16 finance 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
£3.7m fund launched for Solent businesses
A £3.7 million fund to help businesses in the Solent has opened, giving SMEs in the region access to bigger pots of money to help them create jobs and grow.
The Solent LEP (Local Enterprise Partnership), in partnership with Portsmouth City Council, has launched its Solent Advanced Manufacturing SME Fund. The funding pot, previously known as the Solent Futures Fund, was originally only open to businesses directly within the supply chain of Portsmouth Naval Base.
It has now been extended to any SMEs in the Solent maritime, defence, aerospace, advanced manufacturing and general services support for the defence and advanced manufacturing cluster supply chains.
The limit available for individual companies has also been raised from £300,000 to a maximum of £500,000.
www.businessmag.co.uk
Solent LEP senior account manager Steve Futter said: “The Solent has a strong specialism in the defence industries and we need to ensure that this is the case for decades to come. This fund aims to safeguard and develop the industry, creating new jobs, safeguarding existing ones, exploiting innovative business models, improving competitiveness and increasing export business.
“We would urge any eligible SME to get in touch and take advantage of this opportunity.
“We have also been able to secure additional funding to support those with smaller scale projects and so we have a really strong support package for the advanced manufacturing and defence sectors.“
Application documents can be obtained from:
www.solentlep.org.uk 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
Top companies with sustained profit growth identified
Analysis from accountancy and business advisory firm BDO LLP has shown that strong growth is being driven by medium-sized businesses across the central south, and the research identifies the leading companies that are already achieving sustained profit growth.
Of the top 20 companies in the region, six are in the Southampton area. These are: Reilly Holdings, GDC Group, DPP, CLC Group, Silva Holdings and Elforist.
Helen O’Kane, corporate finance director at BDO in Southampton,
explained: “It’s clear that central south mid-market companies have become leaner and their management teams more focused over recent years. They are positioned to take advantage of the upswing and, critically, there are now far more opportunities to gain financial support for growth.
“These six Southampton-based companies have shown great resilience and strength, and their sustained growth provides real inspiration for other mid-market companies in the region.“
Duo of awards for Grant Thornton
Grant Thornton UK LLP has received the ’UK Transfer Pricing Firm of the Year’ award for the third year running, along with taking the accolade of ’European M&A Tax Deal of the Year’ at the prestigious International Tax Review Awards.
The award for transfer pricing was given in recognition of the team’s consistent high-quality work
and practical approach to this increasingly-complex field, while the M&A tax deal award reflected its success with a groundbreaking transaction for Kodak.
Norman Armstrong, partner at Grant Thornton in Southampton, said: “These awards are a strong testament to the strength of our firm and the quality of our output.“
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JULY/AUGUST 2014
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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