Important Tax Measures Taking Effect from April 2014


Mitchell Charlesworth's tax experts have put together this summary of a few of the most important tax measures taking effect from April 2015, some of which were only recently outlined in the Budget 2014.

You can also download a free tax rates card 2014/15 here which includes a summary of (but is not limited to):

- Income Tax Rates & Reliefs
- Car, Van and Fuel Benefits
- Mileage Allowance
- Corporation Tax
- Capital Allowances
- ISAs
- Inheritance Tax and Capital Gains Tax

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For more information about any of the tax rates outlined below, or in the tax rates card, do not hesitate to contact our expert tax team or complete a quick enquiry form and we will be pleased to respond to you directly.

Annual Investment Allowance Extended to £500,000

With immediate effect, the annual investment allowance (for capital allowances) has been extended from £250,000 to £500,000, until the end of 2015. According to George Osborne, this Budget measure will help 99.8% of businesses make a tax saving.

All businesses can deduct against taxable profits the full cost of the first £500,000 spent on plant and machinery (other than cars) each year. Where more than £500,000 is spent, the excess will attract writing down allowances at 18% or 8%, depending on the nature of the expenditure.

If you are planning on investing in equipment in the 2014/15, we suggest you contact Mitchell Charlesworth’s tax experts to see how these rules affect you and ensure that you maximise your claim before the current level of allowance expire. Most importantly, you should make sure you claim if you believe you are entitled to this allowance.

Seed Enterprise Investment Scheme (SEIS) Made Permanent

The Seed Enterprise Investment Scheme (SEIS) that was introduced two years ago as a temporary measure has now been put on a permanent basis. Investing in a small trading company under the SEIS can allow you to gain 50% income tax relief on an investment of up to £100,000.

Capital gains on SEIS shares are exempt from tax if the shares are held for at least three years, and a tax exemption is available for any capital gains that are reinvested.

Investors are urged to be prudent in regards to investing in small companies. This can be a very risky strategy and you must hold SEIS shares for three years in order to retain your income tax credit.

When available funds for investment are in excess of the SEIS limits, it may be possible to secure reliefs under both SEIS and the existing Enterprise Investment Scheme (EIS).

According to the Treasury the SEIS tax relief resulted in £82m of investment in more than 1,100 companies in its first 18 months.

The government has also confirmed that it will introduce measures to promote investment in social enterprises, which have traditionally struggled to raise finance.

The 30% income tax relief that is extended to investors in EISs and VCTs will now be extended to include eligible social enterprises. These social enterprises will be able to receive a maximum of £290,000 investment over three years.

R&D Tax Credits Increased from 11% to 14.5%

From 1 April 2014, small to medium-sized businesses and those start-ups undertaking research and development (R&D) who make a loss will receive an increased tax credit from 11% to 14.5%.

If your company has undertaken any activities which directly contribute to achieving an advance through the resolution of scientific or technological uncertainty in the last year, then you may wish to consider claiming a payable tax credit.

This tax credit, which will be paid in cash, is designed to encourage businesses to continue innovating and investing.

An SME is defined under the R&D tax rules as a company with fewer than 500 employees and either a balance sheet that does not exceed £72m or an annual turnover that does not exceed £83m.

It may be the case that what your company does every day can actually be classified as R&D, even if it appears routine, as a wide range of activities can qualify. Moreover, it is not always easy to determine eligible activities or to know exactly how to apply the rules to your specific industry or situation. There are also various criteria that must be met in order for you to qualify for R&D tax credits.

If you would like more information about R&D tax credits or think you may be eligible for relief, you are urged to seek advice from Mitchell Charlesworth’s tax team to find out whether your activities qualify or have qualified for R&D tax relief.

Claims have to be made within 2 year’s of the company’s year end.

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