Month: October 2016

How much will your business rates be in 2017?

s300_a_couple_of_minutes

Business rates are charged on most non-domestic properties, like:

  • shops
  • offices
  • pubs
  • warehouses
  • factories
  • holiday rental homes or guest houses

If your property has a rateable value below £18,000 (£25,500 in Greater London) you’re considered a small business.

Even if you don’t qualify for small business rate relief, your business rates will be calculated using the small business multiplier instead of the standard one. This is the case even if your business uses more than property.

You can get small business rate relief if:

  • you business only uses one property
  • your property’s rateable value is less than £12,000

Contact your local council to apply for small business rate relief.

The Valuation Office Agency recently revalued all 1.96 million non-domestic properties in England and Wales. These new rateable values are based on the rental value of properties on 1 April 2015, and will be used to calculate business rate bills from 1 April 2017.

You can find out how much your rates will be using this link

https://www.gov.uk/correct-your-business-rates

steve@bicknells.net

Is this the end for Pension Inspecie Transfers?

Buildings in the isometric

An inspecie transfer is generally either a transfer of property from a company/individual or pension scheme to a pension scheme.

These are relatively common and usually occur between different Small Self-Administered Schemes (SSASs) and/or Self-Invested Personal Pensions (SIPPs), otherwise known collectively as Investment Regulated Pension Schemes.

Of course an investment regulated pension scheme is under no obligation to accept an in specie transfer. The trustees of a SSAS and the scheme administrator of a SIPP will review the offered asset to make sure that:

  • a proper market valuation has been made
  • it’s suitable for the investment strategy of the scheme

Inspecie transfers generally create tax refunds, just as they would have done had they been a cash contribution which is tax free or tax deductible for companies.

However, according to Citywire 18th Aug 2016, HMRC have decided they don’t like Inspecie Transfers

In recent weeks the tax man has challenged pension providers over the practice of in specie transfers which allow people to put non-cash assets into their retirement plans. Provided strict criteria are met, individuals can claim back tax relief on the transfers just as they would with a normal contribution into a pension.

Neil MacGillivray, chairman of the Association of Member Directed Pension Schemes’ (Amps), told Citywire’s New Model Adviser there was a ‘very strong possibility’ HMRC could ask for tax relief back on contributions stretching back to 2009. This would have significant ‘financial costs’ for individuals and pension providers he said.

I can’t see why HMRC have an issue with these transfers? why does it matter whether the contribution is inspecie or for cash?

steve@bicknells.net

 

Changing your mind on whether to keep a development or sell it? beware of the tax

Beware

Buying properties into you own property development company is very popular and there are lots of TV programs that tell you how much you could make.

Property Development is a trade where as property investment isn’t.

So what happens if you develop a property and then decide to keep it as an investment rather than sell it?

This known as reclassification and there would be an immediate deemed disposal under TCGA 1992, s 161 as a result a taxable trading profit would calculated based on the market value. The tax would be payable even though the property had not been sold and a profit had not been realised.

 

cgt-s161

The courts have looked for the following evidence of reclassification:

  1. Balance Sheet reclassification moving the asset from Trading Stock to Fixed Assets
  2. Transfer of the property to an investment vehicle including Group Companies
  3. Board resolution that property is being held as an investment

fictitious newspapers

If the market value is below carrying value at the time of appropriation, this would create a trading loss which can be offset against other profits in the year or group profits.

steve@bicknells.net