This month I welcomed Richard Light, Tax Specialist Director, from Lester Aldridge Solicitors, as my guest speaker. Richard has a wealth of experience which started off from training at HMRC to Deloitte’s so with his valuable expertise from various industries and perspective, he bought to the table the following areas for discussion: –
- Planning steps that can be taken where someone owns more than one property
- Situations where losses on shares can be off-set against income
- Succession planning
- Recent experience with HMRC – things you must do to avoid trouble!
Key learnings from the day
1. If you own more than one property then, with careful planning, you can mitigate your future Capital Gains Tax liability. We explored if you live in, as your home, 2 or more houses, you can only have 1 main residence at a time for Private Residence Relief. You can nominate which residence is to be treated as your main residence for any period. Your nomination must be made within 2 years of the date you first have a particular combination of residences. If there is a change in your combination of residences, a new 2-year period begins. If you do not make a nomination, the question which is your main residence will be determined on the facts. These could be based on where you are registered with a doctors, dentist and council tax etc.
2. Succession planning –based on family run businesses there were number of ways in which this could be structured in a tax efficient manner. Richard discussed about gifting to children or where the children already had shares in the business that the company buys back the parents share which has capital gain tax advantages. We also touched on the benefits of having a shareholder agreement or implementing a business plan for sole directors and introducing a successor at an early stage for future planning. This also extended talks to the importance of including your business in your will. Always sensible to put in place a plan for succession – from a commercial & tax perspective
3. Tax planning is still acceptable but it is recommended that you plan to utilise reliefs’ and allowances that are incorporated in the tax legislation
4. Tax schemes are high risk and will be challenged aggressively by HMRC. Richard said these are not for the feint hearted and recommend avoidance!
5. HMRC now have considerable resource & powers to pursue an individual if they have made errors in the Tax Return filing. Tax returns can be tedious but they need to be correct. Consideration should be given to providing an appropriate level of disclosure on the form and providing additional information in the ‘white space’ provided. HMRC time limit to investigate queries known as the ‘enquiry window’ is usually 12 months from the date of filing although can be known to be longer under Discovery Assessment
About our speaker
Richard Light has a wealth of experience in advising high net worth individuals on all aspects of personal taxation, including income tax, capital gains tax and inheritance tax.
Areas of expertise include the preparation & completion of Self-Assessment Returns together with the calculation of the resulting tax liabilities as well as advice on the structuring of share subscriptions in order to qualify for the available tax reliefs’ under the Enterprise Investment Scheme (EIS).
Another key area that Richard advises on is advising on property (residential & rental) tax issues which includes Capital Gains Tax planning where more than one residential property is owned. Advising on the tax reliefs available for losses has also been very relevant since 2008 which includes losses incurred on loans & share subscriptions.
Register your interest for the next Business Finance Club event
I return on 18th September 2018, after a summer break, when Tom Hadley, from Sufu Marketing & I shall be joining forces at this event and delivering ‘How to finance your marketing activity effectively’.
Tom Hadley is a director of Sufu Marketing, a full-service marketing agency based near Fordingbridge, Hampshire. Tom’s career has been in digital marketing for the last 17 years, specialising in project management and strategic planning for some of the largest digital creative and marketing agencies on the South Coast. He’s worked with many blue-chip brands including Gatwick Airport, Activision, BG Group and The National Archives. He’s seen marketing evolve through the beginnings of the internet as a mainstream household tool into the fully-integrated digital lifestyle we all live today and understands both how it continues to change and the fundamentals that are here to stay.
Denise Ward is the director of The SME Financial Controller who offers tailored outsource financial support and consultancy services to SME’s across Dorset and Hampshire. Denise supports businesses that are in the period of growth or change that need greater financial visibility and strategic planning for improved decisions to be made to accomplish their objectives and goals. Denise has worked in a wide range of industries; recruitment, property development, manufacturing, engineering, print, photocopying solutions, kindergartens to name a few giving her a superb breadth of experience and the challenges facing different size organisations.
Our discussion shall cover the following: –
The sorts of things you should be planning on an annual basis
How to prepare financially for “big” marketing costs vs smaller ongoing costs in your budgeting
What are the tools, systems and skillsets you need in place?
How to keep a clear picture of different types of spend on a monthly basis (including people’s time)
How do you accurately measure marketing success?
How do you understand the true picture of profit and attribute it correctly?
I look forward in seeing you at the next event. To secure your place please register your interest here