Later this month the Chancellor, George Osborne, will be presenting the 2014 Budget. We have listed below a few of the changes that we are expecting. We have also covered the announced financial benefits that are being offered to flood victims; a reminder of the need for planning if you are considering a sale of your business; and the benefits of using the VAT Flat Rate scheme.
Expected tax changes in the Budget 2014
The government has already published certain draft clauses for the Finance Bill 2014. We have listed below some of the more topical changes disclosed.
Changes for the tax year 2014-15:
Capital Gains Tax:
Changes for the tax year 2015-16:
It is proposed that spouses (including civil partners) will be able to transfer up to £1,000 of their personal allowance to their spouse (or civil partner). This will be a useful, although somewhat limited, tax planning device that will allow couples to partially equalise their taxable incomes. It will only apply where neither party is a higher rate tax payer.
Compensation for flood victims
The following announcements were posted to the GOV.UK website last month. They provide details of some of the compensation being offered to businesses affected by last month?s flooding across the UK:
A new Business Support Scheme
The scheme is worth up to £10million to provide hardship funding for SME businesses in areas affected by the floods. Both businesses that have been flooded, and businesses that are in affected areas and have suffered significant loss of trade, will be able to apply for support. Eligible businesses will be able to claim for funding for things like immediate clean-up costs, materials, and exceptional costs to help them continue trading.
Extra time for businesses to file accounts without any penalties
If any affected company is unable to file accounts or other documents on time as a direct result of the floods, Companies House will agree an extension and not collect the penalties which apply for late filings. Applications for extensions should be made before the end of the filing period.
A Government Business Support Helpline
The Helpline is providing comprehensive advice and support to businesses affected by floods. It will offer a free 1 hour call with a dedicated Business Support Adviser to help businesses get back on their feet. The helpline number is 0300 456 3565 and can take calls from flood affected businesses now.
Alongside this government action, the government also welcomes the initiative from Enterprise Nation to bring together big business offers of assistance to small firms affected by the floods. These offers of assistance include:
Having spent many years building a business, entrepreneurs can still look forward to a maximum tax hit of just 10% when they sell their business, as long as they have organised their business affairs so that they qualify for the CGT Entrepreneurs? Relief.
Basically, you will need to demonstrate that you meet certain criteria for the year ending on the date you dispose of your business. For example, if you run your business through a company:
These conditions are just the tip of the compliance ice berg. We heartily recommend that you seek professional advice if you are thinking of selling your business or the assets used in a business. The key is to determine the ?qualifying period? for your disposal and ensure that you meet any other criteria. There are different rules for businesses run as a sole trader or partnership.
VAT Flat Rate Scheme
This scheme can be beneficial for businesses that have a low proportion of costs that include a VAT input tax charge, and their business turnover, excluding VAT, does not exceed £150,000.
One interesting feature of the scheme is that you do not have to leave the Flat Rate scheme until your annual income, including VAT, exceeds £230,000.
The only way you can make an effective choice, to join the scheme or not, is to rework your VAT position for say the last four quarters and see how a Flat Rate calculation compares to your current method.
If you have negligible input tax to reclaim, you are within the registration threshold, and the flat rate percentage that applies to your trade sector is favourable, then converting can produce real cash savings.
Tax Diary March/April 2014
1 March 2014 ? Self Assessment tax for 2012/13 paid after this date will incur a 5% surcharge.
1 March 2014 – Due date for Corporation Tax due for the year ended 31 May 2013.
19 March 2014 – PAYE and NIC deductions due for month ended 5 March 2014. (If you pay your tax electronically the due date is 22 March 2014.)
19 March 2014 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2014.
19 March 2014 – CIS tax deducted for the month ended 5 March 2014 is payable by today.
1 April 2014 – Due date for Corporation Tax due for the year ended 30 June 2013.
19 April 2014 – PAYE and NIC deductions due for month ended 5 April 2014. (If you pay your tax electronically the due date is 22 April 2014.)
19 April 2014 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2014.
19 April 2014 – CIS tax deducted for the month ended 5 April 2014 is payable by today.