Following the budget yesterday I have decided to write a brief article summarising the key points that will impact on our small businesses clients in the short term.
In his speech Mr Darling promised to help small businesses and said he was providing a £2.5bn package for this. His plans include:
• A One year cut in business rates for small businesses. The cut will be effective from October 2010 and is aimed at helping 500,000 small businesses. Eligible small businesses occupying properties with rateable values of up to £6,000 will pay NO business rates and business occupying premises with rateable vales between £6,000 and £12,000 will receive significant reductions in their rates. More information on how this is going to work in practice will be available shortly.
• Doubling the Annual Investment Allowance (AIA) for small businesses from £50,000 to £100,000. This looks great on paper however the reality is that the majority of small businesses will not benefit as they will not incur this much capital expenditure.
• Introducing a 100 per cent first year allowance for new and unused zero-emission goods vehicles a period of five years from April 2010. This will provide a great tax break if the available vehicles are fit for purpose. Additionally commercial vehicles already qualify for the current AIA which in effect provides relief at 100 per cent already.
• Doubling the limit for relief on capital gains tax for entrepreneurs to £2m. This may benefit a serial entrepreneur who builds and sells 'many' businesses but I would suggest will not benefit the majority of businesses as most small businesses would be unlikely to sell for anywhere near the original £1m limit let alone the new £2m limit.
• Extending the business payment support helpline which effectively gives business owners time to pay their taxes without incurring any additional surcharge or penalty.
He also said that Lloyds and RBS (the part state owned banks) would provide additional funding of £94bn to small businesses which is great in principle however the proof will be in the banks carrying out this promise and providing much needed affordable funding to small businesses.
At the end of the day the whole process could be repeated again very soon if the Conservatives gain power at the forthcoming election.
Without a doubt this was a political budget which in reality only delayed the pain. There was some tax breaks for small business in the short term whilst the reality is that in the long term taxes will rise.
The Conservatives have already pounced on the announcement to ‘freeze’ the basic personal allowance at the current rate of £6,475 stating that when inflation is taken into account this announcement effectively creates a ‘stealth tax’ which could cost 30 million tax payers an additional £50 a year.
Also ‘frozen’ was the starting point at which Inheritance Tax is paid and again in the longer term when taking inflation into account this will result it in an increase in the tax take.
There was also an announcement that from 6 April 2011 HMRC will also be able to ask for security payments from business owners before the business is permitted to operate a PAYE scheme. This is an add on to the rules that allow the same for VAT. The Tax Office tends to demand such payments where the business owners have previously been involved in a business that failed owing VAT.
A detailed budget report can be viewed on our website www.crumppearce.co.uk
The above is designed as a guide only and should not be relied on in any way. For a detailed guide of how the budget impacts on you please contact your professional advisor.
Tim Pearce
Director
Crump Pearce & Co
43 Merstow Green
Evesham
WR11 4BB
01386 49999
hello@crumppearce.co.uk
www.crumppearce.co.uk
25 March 2010
Planning for success......
This article was first published on our website in March 2010.
As we move forward in 2010 the most successful and profitable businesses will all have one thing in common, they will all have a plan. These businesses will know where they are, where they are going and will have an idea of what they need to do to get there. They will have targets that they will regularly monitor and reviewed so they can react and implement change if they need to.
At this point you may be thinking:
I haven’t got time to write a formal plan;
or
I don’t need to plan, I am the business and I know what I am doing;
or
We don’t need to have a plan, we are a small family business and are too small for all that formal stuff;
or
A variety of other things that will stop you from sitting down and simply assessing where you are and where you want to be.
My answer to these statements is easy - ‘running a business without a plan is like getting into a car and driving without any idea of your final destination – you just wouldn’t do it’.
A plan should be seen as the ‘roadmap’ for getting to where you want your business to be and should link where you are now to where you want to be in the future. A plan does not have to be too detailed and should not be more than a couple of pages long. In fact some of the best plans are what we would term a ‘one page plan’ which as the name suggests is only one page long.
Getting your key objectives down on paper will help to cement them in your mind. It will also give you a document that you can refer back to and allow you to easily monitor performance and benchmark where you are, to where you wanted to be.
The benefits of making your plan will far out weigh the time costs of actually making the plan. Some of the key benefits are:
1.The ability to monitor progress against targets
2.You can identify potential problems and take appropriate action
3.Improve the decision making process, giving you greater control over your business
4.Improve confidence in making key decisions
5.You and your team can focus on clear targets and objectives and stay on course
6.Improve staff motivation, focus, and accountability
7.Improve overall efficiency
Your plan should include:
1.A brief summary of where you are now
2.A brief summary of your key objectives/targets for the future
3.Brief notes of how you are going to get there
Key points to think about are:
1.Key figures such as turnover, staff costs, staff numbers, gross margin etc
2.New and existing products and services
3.Your market position
4.Your current or new/potential customers
5.Your personal objectives
6.Marketing
7.Competition
In order for your plan to be beneficial your targets and objectives need to be measurable in some way. They also need to be achievable and realistic. You need to be honest with yourself – it will be de-motivational for you and your team to set and not achieve un-realistic targets. Furthermore, you will not be able to react if you cannot measure whether or not you are achieving your targets.
For example, setting the target of having the biggest turnover in the area for your industry is most probably both not realistic and not easily measurable – you can’t easily know what your competitor’s turnover is. However, setting the target of increasing your turnover by 10% over the next 12 months by adding a further 5 key clients to your portfolio is both specific, measurable and can be monitored and easily worked towards.
Your plan should be dynamic and should be reviewed and monitored on a regular basis. This allows you to adapt your strategy and put in place changes where necessary.
In summary if you have a documented plan you and your team will know what you are aiming for, you can monitor performance, track results and make informed decisions that will help you to move your business forward.
If you would like help writing your ‘one page plan’ or would like to discuss how a plan can help you and your business please get in touch.
Tim Pearce (Director)
Crump Pearce & Co Limited
Chartered Certified Accountants
43 Merstow Green
Evesham
Worcs
WR11 4BB
01386 49999
tim@crumppearce.co.uk
www.crumppearce.co.uk
As we move forward in 2010 the most successful and profitable businesses will all have one thing in common, they will all have a plan. These businesses will know where they are, where they are going and will have an idea of what they need to do to get there. They will have targets that they will regularly monitor and reviewed so they can react and implement change if they need to.
At this point you may be thinking:
I haven’t got time to write a formal plan;
or
I don’t need to plan, I am the business and I know what I am doing;
or
We don’t need to have a plan, we are a small family business and are too small for all that formal stuff;
or
A variety of other things that will stop you from sitting down and simply assessing where you are and where you want to be.
My answer to these statements is easy - ‘running a business without a plan is like getting into a car and driving without any idea of your final destination – you just wouldn’t do it’.
A plan should be seen as the ‘roadmap’ for getting to where you want your business to be and should link where you are now to where you want to be in the future. A plan does not have to be too detailed and should not be more than a couple of pages long. In fact some of the best plans are what we would term a ‘one page plan’ which as the name suggests is only one page long.
Getting your key objectives down on paper will help to cement them in your mind. It will also give you a document that you can refer back to and allow you to easily monitor performance and benchmark where you are, to where you wanted to be.
The benefits of making your plan will far out weigh the time costs of actually making the plan. Some of the key benefits are:
1.The ability to monitor progress against targets
2.You can identify potential problems and take appropriate action
3.Improve the decision making process, giving you greater control over your business
4.Improve confidence in making key decisions
5.You and your team can focus on clear targets and objectives and stay on course
6.Improve staff motivation, focus, and accountability
7.Improve overall efficiency
Your plan should include:
1.A brief summary of where you are now
2.A brief summary of your key objectives/targets for the future
3.Brief notes of how you are going to get there
Key points to think about are:
1.Key figures such as turnover, staff costs, staff numbers, gross margin etc
2.New and existing products and services
3.Your market position
4.Your current or new/potential customers
5.Your personal objectives
6.Marketing
7.Competition
In order for your plan to be beneficial your targets and objectives need to be measurable in some way. They also need to be achievable and realistic. You need to be honest with yourself – it will be de-motivational for you and your team to set and not achieve un-realistic targets. Furthermore, you will not be able to react if you cannot measure whether or not you are achieving your targets.
For example, setting the target of having the biggest turnover in the area for your industry is most probably both not realistic and not easily measurable – you can’t easily know what your competitor’s turnover is. However, setting the target of increasing your turnover by 10% over the next 12 months by adding a further 5 key clients to your portfolio is both specific, measurable and can be monitored and easily worked towards.
Your plan should be dynamic and should be reviewed and monitored on a regular basis. This allows you to adapt your strategy and put in place changes where necessary.
In summary if you have a documented plan you and your team will know what you are aiming for, you can monitor performance, track results and make informed decisions that will help you to move your business forward.
If you would like help writing your ‘one page plan’ or would like to discuss how a plan can help you and your business please get in touch.
Tim Pearce (Director)
Crump Pearce & Co Limited
Chartered Certified Accountants
43 Merstow Green
Evesham
Worcs
WR11 4BB
01386 49999
tim@crumppearce.co.uk
www.crumppearce.co.uk
Tax Planning For 2010
This article was written at the beginning of March 2010 and first published on our website www.crumppearce.co.uk
The end of the 2010 tax year is only 4 weeks away. Now is therefore the ideal time to complete some pre year-end tax planning and also look at some forward planning for 2011.
If you own a business or are self employed some of the planning opportunities that that you should consider are:
1) Have you made full use of your allowance for the purchase of capital equipment? Most businesses receive an ‘Annual Investment Allowance’ each year meaning the first £50,000 of qualifying capital expenditure in the tax year is set fully against ‘profits’ in the year of purchase. Therefore by bringing forward planned capital expenditure you will bring forward the tax relief.
2) If your are likely to make profits from your business this year but have poorly performing shares that could be sold for less then they cost you it may be worth thinking about crystallising the losses on these shares before the end of the tax year. This loss can then be set against the businesses profits.
3) If you operate a limited company have you made use of your tax free personal allowance by paying yourself a salary up to the personal allowance limit?
4) If you operate your business through a company have you reviewed your dividend policy to ensure that you receive your money in the most efficient way? It may be worth looking at transferring some shares in a family company to your spouse. Inter-spouse transfers are exempt from Capital Gains Tax and could result in serious income tax savings.
An additional point to note here is that to minimise the risk of HM Revenue and Customs treating divided payments as salary, and thus attracting a national insurance charge you should ensure that the transaction is correctly recorded in the company’s books and that the appropriate paperwork is in place.
5) Have you reviewed your pension contributions this year to see if there is any scope to make additional contributions? Because of the changes to the top rate of income tax next year the rules on pension contributions are quite complex and proper professional advice should be sought on this subject.
6) If you own a property classified as a ‘Furnished Holiday Letting’ have you looked at how the change in classification to general letting in April 2010 will affect you tax position? It may be worth bringing forward any planned capital expenditure on the property so that the expenditure qualifies for capital allowances.
Additionally the relief that you can claim on any holiday lettings losses will also change.
7) Have you reviewed your company car policy? It may be worth looking at taking your car ‘private’ in 2011 and claiming mileage for the business use of the vehicle at 40pence per mile for the first 10,000 miles and 25pence per mile thereafter.
Tax planning should not just be about business owners or the self employed. There are also planning opportunities that individuals can look at such as:
1) Are you making full use of your tax efficient savings allowances – ISA’s?
2) If you have surplus cash that you would like to pass onto your relatives without affecting your Inheritance Tax Position you can make gifts of up to £3,000 per tax year. If you did not made any gifts last year you can double that amount.
3) If you are a higher rate tax payer and your spouse is a basic or lower rate tax payer and you receive bank interest and/or dividends have you thought about transferring the savings or shares into your spouse’s name so that tax is paid at the lowest cost?
I firmly believe that no one should pay more in tax than they legally have to and reviewing just one or two of the points mentioned above could create significant tax savings.
If you own a business or a self employed to ensure that you are doing all you can to minimise your tax burden you should make sure that you have a pre year-end tax planning meeting with your accountant and ensure that all necessary action is taken before the end of the tax year. After then it will probably be too late.
If you would like a FREE review of your tax affairs please contact the office on 01386 49999 or on hello@crumppearce.co.uk.
Tim Pearce
Director
Crump Pearce & Co Ltd
Chartered Certified Accountants
The end of the 2010 tax year is only 4 weeks away. Now is therefore the ideal time to complete some pre year-end tax planning and also look at some forward planning for 2011.
If you own a business or are self employed some of the planning opportunities that that you should consider are:
1) Have you made full use of your allowance for the purchase of capital equipment? Most businesses receive an ‘Annual Investment Allowance’ each year meaning the first £50,000 of qualifying capital expenditure in the tax year is set fully against ‘profits’ in the year of purchase. Therefore by bringing forward planned capital expenditure you will bring forward the tax relief.
2) If your are likely to make profits from your business this year but have poorly performing shares that could be sold for less then they cost you it may be worth thinking about crystallising the losses on these shares before the end of the tax year. This loss can then be set against the businesses profits.
3) If you operate a limited company have you made use of your tax free personal allowance by paying yourself a salary up to the personal allowance limit?
4) If you operate your business through a company have you reviewed your dividend policy to ensure that you receive your money in the most efficient way? It may be worth looking at transferring some shares in a family company to your spouse. Inter-spouse transfers are exempt from Capital Gains Tax and could result in serious income tax savings.
An additional point to note here is that to minimise the risk of HM Revenue and Customs treating divided payments as salary, and thus attracting a national insurance charge you should ensure that the transaction is correctly recorded in the company’s books and that the appropriate paperwork is in place.
5) Have you reviewed your pension contributions this year to see if there is any scope to make additional contributions? Because of the changes to the top rate of income tax next year the rules on pension contributions are quite complex and proper professional advice should be sought on this subject.
6) If you own a property classified as a ‘Furnished Holiday Letting’ have you looked at how the change in classification to general letting in April 2010 will affect you tax position? It may be worth bringing forward any planned capital expenditure on the property so that the expenditure qualifies for capital allowances.
Additionally the relief that you can claim on any holiday lettings losses will also change.
7) Have you reviewed your company car policy? It may be worth looking at taking your car ‘private’ in 2011 and claiming mileage for the business use of the vehicle at 40pence per mile for the first 10,000 miles and 25pence per mile thereafter.
Tax planning should not just be about business owners or the self employed. There are also planning opportunities that individuals can look at such as:
1) Are you making full use of your tax efficient savings allowances – ISA’s?
2) If you have surplus cash that you would like to pass onto your relatives without affecting your Inheritance Tax Position you can make gifts of up to £3,000 per tax year. If you did not made any gifts last year you can double that amount.
3) If you are a higher rate tax payer and your spouse is a basic or lower rate tax payer and you receive bank interest and/or dividends have you thought about transferring the savings or shares into your spouse’s name so that tax is paid at the lowest cost?
I firmly believe that no one should pay more in tax than they legally have to and reviewing just one or two of the points mentioned above could create significant tax savings.
If you own a business or a self employed to ensure that you are doing all you can to minimise your tax burden you should make sure that you have a pre year-end tax planning meeting with your accountant and ensure that all necessary action is taken before the end of the tax year. After then it will probably be too late.
If you would like a FREE review of your tax affairs please contact the office on 01386 49999 or on hello@crumppearce.co.uk.
Tim Pearce
Director
Crump Pearce & Co Ltd
Chartered Certified Accountants
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