Tag Archives: Corporate Tax

Autumn Statement 2012: The Facts

Yesterday the Chancellor, George Osborne, delivered his 2012 Autumn Statement to Parliament.

In the Statement, as well as discussing the economic outlook for the country, the Chancellor often announces proposed changes to our taxation system.

Because of this, the Autumn Statement and the Budget are particularly important days for those of us who work in tax. Announcements on the day can include, amongst other things, changes in rates and allowances, new types of relief, reliefs being removed and tax “loopholes” being closed.

On 5 December 2012 the Chancellor was fairly quiet on changes in tax (although more should be revealed when draft clauses for the Finance Bill are released next week). The speech focussed more on the economic state of the country and whether we were meeting our targets to reduce the deficit and national debt (this is what we would expect as most of the tax announcements would normally take place during the Budget speech in spring).

This year, some of the changes that were announced were measures to tackle tax avoidance and evasion, an further reduction in the main rate of corporation tax in Financial Year 2014 bringing it down to 21%, an increase in the personal allowance next year to 9,440 and a reduction in the pension annual allowance to 40,000. All of these are things which will affect our day-to-day roles as tax advisors.

Applicants for roles in Accountancy firms often say that the most challenging part of an interview to prepare for is the Commercial Awareness. If you’re applying for any role in an Accountancy firm but in particular if you’re applying for a role in tax then I would definitely suggest paying attention to the Autumn Statement or Budget. In fact, I remember that my interview for my internship at Grant Thornton took place only a few days after the Budget speech in 2009 and most of my Commercial Awareness responses were based around it! Even better, in the days following there will be a wealth of articles surrounding the subject on websites such as the BBC, the Financial Times and Accountancy Age and, of course, Grant Thornton’s own website.

With that in mind, I would recommend having a look at Grant Thornton’s response to this year’s Autumn Statement (complete with videos from some of our partners!):

http://www.grant-thornton.co.uk/Services/Tax/Budget/

Or, if you’re feeling brave, you can read the full Autumn Statement document released by the Treasury here:

http://www.hm-treasury.gov.uk/as2012_documents.htm

Tax Insight: Start-up Business Relief

When I was a student at Loughborough University, one of my favourite modules was focused around the sources of funds and financial packages of new business start-ups. While this was only a 10 credit final year module, its impact on my desires to focus in this field in the future are clearly apparent.

Since leaving Loughborough, I’ve revisited on several occasions, many of which have been for careers events where I’ve been able to talk to the Grant Thornton employee hopefuls and talent of tomorrow. One question I’m always faced with, for which I find it almost impossible to answer, is “what do you do on a daily basis?”.

While I’m not going to be able to answer that question over the next 300 words, I am going to be able to explain a technical tax relief which I have recently been involved in. Fingers cross this will give an insight into the kind of thing a corporate tax associate does, as well as complementing my previous enjoyment for my favourite degree module.

New business is a real focus of our Coalition Government as it links in directly to David Cameron’s Big Society. As a result, in the March 2012 budget the Government announced a new form of tax relief for individuals if they invest up to 100,000GBP in early start-up companies’ shares.

This relief, called Seed Enterprise Investment Scheme (or SEIS) relief, gives the individual a 50% reduction on their tax liability on SEIS investments up to 100,000GBP. Therefore, an investment in a SEIS company could see a tax liability reduced by 50,000GBP (or your actual tax liability, if less).

Furthermore, if these shares are sold after three years of ownership, they are exempt from Capital Gains Tax (CGT). In addition, there is a temporary CGT break for the 2012/13 tax year which means any gains made from the sale of other assets in the year, which are reinvested in SEIS shares, will be exempt from capital gains tax.

As future gains after three years are exempt, which can be chargeable at 28%, this relief can be worth in excess of 75% in tax reliefs and is certainly a generous way for the Government to encourage growth in new start-up companies.

The company will of course need to meet certain criteria too, including a restriction on their number of employees, amount of assets held and amount raised. They must also be operating within a ‘qualifying trade’ as outlined by tax legislation. These are all factors which must be considered when operating a SEIS plan and clearly its complexity strikes the need for professional tax advice.

I take great pleasure in working through beneficial tax solutions for clients which have a wider impact on the exciting business of new start-ups. I also enjoy how these technical pieces of tax legislation have a defined motivation to work towards building a more diverse and innovative British economy.

If you’ve found this interesting, then maybe a career in tax is for you. Feel free to comment below or tweet at me (@GT_NickB) if you should have any other questions regarding my job or the type of work I get involved with.