finance 47 SME taxes: any questions?
According to recent figures, there are nearly five million self-employed people in the UK and that number continues to rise as tens of thousands set up in business every year. Here are some of the common FAQs that start-ups tend to ask us at Wilkins Kennedy – we hope that these may come in useful for those hoping to set up a business in 2014
Straight to ’Limited’ status
Q: When starting up, is it wise to jump straight in with a Limited company?
A: Your choice of business structure depends on a number of factors. Setting up a Limited company means that claims would be made against the company and its assets and not against your personal assets. This makes a Limited company a popular choice for businesses dealing in high- end products or assets.
In addition, low corporation tax rates and the ability to distribute profits in the form of dividends can result in significant tax and national insurance savings. The level of saving compared with an unincorporated business depends on the level of profits and the extent to which they are drawn out of the business.
However, it is important to bear in mind that operating through a Limited company will result in increased compliance requirements, such as filing statutory accounts and submitting a separate corporation tax return. This additional burden needs to be weighed up against the potential savings on offer.
Time to claim
Q: Is there a time limit for claiming business expenses that I incur before I start trading?
A: Costs incurred in the seven years immediately prior to the commencement of trading can potentially be claimed as a business expense for tax purposes as though they were incurred on the first day of trading, but only if they would have qualified as an allowable
Location, location, location
Q: What are the capital gains tax implications if I sell my house after using part of it exclusively for business purposes? Also, would I be expected to pay business rates on my own property?
A: You may be able to claim tax relief for the use of part of your home for business purposes. However, if you claim that you
Businesses AIM higher
Thames Valley accountants and business advisers James Cowper has helped two companies achieve a listing on the London AIM stock market.
James Cowper acted as reporting accountants on the Initial Public Offerings (IPOs) of EW Group and Bioventix plc on their admissions to AIM.
Incorporated in Guernsey, EW Group is a wealth management and financial planning services provider, delivering a range of services including retirement planning, stockbroking and advisory investment management to businesses, charities and trustees, individuals and families. Additionally, European Wealth manages money on a discretionary basis. The transaction was a reverse acquisition of European Wealth Management Group plc by EW Group – an AIM- listed company.
John Morton, executive chairman of European Wealth Management Group, European Investment
Management and European Financial Planning, said: “The James Cowper corporate finance team provided invaluable advice throughout the IPO process. The team’s attention to detail and drive for a successful result were pivotal in ensuring that all hurdles were overcome and that the process was completed in a timely manner. I would not hesitate to recommend them to others.”
Bioventix, located in Farnham, is a biotechnology company specialising in the creation and engineering of sheep monoclonal antibodies. The James Cowper team’s time-management and organisational skills were brought to the fore, with the entire process requiring completion within four weeks.
Peter Harrison, director at Bioventix, said: “From the outset, we knew we were in capable hands. Nick, Dilys and Tom managed the transaction diligently and the advice and experience that we received was excellent. The process had to be
THE BUSINESS MAGAZINE – THAMES VALLEY – JULY/AUGUST 2014
completed within four weeks to guarantee listing and their pragmatic approach throughout ensured that this was achieved.”
Nick Rogers, head of corporate finance at James Cowper, said: “We are delighted to have advised both EW Group and Bioventix and wish them every success on AIM. Confidence in the economy is continuing to grow and economic forecasts are predicting growth at pre-2008 levels. Private equity houses are looking to increase their portfolios, investing in well-organised and committed management teams, and in sectors with significant development opportunities. The Stock Market is once again becoming a central hub of investment.
“Alongside this, AIM is also experiencing a revival, and these two transactions add to the growing number of listings that are occurring on a monthly basis.”
British Business
Bank at Venturefest The first chair of the government- owned British Business Bank, Ron Emerson, tops the line-up of prominent business experts, academics and entrepreneurs speaking at this year’s Venturefest, Oxfordshire’s leading business creation event.
Emerson will be ‘in conversation’ with Professor Colin Mayer at Venturefest Oxford on Tuesday July 8 at the Saïd Business School, and will then take questions from an audience comprising Oxfordshire’s brightest and best in the business sector.
The session will outline how the British Business Bank will support innovative and growing companies in the UK, and in particular how Oxford’s small and medium-sized enterprises (SMEs) can – and do – benefit from the British Business Bank’s innovative finance schemes. Emerson and Mayer will also discuss how local enterprises themselves can encourage innovative finance options.
Details:
www.venturefestoxford.com
www.businessmag.co.uk
expense if they had actually been incurred on that date.
Care must therefore be taken to ensure that the costs relate to the trade itself rather than, for example, deciding what trade to operate or undertaking training.
Note that the position for recovery of VAT is different and depends on when you register for VAT.
have used part of it exclusively for business purposes you may incur a capital gains tax liability on a proportion of any gain made when you sell your house in future.
If the property is principally residential you should not have to pay business rates.
Requiring assistance
Q: I am a sole trader but I occasionally need the assistance of another self-employed person with a specific skill. How do I pay them?
A: Provided the person who assists you is truly self-employed and not ’employed by you’, they should send you an invoice, which can then be met as an expense of your business on which you can claim tax relief.
Details: Naomi Nesbit 01794-515441
Naomi.Nesbit@
wilkinskennedy.com www.wilkinskennedy.com
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