|
The budget and Capital Gains Tax
The budget will be upon us in a couple of months. Do not forget that in the pre-budget report major changes to capital gains tax were announced so, if these affect you, you only have a couple of months to act. Changes are due to take place on the 6 April 2008. In a nutshell, the proposed changes are that there will be a flat rate of capital gains of 18%. If you are in the process of selling business assets, including shares, you are likely to be disadvantaged by the changes. People selling non-business assets, such as residential tenanted property, will be better off under the changes. Note that it is the date of exchange which is the important date for CGT, not completion.
Employers providing late night taxis for employees
Note that HMRC has just issued detailed guidance in relation to the above as they have found that employers were not following the conditions for tax exemption on such journeys. Note that the rules are as follow:
1. The journey is from work to home.
2. It is made as a result of the employee having to work later than usual (until at least 9pm).
3. Public transport is either unavailable/very slow at that time or something makes travel on public transport unreasonable for the particular employee and
4. The number of such journeys for which a taxi has been provided for that employee in the tax year is no more than 60.
Further information can be found on the HMRC website www.hmrc.gov.uk, putting EIM21831 into the search engine.
Research and development tax claims
The time limit for the above claims is being reduced from 24 months from the end of the accounting period to 12 months from 1 April 2008, so any businesses who are considering making a claim under the 24 months must do so before 31 March.
Annual investment allowance
A reminder about the above which is coming in to force in April. At the moment, if a business buys plant and machinery they get a first year allowance of 40% and thereafter a writing down allowance of 25% on a reducing pool. From April, the new allowance will provide a deduction from profits of the first £50,000 in any year that the business invests in plant and machinery other than cars. If your business is considering investment into plant and machinery you may benefit by delaying this until after April 1 for companies, April 6 for unincorporated.
Buildings and capital allowances
If you buy business premises, you do not get any tax allowances on the purchase. Some small tax allowances could be claimed on industrial buildings, but even this is being phased out. Very often, however, there are items within the building that can qualify for capital allowances and these are the integral fixture and fittings. Examples of these are sanitary wear, built-in kitchens, lifts, central heating systems, fire and burglar alarms and so on. Even if you have bought the building for one inclusive price and there is no split of these integral fixture and fittings, a claim can still be made provided that the valuation put on the integral fixtures is reasonable. Indeed, in the Revenue manuals the Revenue have given examples of percentages of cost of a building that they would consider reasonable depending on the type of trade. Claims can also be back-dated so if you have purchased business premises over the last few years it may be worth asking your accountant to look into this.
Note that there are some important changes coming up in the budget in relation to integral fixtures and fittings. At the moment they qualify for a 40% first year allowance and thereafter with a 25% writing down allowance. From April, certain integral fixtures will only qualify for 10% allowance per year. So you would be better making sure that the claim is done for any accounting periods ending on or before 31 March 2008.
About the authorPat Cobham is a tax partner in Cobham Day Ltd and she is based at 73 Liverpool Road, Crosby, Merseyside, L23 5SE, telephone number 0151 285 3660, www.cobhamday.co.uk.
|
