business focus 29
Chartered accountants Haines Watts presents a series of articles based on its blogs. It offers analysis, reviews and comments and welcomes your feedback at
www.hwca.com/opinion
of the month
Chancellor’s tax bombshell for buy-to-let investors writes Kapil Davda, partner at Haines Watts
During the summer 2015 Budget the chancellor announced changes to the way buy-to- let investors would be taxed from April 2017. The intention is to create a level playing field between landlords and homeowners.
The debate as to how effective these measures will be continues to rage, with some sources suggesting that this is likely to have an impact on around just 20% of buy-to-let investors, at the smaller end. It’s therefore unlikely to make a significant dent on available housing stock numbers, especially as those with cash reserves to buy properties outright won’t be affected.
The changes work by restricting
the amount of tax relief that can be claimed on mortgage loan interest payments at the basic rate of tax (20%), regardless of your personal income tax bracket.
This will have a significant impact on higher (40%) and additional (45%) rate taxpayers. Positive cashflows on highly-geared investments will decrease and, in extreme cases, turn into negative cashflows due to the impact of additional tax, especially if there is a future interest rate rise.
Some basic rate taxpayers will be pushed into the higher rate band and higher rate taxpayers will have to pay tax at the additional rate.
The changes will be phased in between the 2017/18 and 2020/21 tax years, with basic rate restriction
Developing your teams for growth
'People make or break a business,' said Shirin Dehghan, founder of Arieso, who grew her company to become one of the world’s leading providers of customer centric network performance solutions, when she spoke at the Leadership for Growth Summit in October
“The right people will help you to succeed,” said Shirin. “Do they have the right attitude and the right fit with your culture? You can teach people skills but you can’t teach attitude and passion. Quality hires lead to quality work, so don’t compromise with the quality of your staff. I always went with my gut feeling – if something doesn’t feel quite right, don’t hire them.”
Developing your team to prepare them for business growth was a key topic discussed at the Summit. A robust recruitment process, a shared culture and vision within the business, trust across the whole team, positive incentives and space to develop personal and business skills all play significant roles.
Having a shared vision and culture was important to David Sanger, founder of Rollover that became the UK’s largest hotdog company.
“My aim was always to get my team to behave like owners and not employees,” stated Sanger. “To inspire your team to succeed they need to feel that it is a fun place to work – and we encouraged a culture of work hard, play hard. Learn to trust them to do a better job than you. As your business grows you can’t do everything – recognise your own strengths and delegate properly.
“The right sales team was also important to my business,” continued Sanger. “They received very generous incentive packages which encouraged them to stay with the company.”
Susan Elliott, MD of VitalSix, highlighted the importance of developing leadership and business skills. “Whether you need to inspire or motivate your team, or ensure you have the credibility
THE BUSINESS MAGAZINE – THAMES VALLEY – DECEMBER 15/JANUARY 16
to secure investment in your business, developing your skills will be crucial. Attendance at the High Growth Accelerator Programme, which is delivered by the VitalSix team as part of the Henley Business School’s programme of courses for ambitious business leaders, will boost your business skills and help you to refocus on your business strategy.
“We also support business leaders through one to one mentoring – taking the next steps to scale up a business can challenge the skills and experience of many leaders. Ensuring that all members of the team are ready for growth must start at the top.
“There are many elements to a business that need to be ready for growth and having the right people on board, with a shared culture and vision and the right skills will
www.businessmag.co.uk
on relief for finance costs ranging from:
• 25% of finance costs in 2017/18, • 50% of finance costs in 2018/19, • 75% of finance costs in 2019/20, • 100% of finance costs in 2020/21.
This would mean that, on mortgage interest payments of £10,000 a year, the additional annual income tax charge in the 40% band would be:
• £500 in 2017/18, • £1,000 in 2018/19, • £1,500 in 2019/20, • £2,000 in 2020/21.
Tax and retirement planning strategies relying on buy-to-let investments put in place before the changes come into play may need to be revisited, depending on the individual’s circumstances. There is still time to plan, to minimise the impact of the additional tax burden.
For further information regarding these new measures or financial matters visit the website.
Details:
www.hwca.com
ensure that a strong, well-managed sustainable business will emerge.”
Contact VitalSix to review how to get your team ready for growth.
Details: Susan Elliott 0118-9357369
info@vitalsix.co.uk www.vitalsix.co.uk
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