What taxes must you pay, what are the rates, and what’s in the Budget for you and your business?

Tax Relief for Intangible Fixed Assets

Companies can obtain a corporation tax deduction for certain expenditure incurred on intangible assets... Newly created or purchased intangible assets can attract a corporation tax deduction provided they meet certain conditions. What are intangible assets? The term intangible asset covers not only intellectual property such as patents, trade marks, copyrights and know–how, but also a variety of other assets with commercial value like agricultural quotas. In the case of companies, the accounting standard FRS 10 defines intangible assets as: “non–financial fixed assets that do not have physical substance but are identifiable and controlled by the entity through custody or legal rights”. FRS 10 makes it clear that an intangible asset can be purchased on its own, as pa... »

Tax Relief for Research and Development

Relief is available on Research and Development expenditure, which means that a company can claim enhanced relief on qualifying costs against its profits. To qualify as Research and Development (R&D), an activity must be treated as R&D under generally accepted accounting practice, and fall within any guidelines issued by the Treasury. The Department of Trade and Industry (DTI) has issued guidelines on what it considers is treated as R&D for accounting purposes. What reliefs are available? Small and medium sized enterprises (SMEs) may claim: R&D tax relief – which increases the deduction to 175% of the qualifying expenditure (150% prior to 1 August 2008), or payable R&D tax credit – which allows companies who are not in profit to take the relief up front in t... »

Entrepreneurs’ Relief

Capital Gains Tax (CGT) is chargeable on the proceeds received for the disposal of chargeable capital assets by UK residents. For tax year 2012/13, a basic rate taxpayer will suffer CGT at 18%, and for an individual with taxable income or gains over £34,370 (and so subject to higher or additional rates of income tax) the CGT rate is 28%. However, Entrepreneurs’ Relief (ER) reduces the rate of capital gains tax payable on disposals of “qualifying business assets” down to 10%. This relief can apply to the first £10 million of qualifying gains that an individual realizes in his or her lifetime, and because the top rate of CGT that would otherwise be paid is 28%, ER can currently give a total potential tax saving of £1.8 million. ER is a very important relief for ... »

Wills & Estates

A Will is a legal document, that states how you wish your estate to be divided after your death. The estate is administered by executors who distribute it to the people or organisations named in the will, known as beneficiaries. Who is affected? Everyone who has an estate is affected in some way because they will have possessions that will endure after their death and which will pass to succeeding generations. The only requirement for a person to make a will, subject to certain exceptions, is that he or she must be mentally capable and 18 years of age or over. What happens if I don’t make a will? If a person dies without a will, then they die intestate. This means that the estate is divided up according to specific rules that are set out in UK law. The distribution of the estate unde... »

Enterprise Management Incentives

The Enterprise Management Incentives (EMI) scheme is a tax–favoured share option scheme targeted at smaller, entrepreneurial companies. What is the EMI? The EMI is a share option scheme aimed at small entrepreneurial companies that meet certain conditions. It has been designed to assist such companies to recruit and retain both directors and employees, this factsheet will refer to ‘employees’ for simplicity. The scheme offers attractive opportunities for equity participation by employees in recognition of the fact that smaller companies may not be able to match salary levels paid elsewhere. The Enterprise Management Incentives scheme is also flexible enough to allow for the option share to be geared to future capital growth, and performance targets to be used in the schem... »

Grant Thornton

HM Treasury’s United Kingdom Budget 2007

Income Tax Rates Taxable income Rate Cumulative tax 2007/ 2008 2006/ 2007   2007/ 2008 2006/ 2007 £ £ % £ £ 1-2,2301 1-2,1501 10 223.00 215.00 2,231-34,6002 2,151-33,3002 22 7344.40 7,068.00 over 34,600 over 32,400 40 – – Savings income (excluding dividends) is taxed at 10% within the starting rate band and at 20% within the basic rate band Rate applicable to discretionary and accumulation and maintenance trusts is 40% above standard rate band of £1,000; within this band tax rate is 10%, 20% or 22% depending on nature of income. 1 Starting rate band 2 Basic rate band The figures shown here are subject to ammendment as the Finance Bill passes through Parliament. This information has been prepared only as a topical guide to tax and personal fina... »

Tax Planning – Farmland

With the many tax reliefs available, there are opportunities for tax planning with farmland, in order to mitigate the liabilities that may arise in the absence of planning. Introduction Farming and land ownership are both long-term activities in which businesses have traditionally been passed down the generations. As farmers have held their capital in relatively illiquid assets, such as land and buildings, capital based taxation has been severely damaging to farms and farmland in the past. However, there are some capital tax reliefs that can mitigate the impact. Where may investment in farmland be appropriate? Tax planning with farmland may be appropriate where: the potential inheritance tax (IHT) reliefs are attractive significant capital gains from the sale of business assets need to be ... »

Taper Relief

In April 2008 Taper Relief was replaced by Entrepreneurs Relief. This business advice article exists purely for reference purposes. Taper Relief was introduced in 1998 to replace indexation and to encourage long-term investment. Taper Relief was extended dramatically throughout its ten years until it was replaced by Entrepreneurs’ Relief in 2008. Taper Relief was useful for the disposal of assets, particularly those with qualifying business use, and provided a valuable reduction on the amount of Capital Gains Tax payable. Two years after Taper Relief was introduced the Finance Act 2000 extended the definition of a business asset, making the Capital Gains Tax rate applicable to even more taxpayers. The Finance Act 2002 then reduced the minimum holding period, making taper relief appli... »

Tax Self-Assessment

The self–assessment system imposes the major burden for tax compliance on the taxpayer, rather than on the tax authorities. What is self–assessment? The UK self assessment regime for individuals has now been in place for over a decade. Self assessment puts the onus on the taxpayer to complete returns accurately and on time. Tax must be paid on set dates but HM Revenue and Customs (HMRC) can be asked to compute the amount. Penalties may be charged for failing to comply with the requirements of self assessment. Who is affected? Self assessment affects all non–corporate UK taxpayers, including executors, trustees and individuals. It particularly affects those who: are sent a tax return each year have income which is not taxed at source are liable to higher rates of income ta... »

Inheritance Tax

Inheritance Tax (IHT) is usually paid on assets held at death but can also apply to trusts or gifts made within someone’s lifetime and also trusts or gifts within seven years of death. According to Her Majesty’s Revenue and Customs (HMRC) most estates do not have to pay inheritance tax because they are valued at less than the threshold which is currently £325,000 (Tax year 2012-2013). Any amount over the threshold is payable at a rate of 40% or reduced rate of 36% if the estate qualifies as part of a charitable donation. For married couples and civil partners the threshold can be as high as £650,000 if one partner transfers the "nil rate band", their unused Inheritance Tax threshold, to their other half when they die. Inheritance Tax Exemptions and Reliefs... »

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