Steven Mugglestone

The more I learn, the less I know

Posts Tagged ‘Budget 2012

Help yourself to free commentary and advice on the 2012 budget from McGregors:

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McGregors Corporate
, the Midlands based firm of entrepreneurial Chartered Accountants and Business Advisers work with Probiz Tax and have helped to provide a Free Summary of the main provisions of the 2012 Budget as outlined by the Chancellor of the Exchequer on 21st March 2012.

Please help yourself to a free PDF copy, Click:          Budget Report 2012

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

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steven@mcgregorsleicester.co.uk

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Written by Steven Mugglestone

March 23, 2012 at 12:42 pm

Posted in HMRC, Uncategorized

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Call Paddy Power it’s McGregors 2012 Budget Predictions:

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Call Paddy Power it’s McGregors 2012 Budget Predictions

We have already given our top tax tips for 2012, without moving to Switzerland as well as reminding everyone of the tax increases for 2012 already on the books, but now we are on a run up to the budget for March 2012.  So if you are betting people, please feel free to see what odds you can get on our predictions below.

According to the press, this Budget will focus on growth and supporting and directing the British business world into pulling the UK away from a double dip recession.  The budget will also be in the international spotlight from the likes of Moody’s, Fitch and Standard and Poor’s, those organisations that most people have never heard of until the news discusses state credit ratings and a focus on the UK retaining our AAA credit rating.

In the main, all the tax rates for 2012/13 have been set. The reduction in corporation tax for large companies continues to 25% from April 2012 whilst income tax rates show no sign of doing the same. As the news now reports, the Government considers that the 50% tax rate to be temporary, but there are no intentions to reduce this any time soon.

There may be targeted but small tax breaks for the most vulnerable sections of society including families on low incomes and the elderly but there will be a continued focus on anti-avoidance measures including a clampdown on stamp duty land tax avoidance.

For those who have undertaken any tax avoidance strategies
Our advice is always to engage the support of an established firm of chartered accountants for all tax advice, but if you have undertaken any scheme etc., talk to us or other firms that will support you in any of these areas.  We have seen a proliferation of tax boutiques and brokers “selling” tax avoidance structures, over a number of years, who then walk away from any future support once they have earned their commissions from the sale.  If you have been sold any of these structures by brokers and tax boutiques, our advice is to talk to us and we will help and support you in your future discussions with HMRC.

From what we know so far, our key observations, predictions and advice, therefore, to SME and owner managed businesses, based on what has largely already been leaked and/or discussed about the budget is as follows:

Look at your capital requirements NOW and consider accelerating expenditure to March 2012
Capital Allowances are also set to reduce – the Annual Investment Allowance (AIA) will decrease from £100K to £25K from April and annual writing down allowances will reduce by 2% across the board. There have been calls to retain the AIA at the current level as we would not be surprised if there was a stay of execution – perhaps a deferral for a further 12 months.

Do not miss out on R&D tax relief
We have said this on numerous occasions, and pointed out that 75% of Accountants do not claim enough legitimate tax relief or their clients, contact us and/or review what you do in respect of research and development.  The definition is wider than you think and there is significant tax savings to be obtained.  R&D relief will increase again from April 2012 to 225%. The Government is keen to encourage the generation and retention of intellectual property in the UK and we expect this theme to continue. The Patent Box (10% tax rate for IP profits) is due to be introduced from April 2013 and this will complement the R&D regime, but we don’t expect any further changes to be announced in this area at the moment.

Competitive UK Plc
The Government will want to continue making the UK an attractive place to do business and in order to do that it has already set out a corporate tax road map around controlled foreign companies and the patent box regime. The Chancellor will reiterate these changes but may announce minor tweaks in response to consultation.

EIS will be a good, and perhaps an easier alternative to bank finance
There will be a relaxation in the criteria around Enterprise Investment Schemes (EIS) and the introduction of SEIS (a similar scheme aimed specifically at start-ups and seed capital) – all of which is designed to help businesses raise finance. We may see announcements around simplifying the processes around EIS.

Pension Tax Relief
There is speculation that the Government will limit pension tax relief to the basic rate of 20% in the March Budget, so it is advisable to take advantage of the rule that allows individuals to receive any tax relief which hadn’t been claimed in the previous four years.

This rumour, however, has appeared before many of the last budgets. This time, however, it appears to have more support from the Liberal Democrats.  If this change occurs it will affect the pension contributions of higher earners to help pay towards lifting everyone earning under £10,000 out of tax. The controversial plans could lead to a potential saving for the Exchequer of billions of pounds. For higher earners, this move will feel like a tax rise as when paying the top rate of tax you can claim relief of up to 50 per cent on your pension contributions.

Higher Rate Tax Payers – 50% tax
There is currently no report on the money raised by the 50% tax rate but the Government know that they cannot remove it while public sector workers are undergoing a pay squeeze. It is likely to stay the course of the parliament.

Personal Allowances
There will be reaffirmation for the coalition to raise the personal allowance to £10,000 by April 2015. Although there are suggestions of a more rapid rise, this is unlikely to feature as the cost of implementing it is so high.

Mansion Tax
It is envisaged the Government will rule out the creation of two new top-level council tax bands or a ‘mansion tax’. The Liberal Democrats believe installing this measure would enable the Treasury to raise the income tax threshold to £10,000 but Conservative ministers oppose the measure as it breaches the Tory manifesto commitment not to revalue homes for council tax.

Stamp Duty Land Tax
There has also been a great deal of publicity about stamp duty avoidance and it is commonly reported throughout the press. There was an expectation for the Government to act in the Autumn statement so it would be a surprise if did not provide clarity and close the perceived existing loopholes in March.

Statutory Residency Test
As already announced, the statutory test of residence will be deferred until 2013 but there may be a commitment to press ahead with establishing the test. It is understood that the Government is already refining visa and passport rules to encourage wealthy non-domiciled individuals to invest in UK businesses.

Support for Green Initiatives
There will be a balance for drivers and green lobbyists.  The fuel duty escalator will be frozen for the time being as a help for motorists. There has already been a green investment fund established for recycling projects and there is likely to be an update on the Green Investment Bank, either hearing of the first projects it will support or a projected timeline for the projects commencing

Tax Avoidance Clampdown
Following the Barclays bank story, and applying legislative changes retrospectively, the Chancellor will mention tax avoidance and the need to close down loopholes, especially focusing on higher rate tax payers and large corporates. It is anticipated that the Government will look to adopt general anti-avoidance rules (GAAR) along the lines outlined in the recent independent report by Graham Aaronson QC.

Luxury VAT Rate
The Government may impose a rate of VAT at 25% for luxury items.  This will not go down well with wealthy individuals and those that wish to purchase luxury items, especially those who are also caught by the top rate of tax.

Longer term predictions
After the March budget and longer term, there is an expectation that the Budget will contain announcements on changes which will come into effect from April 2013. We know that entrepreneurs have had a hard time over the last couple of years and we do not expect many changes to be announced this time round. The announcements are likely to will focus around encouraging investment and innovation. We work with new developments and young start-up technology businesses and we welcome this.  Our predictions for entrepreneurs are:

  • More investment in combating tax leakage from the system – both in the form of more targeted campaigns but also with the introduction of a GAAR (General Anti-Avoidance Rule)
  • Continued support and development of R&D tax credits
  • Further announcements in connection with Enterprise Zones – including the announcement of new zones.
  • Relaxation of the rules around NIC holidays, opening up the scheme to more entrepreneurs as a way of encouraging them to take on additional staff.

These are our predictions.  If you do go an put a bet on them with Paddy Power or any of the turf accountants, you do so at your own risk as we do not really have psychic powers and could well be wrong on many of the counts above.

If you do wish to consider any of these areas in more detail, do not hesitate to contact us and we can help.

Steven Mugglestone BA FCA,
Finance Director Services
McGregors Corporate, Entrepreneurial Chartered Accountants and Business Advisers
…….Really good for your business

steven@mcgregorsbirmingham.co.uk

steven@mcgregorsleicester.co.uk

McGregors Corporate are a Member of Probiz Tax, providing Innovative Tax Solutions to Owner Managed Businesses.

Written by Steven Mugglestone

March 8, 2012 at 5:58 pm