Campbell Stewart MacLennan & Co
Chartered Accountants 8 Wentworth Street Portree Isle of Skye IV51 9EJ
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Campbell Stewart MacLennan & Co Chartered Accountants 8 Wentworth Street Portree Isle of Skye IV51 9EJ
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Topics
Client Briefing September 2007 Capital Allowances Update, from April 2008 UK Tax & Non-Domiciled Individuals, from 6 April 2008 * = you will need Adobe Acrobat Reader to read these publications. This can be downloaded here. Allowances for capital expenditure From 1 April 2007 for companies and from 6 April 2007 for businesses which pay income tax, the rate of first year capital allowances for small business spending on most plant and machinery continued at 50% for a period of one year with a 40% rate continuing for medium sized businesses.
However, from April 2008 major changes were made to the the rates of these allowances. A ceiling of 100% of expenditure up to £50,000 can be claimed on plant and machinery but the rate of annual allowance, previously 25%, is generally reduced to 20%. At the same time, allowances on agricultural and industrial buildings being withdrawn.
Company Taxation The 2007 budget increased the effective rate of corporation for small companies, those with profits below £50,000 per annum, from 19% to 20% and in the following year to 22%.
These changes may have significant effects for your businesses. Please contact us if you would like to discuss the implications for you. As from 6 April 2007 new and onerous rules were introduced to deal with payments by businesses in the construction industry to subcontractors. If the new CIS rules apply to you, it is highly important that you are fully aware of your obligations and, in particular, that your returns are completed accurately and on time. Please let us know if we can help you to comply with the CIS registration and administration. Considering a New Business or becoming Self Employed? If you are thinking about setting up or buying a new business you will be becoming aware of all the "red tape" involved. In this age, ignorance of the law is considered to be no excuse! In addition to knowledge of your business itself, you do need to know about a host of other issues. These will include some or all of the following:
We can help you with many of these questions, and more. If we cannot cannot do so we will make every effort to make sure that you find the information you need. We deal with a very varied cross-section of clients and our partners and staff have built up extensive experience of a wide range of business issues. We see our task as being to provide the support and help that all smaller businesses need to comply with the ever-increasing level of regulation that faces the business community. Husbands, Wives and Family Businesses It is common for husbands and wives to share profits from a family business either through the use of a partnership or a limited company. In many cases these arrangements were made with an eye to the best tax advantage, for example by splitting profits equally although this might not reflect the real earning power of each spouse. In April 2003 HM Revenue and Customs announced that it would review such arrangements critically and, if appropriate, seek to re-assess profits on what they consider to be a realistic basis. This could involve review of profits for previous years and, as a result, interest charges and penalties could arise. This new approach by HM Revenue and Customs appears to re-write the previously accepted rules for family businesses. In this new business climate we believe that all family companies and partnerships should be take care to ensure that potential difficulties are kept to a minimum. Substantial tax benefits are given to charitable bodies. If you are engaged in not-for-profit activities have you thought of whether it might be possible to obtain charitable status? If you would like to know more about the operations of charities please go to our web page on Charities. Should I use a Limited Company? Between 2002 and 2004 there were strong tax benefits in trading through a limited company. The 2004 budget cancelled this advantage by introducing a tax on dividends paid from the first £10,000 of company profits and it is unlikely that further tax changes will arise in the years ahead. Nonetheless, many business will wish to incorporate for a variety of reasons. However, before deciding to do so a number of considerations should be reviewed, such as:
If you would like more information about the implications of trading through a limited company click here. This is a question which many people should be considering. If your personal assets (including all investments, business and property) exceeds the Inheritance Tax exemption limit there may be risk that on your death a portion of your estate will be subjected to tax at 40%. This can be a heavy burden for your family to bear and, with property values having risen so swiftly in recent years, many individuals face potential tax liabilities on death. If tax liabilities on your estate are to be kept to a minimum proper advice is most important. And it is certainly something that should be left to the last minute! In fact there can be very real advantage in planning your affairs as early as possible. Please do not hesitate to contact us to discuss your individual circumstances. |
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