Current Tax

Issues

John RichardsJohn RichardsManaging Partner

Anthony Andreasen Tax Consultant

Personal Allowance

2009/10

2010/11 >£100000

£6475

>£1129502010/11 >£100000

Abatement

£1 for £2

>£112950

NIL

Personal Tax Example

Personal Tax Example

Personal Tax2009/10 2010/11

Basic Rate

Higher Rate Threshold

Higher Rate

Dividend Higher (effective)

Rate

20%

>£37400

40%Rate

Secondary Threshold

Secondary Higher Rate

25% >£150000

50%Secondary Dividend

(effective) Rate36.1%

National Insurance

2009/10 2010/11

Class 1 & 4 Basic

Class 1 & 4 Higher

11%

1%

11%

1%

12%

2%

2011/12

Class 1 & 4 Higher

Class 1 Employer

Combined Higher

Rate tax & NI

1%

12.8%

1%

12.8%

2%

13.8%

41% 51% 51.5%

Other Tax Changes

•VAT goes back to 17.5% 1/1/2010

•Corporation Tax rate stays at 21% until 2011/12

•Capital Allowances – 40% FYA ceases 6/4/2010

•IHT threshold frozen £325,000

•Furnished holiday lettings beneficial treatment •Furnished holiday lettings beneficial treatment

ceases 5/4/2010

•Stamp Duty holiday on residential property below

£175,000 ceases 31/12/2009

Advancing Income into 2009/10

Earned Income

Earnings £120,000 pa

Move £20,000 to 2009/10 from 2010/11

Increase 2009/10 £8,000

Decrease 2010/11 £10,590

Saving £2,590Saving £2,590

Earnings £200,000pa

Move £50,000 to 2009/10 from 2010/11

Increase 2009/10 £20,000

Decrease 2010/11 £25,000

Saving £5,000

Advancing Income by changing year

end•Solicitor 30/4/2008 £120,000

30/4/2009 £150,000

30/4/2010 £180,000

31/4/2011 £150,000

Overlap relief brought forward £16,000Overlap relief brought forward £16,000

Change year end to 31 March 2010

2009/10 Tax Increase £61,090

2010/11 Tax Decrease £75,990

Saving £14,900

Alternative Suggestions

•Income splitting

•Loans to Shareholders

•Corporate partner/member

Offshore Disclosure Facility

•Notification of overseas bank accounts extended

until 4th January 2010

•Full disclosure by 12 March 2010

•Legislation to attack non disclosure

Tax Efficient Investments

•Enterprise Investment Scheme

•Venture Capital Trusts

•Film Partnerships

•Enterprise Zone Trusts

•Green Energy Investments•Green Energy Investments

Enterprise Management Incentives

•Tax efficient employee incentivisation

•Key employees

•Company must qualify

•Trade must qualify

•Employee must qualify•Employee must qualify

•Options (and shares) must qualify

•Company can obtain advances assurance that it

qualifies under the scheme rules from HMRC

Enterprise Management Incentives

Tax Implications

•Options granted for exercise price equal to or

greater than MV

•No tax on grant or exercise

•Tax + NI Charge

•Option price is less than MV at date of grant

•Shares under the option are free

•Disqualifying event

Enterprise Management Incentives

•Income tax on discounted options

•Corporation tax deduction

•Employers NIC

•Capital Gains Tax•Capital Gains Tax

Company Purchase of Own Shares

•Distributable Reserves

•Ordinarily treated as a distribution

•Capital Gains Treatment?

•Seek advance clearance•Seek advance clearance

•Significant benefit to shareholder (10% or

18%)

Criteria to be met

•Articles of association do not prohibit

•Substantial reduction in share capital

•Ownership period

•Must not be connected

•Bona fide commercial reason•Bona fide commercial reason

•Automatic treatment

Research & Development Tax Relief

“advance overall

knowledge/capability

in the field of science or in the field of science or

technology”

Research and Development Tax Relief

•Enhanced deduction of 175% on qualifying

expenditure (SME)

•Reduce taxable profits or increase allowable

loss

•Loss utilisation v tax credits•Loss utilisation v tax credits

•Large company relief (130%)

•IP changes from Pre Budget Report

Research and Development Tax Relief

•Eligible expenditure

•Staffing costs

•Consumables

•Software

•Utility costs

•Funding•Funding

•Subcontractor costs

•Making the claim

•Briefing document

•Late claims

•Maintaining records in support of R&D claim

Thank you for listening

John Richards

Managing Partner

Tel 0191 2569500

john.richards@r-m-t.co.uk

Anthony AndreasenAnthony Andreasen

Tax Consultant

Tel 0191 2569500

anthony.andreasen@r-m-t.co.uk