FINANCE


BUDGET 2018 AND END-OF-YEAR PLANNING


By Mark Tenby, Director, Martin Aitken & Co


T


he Chancellor was on his feet for over an hour on 22 November and although he made some welcome reforms to VAT relief, which will alleviate some of the budget pressures facing our police and fire services in Scotland, and some additional reforms to oil and gas taxation, the main headline grabbing announcements will not have direct relevance to Scottish taxpayers.


Of more relevance will be the Scottish Budget 2017, which will be announced by the Scottish Finance Minister, Derek McKay, in the Scottish Parliament on 14 December. Immediate reaction from Scotland’s First Minister to Philip Hammond’s proposals that first-time buyers in England and Wales will pay no stamp duty land tax on the first £300,000 of the purchase price of a home, provided its value does not exceed £500,000, were positive. Nicola Sturgeon said she would consider giving ‘further assistance’ to first-time buyers in the wake of Mr Hammond’s giveaway to help more people get on the housing ladder.


PERSONAL TAX Unless there is a dramatic shift in SNP policy, we are unlikely, however, to see the higher rate tax threshold rise to £46,350 for 2018/19 in the UK being applied in Scotland. If current press speculation is to be believed, then we may well see a number of new income tax bands being introduced in Scotland on 14 December. We shall have to wait and see – full commentary on the Scottish Budget announcements will be published on maco.co.uk.


PENSIONS AND SAVINGS The ISA annual subscription limit for 2018/19 will remain unchanged at £20,000 and the lifetime ISA (LISA) annual subscription limit will stay at £4,000. The lifetime allowance for


pension savings will increase to £1.03 million and there is no change to the annual allowance. Interest rates on bank deposits are starting to creep up with the base rate and the amounts earned will be tax free for many.


BUSINESS TAX The rate of the tax credit for R&D expenditure will rise from eleven per cent to twelve per cent from 1 January 2018. You might be entitled to a valuable R&D tax credit even if the pharmacy makes a taxable profit. Check out the position, as you might be surprised what expenditure can qualify and how much it could be worth to you.


From April 2018, there will be no benefit in kind tax charge on electricity that employers provide where employees recharge their personally- owned electric or hybrid vehicles at their workplace. The electric car revolution is only going to go one way, so do take advantage whilst the incentives are on offer.


DIVIDENDS


An annual dividend allowance of £5,000 was introduced last year. Any dividends you currently take in excess of the £5,000 dividend allowance will attract an income tax liability. This allowance will fall to £2,000 from April next year. Many owners of incorporated pharmacies are likely to find themselves disadvantaged by this change. If you haven’t already considered changing the way in which you balance your income and dividend payments, consider the following:


Married couples and civil partners should make sure they spread their taxable portfolios between them, where possible, to ensure they fully utilise each of their dividend allowances, personal allowances and basic rate bands. Taxpayers will see a tax increase of 7.5 per cent on dividend income received above


£5,000 this year(£2,000 from April 2018). This makes sheltering taxable investments in a tax-free ISA all the more important.


PREPARING FOR YEAR-END To ensure you don’t miss out on valuable allowances and exemptions that you are entitled to, you should plan and take advice during the year rather than leaving it until the end of the tax, or your financial, year. You should consider the following year-end planning tips:


The impact of bringing expenditure into this financial year, or deferring to the next, can have a significant impact on your tax position and financial results;


Maximise and use of all allowances, credits and exemptions you are entitled to eg, you save tax by utilising capital allowances if you are considering updating pharmacy equipment and in-store fixtures, fittings and furniture;


Contributing to a pension is an opportunity to benefit from 45 per cent tax relief. Company pension contributions can also be used to reduce dividend tax liabilities by taking advantage of the tax relief on contribution;


BIOGRAPHY Mark has more than 25 years’ experience in assisting a varied portfolio of clients helping them to grow both organically and through acquisitions, as well as preparing businesses for sale and succes- sion. Mark has specific expertise in working with start-ups, franchises, pharmacies, retailers and invest- ment companies and advises on all aspects of accounting, personal and corporate tax planning and wealth matters.


SCOTTISH PHARMACIST - 31


Making improvements to how you manage the pharmacy finances and record keeping can also improve profitability and cash flow. So make a New Year’s resolution to investigate a cloud accounting package for your pharmacy;


And finally, ‘tis the season to think of others, so, if you are considering providing your staff with additional benefits in 2018 as part of their total reward package, there are a range of tax incentives available for pharmacies looking to recruit, retain and incentivise talent.


Best wishes for a prosperous and tax efficient 2018.


MARK TENBY, DIRECTOR MARTIN AITKEN & CO


Email: mark.tenby@maco.co.uk


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48