Phil Hall 1 Comment

VAT and Your New Business

All new companies should be made aware that, you can claim VAT on costs incurred before the business started trading This includes VAT incurred on assets used prior to VAT registration.

Subject to the normal rules on VAT deduction:

  • VAT on services received within six months of the effective date of registration (EDR) and used in the business at EDR is recoverable in full
  • VAT on stock is deductible to the extent that the goods are still on hand at EDR (for example, apportionment may be required)
  • VAT on fixed assets purchased within four years of EDR is recoverable in full, providing the assets are still in use by the business at EDR

Full recovery only applies if a business is fully taxable. If a business is partly exempt, has non-business activities or needs to restrict VAT deduction for any other reason, it will need to take that into account when calculating the amount of deductible VAT.

For further advice on Tax Compliance and VAT, contact Assured FD Services today. With over 20 years experience managing the finances of UK market leading companies, you can rely on receiving the best advice and guidance possible.

 

Assured FD Services 1 Comment

Financial Services Sector Is UK’s Top Tax Payer

The United Kingdom’s (UK) financial services sector paid £71.4 billion in tax last year, accounting for 11.5% of the UK’s total tax collection. This year’s contribution was the highest since 2007, accounting firm PwC noted in its annual report.

Banking institutions and insurance companies were the top contributing sub-sectors, paying an additional £8.4 billion and £3.4 billion respectively, thanks to reforms in corporate tax and the bank levy.

The report, which was commissioned by the City of London, underscores the potential adverse impact to public finances if Brexit limits UK’s access to the European Union’s (EU) single market.

Financial services firms in the UK have expressed concerns about the Brexit’s negative effect on their businesses. Main concerns include losing access to a skilled EU workforce and potential restriction on their ability to trade with the single market, among others.

About 1.1 million people are employed by the financial services sector in the UK, comprising 3.4% of the country’s total workforce.

Many are waiting to see whether the UK can retain “passporting” rights, which enable lenders to continue transact without restrictions across the EU.

Addressing reporters in Brussels on Tuesday, Chancellor Philip Hammond said the government would study the “costs and benefits” of continuing to pay for access to the EU single market after UK formally exits the union, echoing previous pronouncements made by Brexit Secretary David Davis.

Last week, Brexit Secretary David Davis said paying for continued access was a possibility.

Speaking at a tax event on Tuesday, Financial Secretary to the Treasury Jane Ellison acknowledged the concerns of the financial sector, and assured that the government would be negotiating for an deal that will help UK’s financial services sector to be “every bit as successful after our withdrawal as before.”

She adds that Brexit could also mean “new opportunities” for this economically-vital sector.

Assured FD Services

Phil Hall 1 Comment

Need money to fund your start-up? Try the SEIS with Assured FD.

Have you had that fabulous idea that cannot fail, but can’t get funding from your Bank without giving a personal guarantee?

Then the SEIS, or Seed Enterprise Investment Scheme to give it its full name, could be the perfect solution for you.

The problem you face when starting off in business on your own is to get investors willing to back you.

By definition you don’t have trading history to back-up your confidence and you won’t have / or don’t want to offer personal assets to guarantee the debt.

On the other hand an investor knows that funding a startup is high-risk. Most start-ups fail after all.

The SEIS, a little known scheme set up by the former chancellor attempts to solve these problems by giving the investors large tax reliefs from the outset and also providing further tax reliefs as compensation should the business fail.

Who can use this scheme? Just about any start-up or company that has been trading for less than 2 years with few exceptions.

Who can invest? Just about anyone as long as you’re not an existing employee or own 30% or more of the company i.e. You (That rules out your spouse, mum, dad and children too by the way) But friends can invest- up to £100,000 if they have the cash and the tax bill. So can wider family – brothers and sisters.

What do Investors gain? 50% of their investment can be offset against their tax bill straight away even though they have to hold the shares for 3 years. So that £100,000 investment allows the investor to reduce his tax bill by £50,000.

Should he sell his shares after the 3 years have expired, there is no capital gains tax. Should the business be profitable our investor will also be eligible for dividends.

And what if the business fails? The Investor can claim a further relief of his marginal tax rate multiplied by the amount of his investment less the tax he has already recovered. To explain that – our investor above has invested £100,000 and claimed back his £50,000 relief. Should the business fail he, as a higher rate tax payer, can reclaim 40% of £50,000 (£100,000 – £50,000) or £20,000.

If there is a better way to fund your startup, Assured FD Services is unaware of it.

Interested? Contact Assured FD using our contact form or email info@assuredfd.co.uk

Assured FD Services

Phil Hall No Comments

Pensions and Higher Rate tax payers.

One of the more interesting facts that I’ve discovered in the 18 months since I became a part-time Finance Director with Assured is that if you find an issue with one client, then invariably you’ll find it at another. And the issue can be a relatively straight forward one.
I read the other day that the coalition are considering plans to cut higher rate pension tax relief. That is to say limit relief to 20%. That reminded me of an issue I have found at a couple of clients I have worked with as FD.

The circumstances were the same in each case. The Company calculated income tax on their employees earnings BEFORE any pension contributions. The pension provider then claimed back the 20% tax from the Government and grossed up the pension pot accordingly. Fine. However, the Higher rate tax payers were not aware they could claim back another 20%.
Rather than wait for their tax returns, I drafted a letter to HMRC claiming back the relief for this AND earlier years and had their tax coding notices changed accordingly. Job done.

If you think this could apply to you or you need help with any financial management issues, call me now on 07817 676371 or e-mail me at assuredfd.co.uk.