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.
Latest news & blogs…
Claiming Child Benefit could mean you get more State Pension?
If your child is under 12 and you’re not working or don’t earn enough to pay National Insurance contributions, Child Benefit can help you qualify for National Insurance credits.These credits count towards your State Pension. They protect it by making sure you don’t have gaps in your National Insurance record.
Retirement may be the last thing on your mind when you’re looking after a new baby, but what you do now could have a big impact on your future finances.
Despite what you might think, no one automatically gets the full amount of State Pension when they retire. You’ll only get the full amount if you’ve paid, or been credited with, National Insurance contributions for 35 years.
The key word here is ‘credited’. Even if you’re not working while looking after your baby, you’ll get National Insurance credits when you claim Child Benefit until your youngest child is 12. The credits are automatically added to your National Insurance account when you claim Child Benefit, so you don’t need to do anything.
For more information please contact us on 0114 275 6292 or info@shipleystax.com.
Finance Bill 2016 receives Royal Assent
The Finance Bill 2016 finally received Royal Assent on 15 September, enacting proposals announced in the 2016 Budget, Autumn Statement 2015 and Summer Budget 2015. Amongst other things, Finance Act 2016 includes provisions relating to income tax rates and allowances; restrictions on tax reliefs for travel and subsistence expenses (in effect since April 2016), the reduction of the lifetime allowance on pension contributions from £1.25m to £1m (again, effective from 6 April 2016); and the reduction in the main rate of corporation tax to 17% for financial year 2020.
The Act is based on George Osbourne’s final Budget. The annual Finance Bill usually receives Royal Assent in early to mid-July. This year’s extensive delay has been largely blamed on the Brexit referendum followed by the summer parliamentary recess.
The Finance Act 2016 can be found online here or alternatively you contact us for more information.
Further inheritance tax rule changes on Non-Doms
HMRC has published further details of its proposals to amend the inheritance tax rules for non-domiciled individuals.
The changes were initially announced at the 2015 Summer Budget which were aimed at preventing non-doms from escaping a UK inheritance tax (IHT) charge on UK residential property through use of an offshore structure, and thereby bringing to an end the permanent non-dom status for tax purposes.
The consultation document suggests that individuals who are non-domiciled in the UK currently enjoy a significant advantage over other individuals for IHT purposes. UK-domiciled individuals are liable to IHT on their worldwide property, whereas non-doms are only liable on property that is situated in the UK.
Any residential property in the UK owned by a non-dom directly is within the charge of the IHT. However, a common loophole is for such individuals to hold UK residential properties through an overseas company or similar vehicle. In such a case, the property of the individual consists of overseas shares which will be situated outside the UK and are thus excluded from IHT.
In an effort to curb such structures HMRC plans to bring residential properties in the UK within the charge to IHT where they are held within an overseas structure. This charge will apply both to individuals who are domiciled outside the UK and to trusts with settlors or beneficiaries who are non-domiciled. The changes will come into effect from 6 April 2017.
Shares in offshore close companies and similar entities will no longer be deemed excluded property if, and to the extent that, the value of any interest in the entity is derived, directly or indirectly, from residential property in the UK. Where a non-dom is a member of an overseas partnership that holds a residential property in the UK, such properties will no longer be treated as excluded property for IHT purposes.
The consultation will close on October 20. The effect of these proposals will mean structures set up to mitigate IHT will now need to be reviewed in light of the above and specialist tax advice sought.
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