We recently attended the Royal Welsh Show and had a fantastic day talking to farmers, suppliers to the agricultural sector and other advisors.
We wanted to find out about what people thought about Brexit now the implications of the result are starting to emerge, and what impact this may or may not be having on their outlook for the next 12 months.
Legislation is currently being progressed through parliament to enable farmers to choose between averaging their profits over two years, five years or not at all. The rules take effect from the 2016/17 tax year.
Farmers will only be able to average their profits if they meet a volatility test, i.e. the profits for the 2016/17 tax year must be sufficiently different to those in the earlier year(s). The taxpayer must have a full two or five year trading history, so new entrants into the industry may be restricted in how they can take advantage.
The new rules are welcome news for farmers and provide an additional tool in their tax-planning armoury. The last two years have returned lower profits for many farmers and the old two year averaging rules would not have provided much opportunity for lowering the tax bill.
The recent taxation changes regarding buy-to-let property have not been particularly favourable.
There has been the introduction of the additional 3% Stamp Land Duty Tax on acquiring a second property and the significant reduction in capital gains tax rates announced in the 2016 Budget did not apply to residential property which make both buying and selling a buy-to-let more expensive. In addition, the change over the next four years which will result in mortgage interest relief as an expense being abolished and replaced with a 20% tax credit will start to make the annual return on buy-to-let properties that little bit lower for many and may, in some circumstances, mean that the tax liability on that source of income outweigh the net income itself.
However, it seems that buy-to-let market continues to be a competitive one and many are still favouring investing in bricks and mortar. Lenders have worked to keep the market alive following the former Chancellor’s changes. Five years ago , the average rate for a two year fixed was just over 5% but now there are deals available that provide the same term length but with a rate that is less than 2%. With the recent reduction in Bank of England Base rate to 0.25% these rates may reduce even further. The rates for Companies are not so competitive or products readily available, but with this becoming a vehicle that some investors are considering, this may change too in time.
If you have any queries on this subject, please contact our specialist property & construction team on email@example.com
It has now been two months since the Brexit vote and there continues to be much speculation and comment on what may or may not happen. There also remains much uncertainty about what the future relationship between the UK and EU might be in terms of access to markets and the conditions surrounding that. During this period, businesses need to consider their exposure and risk in relation to sales to the EU market and this period of manoeuvring and negotiation may also present opportunities.
For companies seeking to expand in Europe, it may be worth considering acquiring an EU company before the formal exit process is completed. This would provide a base within the Single Market from which to grow. Repatriating profits can be planned as appropriate, and having a EU subsidiary may avoid every day cross border complications in tax or currency.
The Welsh Government has announced £5 million of funding to support SMEs in Wales to create and safeguard jobs.
The fund will support Welsh businesses looking to grow and increase the number and scale of companies that are exporting. Supporting and promoting Wales with potential inward investors will also be a priority.
The first element of the fund will be available between September 2016 and March 2017. Eligible costs are capital costs. Applications must be completed and received by the 30 January, 2017 and clients must have purchased and paid for the asset in full by 31 March, 2017.
The second pot of funding will be delivered between 2017/18 (further information about this fund will follow).
Companies will receive up to 50% match funding between £5,000 and £50,000 with this being the maximum amount of support.
We would be happy to discuss with you the possibility of making an application for funding and supporting you with the application process.
Please contact Mike Fenwick our Director of Grants in the first instance.
It has been long anticipated, but HMRC have finally released the 6 consultation documents relating to Tax Digitalisation that were expected the week of the referendum. These are some of the biggest changes to the way tax operates since PAYE was brought in during the second world war!
The documents cover:
- Bringing business tax into the digital age
- Simplifying tax for unincorporated businesses
- Simplified cash basis for unincorporated property businesses
- Voluntary pay as you go
- Tax administration
- Transforming the tax system through better use of information
Broomfield & Alexander Wealth Management’s Head of Investments takes a look at recent Market responses in the period following the Brexit announcement.
June 23rd will likely go down in UK History as one of near seismic proportions. At the time of writing, none of us can truly know the extent of the fall-out, or indeed long-term benefits, of the Referendum decision.
One thing we can be fairly certain of is that, in the short-term, Markets for risk assets such as equities (a main component of many peoples investment portfolio), will be as volatile and unpredictable as a UK opinion poll.
In July 2015’s Summer Budget, the Chancellor caught everyone by surprise by announcing two major changes to the taxation of buy to let properties: the abolition of wear and tear allowance and the restriction of tax relief on loan interest.
The changes to loan interest relief do not begin until April 2017, but wear and tear allowance was abolished on 6 April 2016 and replaced with a new statutory renewals basis for all residential landlords.
Until now the general rule has been that liability to UK tax in respect of trading activities has only arisen where the trade is carried on by a UK resident or where the underlying business is represented by what is termed a permanent establishment.
This limitation to the scope of UK tax has been used in a wide range of circumstances on UK property development projects. A common example of this would be the development of UK property by say a Jersey or Guernsey resident company. The assertion was that by its very nature a development site is not a permanent establishment: by its very nature, the carrying on of business at the site is intended to be time limited i.e. not permanent.
It looks like withholding taxes on dividends from EU subsidiaries or payments of interest or royalties to or from companies located in the EU may become a cash flow problem in the wake of UK’s decision to leave the EU.
Right now, the parent subsidiary directive allows subsidiary companies to pay dividends up to UK parent company without the need to account for withholding tax. Similarly, companies often rely on the interest and royalties directive to make interest or royalty payments free from either UK or local withholding taxes.