Breakfast Forum John Newell, Tax Consultant 20 December 2011 - - PowerPoint PPT Presentation

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Autumn Statement Breakfast Forum

John Newell, Tax Consultant

20 December 2011

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• 1. Enterprise Investment Scheme (EIS)

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• EIS was first introduced in 1994
• In the years to April 2009 £7.5bn of subscriptions
• £2.0bn has been raised in the last 3 years
• Offers both income and capital gains tax relief to

investors

Enterprise Investment Scheme (EIS)

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• From 5 April 2011 30% income tax relief on

subscriptions up to £500,000

• From 5 April 2012 applies to annual

subscriptions up to £1,000,000

• The amount companies will be able to raise

goes up from £2m to £10m.

• Employee limit raised from 50 to 250.

Enterprise Investment Scheme (EIS)

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• Income tax relief on subscription
• Able to defer gains into shares
• No gain (other than deferred gain) on disposal
• Share will qualify for BPR (no IHT after 2 years)

Enterprise Investment Scheme (EIS)

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• Subscriber shares qualify for income tax loss

relief if investment fails

• For 50% tax payer loss on £100,000 investment

is limited to £35,000

Enterprise Investment Scheme (EIS)

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• New Seed Enterprise Investment Scheme
• Aimed at start up companies
• Investors get 50% tax relief (tax credit) on

subscriptions up to £100,000

• Each company can raise £150,000
• CGT relief in 2012/13 only
• Investor could get £100,000 for effective cost of

£22,000

Enterprise Investment Scheme (EIS)

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• 2. Research and development (R&D)

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• SME scheme rates currently at 200% of

qualifying R&D expenditure

• Set to become 225% from April 2012 (subject to

approval)

• From 1 April 2012 loss relief not limited to PAYE

in year.

• Announcements and consultation have begun
• n an “above the line” deduction.
• Similar to “Patent Box” aimed at large business

Research and development (R&D)

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• 3. Annual Investment Allowance

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• From 1 April 2012 AIA to reduce from £100,000

per annum to £25,000 per annum.

• Periods of account that straddle this date will

receive a pro rata allowance.

• For example company with June year end will

get an AIA of £81,250 in the year to June 2012

Annual Investment Allowance

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• Watch for timing of expenditure
• The £81,250 applies as follows: -
• £75,000 for purchases up to 31 March 2012
• £6,250 for purchases after 31 March 2012
• Look to accelerate purchases before 31 March

Annual Investment Allowance

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• 4. Pensions

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Are pensions still tax efficient?

10,000 12,500 BRTR (3,125) (2,500) HRTR CFLS 4,375 9,375 (3,750) 5,625 Tax

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Capital allowances

Commercial Property update – Proposed new legislation April 2012

Paul Thornberry, PTC Capital Allowances Consultants

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Why change?

• To ensure that expenditure on a fixture can
• nly the written –off once against taxable

profits over its economic life;

• Effective 1st April 2012 for corporation tax

payers and 6th April 2012 for income tax payers;

Businesses disposing of, or acquiring property containing fixtures

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• The fixtures legislation is contained in Chapter 14 of Part 2 of the

Capital Allowances Act

• Capital allowances take the place of commercial depreciation,

which is not deductable for tax purposes;

• Currently legislation contains limits on the allowances that can

be taken – the lower of original cost or the last disposal value brought into account by previous owner of fixture;

• No time limit laid down to govern when seller and purchaser

need to agree the part of a sale price attributable to the fixtures;

• This has led to „late‟ claims by current owners at a time when a

single sale value for the fixtures can no longer be agreed and brought into account by both parties.

• HMRC wants tax parity

Current Regime

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• No time limit on pooling expenditure incurred before April 2012;

claims possible on „historic‟ expenditure at anytime before a sale

• f the property;
• Expenditure post April 2012 there will be mandatory requirement

to pool the expenditure at any time after acquisition but before sale;

• Vendor and purchaser need a record of agreement – joint tax

election to fix value of fixtures within two year period of sale;

• General Pool writing down allowances will fall from 20% to 18%

and special rate pool will fall to from 10% to 8 % post April 2012.

Proposals

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Hotels Commercial Offices Leisure Public Houses

Case Studies

Care Homes Retail

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Office building, Central London

£46,860,000 purchase price. Purchased December 2002. £12,040,687 machinery & plant allowances identified. Tax saving in year 1 = £1,204,069*. Total tax saving = £4,816,028*. *Assumes 40% tax rate

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Office building, North London

£1,675,000 purchase price. Purchased March 2004. £307,129 machinery & plant allowances identified. Tax saving in year 1 = £23,035*. Total tax saving = £92,139*. *Assumes 30% tax rate

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Office refurbishment, London

£1m refurbishment expenditure. £695,252 machinery & plant allowances identified. Tax saving in year 1 = £69,525*. Total tax saving = £278,100*. *Assumes 40% tax rate

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Hotel, Rotherham

£4.9m construction cost. Construction completed 2008. £1.8m machinery & plant allowances identified. Tax saving in year 1 = £126,000*. Total tax saving = £504,000*. *Assumes 28% tax rate

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Hotel, London

£1.5m refurbishment expenditure. Construction completed 2006. £557,371 machinery & plant allowances identified. £296,742 revenue expenditure identified. Tax saving in year 1 = £122,104*. Total tax saving = £239,152*. *Assumes 28% tax rate

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Office / Industrial, West Sussex

£2,862,500 purchase price. Purchased April 2002. £716,071 machinery & plant allowances identified. Tax saving in year 1 = £85,929*. Total tax saving = £214,821*. *Assumes 30% tax rate & FYA

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Distribution Warehouse, Milton Keynes

£23.8m purchase price. Purchased December 2008. £6,307,421 machinery & plant allowances identified. Tax saving in year 1 = £630,742*. Total tax saving= £2,522,968*. *Assumes 28% tax rate

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Public House Portfolio, Sussex

£3.5m purchase price (8 houses). Purchased between 2000 & 2007. £710,365 machinery & plant allowances identified. Tax saving in year 1 = £49,726*. Total tax saving = £198,902*. *Assumes 28% tax rate

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Care Home, Devon

£712,480 purchase price. Purchased March 2006. £188,847 machinery & plant allowances identified. Tax saving in year 1 = £14,164*. Total tax saving = £56,654*. *Assumes 30% tax rate

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Eight Retail Units, Kent

£995,000 purchase price. Purchased December 2001. £138,642 machinery & plant allowances identified. Tax saving in year 1 = £10,398*. Total tax saving = £41,593*. *Assumes 30% tax rate

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Petrol Station, West Sussex

£1.25m construction expenditure. Construction completed 2008. £553,201 General Pool P&M allowances identified. £127,946 Integral Features P&M allowances identified. £14,082 revenue expenditure identified. £29,211 Land Remediation Relief identified. Tax saving in year 1 = £50,773*. Total tax saving = £202,843*. *Assumes 28% tax rate

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Experience

• Partners have 30 years specialist experience
• „Big Four‟ capital allowances experience
• Single transactions from £50k to in excess of £100m and

multi property portfolios Service

• Integrated Tax and Surveying skills
• Client facing Partners
• „Cradle to Grave‟ service from early advice to claim

agreement

• Tailored fee agreements to offer maximum value
• Service levels + competitive fees = high value service

Why PTC?

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• Early involvement to maximise the capital allowances

and the return on investment

• Deal with all aspects of capital allowances including

Hotel Allowances, Land Remediation & ECA‟s for energy efficient & water conservation plant

• Aggressive but fully substantiated & defensible claims

to obtain optimum tax relief while maintaining our clients tax profile

• Work closely with our clients advisors as part of the

team

• Long term relationship focus

Approach

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• No cost or obligation „health check‟ and assessment of potential

capital allowances entitlement

• Advice on property acquisitions & disposals
• Project management of capital allowances claims on new

build/refurbishment projects from inception to agreement of the claim

• Preparation of detailed capital allowances claim documents

suitable for submission to HMRC

• Negotiation of claims settlement with HMRC
• Assistance in agreeing formula/percentage agreements with

HMRC for multiple type projects and properties

• Provision of in-house capital allowances training to client‟s tax

and/or property departments

Services

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Contact details

P T Consulting Capital Allowances Consultants Touchdown House 30 Charing Cross Road London WC2H 0DE Tel 0845 873 1502 www.ptconsulting.co.uk Anthony Barber Mobile 07768 245002 Email tjb@ptconsulting.co.uk Paul Thornberry Mobile 07860 907899 Email pft@ptconsulting.co.uk

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Tax Strategies Update

Keith Brewer, Partner

20 December 2011

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What we will cover

• Profit extraction - companies

The story so far The future

• Other Strategies ( If we have time )
• Income Tax
• SDLT
• Capital Gains Tax
• Inheritance Tax

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Why do it ?

Advice > Support > Grow www.rousepartners.co.uk Dividend Bonus Tax Planning £k £k £k

Profit 300 300 300 Bonus/Strategy (-) (264) (266) Employers NI/Costs (-) (36) (36) Corporation Tax (60) (0) (0) Gross Personal Income 240 264 264 Personal Tax 64 119

176 145 264

Improve your personal returns

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How did we used to do it ?

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Creation of Trust

COMPANY EMPLOYEE BENEFIT TRUST Profit £1m EBT (£1m) Left £0 Funds £1m SUB TRUST

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Access to Cash

COMPANY EMPLOYEE BENEFIT TRUST Profit £1m EBT (£1m) Left £0 Funds £1m SUB TRUST Loan

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Initial Tax Benefits/Costs

COMPANY EMPLOYEE BENEFIT TRUST Profit £1m EBT (£1m) Left £0 Funds £1m SUB TRUST Loan

Benefit in kind @ 4% P11D Tax at 20% or 40% Class 1A Employee NIC

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Tidying up

COMPANY EMPLOYEE BENEFIT TRUST Profit £1m EBT (£1m) Left £0 Funds £1m SUB TRUST Loan

Probate Granted

Estate £10m Loans (6m) NET £4m Death

Request to write off loans

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EBT Black Thursday

Thursday 9 December 2010

• Attack on “disguised remuneration”
• In particular an attack on getting funds out of trust
• Draft legislation from 6 April 2011
• Anti-forestalling rules for transactions pre-April 2011
• Earmarking & relevant steps

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Basic Conditions

To invoke - There have to be 5 factors present:

• An Employee
• An Employer
• A relevant arrangement
• A relevant step taken by
• A relevant Third Person

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Son of EFRBS

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Mechanics

£200

Step by Step 1. EFRBS & sub –fund created with £200 2. Employer offers to pay employee £400k

• n the condition that employee enter into

Deed of Promise with EFRBS 3. Employee enters into Deed of Promise 4. Employer makes payment of £400k 5. Employee now has 3 options:

• A. Keep funds personally
• B. Credit DLA
• C. Invest through EFRBS

1 3 2 4 OWNER £500k profits DIRECTORS‟ SUB-FUND 5

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How else can we do it?

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“Non Legacy Schemes”

• Conditional award scheme
• Value shifting schemes
• Reserves extraction by settled dividends
• Contractor solutions

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Tidying up old arrangements

• Preservation of IHT benefits
• Future CGT tax benefits
• Asset protection

VERSUS

• Annual Trustee costs
• Benefits in kind
• Exposure to new legislation

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How do we assess providers

• Financial standing
• Past record
• Number of specialists
• Understand the product
• Our opinion
• Barristers opinion
• Industry opinion

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Income tax – it’s a secret!

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Stamp Duty Land Tax

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Thank you

You can contact Rouse Partners on: t: 01494 675321 e: info@rousepartners.co.uk w: www.rousepartners.co.uk

This presentation has been produced by Rouse Partners LLP for general

• interest. No responsibility for loss is occasioned to any person acting or

refraining from action as a result of this information is accepted by Rouse Partners LLP. In all cases appropriate advice should be sought before making a decision.