barnes roffe llp

BARNES ROFFE LLP BUDGET 2006BARNES ROFFE LLP BUDGET 2009

BARNES ROFFE LLP

BUDGET SEMINAR 2009

SINGLEWELL MANOR HOTEL

23 APRIL 2009


BARNES ROFFE LLP

KEITH MASON

BSc FCA ATII

Partner


ECONOMIC BACKDROP

• Most serious global economic turmoil for over 60 years!

• Won’t repeat the 1930’s inadequate response.

• Predict contraction in world economy for the first time since World War II.

• … but world economy to double in the next 20 years.


ECONOMIC BACKDROP

• UK exports down 14% (Germany 21%, China 26%, Japan 45%).

• G20 fiscal support globally at £5 tn• We began the recession with all time high

employment & low inflation, public debt and interest rates.

• 2009 – fiscal easing @ 0.5% GDP in 2009, followed by tightening @ 0.8% GDP.

• Tax rate – 1.2% as proportion of GDP compared with a year ago.


ECONOMIC BACKDROP

• Inflation projected to fall to 1% in 2009. (last year predicted 2% in 2009!) (target still 2%)

• RPI (-0.4%) to fall to -3% by September 2010 (CPI Stubborn @ 3%)

• In final Qtr 2008 – output fell by 1.6%. Similar expected in first Qtr 2009.

• Contraction of 3.5% forecast in 2009.• Growth of 1.75% forecast in 2010• Growth of 3.5% pa from 2011, then to a trend rate

of 2.75%.


ECONOMIC BACKDROP

• At Budget 2008: 2010 growth forecast ~ 2.5% to 3.0%

• Unemployment @ 4.5% (Up 137,000 in February, 74,000 in March).


ECONOMIC BACKDROP

• 2008 Observations:-• Balanced budget (+£8bn over this economic cycle ~ 1st

Golden Rule).• Current budget deficit - £8bn and then -£10bn (2008), -

£4bn (2009), then in surplus of £4bn (2010), £11bn (2011), £18bn (2012)

• Borrowing forecast at £36bn for 2008. Rising to £43bn in 2009, falling to £23bn in 2013 (2.4% National income, rising to 2.9%, falling to 1.3%).

• National debt @ 36.6% of national income (2007: 38.2%). {1997: 44%}.


ECONOMIC BACKDROP

• At Budget 2008:- Borrowing projected to rise to 39.7% over next four years - 40% is limit per 2nd Golden rule

• Public sector employment falling, private sector rising at Budget 2008.


ECONOMIC BACKDROP

• 2009 Projections:-

• Borrowing forecast at £175bn for 2009. Then £173bn,£140bn, £18bn & £97bn (11.9% national income falling to 5.5% in 2013/14).

• National debt @ 59% of national income, rising to 68%, 74%, 78% & 79% but stabilising and beginning to fall in 2015/16. (1997: 44%!!)


BUDGET 2007

The Irrelevant Budget


BUDGET 2007

‘I did maths for a year at university. I don’t think I was very good at it. And

some people would say it shows’(Gordon Brown)


KEY FEATURES

• Income Shifting rules delayed beyond FA 2009 in 2008 Pre Budget Report, but to be kept under review.

• Naming & shaming for tax avoiders (> £25,00 tax) – projected to raise £60m pa – a cultural revolution!

• Extended support for jobseekers. Guaranteed job/training/work placement for 18-24 year olds unemployed for 12 months or more.

• Extension of 3 year loss carry back to 2010.


KEY FEATURES• FYA 2009/10 @ 40% for main pool qualifying additions.• ISA limit up to £10,200 (£5,100 in cash)• SDLT holiday up to £175,000 (residential) extended to the

end of the year.• 2011/12 Highest tax rate increases (to 45%) brought

forward to 2010/11 and increased to 50%.• Withdrawal of higher rate pension relief for income tax

where earnings exceed £150,000 (down to 20% where income exceeds £180,000) (& measures to combat high contributions before effective date of April 2011).


KEY FEATURES

• Public spending growth (1.1% pa) to reduce to 0.7% by 2013/14 (worse than opposition 2005 manifesto pledges (BBC)).

• £750,000 strategic investment fund (£250,000 for low carbon investments)

• Help for recovery of UK oil/gas reserves (+ 2bn barrels).

• Savings disregard for pension credit increased from £6,000 to £10,000.


KEY FEATURES

• £600m fund for stalled housing developments.

• Public spending efficiency savings - £156m identified.

• 2011 - £80,000 company car cap abolished.

• VAT @ 15% to 01.01.10 remaining the case.

• Car scrappage scheme - £2,000 discount on trade in of a car > 10 years old (until March 2010).


Pre Budget Report ~ Misc.

• New Rates of Air Passenger Duty


Air Passenger Duty ~ 2008/09

Passenger Type Lowest Class (reduced rate)

Other (standard rate)

Destination:

EEA area + Switzerland

£10 £20

Destination:

Other

£40 £40


Air Passenger Duty ~ Future

Band / Distance Lowest Class Other

2009/10 2010/11 2009/10 2010/11

A (0 – 2000) £11 £12 £22 £24

B (2001 – 4000) £45 £60 £90 £120

C (4001 – 6000) £50 £75 £100 £150

D (6001 +) £55 £85 £110 £170



• Trading loss carry back extension:• Corporation tax ~ CAP ending in period 24.11.08

to 23.11.09 (extended to 23.11.10)• Income tax ~ Tax year 2008/09 (extended to

2009/10) • After one year carry back, a further £50,000 may

be carried back a further 2 years.• Two amounts of £50,000 available but not an

aggregate of £100,000 if available amount in either is less than £50,000.



• Corporation tax ~ Loan relationship rules• Connected companies ~ write off not

allowed in debtor company, and no taxable amount in creditor company.

• Previously certain trade balance write offs could give an unequal result, taxing creditor company.

• Late interest rules largely abolished.



Pension Schemes:-

• Lifetime Allowance rises to £1.8m in 2010/11.

• Annual Allowance rises to £255,000 in 2010/11.

• Frozen up to and including 2015/16.



• HMRC Business Payment Support Service ~ arrange affordable tax payment schedule.

• 150% Corporation tax relief on brown-field land remediation extended to land derelict since 1.4.1998, and clearance of Japanese Knotweed.

• Can’t have caused it yourself!


Pre Budget Report + ~ Misc.

• Up to £5,000 subsidy on acquisition of electric / hybrid cars.

• £2,000 “scrappage” allowance on cars more than 10 years old.

• Extension on relief from tax on foreign dividends.• VAT reduced from 17.5% to 15% between

1.12.08 and 1.1.10.• VAT retail scheme t/o limit up from £100m to

£130m.



• All rates of NIC up 1/2 % from 6th April 2011.

• From 6th April 2010 income tax at 50% on income over £150,000 (42.5% on dividends increases effective rate on net from 25% to 36.11%).

• Personal allowance reduced on incomes over £100,000 from 6th April 2010 @ £1 per £2 of income, down to nil (small band with 60% effective rate!)



• Current regime (from April 2008!):• No AIA (100% FYA on cars with low

emissions {110g/km}).• WDA 20% (was 25%)• WDA restricted to £3,000 on cars costing

over £15,000 (was £12,000), and all cars costing over £12,000 in own pool, else main pool (unless private use ~ non companies)



• New regime (from April 2009):

• Cars emitting > 160g/km ~ 10% pool

• Other cars ~ 20% pool

• Cars with private use ~ single asset pool

• Motorcycles ~ main pool for AIA.

• From 1st/6th April 2009 ~ FYA @ 40% on main rate pool expenditure.



• Leased Cars

• Currently disallow:-

P x (OMV – 12000)/2 x OMV

• P is premium, excluding maintenance.

• New regime is a flat rate disallowance of 15% x P if car emits > 160g/km.

• Old regime continues for old leases.


Pre Budget Report ~ Reminder.

• ITSA de minimis for payments on account increased from £500 to £1,000 total IT liability.

• Operative after 6.4.09 (i.e. for 09/10) and first POAs affected will be on 31st January 2010 and 31st July 2010.

• Announced PBR 2008


INCOME TAX

• 10% band abolished from 2008/09

• Basic rate reduced from 22% to 20% from 2008/09.

• Higher rate threshold : £37,400 for 2009/10 (£34,800 in 2008/09).

• From 2010/11 incomes over £100,000, personal allowance reduced by £1 for each £2 income, until nil.

• From 2010/11, income > £150,000 ~ tax rate 50%.


Income Tax Bands ~ 2010/11

Income (Approx) Rate

£0 - £6,000 0%

£6,000 - £40,000 20%

£40,000 - £100,000 40%

£100,000 - £112,000 60%

£112,000 - £150,000 40%

>£150,000 50%

*Dividend rate at 42.5%, trust rate at 50%


INCOME TAX ~ PENSIONS

• From 2010/11 higher rate relief to be withdrawn.

• Begins @ income > £150,000.

• Relief tapered down to 20% by incomes @ £180,000.

• Anti forestalling provisions operative immediately.


INCOME TAX ~ MISC

• Tax credits on foreign dividends available to individuals with immediate effect (10% + holdings).

• Non residents entitled to allowances only by merit of being commonwealth citizens to lose entitlement from 06.04.10.


INCOME TAX ~ MISC

• Anti avoidance to prevent avoiding living accommodation BIK on rented property by substituting rent with upfront “premium” and peppercorn rent.

• Enhanced 100% CA’s (income & corporation tax) extended to uninterruptible power supplies, air to water heat pumps and close control air conditioning systems.


INCOME TAX

• Personal Allowance 6035 6475

• Personal Allowance(old) 9030 9490

• Personal Allowance(v.old) 9180 9640

• Married Couple’s All’ce* 0 0

• “ “ “ (old) 6625 6965

• *Rate of Relief 10% 10%

2008/09 2009/10


INCOME TAX

2008/09 2009/10• Income £50,000 £50,000• Personal Allowance (6,035) (6,475)• Taxable 43,965 43,525• Chargeable @ :-

- 20% 34,800 37,400- 40% 9,165 6,125

• Tax Due £10,626 £9,930


INCOME TAX

• 2008/09 Taxable Income:-

- 10% band abolished (unless non saving income below £2,320 in which case can get £2,320 for savings)

- First £34,800 taxable @ 20%- Balance taxable @ 40%


INCOME TAX

• 2009/10 Taxable Income:-

- 10% band abolished (unless non saving income below £2,440 in which case can get £2,440 for savings)

- First £37,400 taxable @ 20%- Balance taxable @ 40%


INCOME TAX

• Child tax credits et al (commenced 2003).• Abatement of credits based on 39%

income over prescribed limit.• Payment of pension contribution can

reduce abatement of credit entitlement by 39% x £Contribution.

• Personal tax relief at (up to) 40%.• That’s 79% relief altogether.


INCOME TAX

• Childcare: In-house nursery provision is tax/NIC exempt.

• From 6.04.05 this has applied to direct provision of external care &/or vouchers where contract is with employer.

• Need registered carer, available to all staff.• £55 per week limit from 6.4.06. No details

of changes from 6.4.09.


NATIONAL INSURANCE (EMPLOYEES)

• 2008/09 - 1st £105 per week 0% - next £665 per week 11% - thereafter 1%

• 2009/10 - 1st £110 per week 0% - next £734 per week 11% - thereafter 1%


NATIONAL INSURANCE (EMPLOYERS) (CONT)

• 2008/09- charged at 12.8% on “earnings” above £105 per week and nearly all taxable benefits

• 2009/10 - charged at 12.8% on “earnings” above

£110 per week and on nearly all taxable benefits


National Insurances - Planning

2008/09 2009/10

Lower Earnings Limit

Contributions threshold

£90 pw

£105 pw

£95 pw

£110 pw

Significance: Remuneration confers entitlement to basic state pension and a proportion of second state pension for zero NIC cost!!


National Insurance Other Classes

2008/09 2009/10

Class 2 £2.30 pw £2.40 pw

Class 2 small earnings exemption

£4825 pa £5075 pa

Class 3 £8.10 pw £12.05 pw

Class 4 8%(40040-5435)

1% x Excess

8%(43875-5715)

1% x Excess


Mr Average ~ Employee

2008/09 2009/10

Gross £50,000 £50,000

Tax (£10,626) (£9,930)

NIC (EE’s) (£3,903) (£4,260)

Net £35,471

Better off by £339.

£35,810


Mr Average ~ Self Employed

2008/09 2009/10

Gross £50,000 £50,000

Tax (£10,626) (£9,930)

Class 2 NIC (£120) (£125)

Class 4 NIC (£2,868) (£3,114)

Net £36,386

Better off by £445

£36,831


Corporation Tax

• New rates as previously announced.

• 22% small companies rate applies from 1.4.10 ~ deferred a year in PBR.


CORPORATION TAX - RATES

2008/09 2009/10 2010/11

Small co.limit 300,000 300,000 300,000

Small co.rate 21% 21% 22%

Big co.limit 1.5m 1.5m 1.5m

Big co.rate 28% 28% 28%

Changes N/A for North Sea Oil & Gas ring fence activities.


CORPORATION TAX - RATES

Real Rates of Tax 2008/09 2009/10 2010/11

First £300k 21% 21% 22%

Next £1.2m 29.75% 29.75% 29.5%

Balance 28% 28% 28%

Changes N/A for North Sea Oil & Gas ring fence activities.


CORPORATION TAX

• Foreign dividends to be largely exempted from corporation tax, along with other distributions (from 01.07.09)

• Large companies ~ restriction in finance costs in group situations.

• Group relief ~ inadvertent interference with group control conditions via issuance of certain types of preference shares to external investors not to prohibit availability of group relief.


CORPORATION TAX

• 100% FYA on low emission cars (now 110g/km) extended to 31.3.2013


CORPORATION TAX

• IBA’s and ABA’s ~ phased out by 2010/11. Balancing adjustments immediately written down.

• Until 2010/11 subsequent owners get (subject to condition) allowance as per previous owner

• Removal of Balancing Charges.


Incorporate or Not?

• Small co. CT rate to 20% in 2007/08, then 21%, 21% and 22% in next three years.

• Basic rate tax 20 %.

• 10% band abolished.


Incorporate or Not?

• Changing tax rates reduce attraction of tax driven incorporation.

• On £40,000 income, advantage of £2,125 in 2009/10 reduces to £2,040 by 2010/11.

• On £300,000 income, advantage of £2,495 in 2009/10 increases to £5,820 by 2010/11.


Tax Efficiency 2009/10 (per £1,000)Corporation Tax Rate 21% 29.75% 28%

Higher Rate Tax Payer (41%)

Salary £523.05 £523.05 £523.05

Dividend £592.50 £526.88 £540.00

Lower Rate Tax Payer (31%)

Salary £611.70 £611.70 £611.70

Dividend £790.00 £702.50 £720.00



Higher Rate Tax Payer (41%)

Salary £523.05 £523.05 £523.05

Dividend £585.00 £528.75 £540.00

Lower Rate Tax Payer (31%)

Salary £611.70 £611.70 £611.70

Dividend £780.00 £705.00 £720.00


Tax Efficiency 2010/11 High Income (per £1,000)

Corporation Tax Rate 22% 29.5% 28%

Highest Rate Tax Payer (51%)

Salary £434.40 £434.40 £434.40

Dividend £498.33 £450.42 £460.00



Higher Rate Tax Payer (41.5%)

Salary £516.33 £516.33 £516.33

Dividend £585.00 £528.75 £540.00

Lower Rate Tax Payer (31.5%)

Salary £604.59 £604.59 £604.59

Dividend £780.00 £705.00 £720.00


Tax Efficiency 2011/12 High Income (per £1,000)

Corporation Tax Rate 22% 29.5% 28%

Highest Rate Tax Payer (51.5%)

Salary £428.07 £428.07 £428.07

Dividend £498.33 £450.42 £460.00


CORPORATION TAX

• From the above, not much disincentive to incorporate and take dividends. In fact advantages appear to increase as dividends & income tax effective rates diverge.

• Capital gains tax advantages still available on sale of goodwill to company where entrepreneurs relief available.


Dividends- Settlements

• Get husband & wife dividends in now, and until further notice “fill yer boots”!

• Income shifting legislation shelved!


CAPITAL GAINS TAX

Annual Exempt Amount: 2008/09 2009/10

Individuals £9,600 £10,100

Trusts (Most) £4,800 £5,050


INHERITANCE TAX

• Annual Exemption 3,000 3,000

• Nil Rate Band ** 312,000 325,000

• Lifetime transfer rate 20% 20%

• Death transfer rate 40% 40%

• Cumulation period (years) 7 7

• Rates of B.P.R.:- - Higher 100% 100%

- Lower 50% 50%

** ~ transferable inter-spouse from 9.10.07

2008/09 2009/10


INHERITANCE TAX

• Nil Rate Band 350,000 325,000 312,000 300,000

• Looks generous – only 4.3% growth compound.

• Will this keep pace with house price inflation? ~ well, probably, for now!!

• Nil Rate Band to be £350,000 in 2010/11.

2010/11 2009/10 2008/09 2007/08


INHERITANCE TAX

• Agricultural Property Relief (APR) & Woodland Relief (WR) extended geographically to EEA.

• Similar to CGT Hold over relief on these assets.

• Applies (APR) after 22.04.09.

• Applies (WR) before 22.04.09.

• Applies (Hold over) before 22.04.09

• Appears a mismatch in the tax paid after 22.04.09 ~ is late IHT payment on APR assets rewarded?


VALUE ADDED TAX OLD NEW

• Smoking cessation products (OTC) 5% 5%• Contraceptives 5% 5% • Advice on welfare of the young,

elderly or disabled 5% 5%• Reduced rate(dom. fuel) 5% 5%• Energy saving materials 5% 5%• Feminine Hygiene products 5% 5%• Child car seats 5% 5%• Urban regeneration 0/5% 0/5%• Standard rate (15% 1.12.08 to 31.12.09) 17.5% 17.5%• Registration limit £67,000 £68,000• Deregistration limit £65,000 £66,000


VALUE ADDED TAX

• Cash accounting limit-entry £1,350,000

• Cash accounting limit-exit £1,600,000

• Assumed unchanged


VALUE ADDED TAX

Flat Rate Scheme• 2 tests for entry:-a) Turnover up to £150,000b) Income up to £187,500• Second test dropped from 1.4.09• Exit if “income” exceeds £225,000. • For this purpose “income” will now be what you pay

VAT on.


VALUE ADDED TAX

• VAT @ 17.5% restored on 01.01.10.• 2.5% penalty to combat forestalling through early

invoicing.• Simplification of cross EU border supplies of

services.• Supply will (mostly) default to location of consumer

and be subject to inverse charge procedure.


VALUE ADDED TAX

• Simplification of reclaim of inputs in other EU countries:- electronic form submission to HMRC (previously a paper form to another country in another language).

• Simplification on Option to Tax buildings.


Stamp Duty Land Tax (Leases)

Residential (Unchanged)

0% NPV of rents (up to £125,000)

1% thereafter

Other (Unchanged)

0% NPV of rents (up to £150,000)

1% thereafter


Stamp Duty Land Tax (Freehold)

0% Up to £125,000 (£150,000 in disadvantaged areas or for commercial property) (Unchanged).

1% from above to £250,000 (Unchanged).

3% £250,001 - £500,000 (Unchanged).

4% > £500,000 (Unchanged).


SDLT

• 0% limit raised to £175,000 on residential property until 31.12.09.


Car Tax!

For cars registered pre March 2001:

Band New Rate Old rate

≤ 1549cc £125

Same next year

£120

> 1549cc £190

£205 next year

£185


Car Tax 2008/09!

Band CO2 g/km Petrol/Diesel Alternative Fuel

A ≤ 100 £0 £0

B to 120 £35 £15

C to 150 £120 £100

D to 165 £145 £125

E to 185 £170 £150

F to 225 £210 £195

G* 226+ £400 £385

*G applies for new car registrations after 23/03/06


Car Tax 2009/10+

Band CO2 g/km 2009/10 2010/11

A ≤ 100 £0 £0

B to 110 £35 £20

C to 120 £35 £30

D to 130 £120 £90

E to 140 £120 £110

F to 150 £125 £125

G,…. To 165 £150 £155


Car Tax 2009/10+

Band CO2 g/km 2009/10 2010/11

H to 175 £175 £180

I to 185 £175 £200

J to 200 £215 £235

K to 225 £215 £245

L To 255 £405 £425

M > 255 £405 £435

Discounts apply to alternatively fuelled vehicles


First Year Rates (2010/11)

Band CO2 g/km 2010/11

A ≤ 100 £0

B to 110 £0

C to 120 £0

D to 130 £0

E to 140 £110

F to 150 £125

G,…. To 165 £155


First Year Rates (2010/11)

Band CO2 g/km 2010/11

H to 175 £250

I to 185 £300

J to 200 £425

K to 225 £550

L To 255 £750

M > 255 £950


CAR TAX ~ MISC

• From 06.04.11 £80,000 cap on list price for BIK purposes abolished.


OTHER DUTIES ~ 1.12.08

• Wine: +13p/bottle (except sparkling & Champagne @ 17p).

• Beer: +3p/pint (cider & perry @ 3p/litre).• Spirits: +53p bottle• Cigarettes: +17p per 20.• Cigars: +5p per 5.• Fuel: +2p/litre from 01.12.08. + 1.84p from

1.4.09.


OTHER DUTIES ~ NOW

• Wine: +4p/bottle (except sparkling & Champagne @ 5p).

• Beer: +1p/pint (cider +1p/litre) (sparkling + 4p per 75cl).

• Spirits: +13p bottle


OTHER DUTIES ~ NOW

• Cigarettes: +7p per 20.• Cigars: +3p per 5.• Fuel: +2p/litre from 01.12.08. + 1.84p from

1.4.09, +2p Sep 09 & 1p over inflation annually to April 2013.


COMPANY CARS

• C02/km emission level for 15% start BIK will be 130g/km in 2008/09 (135g/km in 2008/09)

• 2009/10 ~ 10% BIK for CO2/km emission < 120g;

• Fuel basis @ £16,900 in 2009/10 as in 2008/09.


COMPANY VANS

• No change if insignificant private use.

• If private use is unrestricted, from 06.04.07 benefit charge is £3000 with extra £500 for fuel if appropriate;

• Double cab pick-up is still a van.


Miscellaneous - EIS & VCTEIS VCT

Inv limit £500,000 £200,000

Minor tinkering with qualification rules for investee vehicles ~ Shipbuilding , coal and steel production no longer allowed

Inv holding period – OLD 3yrs 5yrs

Assume unchanged -NEW 3yrs 5yrs

I.T. relief up to - OLD 20% 30%

Assumed unchanged- NEW 20% 30%

CGT shelter Yes No


EIS & VCT

• Currently 80% money raised must be in use within 12 months, the balance a year later.

• Simplified:- 100% to be in use 24 months after issue or within 24 months of trade commencement if later.


EIS Only

• Time limit on other same day capital raised being used is abolished.

• Qualifying share for share exchanges of EIS shares no longer to trigger CGT other than deferred gains.

• Carry back of relief (currently 50% of £50,000 before 6th October) to be 100% of whole at any time.


MISCELLANEOUS - LANDFILL TAXES

• Standard Rate up from £40 to £48 per tonne from 1.4.09. To increase by £8 per tonne annually from 01.04.11 01.04.13.

• Inactive waste increases frozen at £2.50 per tonne.


Miscellaneous – ISA’s

Annual Subscription Limits

Now From 6.4.10 (6.10.09 if > 50)

Cash ISA £3600 p.a. Cash ISA £5,100 p.a.

Stocks

and

Shares

ISA

£7200 p.a. (with aggregate limit of £7200 over both kinds)

Stocks

and

Shares

ISA

£10200 p.a. (with aggregate limit of £7200 over both kinds)


Big Brother

• HMRC to publish names / addresses / trades of tax avoiders where tax > £25,000 (date TBA) (Currently only if a criminal conviction)

• Large companies / groups to notify HMRC of “Senior Accounting Officer” (SAO) who must take reasonable steps to establish / monitor systems for adequacy for tax reporting.


Big Brother

• SAO to specify to HMRC inadequacies and confirm communicated to auditors

• Penalties for careless / deliberate non-compliance.

• Customs officials at airports no longer need reasonable grounds to check intra-EU movements.


Administration

• Record keeping compliance requirements extended to environmental taxes, IPT, SDLT, SDRT, IHT, PRT from 1.4.10.

• New penalty regime for late payments / returns re PAYE, NIC, CT (N/a if a time to pay agreement in place).

• Typically 5% of tax @ 1 month with further 5% penalties @ months 6 and 12.


Administration

• £100 fines for late returns + daily penalties and further 5% tax geared penalties (70% or 100% after 12 months if deliberate withholding of information with concealment).

• PAYE defaults: penalties based on number of defaults. None if only one, then 2% to 5%, with a further 5% @ month 12.


Administration

• New “Voluntary Managed Payment Plans” (MPPs).

• Tax payments spread evenly over a period straddling due dates.

• No interest / penalties.

• Some time after April 2011.


Administration

• Interest on under / over payments to be harmonised across taxes.

• New HMRC Charter by 31.12.09 governing standards of HMRC behavoir.


Miscellaneous – Self Assessment Filing Deadlines

• Affects 2008/09 Returns.

• Paper Returns ~ 31st October following tax year (2008/09 by 31.10.09).

• On-line ~ 31st January following tax year (2008/09 by 31.01.10).

• Taxpayer amendments will be linked to statutory filing date for both.


TIME LIMITS

• 19 May 2009 – Submission of forms P35 and P14’s.

• 6 July 2009 - Submission of forms P11D to HMRC.

• 6 July 2009 – Submission of forms 42.

• 19 July 2009 – Payment of Class 1A NIC on Benefits for year ended 5 April 2009.


TIME LIMITS

• 31 July 2009 – 2nd Payment on Account of Self Assessment for 2008/09.

• 28 August 2009 – 5% surcharge on 2007/08 tax still outstanding.

• 31 January 2010 – Balance tax payment for 2008/09 and 1st instalment of 2009/10.


BARNES ROFFE LLP

TOP 10 TAX TIPS – POST BUDGET

Mario Cientanni

BSc FCA

Partner


Top Ten Tips - 2008

1) Spousal dividend pre 6.4.09.

2) Spousal transfer to bank indexation.

3) Trigger gains for business asset taper relief.

4) Maximise use of basic rate band.

5) Property to LLP.

6) Revisit NRB wills for BPR double dip.

7) Purchased IIP trust interests for IHT.

8) Salary alternatives.

9) AIM investments for IHT shelter.

10) Family debt & IHT.


Out of the Charts This Year!

• Spousal transfers to bank indexation ~ indexation abolished so its now too late!

• Trigger gains for business asset taper relief ~ taper relief abolished so its nw too late.

• Spousal dividend pre 6.4.09 ~ income shifting shelved. Multiple share classes still sound, and see new entry in 2009!


Top Ten Tips 2009


(10) (6) Revisit NRB Wills

New rules re inter-spouse transfer of unused proportion of NRB on second death mean you should:-

1) Review current wills;

2) Ensure NRB trusts also take up 100% BPR property;

3) Consider worth of NRB legacy ~ will settled assets grow faster in value than the NRB itself?

4) As a minimum arrangements must enable “double dip” style planning after first death!


(9) (10) Family Debt & IHT

• Simple planning!!• Example: Husband sells assets standing

at a gain to wife, left outstanding on debt.• Debt gifted to children.• No CGT on sale.• Debt gift is a PET.• BUT...SDLT is charged on property sale.


(8) (9) AIM Investments for IHT Shelter

• BPR after two years.• Business asset taper relief probable. 10% tax on

gains after 2 years.• Easy in / easy out.• (Advice needed before investing)• Alternatively form own company now & hold

dormant. After 2 years a deathbed bonus subscription and trade start-up could reduce estate!


(7) (8) Salary Alternatives

• Employee pension contributions taken on ~ save up to £250 per £1,000 of increase in scheme value.

• Nursery voucher schemes ~ save up to £1,100 per annum per participant.

• Long service awards @ £50 x years service (Min 20).

• Staff suggestions re employer’s activity at lower of £5,000 or 50% x expected year one savings or 10% x expected first ten years’ savings.


(6) (7) IIP Trusts for IHT

New IIP trusts not included in chargeable estate so consider the following:-

1) One or more children / grandchildren borrow cash and settle full NRB on IIP for self;

2) Large estate holder borrows (secured on estate) cash and acquires the IIP interests;

3) Children / grandchildren repay borrowings;

4) IIP investment income services borrowings of estate holder.

5) Chargeable assets replaced with exempt ones.


(5) (4) Maximise Use of Basic Tax Allowances

• Basic rate band for income tax;

• Spouse’s basic rate band for income tax (See also dividends);

• Lower profit band for corporation tax (get out of 29.75%);

• Use CGT annual exemptions – annually!


(4) (Re-entry) EMI & Quasi EMI Schemes

• Low cost incentivisation for key staff when cash flow poor.

• No loss of control in company.• 18% tax possible on gains, c/f tax rates up to 50%.• Non-qualifying trade? A Quasi EMI via an EBT

may help.• Company tax relief on exercise at

£OMV-£exercise. Can use EBT to raise OMV.


(3) (New) Retained Interest Trusts for IHT

New IIP trusts not included in chargeable estate so, for those in advancing years, consider the following:-

1) Settle PPR + Cash onto a “special” discretionary trust. Rent PPR for 6 months.

2) IIP for 79.5 years vests after 6 months.

3) IIP restricts value of transfer below nil rate band.

4) IIP is outside estate, but its value is not charged to IHT as it leaves via action of trust.

5) Estate substantially reduced after 6 months.


(2) (5) Property to LLP

• Trading company (or even investment company) transfers property to LLP (or cash for property investment) which has company & its shareholders as members to secure future capital growth taxed at 18% (now up to 54% if left in company!).

• Current property value dip makes this more attractive.

• Other tips – incorporate a partnership for low / no tax on transferred goodwill value.

• Serial companies for property development.


(1) (New) Dividend Pre 6.4.10

• On 6.4.10 highest rate of income tax increases to 50% (42.5% dividend rate);

• If tax can be financed, maximise 2009/10 distributions at effective rate on net dividend of 25% (36.11% after 5.4.10);

• Can leave o/s on company loan account.


BARNES ROFFE LLP

BUDGET SEMINAR

SINGLEWELL MANOR HOTEL

23 APRIL 2009

barnes roffe llp

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