We have previously looked at Crowd Funding on this blog in relation to its growth in the debt market. Current data indicates that a total of £1.75bn has been raised in crowd funding to be invested in businesses. The amount invested in businesses just through 1 crowd funding site, CrowdCube, increased from £2m in 2012, to £12m in 2014 and it is projected to more than double to £30m in 2015. Peer to Peer funding seems to have captured the interest of investors and investees alike.
But many of the businesses raising money through this route have to provide historic trading information. This excludes start ups from this increasingly important source of finance. Equity finance, seen as the type of finance more suited for start ups, has traditionally been seen as the realm of wealthy individuals acting as “angels”. But now crowd funding is expanding into this area.
The timing seems to be right with a public more interested and engaged in business and the economy, the proliferation of technology and social media and very low interest rates offering no return for investors. Crowdcube and Seedrs are the largest and most well known names in the sector.
It is well known that food prices can fluctuate based on yields in different years or market conditions. Currently it is dairy farmers experiencing tough conditions with the price of milk falling, but meat prices can also vary, for example depending on imports of New Zealand lamb.
While many farmers experiencing falling incomes may think that they do not have tax to pay, this may not be the case due to the payment on account system which HMRC operate and depending on when the accounting year end falls.
Many farming business are run as a partnership and therefore are in a system of payments on account where the current year’s tax bill is estimated based on the previous year’s result until actual figures are prepared and adjusting payments can be made (or refunds received). If prices achieved resulted in good profits in 2013/14, a tax bill and another payment on account will be due in July 2015 to HMRC based on those good profits.
But if the situation has been different in 2014/15 as they have been in the dairy industry, a July tax bill based on the better year is the last thing many farmers want to see. By doing the accounts soon after the year end the July payment on account can be adjusted to an actual amount rather than just an estimate based on the previous successful year. In many cases this may wipe out the July payment and possibly even result in a refund.
A recent change in property valuations may mean that your business is caught under the annual tax on enveloped dwellings (ATED). ATED is payable by companies that own UK high value residential property and is payable every year. Take action now to safe guard your interests.
When this new charge was announced, many farmers would not fall foul as it only applied to properties valued over £2m and the farmhouses under this threshold are currently 100% relieved.
The Limits have now reduced to properties valued at more than £1m from 1 April 2015 and more than £500,000 from 1 April 2016. If a company owns a farmhouse that carries out farming commercially and with a profit seeking motive, it may be able to claim a 100% relief that will reduce the ATED charge to nil providing the conditions are met. This claim for relief must be made to HM Revenue & Customs and should not be assumed.
It is worth noting that any residential outbuildings which are owned by the company which are valued at more than the above mentioned limits will fall into the ATED charge.
Although many farming business operate through a partnership or sole trade, there are a number of businesses which may be caught by this annual tax charge. If you think this may apply to you, please contact us on firstname.lastname@example.org to discuss taking steps to reduce your liability.
With the end of the tax year approaching now is the time to ensure you have fully utilised the reliefs and exemptions available to you. These include:
Probably the most obvious, but often overlooked, is to use up your ISA entitlement. The cash limit increased significantly from 1 July 2014, when New ISAs (NISAs) were introduced. The NISAs allow any combination of cash and shares up to a maximum of £15,000. Prior to 1 July 2014, there was a limit of £5,940 on cash investments.
As announced in the March 2015 Budget, the rate from 6 April 2015 will be £15,240 and from this date you will be able to take out your money and put it back in within the same year, without losing your ISA tax benefits – as long as the repayment is made in the same financial year as the withdrawal. (To see this and other changes announced in the 2015 Budget click here to download our Budget Report 2015)
In the run up to the Budget 2015 most commentators were predicting that there would be very little by way of new announcements, and that it would be very much a “holding action” pending more fundamental announcements after the election.
On some levels this was true. There was relatively little in the headline figures of tax rates and allowances which had not been either announced in the Autumn Statement or leaked in the few days beforehand. However, the Chancellor undoubtedly managed to pull some big rabbits out of his hat – or at least the promise of emerging rabbits over the life of the next Parliament.
First and foremost was the very welcome announcement that, in response to lobbying by the NFU and others, the special rules for farmers averaging would be reviewed in order to extend the period over which self-employed farmers can average their profits for income tax purposes from 2 years to 5. It is a long time since a government has brought in special legislation for farmers, and it is a welcome move, particularly in this era of price volatility. There will be a consultation later in 2015 on the detail of the new relief, and it should be remembered that it still only applies to individuals and members of partnerships (i.e. not farming companies). The measure will come into effect from 6 April 2016 and be legislated for in a future Finance Bill.
The Chancellor delivered a number of announcements in Budget 2015, but what impact do these have for the third sector?
It is clear that whilst the economy is getting stronger, pressure on budgets will continue, which means that Council funded charities will continue to face downward pressure on income.
Headlines for the sector:
- Review on the use of Deeds of Variation to avoid Inheritance Tax
Leaving money to charities, as part of a will, currently has significant advantages for reducing the amount of tax paid by the deceased’s estate. Might this review, scheduled for the autumn, have unintended consequences for charities, particularly those charities which receive legacies?
This year’s Budget was very much focused on individual finances, a budget for ‘the people’. For the manufacturing sector the announcement didn’t hold any great surprises, but did confirm some positives and missed opportunities…
We knew from previous announcements that the corporation tax rate would be reduced to 20% from 1 April 2015 and that tax relief for R&D would be increased from 1 April 2015.
Measures to encourage employment of under 21’s and Apprentices are being introduced via an exemption from employers NIC from April 2016.
There were helpful announcements for energy intensive industries. The long term review of business rates will be positive, provided it carries through the intention of assisting those who invest in energy efficient equipment within their sites (for example by investing in energy efficient plant and machinery).
The Budget today was a very mixed bag for the digital, media and technology sectors, probably with more negatives than positives.
We knew from previous announcements that the corporation tax rate would be reduced to 20% from 1 April 2015 and that tax relief for R&D would be increased from 1 April 2015 also.
We also knew that measures to encourage employment of under 21’s and Apprentices are being introduced via an exemption from employers NIC.
There were helpful extensions to the Creative Sector tax reliefs for High End Television and the introduction of a tax relief for Orchestras (and a consultation to consider how tax reliefs could assist local newspapers). There was also new funding announced for games developers in the form of a Video Games Prototype Fund.
The Budget in an election year seldom disappoints with the Chancellor typically delivering tax incentives to the Voter. This one was refreshingly modest. With a strengthening economic recovery and the latest increased UK economic growth announcement from the Independent Office for Budgetary Responsibility, vote winning giveaways may have been expected. The focus was definitely on a ‘responsible’ budget with no ‘unfunded or irresponsible spending’. The Chancellor has put together a simple package of measures impacting on small business, pensioners and the Voter on the street alike.
The announcement of a reduction in the Severn Bridge toll from 2018 and support for the Swansea Tidal Lagoon scheme are welcomed. The Swansea Tidal Lagoon scheme has the potential to create thousands of jobs and inject millions of pounds into the Welsh economy. Talks will start with Cardiff and local partners towards establishing a City Deal for Cardiff. Under the scheme, cities are given specific powers and freedoms to help increase economic growth, create jobs or invest in local projects.