The Media may focus on the Budget this week, but business owners should reflect on the changes announced already, that are due to come into effect from 1 April for companies and 6 April for everyone else. Here is a roundup of the Top 5 of those changes that we anticipate will affect the most people:
- Capital Allowances on commercial properties: A HUGE change to those buying properties after this date. In the past it has been possible to review a property after you buy it, and conduct specialist surveys to claim capital allowances on eligible items, such as air conditioning units. Those buying property after the current tax year will be unable to do this unless whoever owns the property now makes the claim for them and passes it on. If you are in the process of buying, make sure that you know whether you are completing the purchase before or after 31 March.
- LLP Tax Rules: The proposed changes to taxing members (partners) of LLPs are due to take effect from 6 April 2014. This appears to have been postponed, but it is a point to keep an eye on if you operate as an LLP. In simple terms, Parliament is concerned that LLPs are being used to work around employment taxes, and is in the process of changing the presumption that members of an LLP are self-employed to instead start from the presumption that they are employees. The House of Lords will be scrutinising the detail of the Finance Bill in the coming weeks. Watch this space!
- Pension Changes: Annual contribution limits are being reduced from £50,000 to £40,000. The lifetime cap on contributions is reducing from £1.5million to £1.25million, affecting a large number of people buying commercial properties through pension structures.
- Corporation Tax: Rate is reducing to 21%. Any expenditure will therefore attract greater tax relief if incurred in the current tax year. An easy way to save 2p for every £1 spent!
- Associated Companies: Rules are changing (again). Few people have kept track of these changes and many are blissfully unaware that their company may have drifted in and out of these rules in recent years. If you or your spouse have interests in more than one company, you should be checking how you are affected.