Company Directors: Why You Should be Making the Most of Tax Relief Allowances

Company Directors: Why You Should be Making the Most of Tax Relief Allowances

As a company director, you’ve already got your head round all the legally enforceable regulations that govern your role. You have taken on the responsibilities directorship entails and kept the interests of the company at the heart of your decision making. Your record keeping and company accounts are maintained through clear, scrupulous systems; and a crucial part of your financial management is the administration and payment of relevant taxation. As unpopular as it is inevitable, there is one upside to the tax system – allowances! Nobody wants to miss out on their entitlement so here we look at what you need to pay and what you can claim back… The main business taxes: What you need to be aware of Her Majesty’s Revenue and Customs (HMRC) establishes the rules and you are legally responsibl... »

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 ... »

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... »

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... »

Enterprise Investment Scheme

The Enterprise Investment Scheme offers generous income tax and capital gains tax reliefs to investors in certain companies. The reliefs are available to ‘qualifying individuals’ who subscribe for ‘eligible shares’ in ‘qualifying companies’ undertaking ‘a qualifying business activity’. The regime is currently under review, but the consultation is ongoing. What are the investment limits? Individuals may invest any amount in Enterprise Investment Scheme shares. However, only the first £400,000 invested in any one tax year (£200,000 prior to the tax year 2006/07) will qualify for income tax relief and capital gains tax (CGT) exemption. For this purpose a husband and wife are treated separately. Individuals must subscribe a minimum of... »

Discretionary Trust, Wills & Inheritance Tax

Although any unused nil rate band is transferred to a surviving spouse or civil partner, making provision for a discretionary trust in your will could still be worthwhile. How do the inheritance tax rules work? The first slice of any individual’s estate, including gifts that they have made in the last seven years, is generally free of inheritance tax. This slice, referred to as the ‘nil rate band’, was increased to £325,000 from 6th April 2012. Inheritance tax is charged at 40% on the amount that exceeds the nil rate band. Any unused nil rate band can now be transferred to a surviving spouse or civil partner. This means that where the second death occurs on or after 9th October 2007, the benefit of any unused nil rate band on the death of the first spouse is transfe... »

Employees & Company Car Tax

A guide for company car drivers from ComCar The emissions–based regime for taxing company cars has been in force since April 2002. Introduction The provision of a fully expensed company car is still a common employee benefit. Some even suggest that it will become more popular as shortage of finance and soaring insurance costs cause “cash takers” to give up their allowance and move back to the company car. The success of salary sacrifice could also increase the size of the company car park. Taxation policy is strongly focused on the CO2 emissions of the vehicle, perhaps making this the area where environmental taxation is at its most advanced as well as its highest level in terms of tax per tonne of CO2. There are implications for income tax, VAT, Employers and Employees n... »

Venture Capital Trusts

Investments of up to £200,000 in Venture Capital Trusts (VCTs) offer significant tax incentives to investors including 30% income tax relief. VCTs are quoted limited companies whose purpose is to invest shareholders’ funds in smaller unquoted trading companies, (including AIM listed stocks) having potential for growth, with a view to making profits. Most Venture Capital Trusts are run by investment managers and raise their funds from private investors. What are the tax benefits? Individuals may be able to secure a number of tax advantages from this sort of investment. However, from 6 April 2006, shares in VCTs must be held for at least five years (previously three years) to obtain all the potential tax benefits. In addition, the individual must be 18 years of age or more on the... »

Tax-Free Investments

Tax-Free Investments

This article on Tax Free Investments is currently being updated. Please check back soon for revised Tax Free Investment information. »

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