40 finance Reflecting on the Budget


Last month’s Budget had plenty of good news for businesses and entrepreneurs, and reforms that the chancellor claimed are designed to ‘put the next generation first’, writes tax director Holly Bedford-Bell


However, as usual, there was a sting in the tail with a tightening up of various areas where the Government perceive the tax rules to be too generous. Key measures announced included:


Company tax


• A reduction in the rate of corporation tax to 17% from April 2020.


• Restricted tax relief for interest expenses from April 2017 for larger companies.


• More flexibility in the offset of brought forward trading losses for companies, however, for larger companies the offset of brought forward losses will be restricted from April 2017.


• Corporation tax charged on loans to participators (what is known as the s455 charge) increased from 25% to 32.5% from April 2016.


• The Government will consult on the extent to which the ‘substantial shareholdings exemption’, which allows a trading group to sell a subsidiary tax-free, is still delivering on its original policy.


Capital gains tax and personal tax


• The personal allowance and threshold to higher rate tax increased to £11,500 and £33,500 respectively from April 2017.


• Capital gains tax rates to be cut 28% to 20%, and from 18% to 10% from April 2016 with the exception of gains in respect of residential property and


carried interest. Deferring a disposal of assets until after April 6, 2016 may prove beneficial.


• Entrepreneurs’ Relief extended to outside investors in unlisted companies who hold shares for three years.


• Anti-avoidance rules relating to company liquidations, share buybacks and company sales will be introduced.


• Some of the changes introduced last year restricting entrepreneurs’ relief on joint venture companies, the ‘associated disposals’ rules and on transfers of goodwill to partnership modified with retrospective effect where it has been seen that they disadvantage commercial arrangements.


• Increased dividend tax rates and a £5,000 nil rate band; the new income tax rates are 7.5% (basic rate) 32.5% (higher rate) and 38.1% (additional rate). The 10% dividend tax credit abolished from April 2016.


• A new lifetime limit introduced, meaning that any individual will only receive capital gains tax relief on the first £100,000 of gains from Employee Shareholder Status (ESS) shares.


Other taxes


• Reforms to SDLT on non-residential property from tomorrow mirroring the ‘slice system’ in place for residential properties.


• The additional 3% SDLT rate for purchases of additional residential property is introduced from April 1, 2016. There is no exemption for large investors, as was anticipated.


• Class 2 National Insurance contributions abolished from April 2018 and class 4 NIC reformed to provide benefit entitlements. Employer National Insurance on termination payments above £30,000 will also apply from April 2018.


The tax team at HMT led by Holly Bedford provides specialist advice to shareholders, management and companies on acquisitions, disposals and corporate restructurings.


Details: Holly Bedford-Bell hbedford-bell@hmtllp.com 01491-579740 www.hmtllp.com


BizBritain to broker more growth loans for new businesses


Entrepreneurs in the Thames Valley are being given the opportunity to access up to £250,000 in low-cost growth loans thanks to Marlow-based BizBritain, which has just been announced as the official broker in the Thames Valley area for YES Growth, an organisation offering short- term loans for UK SMEs.


BizBritain was founded by entrepreneur Matt Gubba to deliver funding and mentoring to people looking to start a business. It is an official delivery partner of the Government’s Start Up Loans


www.businessmag.co.uk


Scheme. Now it has partnered with YES Growth to ensure that new companies are supported throughout their lifespan, from setting up to growing their operations, by being provided with access to appropriate funding channels.


As well as providing access to low-cost loans, BizBritain helps applicants to develop and improve their business plan to achieve sustainable growth.


The loans are available to any entrepreneur who has been trading for more than 24


months and who has a minimum turnover of £200,000. Approved applicants can receive money within a week.


Gubba said: “We are proud to have partnered with YES Growth to help local businesses fulfil their growth ambitions. The Thames Valley area has a strong history of entrepreneurship and we are looking forward to working closely with entrepreneurs who want to hone their commercial proposition and take their business to the next level.”


Details: www.bizbritain.org THE BUSINESS MAGAZINE – THAMES VALLEY – APRIL 2016


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