blog

Tax holiday extended to encourage business investment...

Wed, 01 May 2013 15:35:47 +0200

A Government incentive introduced to encourage business investment has been extended for two years. Individuals who invest in new companies operating qualifying small businesses, may be able to benefit from capital gains tax (CGT) relief.

The Seed Enterprise Investment Scheme (SEIS) was launched in 2012 to encourage people to invest in start-ups, by offering a range of income tax and capital gains tax reliefs for subscribing for new shares in these companies.

As an extra incentive, an investor who re-invests a capital gain of up to £100,000 made in 2012/13 in SEIS shares in the year is able to claim CGT exemption on that gain.

It is now proposed to extend this re-investment relief for gains made in the tax year 2013/14. Reinvestment relief of 50% of the matched gain will be available where the proceeds are invested in SEIS shares in either 2013/14 or 2014/15.

Andy McQuillan, Tax Partner said: “The Chancellor, George Osborne, announced these changes as part of his recent Budget plans, as the Government looks to encourage more investors to take advantage of SEIS and support new startup businesses.

“The scheme offers a range of tax reliefs, so anyone looking to invest in new businesses should seek professional advice as soon as possible if they wish to maximise on the tax breaks that might be available, while they remain in place.”

Tax relief set to help bosses manage sickness absence...

Tue, 23 Apr 2013 12:48:46 +0200

Business owners will be able to benefit from tax relief when they pay to help their employees return to work after sickness.

Employers will be able to receive a tax relief, on expenditure of up to £500, on support such as health treatment that has been recommended by a new health and work assessment and advisory service.

The measure was announced in the Budget on 20 March. The Government will consult on the details of the tax relief later this year ahead of the introduction of the health and work assessment and advisory service in 2014.

The service, which was first announced by the Government in January, will provide occupational health expertise to many small businesses for the first time. It will provide an occupational health assessment after four weeks of sickness absence, following which it will ensure individuals receive the most appropriate interventions, case management and follow-up support.

John Southwel, Partner said: “More than 130 million working days are lost to sickness absence, so the introduction of this tax relief and the new assessment and advisory service should hopefully help businesses hold on to their staff and help them stay in work.”

National Insurance cut boost for small businesses...

Fri, 19 Apr 2013 11:04:52 +0200

Small business owners should seek advice to see if they will be exempt from paying employers’ National Insurance Contributions (NIC) when new measures come into force.

From April 2014, all businesses in the UK will have their NIC reduced by up to £2,000, under changes announced by Chancellor George Osborne in his 2013 Budget, which could see up to a third of all employers not having to make any contributions at all.

The Employment Allowance, as it will be known, will also apply to charities and community sports clubs. According to the Treasury, the change will be applied through standard payroll software.

Andy McQuillan Partner said: “This will come as good news to many small businesses, who could find that they no longer have to make employer contributions at all after April 2014.

“If all goes to plan, the Employment Allowance should remove a significant financial hurdle for new business owners wanting to take on their first employee. If you are a business owner, or are planning to set one up, it might be a good idea to seek professional advice to see how this change will affect you.”

A Budget for our “Aspiration Nation”...

Thu, 21 Mar 2013 14:38:58 +0100

The Chancellor began his speech today by reminding us of the tense economic situation in Europe, particularly in light of recent developments in Cyprus. As 40% of our exports are within European markets, it is important to keep this in mind.

However, despite this gloomy news from the continent, the Chancellor predicts continued growth for the UK economy right through to 2017.

To aid continued growth the Chancellor announced a further £3bn investment in our infrastructure (railways, roads and broadband capabilities) referring to these as the “economic arteries of the country”.

From a local perspective, it was announced that the ceramics industry will be given a specific exemption from a tax known as the climate change levy. This is very welcome news to Stoke-on-Trent where much of this industry is based and we can thank local MP, Tristram Hunt, for his continuous lobbying for the introduction of this new tax break.

George Osbourne proudly announced that the UK now has one of the most competitive tax regimes in the world. However, further tax measures will be introduced to further enhance the UK’s world-leading position. This includes increased tax relief for companies undertaking research and development and extended tax breaks for individuals investing in new companies via the Seed Enterprise Investment Scheme. The main rate of Corporation Tax rate will also fall from April 2015 to just 20%.

The Chancellor reported that the introduction of the 50p income tax rate has actually resulted in a fall in overall tax revenues. Hence the Chancellor is now determined to make the UK’s tax system more competitive and, in turn, deliver higher tax revenues.

The Chancellor has also promised the largest ever package of anti-avoidance to come into effect to stop companies and individuals avoiding tax. The Chancellor plans to use the UK’s 2013 presidency of the G8 group as a platform for driving these new measures.

Help for young families was announced with the introduction from autumn 2015 of a childcare allowance. This will allow working parents to claim up to 20% of childcare costs, subject to a maximum of £1,200 per child.

Further help was offered to Britons by the introduction of a “Help to Buy” scheme. This package comes in two forms. Firstly, the government will provide mortgage guarantees to help support lenders who are currently reluctant to lend. Secondly, the government will introduce a scheme whereby they provide up to 20% towards a deposit upon the acquisition of a new build home. The loan will be interest free for 5 years and then repayable when the home is sold.

Welcome news for motorists came in the form of a freeze on fuel duty in September 2013 and there was even better news for beer drinkers with the abolition of the beer duty escalator and a cut in beer duty overall by 1p.

The government has stuck to it’s promise of delivering a £10,000 personal allowance by the end of the parliament and this has in fact been brought forward by a year and will come into effect from April 2014.

Finally, great news for small businesses looking to employ staff. The Chancellor announced that the first £2,000 of any company’s employer’s NIC liability will be cut. In real terms, this means that an employer can now employ 4 people on national minimum wage without incurring any employer’s NIC.

HMRC draws up timetable to snare tax evaders

Thu, 14 Mar 2013 17:43:04 +0100

HM Revenue and Customs (HMRC) has drawn up a timetable of investigations it plans to launch over the next six months as part of an ongoing crackdown on tax evasion by wealthy individuals.

The document, entitled ‘Closing in on Tax Evasion’, sets out the ways in which HMRC will target affluent UK taxpayers suspected of not paying their fair share of tax.

HMRC will begin by scrutinising self-assessment tax returns submitted for the 31 January deadline for evidence of potential tax evasion and in February HMRC cross-checked information held by credit reference agencies to identify those whose income and wealth does not match records held by HMRC.

March’s campaign will see tax officials targeting people with second or multiple properties in the UK or abroad who have not declared any profits or gains made from these properties.

HMRC will increase the number of specialist investigators in April, resulting in more than 300 dedicated staff focusing on the affluent individuals suspected of tax evasion or avoidance, also using new data-driven tools to seek out those who are evading tax. HMRC’s ‘affluence unit’ has already announced that it is now targeting individuals with assets and property worth £1 million, having previously focused on those with £2.5 million or more.

In May, HMRC will identify offshore trusts it believes are being used to hide income and assets overseas.

Andy McQuillan, Tax Partner at Dains said: “This timetable of investigations shows that HMRC is continuing its toughened stance on illegal tax evasion. This makes it all the more important to ensure your tax affairs are in order. A simple error or unintentional discrepancy could attract HMRC’s attention, so if you are unsure of anything then it is worth seeking qualified professional tax advice.”

HS2... tax advice for property and landowners...

Mon, 04 Mar 2013 13:12:29 +0100

Following the government’s recent release of the proposed route for HS2, Dains are advising affected landowners how to maximise potential compensation payments.

Property and landowners affected by the impending high speed rail link (“HS2”) should plan ahead in order to secure compensation, particularly given the various tax charges that can be levied on such payments.

There are various types of payment that can be made. Firstly, a compulsory purchase order (“CPO”) can be served whereby a market value payment is made in return for the compulsory acquisition of land.

However, if your property or land is not subject to a CPO, you may still be entitled to make a claim for compensation if your property is affected by HS2. This can be due to noise, building disruption or blight on the landscape.

The tax consequences of the receipt of payment under a CPO or under compensation are complex. However, there are a number of specific reliefs available and, with careful planning, it is possible to structure your affairs such that any relief is maximised.

Many compensation packages are made up of several different components, all of which are taxed differently and it is therefore vital that the appropriate advice is sought.

Another key factor here is land valuation. It is important for landowners to realise the maximum value of their land in order to benefit from any CPO or compensation payment.

If you would like to discuss how HS2 affects you, please contact Phil Pellegrini on freephone 0800 298 3899 in the first instance.

Gift Aid Small Donation Scheme...

Tue, 26 Feb 2013 15:15:16 +0100

Following the announcement in the 2011 Budget that a new small donation scheme would be introduced in 2013, the Small Charitable Donations Act 2012 received royal assent in December 2012.

The aim of the new Gift Aid Donations Scheme is to allow charities and Community Amateur Sports Clubs, to claim a Gift Aid style payment on small donations where it is traditionally difficult for charities to obtain gift aid declarations, such as bucket collections.

The scheme will only be available to organisations which have a clean gift aid compliance record with HMRC. The organisation must have been registered for gift aid with HMRC for the last three tax years and have made at least three successful claims in the last seven years.

The Small Donations Scheme will be limited to a maximum annual claim of £5,000 worth of donations. In cash terms for an organisation this is a potential £1,250 worth of additional funding.

Claims under the Small Donations Scheme must be made within one year of the end of the tax year in which the donations were collected. Organisations will make their claims under the Small Donations Scheme in the same way that they currently claim for Gift Aid. HMRC are currently developing a new online claims systems which is expected to be introduced later this year..

For further information or advice on the above please contact Andy Morris or Mark Gurney on 0800 298 3899, email enquiries@dains.com

Dains oversee multi-million pound sale of composites firm...

Fri, 25 Jan 2013 11:45:55 +0100

Dains corporate finance has advised on the sale of Langley Mill-based Amber Composites in a multi-million pound deal.

Specialising in the production of advanced composite materials, the company serves customers worldwide in the aerospace, automotive, motorsport, and marine industries. The company has put particular emphasis on making vehicles more efficient and has recently won large contracts with major automotive manufacturers.

Corporate finance advice on the deal was led by Simon Bursell and Jenny Moore to Amber Valley Holding Company as it sold the business to Dutch textile technology company Royal TenCate.

Simon Bursell, Corporate Finance Partner comments: “Amber Composites is a world class manufacturer at the cutting edge of composite materials technology. This transaction has completely justified the management team’s strategy of providing outstanding customer service and continuing to invest in the business despite the uncertain economic environment.”

Director of Amber Valley Holding Company, Jonathan McQueen commented: “The expert advice, project management, and leadership Dains has provided throughout this complex deal was invaluable, allowing me to continue to manage the company effectively during the process.”

Amber Valley Holding Company will use funds raised from the sale to invest in TRB Lightweight Structures, a design and manufacturing business it purchased along with Amber Composites in 2007. Jonathan added: “We are looking forward to focusing on TRB where our goal is to become a world leader in the design and manufacture of lightweight structures.”

HMRC warn businesses on late VAT returns...

Fri, 11 Jan 2013 11:05:50 +0100

As many as 50,000 businesses that have failed to submit VAT returns will be targeted by HM Revenue and Customs (HMRC) this month with warnings that their tax affairs will be closely scrutinised.

More than 600,000 businesses have to put in VAT returns each month and most do so on time. But in a new campaign some 50,000 will be warned that, from 28 February, their tax affairs will attract greater attention.

The VAT Outstanding Return campaign is aimed at businesses that have one or more VAT return outstanding, and have been told to submit their returns but have not done so. Some will have received an assessment of VAT for these periods.

These businesses are being given an opportunity to get up to date and pay the tax they owe by 28 February. After that, HMRC will target them and take a much closer look at their tax affairs. By using this campaign to come forward voluntarily, they might receive better terms, as any penalty they pay may be lower than if HMRC comes to them first.

Phil Luty VAT Partner said: “If HMRC has sent you a VAT return and you have not yet taken any action, this campaign is a clear reminder to bring your tax affairs up to date promptly. HMRC can use its legal powers to pursue outstanding returns and any VAT that is unpaid plus Penalties, even criminal investigation, could follow. If you require assistance in bringing your VAT affairs up to date or would like to review your current processes to eliminate any inaccuracies- please contact us."

For further information or advice on all matters concerning VAT, please contact Phil Luty on 0121 384 9587 or email: pluty@dains.com

HMRC targets smaller businesses...

Mon, 10 Dec 2012 12:28:54 +0100

Business owners should ensure their tax affairs are in order as HM Revenue and Customs (HMRC) increases its focus on smaller firms.

New figures show that HMRC collected 40 per cent more revenue in tax and fines from smaller businesses in the last tax year as it steps up its efforts to clamp down on tax evasion.

According to the latest research, HMRC investigations into smaller firms produced an extra £434 million in tax and fines in 2011/12, compared to £311 million in 2010/11.

Andy McQuillan, Partner said: “In many cases, smaller businesses simply do not have the resources to deal with a tax investigation, meaning that demands for extra tax go unchallenged. This, in turn, effectively makes SMEs easier targets for HMRC than larger firms.

“If you are the subject of a tax investigation then it is important to seek professional help at the earliest opportunity. However, now is the time to ensure your company’s tax affairs are in order, rather than waiting for the taxman to come calling.”

Mini-Budget seeks to help small businesses...

Thu, 06 Dec 2012 12:56:58 +0100

Businesses may benefit from key measures introduced in the Chancellor’s Autumn Statement.

A number of measures were introduced by George Osborne designed to help small and medium-sized businesses grow and encourage inward investment, despite admitting there were “no quick fixes” in healing the UK economy.

Highlights from the announcement include a further cut in Corporation Tax to 21% by April 2014, while the Government also intends to increase annual infrastructure investment on new roads, schools and ultra-fast broadband to £33bn.

Furthermore it was announced that the Government’s flagship Business Bank would receive an extra £1bn in capital to offer as cheap loans to SMEs, while there was a significant increase in the Annual Investment Allowance (AIA).

Mr Osborne declared that from 1^st January 2013, AIA would increase ten fold, with businesses able to claim 100% tax relief on £250,000 of investment, compared with the current allowance of £25,000.

The Autumn Statement, which some have described as a ‘mini-Budget’ also saw good news for the individual, with a 1% rise in Inheritance Tax and Capital Gain Tax thresholds, while the threshold for the 40% rate of income tax is to rise by 1% in 2014 and 2015, from £41,450 to £41,865 and then £42,285. The basic income tax threshold is also set to increase to £9,440 next year.

There was a big blow for high earners, however, as Osborne raided pension tax relief, cutting the annual limit from £50,000 to £40,000 in 2014/15. The lifetime limit was also cut from £1.5m to £1.25m in 2014/15 to claim tax relief on pension contributions.

The measures were announced as Osborne admitted that the Government would fail to hit its target of eliminating the structural deficit by 2015, with growth for 2012 revised down to -0.1% from an initial forecast of 0.8%.

Andy McQuillan, Tax Partner said that while many measures seem to help ease the burden for small and medium-sized businesses, it is worth examining the statement in detail.

“The Autumn Statement, which turned out to be more of a mini-Budget, seems to introduce many measures which should help businesses out in the short term.

“We particularly welcome the £1bn extra for the Business Bank, although we are yet to see the full benefits of this, and many clients are still finding it difficult to access finance.

“The AIA increase should help businesses invest for the future, while a cut in Corporation Tax should hopefully encourage inward investment.

“However despite the announcements, business owners will not be waking up this morning with the belief that anything radical has changed and the country still has a long way to go before it is back on its feet and business is once again booming.

“We would urge businesses owners to carefully study the detail of the measures to see where they can benefit.”

Quarter of firms still unaware of RTI...

Fri, 23 Nov 2012 14:26:14 +0100

Dains are advising employers to ensure they are up to speed with major changes to the way they will have to report their payroll figures to the tax office, after new information has revealed that many are still unaware of the new requirements.

The Real Time Information (RTI) system will be mandatory for all employers, who will be required to submit details of salary payments and deductions as they are made, rather than reporting at the end of the tax year as they do now.

However, a survey by the Federation of Small Businesses (FSB) has found that many smaller firms are still unprepared for the change, which takes effect from April next year.

Of the 1,700 small firms polled, just 16 per cent were fully aware of RTI, while 25 per cent had never heard of it. The survey also found that 60 per cent of firms had not received any communication from HM Revenue and Customs (HMRC) about the changes.

Andy McQuillan, Partner at Dains, said: “These figures suggest that the Government’s campaign to promote RTI has not been as successful as it would have hoped, with many businesses still completely unaware that they will have to change the way they report their payroll to HMRC in just over five months time or otherwise may risk being penalised.

“If you are unsure whether your business is ready for RTI, you should seek advice as soon as possible, as there are a number of steps that an employer must complete before it can provide the real time information to HMRC, and some employers may need to buy new software.”

Tax Relief for Research & Development...

Wed, 21 Nov 2012 11:24:12 +0100

Can you reduce your company’s corporation tax bill or claim cash back from HMRC?

Research & Development (R&D) tax relief is available to companies developing new processes or technology. Your company may be incurring R&D expenditure on a daily basis and entitled to make a claim.

The relief is available against staff costs, consumables and outsourced R&D.

If your company is an SME¹ you can benefit by;

• claiming a reduction in your corporation tax bill by at least 45p per £1 spent on R&D; or
• claiming cash back of 25p per £1 spent on R&D (applies to loss making SMEs)

If your company is a large company (not an SME¹) you can claim by:

• reducing your corporation tax bill by at least 26p per £1 spent on R&D

What is eligible R&D?

Eligible R&D is work that is undertaken to resolve scientific or technological uncertainty aimed at achieving an advancement in science or technology. 'Advancement' may be the creation of a new product or process or the improvement of an existing one.

R&D does not need to be successful in order to qualify for the relief outlined above. Provided qualifying R&D has been undertaken then the relief is available. In addition, a company may qualify for the relief even where the work has been outsourced to a third party.

R&D is not confined to companies within the technology sector. Dains have made claims for companies across a range of sectors including:

•      Software development
•      Manufacturing
•      Engineering
•      Automotive
•      Chemical engineering
•      Forensic services

Time limits

There is a time limit of two years from the end of the accounting period to submit an R&D claim within a corporation tax return.

How we can help you

A tax adviser from Dains can greatly increase your chances of successfully claiming R&D tax credits. We can assess your claim to ensure that it meets all the requirements before it is submitted. Our service is efficient and will usually start with a meeting with the financial and technical members of staff working on the project. This meeting will enable us to gather information relating to the costs and details of the R&D project undertaken to establish whether the project will qualify for the enhanced R&D tax relief.

Flexible fees

Dains offer a variety of pricing options to suit your company. We can agree a fixed fee in advance, a contingent fee depending on the outcome of the R&D claim or a combination of the two. This way you can be sure that you will receive value for money.

Further details

For further information about our Research & Development tax relief service, please contact us on 0800 298 3899 or email: enquiries@dains.com for an initial, no-obligation, discussion.

¹ SME's are Small and Medium Enterprises. A SME company has less than 500 employees, turnover of up to €100m and/or balance sheet assets of up to €86m.

Prince's Trust Launches £3 Million Scheme for West Midlands' Young Entrepreneurs...

Wed, 07 Nov 2012 13:14:34 +0100

The Prince's Trust has launched a new £3 million scheme to support young entrepreneurs in the West Midlands. The Enterprise Programme has been set up with £1.5 million from the European Regional Development Fund, matched by £1.5 million from the Trust's own resources.

Support is targeted at disadvantaged young people aged 18-30, to help them move into self-employment. Those who are unemployed or under employed, leaving care or offenders' institutions, from an ethnic minority background, disabled, parenting alone or who have low level of basic skills all qualify for assistance.

The initiative is expected to support more than 2,000 young entrepreneurs and aims to create hundreds of jobs in the West Midlands region.

Loans of between £1,000 and £5,000 are available to help applicants start-up in business and commence trading. Almost any business idea will be considered as long as it can be shown to be viable.

Applicants must be aged between 18 and 30 and located in the West Midlands region of England.

New recruit for Dains Corporate Finance team

Tue, 02 Oct 2012 16:39:57 +0200

Dains has made a further investment in their corporate services team with the appointment of Jenny Moore as Corporate Finance Manager.

Jenny is a well known corporate finance adviser having gained experience in both a ‘Top 10’ national practice and a regional firm. She has worked on a range of management buyouts, corporate sales and acquisitions, as well as distressed refinancing. She has also supported a number of large corporate clients with their growth plans, acquisition strategies and stakeholder restructurings.

Simon Bursell, Corporate Finance Partner said: “We are extremely pleased to welcome Jenny into our corporate finance advisory team. Her wealth of experience in corporate M&A transactions will reinforce our ability to support local businesses and our reputation in the corporate mid-market. This is an exciting time for Jenny to be joining the firm as Dains expands its geographical footprint across the Midlands. She has already proved to be a great asset and we hope to announce a series of deal completions in the near future.”

Speaking of her role Jenny said: “The role is a fantastic opportunity to contribute to the firm’s ongoing commitment to local businesses. I look forward to working with the award winning team.”

A STEP in the right direction for Dains Private Client Team...

Mon, 24 Sep 2012 10:51:23 +0200

Dains is pleased to announce that Tom Hudson has successfully passed the Society of Trust and Estate Practitioner exams and is now a fully qualified member of STEP.

STEP is the leading worldwide professional body for practitioners in the fields of trusts, estates and related issues. STEP members help families plan their long term financial future, facilitating good stewardship and financial planning across future generations. STEP members also help families comply with the often complex tax rules surrounding trusts, estates and inheritance.

Tom joined Dains in 2010 after qualifying as a Chartered Tax Adviser in 2007. Tom focuses on providing specialist tax planning advice to high net worth individuals and their families and has a specific interest in developing long-term tax efficient asset holding structures for clients. The ultimate aim of much of Tom’s work is to mitigate the impact of Inheritance Tax and, ultimately, protect family assets for future generations.

Phil Pellegrini, Private Client Partner, said: “Qualification as a Trust and Estate Practitioner compliments Tom’s existing tax qualifications and will allow the team to expand its area of expertise in the field of trust and estate planning for our clients.”

For further information please contact Tom Hudson on 0800 298 3299

Derby based professionals help Derby Express Couriers deliver MBO...

Fri, 21 Sep 2012 14:05:48 +0200

A management buyout has seen Derby based total logistics providers Derby Express Couriers (Overnight) sold by founding shareholder Nick Taylor to directors, Lorraine Sharp and Susan Hill.

The business, renowned for reliability, quality of service and customer care is a total logistics provider offering overnight parcel delivery service, a next-day pallet service and a worldwide delivery service. During her 12 years working at Derby Express, Lorraine has driven the business forward resulting in a number of awards for quality service. Susan has been instrumental in growing both the sales team and the customer base. The MBO means Lorraine and Susan can now lead the business during the next phase of its development and build on its already strong reputation.

Lorraine commented: “Susan and I are privileged to be able to lead the business to the next stage. We take pride in offering a quality and reliable service to all of our customers and are completely committed to keeping our customers and staff at the heart of all that we do. We had great support from our team of advisers through-out the MBO process meaning we could remain focussed on running the business on a day-to-day basis.”

The Derby Express MBO team were advised by Simon Bursell and Jenny Moore from the Derby office of Dains, the Midlands based firm of business advisers. Simon said: “Lorraine and Susan have a fantastic opportunity to shape the future of the business as owners. A number of Derby based professionals worked on this important transaction and its completion is a testament to the quality of the advisers working in the Midlands.”

The funding was provided by Teresa Geraghty, Business Development Manager of ABN AMRO Commercial Finance. Teresa commented: “It was good to work with the local business community on this excellent opportunity for the management team. It‘s always great to be able to provide such a dedicated team with the ongoing working capital they need to move the company forward.”

During the sale process, Nick Taylor was advised by James Bagley of Smith Cooper, the Midlands based accountants and business advisors. James commented “Derby Express Couriers were one of Smith Cooper’s first clients over 20 years ago, our long standing and close knit relationship with both Nick and the business meant that we were able to provide the best advice in order to deliver a successful transaction for Nick. Derby Express Couriers are an award winning business known for their high quality service, and we wish Lorraine and Susan every success as they continue to take the business to the next level.”

Legal advice to the management team was provided by Derby lawyers Ran Oren and Martyn Brierley from Flint Bishop Solicitors. Fraser Cunningham and Fiona Boxwell of Smith Partnership advised the vendor.

For further information please contact Simon Bursell on: 0800 298 3899

Changes to income tax for people earning £50,000+

Tue, 18 Sep 2012 11:25:05 +0200

A new charge to Income Tax has very recently been introduced and is known as the "High Income Child Benefit Charge"...

The charge

Individuals are liable to the new charge if their annual taxable income exceeds £50,000 and if they, or their partner, is in receipt of Child Benefit during the tax year.

If both partners have adjusted net income over £50,000, the partner with the higher income is liable for the charge.

This new charge comes into effect on 7 January 2013.

Amount of the charge

The income tax charge will apply at a rate of one per cent of the full Child Benefit award for each £100 of income between £50,000 and £60,000.

Therefore the charge on taxpayers with income above £60,000 will equal the total amount of Child Benefit paid. This is best explained by way of an example.

If you have income of £55,000 and you or your partner receives full Child Benefit for 2 children of £1,752 for a whole year, the charge will be 50% of the £1752 Child Benefit = £876.
If you have income of £60,000 (or more) and you or your partner receives Child Benefit for 2 children of £1752 for a whole year, the charge will be based on 100% of the child benefit received, i.e., a tax charge of £1,752 would be levied, effectively cancelling out the value of the Child Benefit originally received.

Definition of 'partners'

Partners are defined in the legislation as being either:

Married to or in a civil partnership with each other, and are neither separated under a court order nor permanently; or
Not married to nor in a civil partnership with each other but are living together as husband and wife or as civil partners.

How might this affect you?

If you or your partner earns in excess of £50,000 per annum and you are claiming child benefit, you will be affected by this measure.

Child Benefit claimants will be able to elect not to receive the child benefit to which they are entitled if they or their partner do not wish to pay the new tax charge. The claimant may subsequently decide to withdraw that election in certain circumstances if they or their partner are no longer liable to pay the charge.

Where an individual is liable to pay the charge, but does not currently file tax returns with HMRC, they now have an obligation to give notice of their liability to HMRC which may result in them having to complete and file a self-assessment tax return.

As with many taxes, there remain opportunities to plan for this new tax charge. One example is, for those able to decide when to draw salary or dividends from a business, it may be possible to reduce income in a particular tax year to avoid the charge.

If you would like to discuss how this may impact upon your own circumstances, please contact Phil Pellegrini on 0800 298 3899 or email: enquiries@dains.com

Recent tax case sets alarm bells ringing...Provision of 'company' cars...

Thu, 13 Sep 2012 14:52:56 +0200

A recent tax case may raise alarm for those providing cars through a partnership whilst also operating a trade via a limited company. The case has highlighted some intricacies within the legislation surrounding the provision of a company car which may have far reaching consequences.

In this particular case, a partnership was operated alongside a limited company, the partners of which were also the shareholders and directors of the limited company.

The partnership provided all the partners with a car and private fuel. Although the partnership also provided small ancillary administrative services to the company, the courts found that the only reason for operating the partnership alongside the limited company in this way was to try and avoid the benefit in kind tax charge on the provision of a car.

In the ruling in this case, all individuals concerned were found to have flouted the rules and taxed under the benefit in kind provisions accordingly.

What is the impact of this case?

The decision in this tax case has re-affirmed HM Revenue & Customs’ tough stance on directors who indirectly benefit from the provision of company assets.

Following this case, it is likely that HM Revenue & Customs will be keen to crackdown on any similar arrangements which seek to avoid benefit in kind charges on company cars.

Any tax planning strategies previously undertaken in this area may be in need of review and, ultimately, any strategy adopted must now be commercially driven to avoid challenges from HM Revenue & Customs.

If you would like to discuss how this may impact your personal circumstances, please contact Tom Hudson on 0800 298 3899 or email: enquiries@dains.com

New winding up rules...

Thu, 30 Aug 2012 15:19:18 +0200

Dains warn of recent regulatory changes to the process of winding up companies.

A key aspect of the change is that companies which are in the process of winding up can only claim capital distributions on a maximum of £25,000 in remaining cash or assets. A firm will now need to go through Members Voluntary Liquidation (MVL) – involving an Insolvency Practitioner - to obtain capital treatment on assets over the £25K threshold. One of the main advantages of the MVL procedure for shareholders is the fact that distributions to them are treated as capital distributions. This often means for the individual that a lower rate of tax will apply, although it is essential for the individual to take professional advice on his/her personal tax position.

Nicki Hawksley, Business Recovery & Insolvency Partner at Dains said: “The Business Recovery & Insolvency department is traditionally seen as dealing with companies unable to pay their debts, however in this instance Insolvency Practitioners will need to work with solvent companies to assist shareholders to maximise their returns from their business, as the MVL procedure must be carried out by a Licensed Insolvency Practitioner.

“We would advise directors and shareholders of any company who is considering the prospect of winding up its business that careful planning is therefore required to ensure they are following the most suitable route and seek professional advice on how to best mitigate their potential impact.”

For further information please contact Nicki Hawksley on 0800 298 3899