Archive for May, 2021

Company super-deductions and tax increases

Thursday, May 27th, 2021

One of the more innovative aspects of the recent March budget was the introduction of the rather grandly named super-deduction.

Limited companies that invest in qualifying assets in the two-year period 1 April 2021 to 31 March 2023, will be eligible for a 130% tax write-off.

What this means is that if you buy say a new computer system for £5,000 you will be able to claim a £6,500 write-off against your taxable profits.

Note, the reduction is in the amount of profit subject to corporation tax. The 130% is not a deduction from tax payable.

In our example, the capital purchase of £5,000 would be converted into a super deduction of £6,500 that would reduce corporation tax by £1,235 (£6,500 x 19% – the current rate of corporation tax).

Interestingly, the tax saved of £1,235 is almost 25% of the £5,000 investment. You may remember that the Chancellor advised, in the same March budget, that he is considering raising corporation tax to 25% from 1 April 2023, the date on which the 130% super deduction ends. Large companies with profits more than £250,000 will pay the 25% rate.

Smaller companies will continue to pay a lower rate of 19% if profits less than £50,000. No doubt this will lead to complex marginal rates being applied to companies with taxable profits between £50,000 and £250,000.

Clearly, the Chancellor wants businesses to invest during the next two years and this tax incentive will help to smooth the way.

Businesses tempted to make larger investments need to consider how the assets will contribute to rebuilding their businesses after the recent, and prolonged, COVID disruption. It is useful to make the most of these tax incentives, but the purchase of capital assets needs to create additional profits.

Readers who are considering capital acquisitions would be wise to seek advice before placing orders to make sure that all aspects of their investment are carefully considered. We would be delighted to help.

New tariff suspension scheme for the UK

Tuesday, May 25th, 2021

To reduce costs for UK firms that import certain goods from abroad, the Department for International Trade (DIT) has announced a new tariff suspension scheme. The aim, according to a recent press release, is designed to make UK companies more competitive.

The published details of the scheme are reproduced below:

From next month, firms based in the UK or Crown Dependencies will be able to apply for duties on goods they import to be temporarily reduced or withdrawn. Once a suspension has been introduced, all UK importers will be able to benefit from the reduced rate.

The new scheme will allocate suspensions based on the needs of firms in the UK and the wider economy, on any import that satisfies the selection criteria set out on GOV.UK.

In recognition of the challenges surrounding the Covid-19 pandemic, existing duty suspensions that the government rolled over from the EU will be extended beyond 31 December 2021 to ensure business certainty.

Businesses will be able to apply from June 1 and the suspensions are expected to apply from early 2022.

The government are no doubt concerned by inflationary pressures building in the UK economy as demand-led activity starts to boost output.

There must also be supply-side pressures as industry starts to assess the financial impact of EU tariffs following our exit from the EU.

Nevertheless, this intervention is welcomed and readers whose businesses have incurred additional import costs following Brexit would be wise to follow the DIT announcements published on the gov.uk site.

New rules to curb pension scammers.

Thursday, May 20th, 2021

The government is helping shut the door on social media scammers trying to plunder people’s pensions under new scam prevention measures due this autumn.

Under the plans, suspicious requests could be stopped if pensions savers have been approached to access or transfer their savings uninvited via social media. Such unsolicited contact would trigger a “red flag” which would mean pension trustees or scheme managers can block it.

Many scammers are using social media and other online channels to offer people “too good to be true” incentives such as free pension reviews, early access to their money, or time limited offers. Lured by these attractive offers, people are coerced into transferring their savings into a scam scheme designed to fleece them of their savings.

Most pension transfers are legitimate and can proceed with minimum intervention. However, the Pension Scams Industry Group estimates five percent of all transfer requests give trustees and scheme managers cause for concern.

The pension transfer regulations – published on GOV.UK for consultation today – will introduce a new red and amber flag system.

The “red flags” and “amber flags” are triggered when one, or a combination, of a specific set of circumstances are present and indicate fraudulent activity.

A red flag will give the trustee the power to block the transfer, while an amber flag allows them to block the transfer until the member provides the evidence that they have taken specific transfer scams guidance.

The presence of these flags could be determined based on the individual’s response to a range of standardised questions, including:

  • Did someone advise or recommend that you consider a pension transfer?
  • Were you initially approached by e-mail, text, phone call, letter or through social media?
  • Who contacted you and how do you know them?
  • Was it someone offering independent advice or someone representing a firm that contacted you?
  • Are you aware of how your money will be used/invested?
  • Are any of your investments subject to an exit penalty if you wish to access or transfer the investments within an agreed period (for example within 5 or 10 years)?
  • Do you know what the costs and charges are for your new arrangement?
  • Are you working with an adviser or firm based outside the UK?

 

This is a welcome response to curb the rise of these online scammers and protect hard-earned pension savings. Consultations on the proposed legislation are open for responses until 9 June 2021.

Tax Careers: Milne Craig

Tuesday, May 18th, 2021

TAX TRAINEE VACANCY (GRADUATE AND NON-GRADUATE)

[CLOSING FOR APPLICATIONS ON TUESDAY 25TH MAY AT 5PM]

The directors are pleased to announce that we have an additional vacancy for a new trainee within our tax department starting around August this year.

Applications, with a full Curriculum Vitae, should be emailed to our head of tax, Donald Parbrook at-  donald.parbrook@milnecraig.co.uk as soon as possible as the vacancy will close to new applicants as soon as an acceptable shortlist for interview has been achieved.  We are welcoming direct applications for the trainee position i.e. we are not accepting agency applications for trainee roles at this time.

Our tax team is twenty strong and works on personal and corporation tax compliance as well as advisory projects.  We have a strong track record and many of our team have qualified as Chartered Tax Advisers with support with training materials and courses alongside full time employment.

Traineeships in our tax department are open to both graduate and non-graduate applicants (and the training programme tailored to suit accordingly).  However, all trainees have to demonstrate an interest in working in a professional environment within a busy tax team and a strong enough academic record to suggest they will be willing and able to obtain the professional qualifications to at least “Association of Tax Technician” standards.

Applicants with a degree are expected to have a 2:1 standard honours degree.  Applicants without a degree should have suitable evidence of very good mathematical skills at school or college level, or work experience within a professional firm in tax or accountancy type work but wish to have the opportunity to obtain professional training and study support for membership of the recognised professional bodies.  Excellent English skills are also required as reading professional technical guidance and the legislation, and preparing written communication for clients is a key part of a long term career in tax.

Posted 18th May 2021.

 

Guide for Buy to Let landlords 2021

Tuesday, May 18th, 2021

Those interested in property based investment may find our new booklet on buy to let landlord taxation interesting:

Click the link below:

Buy to Let Guide 2021

If you have any questions, please get in touch with your usual Milne Craig contact (or email Donald Parbrook – donald.parbrook@milnecraig.co.uk)

 

 

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