Planning To Sell Your Business In 2022?

Now that the economy is starting to recover, this could be a good time to think about selling your business. Remember that under the current capital gains rules, the first £1 million of an individual’s gains potentially qualify for a 10% rate of tax, provided business asset disposal relief applies. We can check whether or not you and other business owners qualify for this generous relief. Note that the £1 million limit applies to all disposals during an individual’s lifetime.

If your business is worth more than £1 million, you might want to consider the transfer of shares to other family members, although they will need to satisfy the conditions for business asset disposal relief for at least 2 years prior to any sale.

28th January 2022 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• Submitting your tax return - Extension to 28 February 2022
• Prepare your business for Making Tax Digital (MTD) for VAT
• 130% Super Deduction
• Statutory Pay Rates from April 2022

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Submitting your tax return - Extension to 28 February 2022

If you’ve already sent us your tax return information and we have submitted your return to HMRC, thank you! You don’t need to do anything else other than pay any amount due.

If you have recently sent us your information, or if you have not yet sent us your information, (because of Coronavirus) HMRC are now waiving late filing and late payment penalties for one month – giving you extra time, if you need it, to send your information to us so we can complete your tax return and submit it to them.

You will not receive a late filing penalty as long as your tax return is filed online by 28 February.

Interest will be charged from 1 February on any outstanding liabilities you have not paid. You will not be charged a 5% late payment penalty if you pay your tax or make a Time to Pay arrangement by 1 April.

If you can’t pay in full by 31 January because of financial difficulties, HMRC may be able to help by arranging a payment plan. Payment plans or payments in full must be in place by midnight on 1 April to avoid a late payment penalty. If you owe less than £30,000, you may be able to do this online without speaking to them. Go to GOV.UK and search 'HMRC payment plan'.

Please contact us if you need assistance.

Prepare your business for Making Tax Digital (MTD) for VAT

Making Tax Digital for VAT becomes mandatory for all VAT registered businesses from 1 April 2022.

Businesses with a taxable turnover above £85,000 have already been required to follow Making Tax Digital, keeping digital records and filing VAT returns using compatible software since April 2019.

From 1 April 2022, all VAT registered businesses must file digitally through Making Tax Digital from 1 April 2022, regardless of turnover.

We can sign you up to MTD, although you will be responsible for meeting your VAT obligations. Those who do not join Making Tax Digital for VAT may be charged a penalty for failure to do so.

If your business has not signed up to MTD compatible bookkeeping software then please talk to us urgently about how we can help your business comply with the new law.

130% Super Deduction

130% SUPER -DEDUCTION FOR INVESTING IN NEW PLANT CONTINUES

Many businesses may have been too short of cash to take advantage of the new super-deduction for investing in new plant in 2021 but may be more confident about investing in 2022.

This tax break, which started on 1 April 2021 continues until 31 March 2023, allows companies to deduct 130% of the cost of new plant and machinery from their profits where that plant would normally be included in the general capital allowances pool.

If a company buys a new commercial vehicle costing £50,000 that means they can deduct £65,000 from trading profit saving £12,350 in corporation tax. Note that there would be a clawback charge on disposal of the asset, which could be as much as 130% of the proceeds.

There is currently no financial limit on the amount that the company spends on new equipment qualifying for 130% tax relief.

£1 MILLION ANNUAL INVESTMENT ALLOWANCE STILL AVAILABLE

Second hand plant and machinery does not qualify for the 130% super-deduction but would still qualify for the 100% Annual Investment Allowance (AIA).

The amount of expenditure qualifying for 100%  tax relief was originally scheduled to revert to just £200,000 from 1 January 2021 but will now continue at £1 million until 31 March 2023.

Although the 130% super-deduction only applies to limited companies the AIA is available to sole traders and partnerships as well.

Remember that there is currently a further 100% first year allowance for the cost of buying a new zero emission car for the business.

Previously 100% relief was available where the CO2 emissions of the car were no more than 50g per kilometre. However, that threshold changed in April 2021.

Statutory Pay Rates from April 2022

The government has published the proposed statutory rates for maternity pay, paternity pay, shared parental pay, adoption pay, parental bereavement pay and sick pay from April 2022.

The rates normally increase each April in line with the consumer price index (CPI) and this normally occurs on the first Sunday in April, which is 3 April 2022.

See: Benefit and pension rates 2022 to 2023 (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1036433/benefit-and-pension-rates-2022-2023.pdf)

21st January 2022 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• New VAT penalty regime delayed to January 2023
• Paying back a Self-Employment Income Support Scheme (SEISS) grant
• What’s Your Exit Strategy?
• Recovery Loan Scheme extended

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a great weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100