Showing posts with label entrepreneurship. Show all posts
Showing posts with label entrepreneurship. Show all posts

Thursday, March 31, 2016

New clampdown on capital treatment of distributions

Starting April 6th next month, a new targeted anti-avoidance rule (TAAR) will make it more difficult to convert profits generated in a company into a capital receipt in the hands of the shareholders. Indeed, a capital distribution made in the winding-up of a company will be taxed as income if either within two years of the winding-up the shareholder continues to be involved in the same trade as that carried out by the company that has been wound-up or if profits, in excess of those required by the company, were retained in the company so that they could be received as capital on a later liquidation.

These new measures only apply to individual shareholders and close companies (broadly, companies controlled by five or fewer people) but it represents a significant tax increase where the shareholder was able to claim Entrepreneur's Relief on the gain (a jump from 10% to 38.1% if dividends are falling within the additional rate band).

More specifically, the anti-avoidance is targeted after the following behaviours:

Tuesday, May 14, 2013

The 10,000 Small Businesses Programme

One often says that there is no such thing as a free lunch. It might not be the case with the Goldman Sachs sponsored 10,000 small businesses programme.

The programme modelled after a US programme of the same name aims to stimulate employment creation and economic growth and has a broad regional coverage, including many areas of relative economic disadvantage. It was first piloted in Yorkshire in 2010, followed by expansion to North West England, the Midlands and London. As of April 2013 almost 500 small business leaders across the country have participated, and approximately 250 new participants join the programme each year.

The programme is designed specifically for the leaders of established small businesses who have the ambition and the potential to generate substantial growth in their enterprises. Participation is by competitive entry and is fully funded by the Goldman Sachs Foundation for successful candidates. Businesses need to be established (at least one year of trading), have between 5 to 20 employees and have growth ambitions. While the programme is competitive, the last cohort in London had 25 successful applicants for slightly more than 100 applications. So it is within reach.

Wednesday, May 30, 2012

Business owner? Don't forget tax credits!

Tax credits are something that most accountants don't like to deal with. They are often considered as social benefits and therefore something that is outside of the scope of their offering. It is difficult however to advise properly on the tax affairs of an individual or a company without taking child and working tax credits into account. Indeed, many decisions you can take as a business owner will have consequences on eventual tax credits and your bottom line.

It is often assumed that tax credits are only available to the unemployed or the very low earners. What people forget is that there are some instances where your earnings can be very low for a limited period (say you start a new business or you incur exceptional capital expenses). In that case there is no reason not to claim this extra government money. Especially since, because tax credits are based on income and not capital, it is possible to be in a situation where you have significant capital gains, inheritance income or just savings and where you are still entitled to those subsidies.

Monday, April 16, 2012

Top tax saving tips for the self-employed

The most frequent question I get when I meet clients starting their new business is how to reduce their taxes. Obviously this is a loaded question and most of the work we do is geared towards insuring that our clients pay their fair share but not more! There are hundreds of ways you can reduce your tax liability but if you can do just 5 things, here they are:

1. Incorporate

When you start your own business, you have basically 2 options: run your business as a sole trader (or a partnership) or setup a limited company. The sole trader option can seem quite attractive since it's quite simple to administer. However, using a limited company can bring significant tax savings since companies are not subject to National Insurance. As a matter of fact, for a company with annual profits of £80,000 the overall tax savings can be as much as £5,000 per year.

Thursday, December 15, 2011

The Seed Enterprise Investment Scheme

This new tax advantaged form of venture capital scheme was announced at the Autumn Statement 2011; it will be focused on smaller, start up companies and will provide a form of relief similar to the EIS Scheme. This scheme will make tax relief available to investors who subscribe for shares and have less than a 30% stake in the company.

The main points to note are as follows:
  • The type of company this applies to is one that has less than 25 employees with assets of up to £200,000 who are preparing to carry on new business