’ we can certainly guide you as regards what’s available – ranging from low risk deferral schemes to higher risk tax savings schemes.
Call us on 0161 832 4841.
SAVING TAX WITHOUT RISK
….. and it’s quite simple
….. and we told you about it ages ago.
Do you remember a few years ago, when the rules about the provision of cars as a benefit to employees were dramatically changed, it was pointed out that there were some unexpected consequences as regards winners and losers under the new system. Then, there were also changes as regards ‘green’ cars when cars with CO2 emissions under 120gm/km became eligible for 100% capital allowances. The end result is that providing environmentally sound cars to a spouse or children of company directors or employees can turn out to be quite tax efficient.
And, here’s a little snippet for drivers of diesel company cars. If you register a new car after 1 January it may cost you more in tax than if the new car is bought in December. This can apply over the life of the new car. Only how many more shopping days until 31 December?
HERE’S SOMETHING FOR ALL
All right, we’re not all trying to avoid massive tax bills or get refunds of tax paid three years ago. We’re not all able to influence company decisions whilst having teenage children who are keen to drive Smart cars. But most of us do want to get old and, one day, retire. In most cases that means…..yes, pensions.
No, we’re not going to tell you all about the A-Day changes now. You read about little else in the financial pages of a Sunday newspaper. This is just a reminder. The opportunities offered by the A-Day changes are tremendous, even with the amendments in the Pre-Budget Statement, but for some people protective action may also be needed – why not talk to us on 0161 832 4841 so we can point you in the right direction . But don’t leave it until April 2006.
PRINCIPAL PRIVATE RESIDENCE (PPR)
This is something everyone knows about but a little revision doesn’t hurt, especially if we’re able to clear up one or two misconceptions at the same time.
If you’re selling a property and it has been your home at some time, you can claim PPR relief from CGT in respect of any period when it was your only or main residence, plus the final three years of ownership. Put another way, if you’ve moved out of your house but sell it within three years, you should have no CGT to pay.
If you’ve moved house and rented out your old property, there is a further relief which can be claimed against that part of the gain not covered by PPR. This further relief is the lower of £40,000 and the amount of the gain, otherwise exempt by virtue of PPR relief. Double it if a property is jointly owned, e.g. by spouses, and the amount involved is not to be sneezed at.
If you do have more than one residence you have the opportunity of making an election to clarify which home is the one to attract PPR. It is usually good practice to make an election even when it is quite obvious which property is, in fact, your principal residence – but now we’re starting to get into complications……
We have recently become aware of an opportunity to invest in property in such a way as to obtain immediate tax relief against current year’s income, whilst producing a rate of return which should be fairly competitive over a number of years. When the ‘investment’ was outlined to us it did remind us a little of the old Enterprise Zone investments. It is only a tax deferral idea but, of course, everything depends upon how you invest the initial tax saving.
We’ve not got full details yet but when we do, we’ll mention more. In the meantime, if you think it’s an opportunity which may interest you, please do let us know of your interest by calling us on 0161 832 4841 so we can make a point of giving you the relevant information as soon as we know more ourselves, which hopefully will be by the end of January 2006.
IT DOESN’T END HERE
Do you know where your business will be in five year’s time?
Do you know how to get there?
We can help you identify and achieve your targets. We offer to facilitate a strategic planning day which will help you to clarify where your business is now and plan for what you want, not more of the same. Contact Stephen Verber on 0161 832 4841.