Archive for November, 2015

R & D boost for smaller businesses

Wednesday, November 4th, 2015

In a major boost for pioneering small businesses, the Financial Secretary to the Treasury, David Gauke, recently launched a new plan outlining how government will make it easier for small businesses investing in research and development to claim tax relief.

The two-year plan, which is a response to an HMRC consultation, aims to increase take-up of research and development (R&D) tax relief through raising awareness of the relief amongst small businesses and making it easier for them to apply.

The tax relief, which encourages companies to invest in costly new product development, helps companies reduce the amount of corporation tax they pay on profits by offsetting them against any investment in research and development. Latest statistics for 2013-14 show more than 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but the government wants to go further.

Financial Secretary to the Treasury David Gauke said:

R&D is crucial for the long-term growth of the UK economy. Over 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but we need to go further to support pioneering small businesses.

That’s why we’ve published a document setting out our plans to increase awareness and make it easier for people to apply.

The plan, ‘Making R&D Easier: HMRC’s plan for small business R&D tax relief’, was published 28 October 2015 and sets out that:

  • From November, small companies – with a turnover under £2 million and fewer than 50 employees – will be able to seek advance assurance on R&D tax relief. This will give them greater certainty and enable them to plan their finances effectively.
  • HMRC will explore ways to improve its communication around R&D tax relief, including looking at ways to use data and work with other government agencies to identify companies that have carried out R&D but have not claimed relief.
  • Interactive guidance will be developed with stakeholder involvement

HMRC evaluation shows that each £1 of tax foregone by R&D tax relief stimulates between £1.53 and £2.35 of additional R&D investment. SME R&D relief works by way of super deduction, allowing companies to reduce profits liable to corporation tax by 230 per cent of their qualifying R&D expenditure. In 2013-14, businesses received £1.75 billion in R&D tax relief, an increase of almost £750 million since 2009-10.

R & D boost for smaller businesses

Wednesday, November 4th, 2015

In a major boost for pioneering small businesses, the Financial Secretary to the Treasury, David Gauke, recently launched a new plan outlining how government will make it easier for small businesses investing in research and development to claim tax relief.

The two-year plan, which is a response to an HMRC consultation, aims to increase take-up of research and development (R&D) tax relief through raising awareness of the relief amongst small businesses and making it easier for them to apply.

The tax relief, which encourages companies to invest in costly new product development, helps companies reduce the amount of corporation tax they pay on profits by offsetting them against any investment in research and development. Latest statistics for 2013-14 show more than 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but the government wants to go further.

Financial Secretary to the Treasury David Gauke said:

R&D is crucial for the long-term growth of the UK economy. Over 15,000 SMEs claimed the relief in 2013, an increase of around 19 per cent from the previous year, but we need to go further to support pioneering small businesses.

That’s why we’ve published a document setting out our plans to increase awareness and make it easier for people to apply.

The plan, ‘Making R&D Easier: HMRC’s plan for small business R&D tax relief’, was published 28 October 2015 and sets out that:

  • From November, small companies – with a turnover under £2 million and fewer than 50 employees – will be able to seek advance assurance on R&D tax relief. This will give them greater certainty and enable them to plan their finances effectively.
  • HMRC will explore ways to improve its communication around R&D tax relief, including looking at ways to use data and work with other government agencies to identify companies that have carried out R&D but have not claimed relief.
  • Interactive guidance will be developed with stakeholder involvement

HMRC evaluation shows that each £1 of tax foregone by R&D tax relief stimulates between £1.53 and £2.35 of additional R&D investment. SME R&D relief works by way of super deduction, allowing companies to reduce profits liable to corporation tax by 230 per cent of their qualifying R&D expenditure. In 2013-14, businesses received £1.75 billion in R&D tax relief, an increase of almost £750 million since 2009-10.

Tax Diary November/December 2015

Monday, November 2nd, 2015

 1 November 2015 – Due date for Corporation Tax due for the year ended 31 January 2015.

 19 November 2015 – PAYE and NIC deductions due for month ended 5 November 2015. (If you pay your tax electronically the due date is 22 November 2015.)

 19 November 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2015.

 19 November 2015 – CIS tax deducted for the month ended 5 November 2015 is payable by today.

 1 December 2015 – Due date for Corporation Tax due for the year ended 28 February 2015.

 19 December 2015 – PAYE and NIC deductions due for month ended 5 December 2015. (If you pay your tax electronically the due date is 22 December 2015)

 19 December 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2015.

 19 December 2015 – CIS tax deducted for the month ended 5 December 2015 is payable by today.

 30 December 2015 – Deadline for filing 2014-15 Self Assessment online to include a claim for under payments (under £3,000) be collected via tax code in 2016-17.

Business rates

Monday, November 2nd, 2015

There are still reliefs you may be able to claim that will reduce your business rates. The process depends on where you are based:

Business rates relief in England

You will need to apply for these reliefs at your local council:

  • small business rate relief
  • rural rate relief
  • charitable rate relief
  • enterprise zone relief
  • retail relief

Exempted buildings and empty buildings relief is automatically applied by your local council.

Some local councils give extra discounts. For example, you may be able to get hardship relief or transitional rate relief if your business meets certain criteria.

 Business rates relief in Scotland

Your local council will automatically apply some reliefs, but you might need to complete an application form for other reliefs. You have to apply for the following discounts:

  • Small Business Bonus Scheme
  • Fresh Start
  • New Start
  • Rural rate relief
  • Charitable rate relief
  • Disabled persons relief
  • Enterprise Area relief
  • Renewable energy generation relief

Some local councils provide an additional hardship relief if your business meets certain criteria. Contact your local council to find out more. You should also contact them if you're not getting any reliefs you think you're entitled to, if your circumstances change or the property changes hands.

Business rates in Wales

Some premises will be exempt from business rates, while others may qualify for:

  • the small business rates relief scheme
  • the charitable and non-profit organisations rates relief
  • relief on empty properties

Your council can also grant hardship relief to businesses if they believe that it is in the interests of the local community to do so.

Business rates in Northern Ireland

There are a number of reliefs available to business ratepayers in Northern Ireland. These schemes include:

  • Small Business Rate Relief
  • Empty Premises Relief
  • Small Business Rate Relief for small Post Offices
  • Charitable Exemption
  • Sport and Recreation Rate Relief
  • Residential Homes Rate Relief
  • Industrial Derating
  • Non-Domestic Vacant Rating
  • Hardship Relief
  • Automatic telling machines (ATMs) in rural areas

You can find out more about eligibility and how to claim by talking with your local council.

End of the tax cycle

Monday, November 2nd, 2015

There is barely three months left until the deadline for filing Self Assessment returns for 2014-15 passes. After 31 January 2016 automatic late filing penalties will apply.

Unfortunately, on the same date, 31 January 2016, you will need to settle any outstanding tax owed for 2014-15 and make a payment on account for 2015-16.

Readers who are adopting a “head in the sand approach” to filing their returns should reflect on this: is it better to know how much tax you will owe sooner rather than later – you will after all have more time to gather the funds; or, adopt a mañana approach, there is always tomorrow?

From your accountant’s point of view, clients who fall into the latter category are difficult to manage as their reluctance to deliver tax records funnels a last minute rush of activity as the filing deadline approaches.

Could we therefore request clients who have not yet provided tax information to complete their 2015 returns, do so as soon as possible.

And can we thank clients who have been more timely, who have completed their filing obligations, who will not pay a late filing penalty, and who were advised of their tax payments in good time. Thank you.

One final point. It is, of course, entirely possible that you may have overpaid tax for 2014-15. If this is the case, the argument to file sooner rather than later is a no-brainer: why would you leave your cash in the Treasury’s coffers for longer than you need to?

Less is more

Monday, November 2nd, 2015

In order to increase tax revenues  the Treasury is faced with a conundrum:

  • To increase rates of tax charged and hope that this does not prove to be a disincentive to increase profits and investment, or
  • To decrease rates of tax charged and hope that this proves to be a stimulant to business growth.

The Financial Secretary, David Gauke, recently made the following remarks at an international tax conference:

“The results we are seeing on the ground since we started cutting Corporation Tax have been very encouraging. We’ve seen business investment increasing – with a record number of inward investment projects last year – and some early signs of improvements in productivity…

And, interestingly, we’re also seeing Corporation Tax receipts strengthening.

Between 2010 and 2014 – that is, during the time that we cut the headline rate from 28% to 21% and cut the small companies rate – annual receipts increased by 12%.

And if you strip out the financial services sector (where receipts have been heavily affected by losses built up in the financial crisis), Corporation Tax receipts rose by 16% between 2010 and last year.

That’s a real terms increase in receipts over a period where the headline rate has been cut by a quarter.”

So maybe less is more?

The VW emissions fiasco

Monday, November 2nd, 2015

Many owners of VWs will be peeved that they may have been misled if the recent revelations regarding published CO2 levels are confirmed: they will be driving cars that are not as environmentally friendly as they were led to believe.

 VW have admitted that as many as 1.2m of its vehicles sold in the UK have been fitted with software that cheated emissions tests.

 It is likely that the CO2 ratings of the affected vehicles will be increased, and the Treasury has recently announced its reaction to the issue.

Benefit in kind tax is based on the list price of a vehicle when new and the CO2 rating. If the engines are diesel powered there is also a 3% surcharge. Accordingly, if the CO2 numbers increase, so too will the company car driver’s Income Tax charge. However, HMRC have confirmed that no one will pay extra tax as a result of this scandal. See quote from the Transport Secretary below. In theory, HMRC could recalculate benefit in kind charges for previous and future years on the basis that the percentage benefit used was understated. Fortunately, common sense has prevailed.

Transport Secretary Patrick McLoughlin said:

'Our priority is to protect the public and give them full confidence in diesel tests. The Government expects VW to support owners of these vehicles already purchased in the UK and we are playing our part by ensuring no one will end up with higher tax costs as a result of this scandal.'