TAx solutions for CORPORATE CLIENTS
Corporations face a range of different tax requirements. We have listed some of the most common areas that can be analysed in order for you to maximise your tax relief.
Capital allowances are a way of obtaining tax relief on capital expenditure. This is valuable to your business since accounts depreciation is not tax deductible.
The allowances are treated as a tax-deductible expense and thus reduce taxable profits.
Capital allowances are not just available against capital expenditure incurred from the date your business starts. Capital expenditure incurred prior to your business starting may also qualify for tax relief.
Capital allowances are typically available for:
- equipment (e.g. computers, telecommunications, printers)
- integral features (e.g. air conditioning, electrical wiring)
But are also available on a range of other items and features which are often overlooked by business and their advisers when identifying capital allowances.
OUR OFFER IS SIMPLE AND REWARDING.
Capital allowances offer very significant tax savings, but the process is complex and technical. We make your life easy by managing your case from start to finish. We apply our expertise to ensure you obtain the maximum tax relief available on your capital expenditure.
Our specialists routinely save our clients thousands of pounds on their tax bill that they were previously unaware of.
A client purchased an office building five years ago for £1 million, and had one of the top 10 UK tax practice as his tax advisors.
Signature Tax contacted this client as part of a free tax health check to confirm that the client was paying the correct amount of tax. After carrying out a due diligence report into the property history, we determined that the client was eligible to make a capital allowances claim.
We prepared a report suitable for submission to HMRC and worked closely with the client’s accountants to identify £310,000 of capital allowances, which generated a tax repayment for the client.
The well-established tax advisers had missed this opportunity and Signature Tax saved the client in excess of £120,000.
research and development
Your business may be eligible for significant tax relief. This is available to businesses spending time and money on research & development (R&D). Indeed this type of tax relief is actively and prominently supported by the UK Government.
Why? The UK Government wants to encourage R&D as this creates valuable UK situs Intellectual Property and skilled jobs.
Tax relief is available to a wide range of R&D expenditure and not only those projects which are "obvious" R&D projects. Many businesses are currently spending large amounts on projects that may never be realised or only become realised after numerous iterations.
The expenditure related to these projects would often qualify for R&D relief except that businesses and advisors are not looking beneath and surface.
We specialise in identifying that qualifying expenditure and making sure businesses obtain the relief and therefore tax refunds or savings.
Ecowash Ltd is a small company and after reviewing the published guidance, it has come to the conclusion that it’s activities leading to the development of a new biodegradable cleaning product will qualify as ‘Research & Development’ (R & D).
The company has identified relevant R & D expenditure as follows;
- Staff costs relating to the project of £300,000
- Software and consumables of £78,000
The total allowable costs are, therefore, £378,000.
The above expenditure is revenue expenditure and has been deducted in the accounts. The costs will also qualify for a deduction in calculating taxable profits, even if no claim is made.
However, as Ecowash qualifies under the small company rules, the company can also either elect for:
- an additional deduction for tax purposes amounting to 130% of the qualifying R & D expenditure or;
- If it is loss making, a repayable tax credit.
The company decides to maximise the relief available, and elect for the first option. £491,400 is then deducted from the original accounting profit, leading to a potential tax saving of £98,280.
Companies are actively encouraged to take advantages of these reliefs by the government. If your company has incurred any costs in relation to research or development, the tax savings could be considerable.
CORPORATION TAX on chargeable gains
Corporation Tax on chargeable gains applies to companies when they dispose of assets that have appreciated in value.
· Chargeable gains apply to property, investments and much more.
· Chargeable gains can also be offset by any losses that the company may have such as from other capital disposals or trading.
· Companies are also entitled to certain reliefs that individuals are not, such as allowances for indexation.
We provide our clients with guidance that synchronises with their investment strategy to give them a clear and full picture of what they will taxed, following any gains on their assets and investments.
AB Limited sold a factory for £320,000. The factory was purchased on 24 January 1994 for £164,000, and was extended at a cost of £37,000 during March 2004. The latter qualifies as enhancement expenditure and can be deducted when calculating the gain.
As the property has been disposed by a company, indexation can also be deducted (an allowance that provides relief for inflation). Indexation has been calculated as £80,000.
Unlike individuals, companies are not entitled to an annual exemption.
The chargeable gain in this scenario is £39,000. This will be taxable at the effective rate of corporation tax.
However, there may be reliefs available that will mitigate the gain further, particularly if the company is part of a group.
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If you are interested in finding out more, and would like to make a consultation with one of our specialists, please complete the below form, or call us on 0161 850 0648.