Plant And Machinery | Sherie Griffiths

March 26, 2010

Budget 2010 – Good News For Some, But The Hard Decisions Are Yet To Be Made

Filed under: Branston Adams, Chartered & Certified Accountants, Business, Money — Tags: Abolition, Business Disposals, Certified Accountants, Duty Holiday, Finance Side, Financial Platform, First Time Buyers, Housing Market, Indexation, Investment Allowance, Isas, Lifetime Limit, Low Interest Rates, Nest Eggs, Pensioners, Personal Finance, Plant And Machinery, Stamp Duty, Strands, Welcome Announcements, Welcome Move — sheriegriffiths.com @ 9:47 am

From Branston Adams, Chartered & Certified Accountants, Surrey.

‘Budget 2010 – Securing the recovery’ is a strong title backed by the objective of building a strong economy and a fair society. This obviously cannot be achieved in one Budget especially one so close to the election.

There are both a few welcome announcements and a few concerns with the detail of the Budget, especially having looked at some of the notes. As with all Budgets further analysis will be needed to ensure the rhetoric is backed up by the detailed rules and implementation. We know that the Government needs to raise cash and provide a secure financial platform – this is an economic imperative.

Strands that are of interest include the extension of the stamp duty holiday for first time buyers until 25 March 2012, applicable to homes under £250,000. This is a welcome move to boost a housing market which may just be seeing signs of recovery. However a permanent abolition of this onerous tax would have shown real commitment to the future well-being of the housing market.

On the personal finance side, changes had been already announced with the recognition that savers and pensioners have suffered during this recession, with low interest rates whittling away at financial nest eggs. Tax free ISAs, with an annual £7,200 limit, will increase to £10,200. The new announcement linking ISA limits to indexation from 2011/12 will hopefully help savers and pensioners.

For those businesses that have money to invest, they will benefit from a range of allowances including the annual investment allowance. This has been doubled from £50,000 to £100,000 for expenditure incurred on plant and machinery.

Entrepreneurs will be pleased that the lifetime limit on business disposals has been increased to £2m. This is a good sensible change for business owners that makes the UK a better place for doing business.

To sum up, this was a Budget with a few pieces of good news for entrepreneurs and pensioners, but the hard decisions have been postponed. We now have to look forward to the General Election and maybe another Budget.

For a pdf or hard copy of our Budget summary and tax data card, please contact us.

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April 27, 2009

Was The Budget What You Were Expecting? – Business Tax & Investment Incentives: Part 2

Enterprise Investment Scheme (EIS)

The restrictions on the carry-back of income tax relief to the previous tax year will be removed. This will apply to 2009/10 and subsequent years. With effect from 22 April 2009, further changes will be introduced to simplify and improve the EIS rules.

Loan relationships

Where trade debts between connected companies are released after 22 April 2009, the debtor companies will no longer be taxed on the debts released. For accounting periods beginning on or after 1 April 2009, deductions for interest payable to certain connected foreign companies will now be available on a paid basis rather than on the accruals basis.

Foreign profits

Legislation is to be introduced to ensure that dividends and other distributions received from foreign companies on or after 1 July 2009 will largely be exempt from corporation tax. UK distributions will be exempt to the same extent. Finance expense payable by UK members of a group of companies will be subject to a cap equal to the consolidated gross finance expense of the group. This will apply to amounts payable in accounting periods beginning on or after 1 January 2010. With effect from 1 July 2009 there will be changes to the controlled foreign companies rules and the Treasury Consent rules will be replaced.

Corporate transparency

For accounting periods beginning on or after Royal Assent, the senior accounting officers of large companies and large groups of companies will have reporting obligations aimed at ensuring that the accounting systems are adequate for the purposes of accurate tax reporting. These obligations will be supported by penalties chargeable on the senior accounting officer personally and on the company.

Anti-avoidance

A number of measures will be introduced to tackle anti-avoidance. These will affect:

Intra-group convertible finance
Derecognition of income from derivative contracts
Plant and machinery leasing
Foreign exchange matching
‘Disguised interest’
Exploitation of qualifying loan interest relief
Real Estate Investment Trust (REIT) regime
Double tax relief where foreign tax is repaid
Receipts derived from a right to receive income.

With the publishing of the 2008 Finance Act, the UK overtook India as the country with the longest tax code world.

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April 24, 2009

Was The Budget What You Were Expecting? – Business Tax & Investment Incentives: Part 1

Corporation Tax

Corporation tax rates and bands are as follows:-

Financial year to 31 March 2010 31 March 2009

Taxable profits

First £300,000                21%                                                    21%
Next £1,200,000            29.75%                                            29.75%
Over £1,500,000            28%                                                   28%

Trading losses

Trade loss carry back will be extended to a period of three years, with losses being carried back against later years first. After carry back to the preceding year, a maximum of £50,000 of unused losses will be available for carry back to the earlier two years. This will apply to trading losses made by companies in accounting periods ending between 24 November 2008 and 23 November 2010 and to trading losses made by unincorporated businesses in tax years 2008/09 and 2009/10. The £50,000 limit applies separately to the unused losses of each 12 month period or tax year.

Capital allowances

A 40% first year allowance will be introduced for expenditure on qualifying plant and machinery that would normally be allocated to the main capital allowance pool. This will be
available to businesses incurring such expenditure in the 12 month period beginning on 1 April 2009 for corporation tax and on 6 April 2009 for income tax.
Qualifying expenditure incurred on cars on or after 1 or 6 April 2009 will now be allocated to one of the two general plant and machinery pools. Cars with CO2 emissions exceeding 160 g/km will be dealt with in the special rate pool and attract writing down allowances (WDA) at 10%. Cars with CO2 emissions of 160 g/km or less will be added to the main rate pool and attract WDA at 20%. Expenditure incurred before April 2009 will continue to be subject to the old ‘expensive’ car rules for a transitional period of around five years. Cars that have an element of non-business use will continue to be dealt with in single asset pools to enable the private use adjustment to be made, but the rate of WDA will be determined by the car’s CO2 emissions.

Car leases

From April 2009, the rules restricting the amount of car lease rental payments that can be deducted for tax purposes will be changed to a flat rate disallowance of 15% of relevant payments. This will apply only in respect of cars with CO2 emissions exceeding 160 g/km. For leases that commenced prior to April 2009, the previous rules will continue to apply until the end of the lease.

‘The avoidance of taxes is the only pursuit that still carries any reward’.
John Maynard Keynes, British economist

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