SRLV Accountants London UK

A Budget for Business?

• Reduction in corporation tax rates – 24% this April down to 22% from 2014

The Budget was good news for businesses. The reduction in corporation tax rates now means that, for the first time, entrepreneurs can have a successful company and in due course sell it, paying tax on profits and gain on sale of less than 30% overall.

• Long awaited relaxation of Controlled Foreign Company (CFC) rules, following consultation

The new low rates of corporation tax and new CFC rules are designed to make the UK more attractive to inward investors.

•  EMI share option scheme limit more than doubling – staff eligible for shares worth up to £250,000

The EMI rules are to be made more flexible and the increase in limits is welcome, but won’t affect that many people.

Chancellor clamps down on anti-avoidance 

• Stamp Duty loopholes start to be closed

Stamp duty avoidance through offshore companies has been widely criticised.  The Chancellor today announced a new punitive rate of 15% stamp duty land tax (SDLT) on properties costing more than £2 million bought by an offshore ‘envelope’.  These vehicles will now also pay capital gains tax (CGT).  This is a good start, but UK property is still under-taxed in the hands of non-residents.  UK property in an offshore envelope company will still be outside the scope of inheritance tax and non-UK resident individuals will still pay no CGT on UK property. However, UK residents owning property abroad will usually be within the scope of tax in the country where their property is located.

• Following initial consultation a General Anti-Avoidance Rule (GAAR) will be brought in next year

Graham Aaronson QC’s review has recommended a GAAR.  Commentators are mixed on how flexible this will be, whilst understanding the need to clamp down on unacceptable tax avoidance.  We need to see the detail on this to ensure that normal commercial transactions will not get caught.  HMRC can be over-zealous, so cautious optimism only at this stage.

•  New Capital Gains Tax rules on offshore companies

Sub-sale relief is to be closed and SDLT on properties costing more than £2 million will increase to 7% at midnight tonight.  This shows that the Government is serious about using SDLT as a revenue raising measure.  Clearly, a one-off SDLT charge is more practical than the proposed mansion tax, which was full of inconsistency.

Personal tax changes more modest than expected 

• 50% tax rate down to 45% from next year

The Chancellor was very clear that his research had shown that far less tax was raised from the 50p rate than anticipated.  This accords with our experience that 50p tax plus 2p National Insurance represents a tipping point.  The new rate is expected to bring in more money but the ‘hidden’ top rate of 60% tax remains in force for a tranche of income just above £100,000, at which point personal allowances are withdrawn.

• Personal allowances increased to £8,105 this year and £9,205 next year

Raising personal allowances is a priority of the Coalition Government with pressure to hit £10,000 and bring the lowest earners out of the charge to tax altogether. This has to be a good idea for the tax administrators and for the individuals, but in the current economic climate Government is unable to increase the limits any faster.

•  Child benefit to be withdrawn for higher earners

Child benefits for higher earners have proved to be a political football.  To counter criticism, these will now be phased out for families where a worker earns more than £50,000 and is fully withdrawn if they earn more than £60,000.  This is more subtle than the previous ‘in or out’ proposal, but what will it cost to implement?

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It was an emotionally charged 54^th Grammys ceremony in LA on Sunday night that saw Adele pick up 6 awards after a storming 2011.

SRLV client, Paul Epworth co-wrote and produced Adele’s hugely successful album ’21′ and shared in her honours by picking up the coveted Producer of the Year (Non-Classical) for his work with her, as well as his work with Foster The People and Cee-Lo Green.

Paul Epworth’s other three awards were for his work on:

Record Of The Year – Rolling In The Deep – Adele

Album Of The Year – 21 – Adele

Song Of The Year – Rolling In The Deep – Adele

Adele’s record label XL Recordings is also a client. A double whammy at the Grammys for SRLV clients!

Our congratulations to Paul and XL Recordings (and to Adele), as well as all the other Grammy winners.

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The much publicised Harry Redknapp tax evasion case serves to highlight the pitfalls that many celebrities and high earning sports stars can find themselves faced with when managing their finances.

These people are incredibly busy, have a number of advisors working for them and, of course, earn vast sums of money.  Whilst fantastic on the one hand it brings with it a myriad of problems as this case has highlighted.  The skill is, of course, making sure you have the right advisors working with you and specifically, when it comes to your finances, making sure someone is fully aware of what is going on and is taking responsibility to ensure that you are doing everything by the book.

There’s been no wrong doing determined on Harry’s part, but clearly investing your money offshore doesn’t mean it’s off limits to HMRC.   The tax rules regarding offshore monies are complex and individuals must take great care to fully communicate with their professional advisors, to ensure they comply with the UK legislation.

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