Signature Tax Newsletter February 2019

SigTax Newsletter February

With the tax return deadline having come to a close on 31st January, have a little chuckle at some of these excuses people have used to try and avoid any late return penalties:

  • My mother-in-law is a witch and put a curse on me  

  • I’m too short to reach the post box

  • I was just too busy – my first maid left, my second maid stole from me, and my third maid was very slow to learn

  • Our junior member of staff registered our client in Self Assessment by mistake because they were not wearing their glasses

  • My boiler had broken and my fingers were too cold to type

We hope you never had to resort to any of these silly excuses, however HMRC do offer help for those people with genuine excuses. If you require any assistance on your 2019 self-assessment please do not hesitate to get in touch with us at

Do you have Commercial Property?

Under UK Tax Legislation, a company or business which has expenditure on capital assets, is not allowed to make a deduction for expenditure in it’s accounts. Instead, businesses are provided with a tax relief called Capital Allowances (CA). 

In order to claim capital allowances, taxpayers must group items into "pools" of capital expenditure on which the taxpayer has not previously claimed capital allowances. These pools attract different rates of allowances: most plant and machinery falls within the main pool (18% rate), but integral features and items which have a life of more than 25 years will fall within the special pool (8% rate).

Purchasing Property ?
Commercial or semi-commercial property, whether it is owned privately or as a limited company, there may be a scope to claim capital allowances, which can be used against your profits immediately. For this reason Capital Allowances are a highly valuable form of relief. 
Capital Allowances must be identified and recorded at the point of purchase which is agreed and passed down by a s.198 election, which determines the CA amount passed over from the Seller to the buyer, this removes the possibility of the CA being claimed twice on the same asset.
If parties make a s198 election at Tax Written Down Value(“TWDV”), the seller will unable to claim further allowances.

Own Residential Property ?
You can only claim CA for items in residential property if your business qualifies as a furnished holiday lettings business. In each year the property must be:

  • available for holiday letting for 210 days

  • let for 105 days or more

What can I claim on ?
Capital Allowances are generated from expenditure on fixtures and when you buy assets that you keep to use in your business, known as Plant and Machinery–
·         Equipment
·         Machinery
·         Integral Features

Capital Allowances are generally calculated by writing down the cost of the qualifying asset (e.g. the heating system) at a fixed rate on a reducing balance basis. The rate is determined by the type of asset and this generally means the tax relief is spread over a number of years

Integral features
Integral Features attract CA at a rate of 8% per year over the useful life of the asset.
Integral Features include –
·         Lifts & escalators
·         Air-conditioning
·         Electrical systems 
·         Water heating systems

Fixtures attract CA at a rate of 18% per year over the useful life of the asset
·         Fitted Kitchens
·         Bathroom Suites
·         Fire Alarm and CCTV systems

If you believe you have a potential Capital Allowances claim please do not hesitate to contact us on 0161 850 0648 or email us at

Changes to Entrepreneur's Relief

In the Budget speech, important changes were proposed to the definition of 'Personal Company' for the purposes of entrepreneur's relief.  The changes are put in to place to target the relief at ‘genuine entrepreneurs’ by way of limiting the relief to individuals who’s interest in the company just passed the minimum threshold. The existing requirement of holding at least 5% of the ordinary shares with a 5% voting right has been added to in which 5% of the profits available for distribution to the ‘Equity Holders’ must be held. These conditions must be met on original investment and again met throughout one year prior to disposal (two years from 6 April 2019). 

Research and Development

R&D tax credits were introduced for SMEs in 2000 and extended to large companies from 2002 and every year since, tens of thousands of pounds are being lost in tax relief by eligible companies who fail to submit a claim for tax relief which they are perfectly entitled to. This reflects the misconception that Research and Development (R&D) is confined to global tech giants or research laboratories and people in white coats. Businesses are often undertaking R&D every day, driving innovation and moving the UK economy forward without realising, which is precisely why the Government want to incentivise you for doing so.

R&D tax relief is the Government’s way of rewarding UK businesses that invest in innovation. This innovation can be in the form of developing new, or appreciably improving existing products, processes, services, devices and materials. The project must seek to achieve an advance in science or technology and doesn’t always have to be completed. An attempt to resolve a technical uncertainty and subsequently failing, will also fall within the HMRC guidelines.

Signature Tax are market leaders and specialists in R&D tax credits with a very experienced team of Tax Advisors, Accountants, Report Writers and Industry specialists. We will investigate your business activities, produce and submit a fully compliant report to HMRC and answer any queries raised on your behalf. Refunds are typically paid within 60 days of submission.

Our in-house specialist Steve can be contacted on or 07921 841 724 who would be pleased to speak with you on a no obligation basis to answer any queries you may have.