A summary from the recent Budget issued in March 2016

Budget 2016

Ensure that UK tax will be paid on UK property development;

Limit capital gains tax treatment on performance rewards; and
Cap exempt gains in the Employee Shareholder Status.

Loans to participators will be taxed at 32.5% to prevent tax avoidance.

And we’ll tighten rules around the use of redundancy payments.
Termination payments over £30,000 are already subject to income tax. From 2018, they will also attract employer national insurance.

First, some multinationals deliberately over-borrow in the UK to fund activities abroad, and then deduct the interest bills against their UK profits.

So from April next year we will restrict interest deductibility for the largest companies at 30% of UK earnings, while making sure firms whose activities justify higher borrowing are protected with a group ratio rule.

Tax Losses
And lastly we’re going to modernise the way we treat losses. We’re going to allow firms to use losses more flexibly in a way that will help over 70,000 mostly British companies.

Corporation tax
I can confirm today we’re going to reduce the rate of Corporation Tax even further.

Corporation Tax was 28% at the start of the last Parliament and we reduced it so that it’s 20% at the start of this one.
Last summer I set out a plan to cut it to 18% in coming years.
Today I am going further. By April 2020 it will fall to 17%

Internet Retail
I also want to address the great unfairness that many small businessmen and women feel when they compete against companies on the internet.

Sites like Ebay and Amazon have provided an incredible platform for many new small British start-ups to reach large numbers of customers.
But there’s been a big rise in overseas suppliers storing goods in Britain and selling them online without paying VAT.

That unfairly undercuts British businesses both on the internet and on the high street, and today I can announce that we are taking action to stop it.

That’s the first thing we do to help our small firms.
Second, we’re going to help the new world of micro-entrepreneurs who sell services online or rent out their homes through the internet.

Our tax system should be helping these people so I’m introducing two new tax-free allowances each worth £1,000 a year, for both trading and property income.

Business Rates
Business rates are the fixed cost that weigh down on many small enterprises.

At present small business rate relief is only permanently available to firms with a rateable value of less than £6,000.

In the past I’ve been able to double it for one year only.

Today I am more than doubling it, and I’m more than doubling it permanently.

The new threshold for small business rate relief will raise from £6,000 to a maximum threshold of £15,000.

I’m also going to raise the threshold for the higher rate from £18,000 to £51,000.
Let me explain to the House what this means.

From April next year, 600,000 small businesses will pay no business rates at all.
That’s an annual saving for them of up to nearly £6,000 – forever.
A further quarter of a million businesses will see their rates cut.

In total, half of all British properties will see their business rates fall or be abolished altogether.

And gets rid of tax for small businesses.

Stamp Duty
Just over a year ago, I reformed residential stamp duty. We moved from a distortive slab system to a much simpler slice system.

And as a result 98% of homebuyers are paying the same or less, and revenues from the expensive properties have risen.

At the moment, a small firm can pay just £1 more for a property and face a tax bill three times as large. That makes no sense.

So from now on, commercial stamp duty will have a zero rate band on purchases up to £150,000; a 2% rate on the next £100,000; and a 5% top rate above £250,000.

There will also be a new 2% rate for those high value leases with a net present value above £5 million.

This new tax regime comes into effect from midnight tonight. There are transitional rules for purchasers who have exchanged, but not completed contracts before midnight.

Severn Bridge Toll
I’ve listened to the case made by Welsh colleagues and I can announce today that from 2018 we are going to halve the price of the tolls on the Severn Crossings.

Sugar Tax
A can of cola typically has nine teaspoons of sugar in it. Some popular drinks have as many as 13.

That can be more than double a child’s recommended added sugar intake.

Let me give credit where credit is due.

Many in the soft drinks industry recognise there’s a problem and have started to reformulate their products.

Robinsons recently removed added sugar from many of their cordials and squashes.

Sainsbury’s, Tesco and the Co-op have all committed to reduce sugar across their ranges.

So industry can act, and with the right incentives I’m sure it will.

I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation:

I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing.

So today I can announce that we will introduce a new sugar levy on the soft drinks industry.

Let me explain how it will work.
It will be levied on the companies.
It will be introduced in two years’ time to give companies plenty of space to change their product mix.

It will be assessed on the volume of the sugar-sweetened drinks they produce or import.

There will be two bands – one for total sugar content above 5 grams per 100 millilitres; a second, higher band for the most sugary drinks with more than 8 grams per 100 millilitres.

Pure fruit juices and milk-based drinks will be excluded, and we’ll ensure the smallest producers are kept out of scope.

We will of course consult on implementation.

We’re introducing the levy on the industry which means they can reduce the sugar content of their products – as many already do.
It means they can promote low-sugar or no sugar brands – as many already are.
They can take these perfectly reasonable steps to help with children’s health.

Of course, some may choose to pass the price onto consumers and that will be their decision, and this would have an impact on consumption too.

We understand that tax affects behaviour. So let’s tax the things we want to reduce, not the things we want to encourage.
The OBR estimate that this levy will raise £520 million.
And this is tied directly to the second thing we’re going to do today to help children’s health and wellbeing.

We’re going to use the money from this new levy to double the amount of funding we dedicate to sport in every primary school.
And for secondary schools we’re going to fund longer school days for those that want to offer their pupils a wider range of activities, including extra sport.

It will be voluntary for schools. Compulsory for the pupils.

There will be enough resources for a quarter of secondary schools to take part – but that’s just a start.

A determination to improve the health of our children.
A new levy on excessive sugar in soft drinks.
The money used to double sport in our schools.

Fuel Duty
A Britain fit for the future.
So I can announce that fuel duty will be frozen for the sixth year in a row.
That’s a saving of £75 a year to the average driver; £270 a year to a small business with a van. It’s the tax boost that keeps Britain on the move.

Tobacco Duty
Tobacco duty will continue to rise as set out in previous Budgets, by 2% above inflation from 6pm tonight – while hand rolling tobacco will rise by an additional 3%.

And to continue our drive to improve public health we will reform our tobacco regime to introduce an effective floor on the price of cigarettes and consult on increased sanctions for fraud.

Pub Industry
I’ve always been clear that I want to support responsible drinkers and our nation’s pubs.

5 years ago we inherited tax plans that would have ruined that industry.
Instead, the action we took in the last Parliament on beer duty saved hundreds of pubs and thousands of jobs.

Today I back our pubs again. I am freezing beer duty and cider duty too.
Scotch Whisky accounts for a fifth of all of the UK’s food and drink exports.

So we back Scotland and back that vital industry too, with a freeze on whisky and other spirits duty this year.

All other alcohol duties will rise by inflation as planned.

Class 2 National Insurance
Let me start with Enterprise.
We know that when it comes to growing the economy, alongside good infrastructure and great education we need to light the fires of enterprise.
And our tax system can do more.

To help the self-employed I’m going to fulfil the manifesto commitment we made, and from 2018 abolish Class 2 National Insurance Contributions altogether.

That’s a simpler tax system and a tax cut of over £130 for each of Britain’s 3 million strong army of the self-employed.

Capital Gains Tax
Our Capital Gains Tax is now one of the highest in the developed world, when we want our taxes to be among the lowest.

The headline rate of Capital Gains Tax currently stands at 28%
Today I am cutting it to 20%.

And I am cutting the Capital Gains Tax paid by basic rate taxpayers from 18% to just 10%.

The rates will come into effect in three weeks’ time. The old rates will be kept in place for gains on residential property and carried interest.

So faced with the truth that young people aren’t saving enough, I am today providing a different answer to the same problem.

We know people like ISAs – because they are simple.
You save out of taxed income; everything you earn on your savings is tax-free; then it’s tax-free when you withdraw it too.

From April next year I am going to increase the ISA limit from just over £15,000 to £20,000 a year for everyone.

And for those under 40, many of whom haven’t had such a good deal from the pension system, I am introducing a completely new flexible way for the next generation to save.
It’s called the Lifetime ISA.

Young people can put money in, get a government bonus, and use it either to buy their first home or save for their retirement.
Here’s how it will work.

From April 2017, anyone under the age of 40 will be able to open a Lifetime ISA and save up to £4,000 each year.

And for every £4 you save, the government will give you £1.
So put in £4,000 and the government will give you £1,000. Every year. Until you’re 50.

You don’t have to choose between saving for your first home, or saving for your retirement.

With the new Lifetime ISA the government is giving you money to do both.

For the basic rate taxpayer, that is the equivalent of tax-free savings into a pension, and unlike a pension you won’t pay tax when you come to take your money out in retirement.

For the self-employed, it’s the kind of support they simply cannot get from the pensions system today.

Unlike a pension you can access your money anytime without the bonus and with a small charge.

And we’re going to consult with the industry on whether, like the American 401K, you can return money to the account to reclaim the bonus – so it is both generous and completely flexible.
Those who have already taken out our enormously popular Help to Buy ISAs will be able to roll it into the new Lifetime ISA – and keep the government match.

A £20,000 ISA limit for everyone.
A new Lifetime ISA.

Tax Free Allowance
A Budget that puts the next generation first.
In two weeks’ time it will rise to £11,000.

We committed that it would reach £12,500 by the end of this Parliament.
And today we take a major step towards that goal.

From April next year, I am raising the tax-free personal allowance to £11,500.

That’s a tax cut for 31 million people.
It means a typical basic rate taxpayer will be paying over £1,000 less income tax than five years ago.

And it means another 1.3 million of the lowest paid taken out of tax altogether.

We made another commitment in our manifesto and that was to increase the threshold at which people pay the higher rate of tax.

That threshold stands at £42,385.

I can tell the House that from April next year I’m going to increase the Higher Rate threshold to £45,000.

A personal tax free allowance of £11,500.

No one paying the 40p rate under £45,000.

Full Article on

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own.  It is not intended to be used to make all of your business decisions but as a guide only.

From November 2015 and updated in January 2016 there is now a requirement for any landlord to complete a landlords licence regardless of how many properties they own.

We have a number of landlords on our books so felt it was necessary to keep you informed of this new legislation.

The deadline for compliance is the end of November 2016,  failure to comply can carry large fines so landlords to please deal with this at your earliest opportunity.

Please visit the website below to see how this will apply to you.  This needs to also be considered if you are considering adding an extra income of property or planned pension provision in this area as this will also affect you.

There are quite a lot of financial agreements out there in the market,  I wanted to talk to you about financial agreements concerned with the buying of assets for the business. 

Please double check the small print before signing any financial agreement, 
we have seen occasions that the finance company has contacted clients with confirmation that their contract has come to an end.  The client thinks that the agreement will naturally cease.

Surprisingly because the finance company has had no contact from the client, even though the client effectively owned the equipment.   They have then been put onto a rolling rental contract.  Facing extra charges.

Then upon cancelling the agreement as soon as this has been discovered have to give 3 months notice and cant do a thing about it,  mainly because it was in the small print clause of the agreement.

This information is not meant to scare you into not signing up for financial agreements,  but please look at them with your eyes wide open.  These companies have put their top solicitors putting their agreements together quite often they confuse people.

Another one to be wary of is confirming that you are signing a purchase agreement and not just a rental agreement. 

Rental agreements are open ended for as long as you have the asset in your possession,  they can also carry notice periods for closing the agreement.

Interest,   we are seeing agreements around the 6-7% but we are also seeing them for 
12-15% interest.   Negotiate the best deal you can with these or this could be costing you a lot of money.

Shop around, don’t take the first offer that’s put your way, a little research can help a lot.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own.  It is not intended to be used to make all of your business decisions but as a guide only.

Imagine you have worked really hard and put your time and effort in to creating a painting, or a piece of music, or an invention, and someone decides to use or distribute your work without your permission, now that’s not right.


Copyright is a legal right by law that grants the creator of an original work exclusive rights to its use and distribution, usually for a limited time. It is the right to stop others copying or reproducing someone’s work.


The way in which a copyright is obtained is frequently misunderstood. A copyright arises automatically when an original piece of work is created which usually required some skill or judgement. In the UK there is no need to register a copyright, however, there is definite advantages to registration, including the ability to sue for infringement. 


Typically, the duration of a copyright is the creator’s life and then varying according to the work

usually 50 to 100 years after the author dies.


A copyright does not cover ideas and information, only the form or manner in which they are expressed. For example, a copyright to a Mickey Mouse cartoon restricts others from making copies of the cartoon or creating work based on Disney’s anthropomorphic mouse, but does not prohibit the creation of other works about anthropomorphic mice in general. In simpler terms, it is the expression of the idea that is protected and not the idea itself. People are allowed to borrow an idea and create something similar but they cannot copy it. 


Copyright may apply to a wide range of creative, intellectual or artistic forms of work. These can include, poems, plays, other literary work, motion pictures, choreography, musical compositions, sound recordings, paintings, drawings, for example.


If you are a creator of an original work it is up to you to make sure your work is not subject to a copyright infringement and if you want to create something from an idea it is your duty to make sure they are different enough to not be judged a copy. 


For more information on copyright you can visit the Intellectual Property section of the government website on https://www.gov.uk/government/organisations/intellectual-property-office 

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own.  It is not intended to be used to make all of your business decisions but as a guide only.



A couple of updates on the Budget released in July 2015

Please see a couple of articles with links to the website below.

Buy-to-let investments

The other major property-related changes in the Budget statement will affect “buy-to-let” investors in residential property (whether in the UK or overseas). Investors in commercial property are unaffected; as are investors in properties which meet the criteria to be treated as furnished holiday lettings. There are two separate changes.

Wear and Tear

The first change relates to the “Wear and Tear” allowance for furnished lettings. It applies to companies as well as to individual landlords (but not to furnished holiday lettings). At present, the costs of replacing furniture and fittings are not tax-deductible. Instead, a notional deduction is given for tax purposes equal to 10% of rents. HMRC seem to consider that in many cases this is over-generous and from April 2016, it is intended that the 10% deduction will be abolished and instead tax relief will be given for the actual costs of replacements. Note that this change does not affect tax relief for expenditure on routine repairs to the property, including furniture and fittings in it, which will continue, as now, to be tax-deductible in full.

Financing costs

The second change is in relation to “finance costs” such as mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans. Starting from 6 April 2017 (and phased in over 4 years from then) tax relief for these costs will be restricted the basic rate of Income Tax. This restriction will apply to individuals (presumably including individual members of partnerships or LLPs) only. It will not affect companies, but the position of trusts is not yet clear. No Income Tax relief is of course in any event available for capital repayments of a mortgage or loan.

Instead of deducting finance costs from rents to arrive at taxable profits, landlords will instead receive relief in terms of tax by deducting an amount equal to tax at the basic rate on the finance costs from the tax otherwise chargeable on the profits. If the tax deduction for finance costs exceeds the tax otherwise payable on the profits the excess can be carried forward and used in subsequent years.

The change will be phased in so that for 2017/18 the new rule will apply to 25% of the finance costs (with the other 75% being deducted in computing taxable profits as now); for 2018/19 the restriction will apply to 50% of the finance costs; for 2019/20 to 75%; and from 6 April 2020, 100% of the finance costs will “disallowed” and dealt with under the new rule.

Although its impact is ameliorated by the delayed and phased introduction, this change will significantly change the economics of some buy-to-let portfolios. Since the change does not affect companies, one response may be to consider adopting a limited company structure. But there are many factors to consider in choosing the right structure, summarised in our recent briefing note and the position is further affected by the change from April 2016 of the way in which dividends are taxed, also announced in the Summer Budget. The tax credit attaching to a dividend will be abolished and dividends will be taxed as normal income albeit at special rates of tax (with exemption for the first £5,000 of dividends). Broadly, this will increase the effective rates of tax on


Small firms face another taxation shake-up


  • The changes to dividend tax are the start of a process to reduce the tax advantages of incorporation.
  • For existing companies dividends are still generally more tax efficient that salary, though the advantage are reducing.
  • IR 35 and personal service companies are back on the government’s agenda.
  • The OTS has been asked to look again at the alignment of tax and NIC and at small company taxation generally.
  • There will be much to talk about with clients – many of them could face significantly higher tax bills next year.
Evasion, avoidance and aggressive tax planning, we understand – but imbalances? What are they? It is now clear that one of those imbalances that he seeks to address is the taxation of small companies.

We are in for considerable changes over the next few years.

We have been here before – indeed I seem to have spent considerable parts of my career grappling with these imbalances.

There are, in essence, three separate tensions within the system which make rational policy making so difficult.
  • Employed versus self-employed.
  • Incorporated versus unincorporated.
  • Dividend versus salary
Any change in part of this triangle has knock-on effects elsewhere – does anybody remember the ill-fated non-corporate distribution rate?

The result is that the taxation of small business in this county is far too complex and creates distortions and sometimes produces arbitrary results. Let’s be honest, some of those results are in our client’s favour and so removing distortions will create losers and well as winners.

But I’ve yet to meet anyone who really believes that what we have at the moment is a sensible and coherent system: change is necessary.

Seeing the bigger picture

So what is happening? After a couple of days reflecting on the Budget announcements I am starting to see what I think are the overall themes, although many of the details need to be firmed up. I’m writing this in advance of the publication of the Finance Bill so what follows will need to be reviewed against the small print.

The most obvious change is in the taxation of dividends. From next year dividends will have no tax credit attached (thus removing the often confusing distinction between “gross” dividends and “net” dividends) and the amount received will be all that matters.

Dividends will be taxable at 7.5%, 32.5% and 38.1% respectively, depending on the marginal rate. As we will no longer have to take into account the grossed-up amount of the dividend in determining which rate band somebody falls into there are likely to be some odd results close to the rate band changes.

Those rates represent real increases in tax. The blow is, however, softened by the introduction of a £5,000 dividend allowance for all taxpayers. The assumption is that this will mean that an individual who receives total dividends in a year of £6,000 will be taxable on £1,000.

I did see some commentators suggest that it meant something different: that if the dividends were less than £5,000 no tax was paid, but once they got to £5,001 tax was paid on the whole amount.

I don’t think that that can be right but, until we see the legislation, we can’t be certain. I will assume in the rest of this article that the former reading is the right one.

What’s the objective?

Why has he done things this way? First, I believe that the £5,000 limit is all linked with digital tax accounts. Just as we saw earlier in the year with savings income, taking out small amounts from tax should reduce the compliance burden considerably.

A typical self-assessment taxpayer whose dividend and interest income are small should have little to enter onto his digital account (I say should because we don’t yet know the mechanics of all this).

Second, the changes will raise more tax from those few extremely wealthy people with massive dividend portfolios. But third, and this is the key change, it will directly affect small businesses.

The Budget Red Book is clear on this. It says at 1.189:

“These changes will also start to reduce the incentive to incorporate and remunerate through dividends rather than through wages to reduce tax liabilities. This will reduce the cost to the Exchequer of future tax motivated incorporation (TMI) by £500 million a year from 2019-20. The tax system will continue to encourage entrepreneurship and investment, including through lower rates of corporation tax.”

There are two limbs to this: incorporation and dividend versus salary. Let’s take them in reverse order. A low-salary, high-dividend route still looks to be more tax-efficient even after these changes. Everybody has a different way of doing the comparison.

I like to keep it simple and look at a basic rate taxpayer who has used up his personal allowance against salary and is looking to take another £10,000 out of his company.

This confirms that the dividend route is still more efficient. This is consistent with what is said in the Red Book with its reference to “start to reduce the incentive”. I can only read that as a very strong hint that dividend tax rates will eventually be ratcheted up to align salary and dividends.

The chancellor hasn’t done it by putting National Insurance on dividends – with all of the problems that would have caused elsewhere in the tax system – but the new dividend tax is in some ways a back door way of doing the same thing.

So, the message to clients is: expect to pay more tax next year. If, as a result, they question the chancellor’s triple-lock announcement about no increases in tax rates, this query might be passed to 11 Downing Street.

Tax-motivated incorporation

What about the other element – the tax-motivated incorporation? Many people incorporated their businesses at the time of the 0% corporation tax band and, to an extent, all actions taken since have been trying to close the stable door after the horse has bolted. But these new changes are intended to discourage individuals from incorporating purely to obtain a tax advantage.

The computations here are trickier because we do not yet know the National Insurance bands for next year and therefore complete precision is not yet possible.

But the tipping point at which incorporation starts to deliver significant tax systems has clearly gone up. It looks as if incorporation at earnings even as high as £30,000 will now deliver a very marginal benefit.

I think of it this in the following broad terms. The advantage of incorporation has been that much of the income could be received as a tax-free dividend. Of that £30,000, something like £20,000 could be taken as dividend (using the personal allowance to cover salary).

Next year that £20,000 will create additional tax of £1,125 (£15,000 x 7.5%). That is a significant increase whereas, broadly speaking, the self-employed will see little change. Additional tax at that level would make incorporation much less attractive.

In our heart of hearts we all know some taxpayers who could not cope with operating through a company. The additional hassle of dealing with benefits in kind, loans to participators and company returns is often a nightmare for them, and hence for advisers.

With the tax benefits of incorporating being reduced (and I expect them to be further reduced in the coming years) there is a lot to be said for them to remain as self-employed.

Other changes

The dividend tax was not the only small business measure. Personal service companies are back on the agenda.

There is not only the decision to withdraw the employment allowance for one-person companies, but yet another review of the IR35 provisions to “find a solution which protects the Exchequer and improves fairness in the system”.

So where does this leave us? As I have said many times over the years the system for taxing small businesses lacks any coherence.

What we have is the result of various strands of the tax system designed for different purposes all crashing together on the small businesses that are the lifeblood of the economy.

This creates complexity and administrative burdens. We need a system designed specifically for small businesses and which addresses the triangle of tensions outlined above.