Company Tax planning

Company

Reorganisation

Company A Limited owned an asset worth a substantial amount. The asset was in a company in which the owners were involved in entrepreneurial ventures. The directors were looking to continue with their speculative business ventures yet wanted to protect the asset from the commercial risk.

Comment: Shipleys Tax undertook a group reconstruction which resulted in the asset being transferred to another entity without any immediate tax liability to the company or its shareholders.

Partial Sale

Company X Group Limited was looking to sell off two subsidiaries to a buyer in exchange for shares. With the structure the client had in place, the sale of the two companies would have resulted in a tax liability of around £1.8 million on a paper gain and also caused the shareholders to lose favoured tax status.

Comment: Shipleys devised a group reorganisation which resulted in the two companies being sold with no immediate tax liability to the group or its shareholders.

Share schemes

Company Y Limited wished to reward and tie in employees. Bonus schemes were expensive and arbitrary and caused cash constraints.

Comment: Shipleys implemented a tax efficient share scheme arrangement. This achieved the client’s objectives and also gave the founder shareholders the opportunity to establish an alternative exit strategy.

Parallel companies

Company A Limited had a very complex company structure comprising of a number of non-trading intermediate holding and parallel companies which served no particular purpose and was not a tax efficient structure. The structure had arisen as a result of a piecemeal acquisitions and shareholder changes which was administratively difficult to manage. The parallel companies were related and had numerous inter company loans which the directors wanted to make tax efficient.

Comment: Shipleys implemented a tax efficient group reorganisation and put measures into place which would enable them to take full control of their inter company loans with minimal tax consequences.

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Autumn Budget Statement 2022

Company Shipleys Tax Advisors

THE CHANCELLOR Jeremy Hunt belatedly announced his Autumn Statement today heralding a new phase of austerity and sneaky tax rises.

Here at Shipleys Tax we briefly look at what’s changed… again.

Personal tax

The Chancellor maintained that there were no increases to the headline rates of tax. However, this is somewhat misleading and does not mean that individuals won’t pay more income tax, quite the opposite in fact.

  • The threshold at which the 45% rate of income tax kicks in will be reduced from £150,000 to £125,140 from 6 April 2023.  
  • The personal allowance will remain at the current level until April 2028. As wages are increasing, albeit at a lower rate than inflation, this means that earners will start to pay income tax. The freeze on the 40% tax rate threshold is paid has also been extended by two years to 2028.
  • The tax-free dividend allowance will be cut to £1,000 from April 2023 then to £500 the from April 2024.

National Insurance

The employment allowance will remain at the current level of £5,000. The main NI thresholds will also be held at the current level until April 2028 meaning the amount businesses and individuals pay will increase.

Capital gains tax (CGT)

There is no change to the CGT rates, but the annual exempt amount will be cut from £12,300 to £6,000 from 6 April 2023, and then to £3,000 from April 2024.

Corporate Tax changes  

  • Confirmation of the increase in Corporation Tax to 25% from April 23.
  • The £1 million level of the Annual Investment Allowance is being made permanent.
  • R&D tax reliefs – for expenditure on or after 1‌‌‌ ‌‌April 2023, the SME additional deduction will decrease from 130% to 86%.

Stamp Duty Land Tax (SDLT)

The increase in stamp duty land tax allowances to £250k for residential property will be retained, but only until 31 March 2025.

Company cars

  • Electric vehicles will no longer be exempt from vehicle excise duty from April 2025.
  • First Year Allowance for electric vehicle chargepoints – 100% First Year Allowance for electric vehicle chargepoints will be extended to April 2025.

Other announcements

  • IHT – the nil rate band which is the amount an individual can leave tax free on death, will be frozen at £325,000 for a further two years until 2028. 
  • The energy profits levy will increase to 35% from 25% and extended from four to six years.
  • National living wage to increase to £10.42 per hour from 1 April 2023.
  • Tax avoidance – the government is investing a further £79 million over the next 5 years to increase HMRC’s capacity to tackle serious fraud, and to reduce non-compliance among wealthy taxpayers.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that Shipleys Tax do not give free advice by email or telephone.

Mini-Budget scrapped by new Chancellor

Company Shipleys Tax Advisors

THE NEW CHANCELLOR has today scrapped most of the mini-Budget announcements made by his short lived predecessor. What, if any, of the announcements made by Kwasi Kwarteng survived the latest round of U-turns?

In today’s brief Shipleys Tax blog, we look at the latest round of fiscal policy announcements, which may or may not stick around.

What’s left from the mini-Budget 2022

The Chancellor, Jeremy Hunt, announced today that the cutting of the basic rate of income tax (from 20% to 19%) would be postponed indefinitely – at least until “economic conditions allow a reduction”.

This had been rumoured toward the end of last week, but that wasn’t the end of the U-turns. The planned cutting of dividend tax (which was increased in line with National Insurance) has also been scrapped, as has the reversal of the controversial off-payroll working/IR35 rules. The cap on energy bills that was set to last for two years will now, however, be reassessed in April.

What has remained?

The only major measures that remain from the mini-Budget are the changes to National Insurance (1.25% cut retained), increase in the stamp duty land tax allowance, and the permanent increase of the annual investment allowance to £1 million.

More to follow.

Further embarassing U-turns on the Mini-budget 2022

Company Shipleys Tax Advisors

THE EMBARASSING farce continues at Westminster with more twist and turns than reality TV. The PM Liz Truss has today overseen more U-turns to her now defunct flagship fiscal policy – the Mini-BUdget 2022.

Here at Shipleys Tax we look at the new merry-go-round of announcements made today. Quite how long these policies will last is anyone’s guess.

NEW Summary Budget measures – 14 October 2022

  • Income tax
    • 45% Additional rate abolished (40% top rate now) SCRAPPED – 45% top tax rate to be reinstated
    • Basic rate cut to 19% (from 20%) – RETAINED FOR NOW
  • NIC – April 2022 increase in NIC reversed from 6 November and Health & Social Care Levy scrapped: RETAINED
  • Corporation tax to remain at 19% – planned 2023 increase to 25% cancelled SCRAPPED – Rise to 25% reinstated
  • Off payroll working/IR35 – previous legislative changes to be repealed from April 2023 – RETAINED
  • Introduction of VAT-free shopping for overseas visitors – RETAINED
  • New “Investment Zones” with enhanced tax reliefs and relaxed planning frameworks – RETAINED
  • Removal of cap on bankers’ bonuses – – RETAINED
  • SEIS and CSOP limits to be increased. EIS and VCT reliefs will be extended beyond 2025 – RETAINED
  • Annual Investment Allowance to stay at £1m for capital allowances – RETAINED
  • No stamp duty on first £250,000, for first time buyers that rises to £425,000 – comes into operation today- RETAINED

All policies subject to change. Further detail to follow.

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