Practical and intelligent tax saving solutions for you and your business
Whether personal or business tax affects our everyday life and it never stands still.
In the current climate clients expect their advisers to help them make more savings each year through careful tax planning.
Shipleys have a team of knowledgeable tax and accountancy experts who constantly look at ways to add value and provide practical effective solutions whether it’s an owner-managed business or a multi-national group. Our clients know that we genuinely value their custom and ensure that they are always more than satisfied with our work and costs.
- Structuring your Business
- Property Tax
- Capital Allowances
- Inheritance Tax Planning
- Asset Protection and Preservation
- Non UK Resident Domicile & Property Holding Structures
- Tax & VAT Investigations
- VAT Planning
Structuring your Business
Did you realise that the way your business is structured could be affecting how much tax you’re paying?
Do you get the feeling that you could be paying too much tax?
Operating through the appropriate legal entity is vital but can often be neglected if a business has grown organically.
We can provide advice on the most suitable business structure – sole trader, partnership, company, limited liability partnership.
We can help you to structure your business in the most tax efficient way, saving you tax and improving the efficiency of the business.
We also have the expertise to advise on all areas of corporate structuring issues such as:
• Reorganisations and mergers
• Company Purchase of Own Shares
• Reductions in share capital
• Planning with share rights
• Group tax planning
The taxation issues can be complex, but with our expertise we can guide you through, helping you meet your commercial objectives in a tax efficient way.
One of the most common questions we hear is “how do I get my profits out of the company paying as little tax as possible?”
We work with our clients to consider the tax picture as a whole – getting an understanding of both personal and corporate, short term and long term goals.
Because we take into account the whole picture, we can ensure that when it comes to tax, you won’t miss a trick and that all avenues of tax relief are explored.
We know that working with us, through careful planning, you can extract tax from the business without facing a hefty tax bill.
We can also help you to calculate the taxation impact of extraction policies by dividend or salary/bonus; provide advice in relation to pension contributions and also have particular expertise in tax planning using different classes of share capital.
If you like the sound of working with people who have your goals and aspirations at the heart contact us now.
Shipleys are experts when it comes to property tax matters, advising you on how to arrange your property transaction in the most tax efficient manner. With effective strategies, we can significantly reduce the exposure on property transactions.
Speak to us about:
- Services for developers
- Services for investors
- Professionals working in the property sector
- Services for property agents
When you buy, lease or improve a commercial property, HMRC allows you to offset some of that expenditure for tax purposes. Your advisors have probably claimed for the more obvious features, but as capital allowance specialists we dig much deeper to make significant additional claims on your behalf.
Typically, we identify Capital Allowances of between 10% and 30% of the commercial property purchase price.
We use specialist surveyors with tax expertise, to visit your property to uncover this extra layer of allowable items. This service is relevant for two types of clients:
1. Commercial property owners and investors who can retrospectively claim for unused allowances, (going back many years in some cases), for alterations, extensions and upgrades to their buildings.
2. Buyers and sellers of commercial property who need to agree a value for plant and machinery as part of the purchase process.
Inheritance Tax Planning
IHT has been commonly described as a ‘voluntary tax’ and with good reason. It can usually be reduced with proper and often simple planning, ranging from lifetime planning, will planning or even after death variation or disclaimer can mitigate tax.
IHT planning will assist in preserving family wealth and will reduce tax bills for your heirs, With careful lifetime planning, you can even reduce your exposure to IHT whilst retaining the asset and income.
Asset Protection and Preservation
Asset Protection Essential for protecting and preserving company and family assets from third party claims, divorce, bankruptcy, spendthrift spouses, and youthful improvidence. Asset Protection has a number of forms, including:
Company Asset Protection – The valuable assets in a company, namely property, cash and brand, may in certain circumstances be protected by a restructuring exercise, using group structures, all without triggering taxes on the restructure whilst affording protection.
Family Asset/Wealth Protection – Family assets/wealth can be protected and preserved from claims, bankruptcy and divorce. Typically assets are placed into a properly constituted trust within certain limits with the result that the preservation and protection of the family assets is achieved without adverse tax consequences.
Non UK Resident Domicile & Property Holding Structures
This topic always seems to raise the most debate about the fairness of the UK tax system. And has been squeezed over the years, however if you are in the tax privileged position to be either non UK Dom or non UK Resident the tax benefits are still extra ordinarily valuable in the right circumstances, to say the least. However, this valuable status is generally under used (except by the super rich).
A key area of tax planning is on property holding structures for non UK resident and non UK domiciles individuals as properly structured solutions achieve significant tax savings.
Tax & VAT Investigations
Tax investigations by HMRC often come as an unpleasant shock to individuals or businesses and can be very stressful. Those under enquiry often feel targeted and victimised.
At Shipleys we are non-judgmental, vigorous in defending our clients and aim to resolve the investigation in the most efficient manner possible without compromising the quality of our work.
We have the experience and know how to handle local district cases to large tax fraud cases both in direct and indirect (VAT) tax.
Our VAT experts trained with HM Revenue & Customs (HMRC) and have a complete understanding not only of the legislation but of HMRC’s policies and procedures.
Our work extends to every aspect of VAT but some of the services we are most often asked to provide involve negotiation with HMRC on liability issues and agreeing partial exemption methods, providing VAT planning ideas for clients to improve cash flow, assisting clients through the maze of VAT property law, and advising them on EU and other international transactions.
Some of the areas we cover most include:
• VAT and property
• VAT and not-for-profit organisations
• VAT and offshore companies
Contact us now for a free no obligation consultation with a tax consultant.
Latest news & blogs…
Landlords are being hit from all sides by recent and forthcoming tax changes. So is it better to buy a property personally or through a company? We look at the pros and cons below.
Holding it personally
Where a property is held by an individual, the property income tax rules apply. The profits of the property rental business are charged to income tax at the individual’s marginal rate of tax. If a loss is made, this can only be carried forward and set against future profits of the same property rental business. The personal allowance is available if not used elsewhere.
The widely reported interest relief restrictions have been phased in progressively from 6 April 2017. For 2019/20, only 25% of interest can be deducted in computing taxable profits, with relief for the remaining 75% given as a tax reduction at the basic rate. From 6 April 2020, relief for all interest and finance costs will be given in this way.
When purchasing the investment property, if it is a residential property and the landlord already owns at least one other residential property, the 3% Stamp Duty Land Tax (SDLT) supplement will apply.
On sale of the rental property, capital gains tax will be charged on any gain. The higher residential rates apply – 18% where your total income and gains do not exceed the basic rate band and 28% thereafter. Bear in mind you can set your annual exempt amount – set at £12,000 for 2019/20 – against any chargeable gain where available.
Owning it through a company
Where a property is owned through a company, any profits are charged to corporation tax rather than income tax. There is no equivalent of the personal allowance – so profits are taxed from the first pound. However, at 19%, corporation tax rates are lower than income tax rates. More pertinently, the interest rate restrictions do not apply to companies, and interest is deductible in accordance with the corporation tax rules meaning full interest relief is available.
Companies pay corporation tax on chargeable gains and any gain on disposal of the property is subject to corporation tax. There is no annual exempt amount, and basic rate taxpayers pay capital gains tax at a lower rate than the corporation tax rate payable by companies; however, at 28%, the rate payable by higher rate personal taxpayers is more.
If the value of the property is more than £500,000, the company will also have to pay the annual tax on enveloped dwellings. The amount depends on the value of the property – ranging from £3,650 for a property in the £500,000 to £1 million band to £232,350 for properties valued at £20 million or more (2019/20 rates).
Where the property is brought by the company, SDLT will be payable, with the 3% supplement applying to the purchase of residential properties.
Buying through a company will also raise the issue of how best to extract the profits, and once personal and dividend allowances have been used, this will trigger personal tax liabilities in the hands of the recipient.
Do the numbers
The best option will depend on personal circumstances, and there is no substitute for doing the sums. Remember to take account of the non-tax considerations, such as the additional costs associated with running a company and higher borrowing costs.
If you are considering a property acquisition and would like to know how to structure this is in the most tax efficient manner, call us on 0114 275 6292 or email email@example.com.
The man from Del Monte said yes… spend spend and spend again.
The UK Budget was delivered by the Chancellor Rishi Sunak on 11 March 2020 and he didn’t hold back. But was it all style and no substance?
Mr Sunak took over somewhat fortuitously from the former Chancellor Sajid Javid who resigned in controversial circumstances. Given the multifaceted threats faced by the UK, from Coronavirus to Brexit, it was fascinating to see how the rookie Chancellor would measure up.
Would he gravitate to greatness or fumble his fiscal forecasts? Here’s our Budget 2020 overview.
The Chancellor stressed his commitment to businesses. but refused to do anything about the off-payroll working (IR35) rules coming into effect in April. He also decided to ignore previous Tory promises and kept the corporation tax rate at 19%. And for small businesses, entrepreneurs’ relief limit being cut back from £10m to £1m for disposals on or after Budget Day was a welcome modification despite fears it would be abolished altogether.
He further announced an increase in the structures and building allowance from 2% to 3% with effect from 1 April 2020.
One of the surprises of the Budget was the announcement that the current zero-rating of books and printed matter will be extended to their e-equivalents. This change will apply from 1 December 2020, a slightly surprising date although this rate has been permissible under EU law since late 2018.
Many were pleased to see that VAT postponed accounting will be adopted from 1 January 2021 although, ironically, that is permissible under EU law in any case.
There was not much in the way of announcements on the personal tax and national insurance front. The current NIC threshold will be increased from £8,632 to £9,500 from 6 April 2020.
Crucially however, the pensions annual allowance thresholds will be increased by £90,000 each. Thus, the threshold income will now be £200,000 rather than £110,000 and the adjusted income from £150,000 to £240,000. This is a welcome announcement primarily for GPs caught by the pension tax trap, although it remains to be seen how it affects things in practice.
Making Tax Digital
Many industry commentators suggested that the Government should review the rollout and costs to business of MTD for VAT before it decides to extend it to other taxes. It was therefore welcome that the government decided to publish an evaluation of the introduction of MTD for VAT. Many believe that there should be a cost/benefit review as to whether it is fit for purposes for UK businesses.
After delivering his maiden speech amidst considerable uncertainty with some bravura and gusto – including one piercing jibe at the Shadow Chancellor – one can’t help but wonder that the jury is still very much out. As the Red Book is pored over in the coming weeks and months, we will know more for sure.
****UPDATE 18 MARCH 20****: New Off-payroll working rules announced see – https://www.shipleystax.com/coronavirus-off-payroll-ir35-reforms-to-be-postponed-until-april-2021/
Do the off-payroll working rules apply to you? Are you considering winding up your personal service company in April? We explain generally the best way to wind up your company from a tax perspective.
Come April 2020, the much maligned off-payroll working rules come in effect and many workers who have been providing their services through an intermediary, such as a personal service company, may find that their company is no longer needed. This may be because that tax and National Insurance is deducted from payments made to the intermediary, the tax advantages associated with operating through a personal service company are lost. Alternatively, it may be because their end client does not want the hassle of operating the off-payroll working rules and has decided only to use ‘on-payroll’ workers, putting workers previously using personal service companies with no choice but to go on the payroll or an umbrella company.
Where the personal service company is not needed, what is the best way to wind it up and extract any remaining cash?
Striking off can be an attractive option where the personal service company can pay its debts and has less than £25,000 left in the company to extract.
The advantage of this route is that sums paid out in anticipation of the striking off are treated as capital rather than as a dividend, with the result that the capital gains tax annual exempt amount, if available, can be used to reduce the taxable amount. Where entrepreneurs’ relief is available, any taxable gain is taxed at only 10%. To qualify for this treatment, the company must be struck off within two years of making the last distribution.
If the amount left to extract is less than £25,000, but it would be preferable for it to be taxed as a dividend, for example, because the dividend allowance and/or the personal allowance are available or the distribution would be taxed at the lower dividend rate of 7.5%, striking off can still be used. However, to prevent the capital treatment applying, it would be necessary to breach one of the conditions so that the dividend treatment applies instead. This can be achieved by waiting more than two years from the date of the last distribution before striking off.
Members’ voluntary liquidation (MVL)
Where the funds left to extract are more than £25,000 and it would be beneficial for them to be taxed as capital – for example, to benefit from entrepreneurs’ relief or to utilise an unused annual exempt amount, the members’ voluntary liquidation (MVL) procedure can be used.
An MVL is a formal procedure; the director(s) must provide a sworn affidavit that creditors will be paid in full and a liquidator must be appointed.
One important pitfall which many fail to appreciate is that the availability of entrepreneurs’ relief is not automatic and must be claimed based on facts. Using a liquidator to wind up a company does not automatically mean the company shares will qualify for entrepreneurs’ relief, the shareholder needs to ensure that the shares will qualify for the relief as the company may fail one or more the tests.
If you are thinking of liquidation and would like to check whether you qualify for entrepreneurs’ relief, please call us on 0114 275 62 92 or email us at firstname.lastname@example.org.