Practical and intelligent tax saving solutions for you and your business
Tax Solutions
Business or personal, tax affects our lives and never stands still
In the ever-evolving landscape of the UK tax system, staying abreast of changes is crucial, whether you’re a small business owner, a entrepreneur, or a large corporation planning for your financial future. From deciphering complex regulations to finding opportunities for savings, the implications of not getting it right can be costly. As your trusted UK tax advisers, we bring clarity, ensuring you’re well-equipped to navigate the tax rules confidently.
Shipleys Tax have a team of knowledgeable tax and accountancy experts who constantly look at ways to add value and provide effective tax solutions whether you’re an owner-managed business or a large national group. Our clients appreciate our genuine commitment to their needs, consistently finding value in our services and expertise.
Sections
- 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
Most people know that the way their business is structured could affect how much tax you pay. What they don’t usually know is how to get the best advice on this.
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 have the expertise to advise on all areas of personal tax planning and corporate structuring issues including:
• Reorganisations and mergers
• De-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 and help you meet your commercial objectives in the most tax efficient way.
How do I get my profits out of the company paying as little tax as possible?
A common question with many solutions. Which is why 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 is crucial in developing a road map to successfully optimising your tax affairs.
Taking a holistic approach, we can ensure that when it comes to tax, you won’t miss a trick and that all avenues of tax relief are explored.
Working with us through careful planning, you can expect to extract profits from a 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 value your needs and have your goals and aspirations at the heart contact us now.
Property Tax
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
Capital Allowances
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 this topic has been caused much controversy over the over the years. Certainly, if you are in the somewhat tax privileged position to be either non UK Domiciled or non-UK Resident, the tax benefits are still extraordinarily valuable in the right circumstances, to say the least. However, this valuable status is generally under used – except by the super rich and famous.
A key area of tax planning is property holding structures for non-UK resident and non-UK domiciled individuals, properly structured solutions achieve significant UK 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.
VAT Planning
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…
Top Tips for Getting Your Tax Return Right
IT’S THAT TIME of the year again and the dreaded 31 January self-assessment tax return deadline is fast approaching. Missing this critical date or filing an inaccurate return can lead to hefty penalties, investigations, and stress. HM Revenue & Customs (HMRC) has advanced tools to check your finances and identify undeclared income.
In today’s Shipleys Tax note, to help you meet the deadline and avoid taxing problems, here are some basic top tips to get your tax return right and a general insight into how HMRC might verify your information.
Top Tips for Getting Your Tax Return Right
1. File Your Tax Return on Time
This is the number one for a reason. Filing late is an automatic red flag for HMRC, and penalties start from £100, even if you owe no tax. The deadline for online submissions is 31 January 2025, so act now to avoid last-minute panic.
2. Declare All Sources of Income
A very obvious one. Failing to report all your income is one of the most common mistakes, and HMRC has several ways to detect it. Be sure to include:
- Bank interest (onshore and offshore): Declare interest from savings accounts. Offshore institutions report account details under the Common Reporting Standard (CRS).
- Rental income: Include income from properties rented privately or via platforms like Airbnb. HMRC can track property ownership and rental activity.
- Self-employment income: Report all freelance or gig work earnings, including payments through platforms like PayPal, Etsy, or Fiverr.
- Trading gains: Include profits from share trading, forex, or cryptocurrency transactions.
3. Avoid Common Errors
Mistakes can result in penalties or compliance checks. Common errors include:
- Incorrect personal details, like your National Insurance number.
- Miscalculations in income or expenses.
- Forgetting to sign and date paper submissions. Double-check your return or use professional services to calculate figures accurately.
4. Include Child Benefit and Student Loan Repayments
If your income exceeds £50,000, you may need to pay the High Income Child Benefit Charge (HICBC). Similarly, ensure student loan repayments are calculated correctly, especially if you’re self-employed. HMRC shares income data with the Student Loans Company (SLC) to verify repayments.
5. Keep Detailed Records
Accurate record-keeping is essential for a correct tax return and protects you if HMRC asks for evidence. Keep:
- Receipts for expenses.
- Tenancy agreements for rental income.
- Bank statements aligning with declared income.
6. Check Your Tax Code
Ensure your tax code is correct, especially if you’ve changed jobs or started receiving rental or investment income. An incorrect tax code can lead to under- or overpayments.
7. Use HMRC’s Online Tools
HMRC provides calculators for self-employment income, student loans, and expenses. Using these tools can reduce the risk of errors and make your submission smoother.
8. Seek Professional Advice
For complex financial situations, such as rental properties, offshore accounts, or multiple income streams, consult an experienced tax adviser. Professional advice will pay for it self, ensures compliance and peace of mind.
How HMRC Can Check Your Finances
HMRC has access to powerful tools and international data-sharing agreements to identify undeclared income and errors. Here’s how they ensure compliance:
1. The ‘Connect’ System
HMRC’s Connect system analyses vast amounts of data to identify discrepancies between tax returns and third-party information. Sources include:
- Banks and financial institutions.
- Land Registry and property records.
- Online marketplaces like eBay and Airbnb.
- Social media and advertising data for side hustles.
2. Automatic Exchange of Information (AEOI)
Through the Common Reporting Standard (CRS), over 100 countries exchange financial data with HMRC. This includes:
- Offshore bank accounts and interest.
- Investment gains.
- Account balances and transactions.
3. Data Matching
HMRC cross-checks data from employers, banks, and institutions to spot inconsistencies. For instance:
- Rental income is matched with property ownership records.
- Dividend payments are compared to declared investment income.
4. Online Activity Monitoring
Platforms like Etsy, PayPal, and Airbnb are monitored for undeclared income. HMRC also investigates trading platforms for cryptocurrency or stock trading gains.
5. Voluntary Disclosure Campaigns
HMRC runs initiatives like the Let Property Campaign and the Worldwide Disclosure Facility (WDF), encouraging taxpayers to disclose undeclared income. Those who fail to comply face investigations and penalties.
Consequences of Getting It Wrong
Failing to file your tax return accurately or on time can result in severe consequences:
- Financial Penalties:
- Late filing: A fixed £100 penalty for returns filed after 31 January.
- Inaccuracies: Penalties of 30% to 200% of unpaid tax, depending on the severity of the error.
- Backdated Tax Demands:
- HMRC can recover unpaid taxes for up to 20 years in cases of deliberate evasion.
- Criminal Prosecution:
- Severe cases may lead to prosecution, fines, or imprisonment.
- Increased Scrutiny:
- Non-compliance can result in future audits and ongoing monitoring.
- Reputational Damage:
- Publicised cases of evasion can harm personal and professional reputations.
Act Now to Avoid Trouble
With the 31 January deadline fast approaching, now is the time to act. Filing an accurate tax return and meeting your obligations is the best way to avoid penalties and HMRC scrutiny. Use these tips, double-check your figures, and seek advice if needed.
For further assistance or queries, please contact us.
Leeds: 0113 320 9284 Sheffield: 0114 272 4984
Email: info@shipleystax.com
Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. Always consult with a qualified professional before taking action.
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Tis the season to give…
RECENT CHANGES TO UK tax legislation have transformed the rules surrounding charitable donations, particularly impacting those involving organisations outside the UK. Previously, individuals and companies making donations to certain non-UK charities could benefit from UK tax reliefs such as Gift Aid, capital gains tax relief, and inheritance tax exemptions. However, these changes now significantly restrict the scope of eligible organisations.
In today’s Shipleys Tax note, we look at the changes to UK tax relief rules for charitable donations and how they impact individuals and businesses. We’ll cover in general the updated rules, explore planning options, and provide practical strategies to ensure your charitable contributions remain impactful and compliant.
How UK Charity Tax Relief Used to Work for International Donations
Before the changes, charitable donations to organisations based in the European Union (EU) or European Economic Area (EEA) were treated similarly to those made to UK-based charities. This meant that:
- Gift Aid: UK taxpayers could claim Gift Aid on donations to eligible EU/EEA charities, increasing the value of their contributions by 25%.
- Capital Gains Tax Relief: Donations of assets, such as shares or property, to non-UK charities could qualify for relief under the “nil gain, nil loss” principle.
- Inheritance Tax (IHT) Relief: Bequests to non-UK charities in wills were exempt from inheritance tax, ensuring that the full amount benefited the intended cause.
This favourable treatment recognised the interconnected nature of charitable work across borders, encouraging UK taxpayers to support causes globally while enjoying tax benefits.
Before the changes, charitable donations to organisations based in the EU/EEA were treated similarly to those made to UK-based charities..
New 2024 Rules: UK Charity Tax Relief Now Limited
From April 2024, tax reliefs are available only for donations to charities that meet the tightened definition of a “charity” under UK law. This includes:
- Geographical Scope: The organisation must fall under the jurisdiction of the High Court in England and Wales, Northern Ireland, or the Court of Session in Scotland.
- CASCs: Community Amateur Sports Clubs must operate within the UK and provide facilities for eligible sports exclusively in the UK.
- EU/EEA Charities: While there was a transitional period for non-UK charities to adjust, this ended on 5 April 2024.
Donations to Non-EU/EEA Charities
Donations made by UK individuals or companies to charities outside the EU/EEA, such as those in Pakistan, Bangladesh, or the Middle East, generally do not qualify for UK tax reliefs. Under UK law:
- No Gift Aid or Tax Relief: Direct donations to charities in these regions are not eligible for Gift Aid, capital gains tax relief, or inheritance tax exemptions.
- The Alternative: To benefit from UK tax reliefs, donations must be channelled through a UK-registered charity or donor-advised fund (DAF). These entities can distribute funds to overseas causes while ensuring compliance with UK tax rules.
Case Study:
James, a UK taxpayer, wishes to donate £15,000 to a health initiative in Bangladesh. If he donates directly to the Bangladeshi charity, he receives no tax relief. However, by donating to a UK-registered DAF, which then supports the same initiative, James can claim Gift Aid, increasing his donation’s value to £18,750, and receive income tax relief on the amount contributed.
This approach ensures his support remains impactful while benefiting from UK tax efficiencies.
How Can Donors Plan for the New Rules?
- Review Existing Donations:
- Check whether the organisations you support still qualify for tax reliefs.
- If not, explore UK-based alternatives or partner organisations that achieve similar objectives.
- Utilise Donor-Advised Funds (DAFs):
- A DAF is a flexible giving vehicle that allows donors to make a contribution, claim tax relief immediately, and distribute funds to eligible charities over time.
- Example: Emma sets up a DAF with £50,000. She claims tax relief on the contribution and later supports approved UK charities in education and healthcare.
Donations made by UK individuals or companies to charities outside the EU/EEA, such as those in Pakistan, Bangladesh, or the Middle East, generally do not qualify for UK tax reliefs
- Establish a UK-Based Charity or Trust:
- For individuals supporting overseas causes, setting up a UK-based charity that funds projects abroad can ensure compliance with UK rules while retaining tax benefits.
- Example: Sarah establishes a UK charitable trust to support educational initiatives in India, maintaining tax efficiency for her donations.
- Diversify Donation Methods:
- Beyond cash donations, consider giving assets like shares, property, or other valuable items. This may also help reduce other tax liabilities.
- Example: Tom donates a portfolio of shares worth £30,000 to a UK charity, avoiding capital gains tax and receiving income tax relief.
The Bigger Picture
The changes reflect the UK government’s focus on aligning tax reliefs with domestic charitable activities. While they may limit support for international causes, proper planning ensures that donors can still achieve their philanthropic goals.
With the new restrictions on which charities qualify for tax relief, including limitations on donations to EU/EEA and global organisations, it’s more important than ever to understand how to maximise your charity giving while staying tax-efficient. So if you regularly donate to non-UK organisations, it is essential to reassess your contributions, understand the impact of the new rules, and seek professional advice to optimise your giving strategy. This will help ensure your donations remain impactful and tax-efficient under the updated rules.
For further assistance or queries, please contact us.
Leeds: 0113 320 9284 Sheffield: 0114 272 4984
Email: info@shipleystax.com
Please note that Shipleys Tax do not give free advice by email or telephone. The content of this article is for general guidance only and should not be considered as tax or professional advice. Always consult with a qualified professional before taking action.
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