Monthly Archives: April 2015

Research and Development (R&D) Tax Reliefs

shutterstock_84635077The recent budget saw the Chancellor raise the amount of R&D tax reliefs for small and medium sized companies (i.e. companies with fewer than 500 employees) from 225% to 230% from 1 April 2015.

This means a small or medium sized company incurring £100,000 worth of qualifying R&D expenditure would receive tax relief as normal through their accounts for the £100,000 spent together with an additional £130,000 (£100,000 x 130%) tax deduction via their company tax return.

If the company is loss making, the loss can be surrendered for a cash repayment of up to 33% of the qualifying R&D expenditure which is particularly helpful for the cash flow of a fledgling business.

What projects qualify for R&D?

A common misconception is that only larger companies with specialist R&D departments making groundbreaking leaps in the advancement of science or technology will qualify.

However, at PM+M we have made numerous R&D claims on behalf of our clients, of varying sizes and across a number of business sectors.  The R&D projects we see tend to fall into the following areas:

• The integration of two or more existing components/systems to create new assemblies/systems etc.

• The replacement or substitution of one material for another i.e. replacing metal with a more durable substance.

• Develop a system, process, material or device to be: faster, lighter, stronger, cheaper or more accurate.

Basically, if you are doing something that your competitors are not doing and would be impressed by, there is a reasonable chance that it could qualify as an R&D activity.

What costs qualify?

The main cost is usually the salaries of people engaged in the R&D activity, including employer’s national insurance and any pension contributions. Other allowable costs typically include consumables, sub-contractors costs (with some restrictions), software and some utility costs if these can be directly related to the project.

For more information on R&D, please click the button below for a copy of our helpsheet. Alternatively, you can contact the PM+M tax team on 01254 679131 or by email tax@pmm.co.uk.

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New Duty to Disclose All Major Shareholders Interests

shutterstock_144792676A law passed last month requires public disclosure of major interests in UK companies.  The new Persons with Significant Control (PSC) Register needs to include details of anyone with an interest of 25% or more and the information will be publicly available and free to access online.

The need for the new rules comes from the UK Government’s commitment to promoting corporate transparency at recent G8 and G20 Summits.  The Small Business, Enterprise and Employment Act 2015 (SBEEA) starts having an effect next month, but will not be fully implemented until April 2016, giving individuals and companies time to take reasonable step towards compliance.

Anyone who doesn’t take reasonable steps to comply with the new rules may be convicted of a criminal offence, with the penalties including a prison sentence and disqualification from directorship. PSC will also be responsible for disclosing any interests or shares they may have in a directly or indirectly competing company to their current employer or fellow directors.

The government’s target of clamping down on money laundering and tax evasion may have significant commercial issues for many businesses in the UK. It is not uncommon to seek to keep an investment confidential, especially in an early stage business which may shake up a market and upset your existing customers or suppliers. The new rules will add more complications for entrepreneurs seeking to abide by the rules while not necessarily deterring those happy to break them.

Other changes to SBEEA include the bearer share being abolished. The change means that a physical stock certificate will no longer be required to be held by the equity owner as a part of holding the shares.

If you have business interests which could be affected by these disclosures, please contact David Gorton (Head of Corporate Services), who specialises in business structuring on 01254 679131 or email david.gorton@pmm.co.uk.

Vote for a Pension!

shutterstock_98671151As politicians go into election overdrive and the prospect of a coalition Government seems ever more likely, the major political parties are starting the pre-election give away as they look to gain favour with the voting public.

This week saw the Conservatives propose a new Nil Rate Band to save on inheritance tax.  The new band set at £175,000 would be applied to main residences and be available to properties worth up to £2,000,000. This means individuals would be able to pass up to £500,000 to beneficiaries free of inheritance tax when the new allowance is combined with the existing allowance of £325,000.  For couples, this could mean up to £1,000,000 is passed on tax-free.

So is there a catch I hear you cry! In short yes. In order to fund the new allowances tax relief on pensions would be restricted by gradually reducing the annual allowance from £40,000 to £10,000 for those earning more than £150,000.

The Labour Party have also announced they would reduce the annual allowance from £40,000 to £30,000 to fund a reduction in student fees from £9,000 to £6,000.

So it seems whether you vote blue or red future contributions into pensions will be restricted. For those of you planning to make a large pension contribution in the future, or if you earn more than £150,000, you should consider voting for your pension by making the contribution now in order to make full use of all the available allowances.

For more information or if you would like any advice on pensions, please call Antony Keen on 01254 679131 or email antony.keen@pmm.co.uk.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

HMRC Wrongly Issue Penalties For “Late” Self-Assessment Tax Returns

shutterstock_201406001HMRC has experienced a system glitch in relation to the submission of self-assessment returns. Many electronic submissions have been treated as paper submissions, and with a significant deadline difference, penalties have been scheduled to be issued where they do not apply. The self-assessment returns in question are Trust and Estate tax returns.

HMRC has issued a statement acknowledging fault and has detailed that the penalties are not applicable. However, a penalty cancellation request needs to be made to HMRC. Please don’t be alarmed if you receive a penalty notice in the next few days or weeks.

If you do receive a penalty notice, please do not ignore it and get in touch with the tax team as soon as possible on 01254 679131 or at tax@pmm.co.uk, as these notices do have to be formally cancelled.

Annual Tax on Enveloped Dwellings (ATED)

shutterstock_198210140ATED applies an annual tax charge to UK residential properties owned by companies or partnerships with corporate members.

The amount of ATED is worked out using a banding system based on the value of the property – starting from £7,000 for properties valued at between £1m and £2m and increasing all the way up to £218,200 for properties worth over £20m.

Your company will need to complete an ATED return if the property was valued at more than £1m on 1 April 2015 or at a subsequent acquisition date.

From 1 April 2016, a further band will come into effect for properties with a value in the £500,000 – £1m range.

The ATED return is due to be filed by the end of April 2015 for the 2015-16 financial year and the tax must also be paid then.  This filing and paying at the start of the year can catch people out.

However, for the 2015 to 2016 chargeable period, ATED returns for properties falling within the new £1 million to £2 million band are due by 1 October 2015 and payment by 31 October 2015. This is instead of the normal filing date of 30 April 2015.

There are reliefs available to exempt companies from the ATED charge, for example if the property is let to 3rd parties.  It is important to note that you will still need to complete an ATED return to claim the relief.

There are also a number of exemptions from the tax, most significantly for charitable companies using the property for their charitable purposes.  No return is required by these companies.

From a practical perspective, when making your payment, you will need to apply for an ATED payment reference number which can take up to 10 days to receive.  So, whilst there is still time, if you need to pay, you will need to act quickly.

Penalties apply for late filing and late payment so if you are unsure as to whether these rules apply please do get in touch as soon as possible – either email tax@pmm.co.uk or call 01254 679131 and ask to speak to Julie Walsh.

Trivial Benefits – The Facts

shutterstock_180753311The recent Spring Budget announced plans to introduce a statutory exemption for benefits-in-kind that are less than £50 and therefore classed as trivial. This was welcomed because it brings certainty to what was formerly a subjectively applied approach by HMRC to ignore trivial benefits.

However, the new exemption was not included in the Finance Bill issued after the Budget, so its future is currently uncertain.  There is due to be a widespread overhaul of the expenses and benefits rules in 2016, so it is possible that it falls within that.

If the new rules do come into effect, the more problematic aspect for business owners is that they include an annual cap on the exemption of £300 for business owners and their relatives.  That could mean tax complications for business owners. It doesn’t take many sandwiches bought by the business for working lunches (and other minor items) to exceed a total spend of £300 over the course of a year.  Hopefully this part of the new rules will be discarded or modified before they are introduced.

The other aspect to be aware of is that cash or vouchers can never be included as a trivial benefit and are always taxable, regardless of the amount.

The PM+M tax and payroll teams carry out expenses and benefits reviews for clients as part of our PAYE health check service.  If you are interested in finding out more about this or would like advice on expenses and benefits, please email tax@pmm.co.uk or call 01254 679131.

Auto Enrolment – The Results Are In

shutterstock_121236118The PM+M Wealth Management team recently sent out an Auto Enrolment survey to local businesses. The results have shown that 28% of North West businesses which have yet to reach their Auto Enrolment staging date do not know what the new law is or how it will affect their organisation.

Despite a much-hyped campaign undertaken by the government, it seems that a large proportion of companies are still unaware of the details around Auto Enrolment which states that every employer must automatically enrol their workers into a workplace pension scheme if they are between 22 and State Pension age, earn more than £10,000 a year and work in the UK.

The research of 200 North West businesses by our team also showed that 44% do not know their own staging date; 45% are unaware of what the implications will be on their business once they reach it; whilst 50% feel they are not ready. The final question asked whether Auto Enrolment will be dealt with in-house or if the services of an independent adviser will be sought; 56% stated they are unsure of what to do.

Antony Keen, director of the Wealth Management team,  said: “Auto Enrolment is one of the biggest reforms to pensions so it’s vital to know the facts and to do your research. We know it’s an administrative nightmare, but we were still surprised by the findings of the survey. Our advice is clear: plan early and don’t stick your head in the proverbial sand as the pensions regulator can fine companies which fail to comply.”

For more information or if would like some advice on Auto Enrolment, please call Antony Keen on 01254 679131 or email antony.keen@pmm.co.uk.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.