• Date

    18 Aug 2021
  • Category

    Tax, R&D Tax Incentives, Private Client, Corporate Tax

Tax Top Tips | We reflect on the three “must do” things for individuals and businesses this August

We all know COVID-19 has taken its toll. It has brought to light that it is more important than ever to look after your mental and physical wellbeing; this will inevitably be key for success, not only as an individual, but also for your business - ensuring you continue to thrive.

On this journey back to normality, some industries are flourishing more than others. Staycations are on the rise, giving local economies a well-needed boost for hospitality, leisure and tourism. However, other businesses continue to feel the pressure, especially those situated in city centres where lunchtime footfall has drastically shrunk due to commuters not returning, resulting in a rise of “ghost towns”.

We know you are being pulled in a number of directions, leaving you increasingly taxed for time. In this month’s ‘Tax Top Tips’ for business owners and individuals, we reflect on a number of previous tips that continue to resonate, but first, let us start by asking you these three questions…

  1. Did you plan ahead to optimise your tax position?
  2. How much have you achieved?
  3. What areas do you still need to implement and address?

Business Owners

 

1

Research & Development (R&D) Tax Reliefs | Stepping out of the COVID crisis

There are still many companies missing out on this valuable relief designed to support innovative businesses. Eligible businesses can claim benefit from additional tax relief of up to £24.70 for every £100 of qualifying expenditure, or even a cash grant in some cases.

To qualify for R&D Tax relief a project must seek to make an appreciable improvement in its field in order to create a scientific or technological advancement. This can be a product, device, material or a process improvement and claims can be across a wide range of industries and sectors.

If you have come across a problem in your business and have used some element of science or technology to try to fix it then you might have a potential claim, even if your development was unsuccessful or aborted.

If you are not sure whether your project might qualify for this valuable relief, please speak with your usual Azets contact or find out more regarding our R&D tax services.

2

Financial records

 

Now more than ever you need to have your accounts and finances under control and in order; the financial insights you can access from your accounts helps you make smart decisions. This may mean just keeping up with your book-keeping, but for those key decisions you will probably want to prepare cashflow forecasts to review those ‘what if’ scenarios.

Don’t forget to utilise the new technology available to help streamline your finances; OCR (Optical Character Recognition) apps can capture your invoices and post them into your accounting software, whilst cloud accounting software can link to industry specific and general apps for workflow, timesheet recording, cashflow forecasting etc. Work smarter not harder!

Due to COVID-19, not being able to operate or learning to in a different way has given businesses the time to stop and reassess their business and objectives, and ultimately enhance their operations. Ask yourself this question: How sustainable is your profit performance? Click here to find out more.

3

Plan ahead

 

It is never too early to plan ahead, and all business owners should feel encouraged to have a 3–5-year business strategy, and a clear succession plan.

With announced increases in the corporation tax rate to 25% in 2023, increased super allowances of up to 130% available for capital expenditure for a two-year period, and enhanced loss carry back rules for a two-year period, it is more important than ever to plan ahead and discuss with your tax advisor your plans, to ensure that you are optimising your tax positions.



 

Individuals

 

1

Property transfers & stamp duty holiday

As you may be aware, temporary reduced rates of stamp duty apply for residential property purchases. The temporary nil rate band of £500,000 was in place until 30 June 2021. Then from 1 July 2021 to 30 September 2021 the nil rate band became £250,000. The nil rate band will return to the standard amount of £125,000 on 1 October 2021.

If you are transferring or acquiring residential property (or considering it) you may wish to accelerate matters and ensure that you complete before the relevant dates to achieve stamp duty savings. Read our “Hot Property” insight for further information.

2

Protect your wealth

 

You have worked incredibly hard, taken business risks, house on the line and lots of sleepless nights. We could see a number of changes to the tax landscape this year, which could include an alignment of the Capital Gains Tax (CGT) rates to income rates, the introduction of a one-time wealth tax, and the removal of some key tax reliefs. So, it is important to ensure that you have the most effective business structure, that you have at least considered your options and perhaps started to think about succession planning.

There may be areas that you have been putting off for later, however, now may well be the best time to take action, to potentially lock in the current tax rates which would provide you certainty on the tax position and may well protect your wealth. If you would like more information on how to be able to achieve this, please get in touch.

3

Have you reviewed your will?

This is such a key document, and everyone should have one. You should review your Will on a regular basis to ensure your wishes are met when it comes to your assets when you have passed.

We would always advise you to regularly review and update your Will as your family and financial circumstances change, and as tax legislation changes, as a way of ensuring succession and to manage your family’s Inheritance Tax (IHT) exposure. To find out more, please contact a member of our Private Client tax team

 

Get in touch

At Azets, we strongly believe that planning is essential to ensure that individuals and businesses are fully briefed on key changes and how they may be impacted as a result. We also know how important it is to have certainty regarding the tax you pay. Our national tax experts, based locally to you, are on hand to provide support through the taxing times and beyond.

For further information on the areas raised in this insight, or to discuss in more detail, please speak with your usual Azets contact or a member of our tax team.

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