Practical and intelligent tax saving solutions for you and your business

Tax Solutions

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.

Sections


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
• 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, 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.


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 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.


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…

Chancellor extends furlough scheme to end of June

Tax Solutions Shipleys Tax Advisors

Chancellor has confirmed today that the Coronavirus Job Retention Scheme will be extended by one month to 30 June to reflect continuing social distancing measures.

The move provides some certainty and allows firms from across UK to continue to protect millions of jobs. The scheme will continue to be monitored to ensure people and businesses can get back to work as soon as it’s safe to do so to drive UK economic recovery.

Chancellor has confirmed today that the Coronavirus Job Retention Scheme will be extended by one month to 30 June to reflect continuing social distancing measures.

The scheme, which allows firms to furlough employees with the government paying cash grants of 80% of their wages up to a maximum of £2,500, was originally open for three months and backdated from the 1 March to the end of May.

However, the Chancellor said he would keep the scheme under review and extend it if necessary.

The government has taken unprecedented action to help the economy and society bridge a period of national emergency so that as many people as possible can get back to work as the situation improves.

This week the Office for Budgetary Responsibility said the CJRS is limiting the impact on employment. Brewdog and Timpsons are among the thousands of businesses up and down the country furloughing their staff.

Future decisions on the scheme will take into account further developments on the wider measures to reduce the spread of coronavirus, as well as the responsible management of the public finances.

For help and advice on furloughing please call us on 0114 2724984 or email info@shipleystax.com.

COVID-19: Working from Home – What tax breaks can you get?

Tax Solutions Shipleys Tax Advisors

As much of the UK has headed deep into lockdown due to coronavirus, many are getting used to the trials and tribulations of working from home or remote working. Recently the government announced a much criticised £10,000 home working allowance for MPs. But what of the average person working from home? Can they access any tax breaks?  In this article we discuss the general tax reliefs available when working from home.

Note: this article is intended for general guidance only and does not constitute accountancy, tax or other professional advice. We recommend you seek specific advice based on your circumstances.

Different rules apply depending on whether you are an employee or self-employed or a company director when claiming tax relief against income or profits for the costs of using your home for business purposes. As such the tax breaks can be broadly split into three:

  1. Employee homeworkers
  2. Self-employed traders, Partners and Landlords
  3. Company Directors

Employee homeworkers

The general rule for employee homeworkers is that they may claim expenses only if incurred wholly, exclusively and necessarily in performance of their employment duties. This generally excludes expenses which are part-business/part-private.

If an employer reimburses an employee’s expenses under a home-working agreement there will be no tax liability for the employee provided that the expenses qualify for relief under the general rule.

Where home working is undertaken by personal preference no claim is possible, however as most employees are home working due to government guidelines meeting this criterion should not be a problem.

Type of expenses

Claims for tax relief will be limited to metered use of light and heat and itemised telephone calls. Claims for other costs may be possible depending on the nature of the employment.

Instead of claiming actual expenses there is an HMRC approved allowances that can be claimed. This is at a fixed rate of £6 per week or as agreed by the employer via a dispensation agreement with HMRC.

How to claim

For those not completing tax returns, normally the costs incurred for working at home should be re-imbursed by your employer. If this is not available, then HMRC allow for employees to claim direct via their online portal.

To claim these expenses, you need a Government Gateway user ID and password. You can create a user ID if you do not already have one. For this you would need:

  • your National Insurance number
  • a recent payslip or P60 or a valid UK passport.

Tips and pitfalls 

If an employer reimburses an employee’s expenses under a home-working agreement there will be no tax liability for the employee provided that the expenses qualify for relief under the general rule. This strategy is more beneficial for the employee because the employer bears all the costs. 

Self-employed traders, Landlords and Partners

As a general rule working from home means you can claim part of your household costs for tax purposes as long as the expenses is incurred wholly and exclusively for the purposes of the trade. This is the case even if you have an office or other business premises.

What expenses can be claimed?

As self-employed person working from home you are entitled to claim a proportion of most household costs, including but not limited to:

  • Mortgage interest or rent
  • Council tax
  • Water rates
  • Repairs and maintenance
  • Building and contents insurance
  • Electricity
  • Gas, oil or other heating costs
  • Cleaning
  • Gardening

Claims should be based on the proportionate use of the property for the business. This comes down to how much time is used and how much space is used, i.e. how much space is set aside for business use and how much time is spent on business. Given the current coronavirus lockdown it is likely that the time element will be greater than usual.

A proportion of general repairs and maintenance costs relating to the whole property, such as roof repairs or gas maintenance costs may be claimed.  Costs which are specific to an area used for work may be claimed in full – subject to any reduction required for partial private use of that area.

Redecorating a study used for work would be an allowable cost, for example. The flipside of this is that any costs specific to a wholly non-work area may not be claimed at all.

Some calculations may benefit from using floor space instead of rooms. If the business requires a lot of space and the room used is actually the largest in the house, then it would be better if the calculation was done based on floor space rather than rooms.

Any furniture and equipment used for business can claimed 100% thanks to something called an annual investment allowance, although this is subject to a reduction for any private use.

How to calculate the business proportion?

HMRC do not provide any hard and fast rules here, the overriding factor that it is reasonable and justifiable.

As such, there are many possible methods for calculating the business proportion. Generally, in practice, the most popular method is to simply take the number of rooms used for business as a proportion of the total number of rooms in the house. Hallways, bathrooms and kitchens should be excluded from the calculation. So, for example if you use one room in your house as your office and the house also has two bedrooms, a living room, a dining room, two bathrooms and a kitchen then for the purposes of our calculation you can claim one fifth of the household costs (you ignore the bathrooms and the kitchen). Note that you would need pro-rata this for the tax year on a time spent basis. (see below).

Some calculations may benefit from using floor space instead of rooms. If the business requires a lot of space and the room used is actually the largest in the house, then it would be better if the calculation was done based on floor space rather than rooms, as this would normally produce a greater deduction.

Smaller properties

For smaller properties, calculating the business proportion based on floor space or number of rooms may not be suitable, instead it will often make more sense to make claims on a time basis instead. For example, someone working from home with a one bedroom flat it would be difficult to proportion things on a space used basis, as effectively the whole flat will either be used privately or for business. Hence in this scenario the argument is that there is “work”, “rest” and “play” taking place at any given time, accordingly claiming a third of the household costs would be arguably justifiable.

Using a room solely for business purposes may affect any capital gains tax (CGT) exemptions you could be eligible for on the sale of your home. This exemption, which you usually get when you sell your home, is restricted if part of the house has been used exclusively for business.

Part time workers

 Similarly, part time workers would need to apply a further adjustment to take account of the fact that less time is spent at home working. Establishing this reduction needs to be considered on a case by case basis. The key watchword to remember is that the calculation has to be reasonable.

Protecting your Capital Gains Tax exemption

Using a room solely for business purposes may affect any capital gains tax (CGT) exemptions you could be eligible for on the sale of your home. This exemption, which you usually get when you sell your home, is restricted if part of the house has been used exclusively for business. Fortunately, as long as there is private use of each room in the house, no matter how small, your CGT relief is safe. This does mean that your home as office claim has to be restricted, but experience shows that on average the trade-off is worth the potential tax savings made on sale.

Flat Rate Deductions

Like employees HMRC have provided trading businesses a system of flat rate deductions for business use of your home.

The flat rate deductions are an alternative method available instead of the proportionate calculation methods discussed above. The amount of the deduction is calculated on a monthly basis according to the number of hours spent wholly and exclusively working on business matters. The rates applying start from £10 per month rising to £26 per month for 25 to 101 working hours respectively. Experience suggests you would almost certainly be better off carrying out a proper calculation and claiming a suitable proportion of the actual household running costs direct.

Although it is worth noting that the flat rate does not include telephone or internet expenses. The taxpayer can still claim the business proportion of these costs by working out the actual costs.

Company directors

Directors and other employees may only claim the specific additional costs of working from home. Where it is impractical to calculate the exact costs, HMRC permit a claim of £6 per week.

HMRC stipulate that the director must also be required to work from home: simply choosing to do so is generally not sufficient. If you run your company from home and have no other business premises, then this is pretty straightforward.

The calculation methods outlined above for sole traders can also be applied here.

Type of expenses

As with employees, claims are limited to metered use of light and heat and itemised telephone calls. Claims for other costs may be possible depending on the nature of the employment on a reasonable and justifiable basis.

Requirement to work from home

HMRC stipulate that the director must also be required to work from home: simply choosing to do so is generally not sufficient. If you run your company from home and have no other business premises, then this is pretty straightforward. In other cases, there will be a requirement to demonstrate a genuine need to carry out your duties at home and there may also be a need to stipulate this requirement to do so in the employment contract.

However, due to the current COVID-19 lockdown, it is clear that many company directors are required to work from home under Government guidelines. Hence, at present, it is arguable that there is no need for this to be included in an employment contract and most small company directors should be able to claim a deduction for working from home – either at £6 per week or a greater amount if detailed calculations support it. As above, long-term exclusive business use of one part of the property should be avoided so as not to affect the CGT exemption on sale of the home.

A better solution in many cases maybe for the company director to enter into a “licence to occupy” agreement with the company for “non-exclusive” use of an office space in the director’s house.

In order to get tax relief, extra salary over and above the personal allowance will be required. This will lead to additional National Insurance costs. However, this extra tax liability can potentially be avoided, if the company reimburses the director’s expenses under a homeworking agreement provided of course that the expenses qualify for relief under the general rule.

Licence to occupy?

A better solution in many cases maybe for the company director to enter into a “licence to occupy” agreement with the company for “non-exclusive” use of an office space in the director’s house, i.e. an appropriate agreement to rent space in your home to the company. A suitable proportion of all household costs can then be deducted from the rent received and no National Insurance will be due.  Additionally, the company will also be able to claim Corporation Tax relief for the rent paid. Furthermore, by granting the company a ‘non-exclusive licence to occupy’ the relevant space, and maintaining some private use outside working hours, any restriction in CGT relief on your home can be avoided.

If you need help with this or any financial or tax issue please call us on 0114 272 4984 or email info@shipleystax.com – we are ready to help.

COVID-19: Job Retention Scheme Portal Update

Tax Solutions Shipleys Tax Advisors

Coronavirus Job Retention Claim portal is now live

Employers and their agents wishing to make a claim under the Coronavirus Job Retention Scheme can now do so as the claim facility is now open.

To make a claim, employers (or their agents) will need to be registered for PAYE Online. Employers must also have a UK bank account into which the claim money will be paid.

Employers and their agents wishing to make a claim under the Coronavirus Job Retention Scheme can now do so as the claim facility is now open.

The following must also be provided:

  • employer PAYE reference;
  • the number of employees being furloughed;
  • for each furloughed employee, their National Insurance number;
  • the start and end date of the claim;
  • the full amount being claimed (including associated employer’s National Insurance contributions and minimum employer pension contributions);
  • phone number, employer’s name and a contact name;
  • the employer’s corporation tax or self-assessment unique tax reference or company registration number.

A claim can be made by an agent who is authorised to act for the employer for PAYE purposes, but not by an agent who is only authorised to file on behalf of the employer.

Claims can be made online at www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme.

HMRC will check claims and employers should receive the money into their accounts within six days. Where the money is needed to pay the April 2020 payroll, claims should be made without delay.

Claims can be made for furloughed employees who were on the payroll on 19 March 2020 and in respect of whom an RTI submission had been made to HMRC by that date. A claim can be made for 80% of the employee’s wages (capped at £2,500 per month), plus the associated employer’s National Insurance and minimum pension contributions. Claims can also be made for employees who were made redundant or stopped working for the employer on or after 28 February 2020 and who are put back on the payroll after that date. The minimum furlough period is three weeks, and furloughed employees cannot work for the employer while furloughed.

For full time or part-time employees, the claim is based on their normal salary. Where an employee’s pay varies, the claim can either be based on their earnings for the same pay period in the previous year or on their average earnings for 2019/20.

The CJRS portal is effectively “self-serve” which means clients will need a lot of hand-holding and help from their accountants/advisers.

In general the portal works as follows:

  • Claims will not be made by phone, it will be an online service.
  • File only agents, including Payroll Bureaus, will not be able access the service due to data protection reasons.
  • Businesses will need the above information on each of their furloughed employees:
  • the service is designed to be self-serve with guidance in place.

Whilst the most basic CJRS claims can perhaps be processed by employers, we fully expect most employers to require help from their advisers to hand-hold them through the process.

As such we understand that these are troubling and uncertain times for you and your organisation. The team here at Shipleys Tax are here to answer your questions. We will support you through the difficult times and help you make the right decisions.

If you need help with any financial or tax issues relating to COVID-19 please call us on 0114 272 4984 or email info@shipleystax.com.

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