In March 2010 we first met Mercer & Hole ‘clients’, Tom, Andrew and Xena, of the ‘TAX’ family.
Things have moved on for the family over the last three months and in this emergency Budget special edition of Tax Plus, we take a look at how the Budget, which included both well heralded
announcements and some surprises too, impacts them and their businesses.
Mercer & Hole's expert team has just taken their seats to listen to the Chancellor, George Osborne's first Budget.
He tells us it will be, "tough, but also fair".
Mercer & Hole will blog throughout the afternoon and issue our summary analysis on 'Tax Plus' tomorrow.
Below are some key upcoming tax deadlines that you may need to consider. These dates cover the period June – August 2010.
19 June 2010 - PAYE and NIC due for the month ended 5th June 2010. Submit Construction Industry Scheme return for the month ended 5th June 2010.
5 July 2010 - Final date for agreement of 2009/2010 PAYE Settlement Agreements.
6 July 2010 - Final submission date for returns of expenses and benefits (forms P11D and P9D) for the year ended 5th April 2010. Relevant employees to be provided with copies of forms P11D and P9D.
6 July 2010 - Submission date for annual share scheme returns (form 42) for the year ended 5th April 2010.
14 July 2010 - Deadline for submission of forms CT61 and payment of any associated income tax for the quarter ended 30th June 2010.
19 July 2010 - PAYE and NIC due for the month ended 5th July 2010. Quarterly PAYE and NIC due for the quarter ended 5th July 2010 for qualifying small employers. Due date for payment of Class 1A NIC arising on relevant benefits in kind for the year ended 5th April 2010. Submit Construction Industry Scheme return for the month ended 5th July 2010.
31 July 2010 - Second payment on account due in respect of 2009/2010 personal tax. Second penalty of £100 applied where 2009 self-assessment tax return has not yet been submitted. Second 5% surcharge applied where 2008/2009 tax has not been settled in full by this date.
2 August 2010 - Submission date for forms P46 (Car) for changes during the quarter ended 5th July 2010 to car or fuel benefits provided to employees.
19 August 2010 - PAYE and NIC due for the month ended 5th August 2010. Submit Construction Industry Scheme return for the month ended 5th August 2010.
Another key date that everyone is waiting for with anticipation is Tuesday 22 June 2010. Chancellor George Osborne has confirmed that the new Conservative-Liberal Democrat coalition government's emergency budget will be unveiled on this date.
We will be blogging on SME Plus Blog and Tax Plus Blog on Budget day. If you do not already subscribe to our blogs click here for SME Plus Blog or here for Tax Plus Blog to ensure you get our comment and analysis as and when it happens.
Barry Hallam is a senior manager at Mercer & Hole. If you would like to discuss the contents of this post with Barry you can call him on 020 7353 1597.
Chancellor George Osborne has confirmed that the new Conservative-Liberal Democrat coalition government's emergency budget will be unveiled on Tuesday 22 June 2010. Mr Osborne confirmed the date at a briefing with his Lib Dem deputy David Laws, the Treasury Chief Secretary.
Mr Osborne said that the new coalition government will start "significantly reducing" the country's record deficit, with the emergency budget being used to detail the UK government's plans to cut public spending.
Mr Osborne also stated that the new government will review all decisions on spending made in 2010 by the previous Labour Party government.
We will be blogging on SME Plus Blog and Tax Plus Blog on Budget day. If you do not already subscribe to our blogs click here for SME Plus Blog or here for Tax Plus Blog to ensure you get our comment and analysis as and when it happens.
Barry Hallam is a senior manager at Mercer & Hole. If you would like to discuss the contents of this post with Barry you can call him on 020 7353 1597.
We have taken a different approach this year in considering the Chancellor's Budget announcement. With this edition of Mercer & Hole's Tax Plus we have highlighted how some of the changes will impact on the 'TAX' family.
Please contact me if you'd like to discuss any of the issues experienced by Tom, Andrew and Xena.
David Mansell is a partner at Mercer & Hole. If you would like to discuss the contents of this post with David you can call him on 01908 605552.
The chancellor has just announced he is about to sign tax information exchange with Dominica, Grenada and Belize.
These agreements, he says, will be signed within days.
Darling tells us nine out of ten first time buyers will no longer pay stamp duty - as he has doubled the stamp duty payment threshold to £250,000 for first time buyers from midnight tonight.
The Chancellor has just announced a scheme to provide 1 million people over five years with a basic bank account.
As Budget Day approaches, there has been speculation that the Chancellor is thinking about reintroducing some form of apportionment for close companies. In my opinion, an additional charge on dividends and other sources of investment income would be a much more effective way of dissuading owner managers from their present low salary high dividend regime.
In 1989, the then Conservative Government under Margaret Thatcher abolished the so-called close company apportionment rules which had been around since the 1920s. These provisions were intended to ensure that, where the directors of a successful family company decided not to distribute a substantial part of their post-tax trading and investment profits, they were deemed to have done so, subject to the retention of a reasonable sum for the working capital requirements of the business.
Given that the Chancellor of the Exchequer, Nigel Lawson, had recently harmonised income tax and capital gains tax rates at a maximum of 40%, it was considered that a measure designed to ensure that taxpayers should not benefit from a lower (or nil) rate on capital gains when the money could have been distributed as more highly taxed income in the form of a salary or dividend was now redundant.
In recent months, there have been rumours emanating from the Treasury that the present Chancellor is considering the possibility of re-enacting this former legislation. Presumably, the thinking is that, with effect from 6 April 2010, a high income individual will be taxed at up to 50% on his salary or 36.1% on his dividends, but that he only faces a capital gains tax charge of 18% (or sometimes 10%) on the disposal of his shares. Although it seems almost certain that capital gains tax rates will have to rise in the next year because of the gap between the top income tax and capital gains tax rates, the Government would probably wish to retain the present modest charge for those who qualify for entrepreneurs’ relief.
Accordingly, a tax scenario which encourages the retention of profits in owner-managed businesses – which is presently the case – is likely to be stopped. And one way of doing this might be to introduce a Mark II version of the close company apportionment regime.
Another consideration is that, with the impending introduction of higher rates of income tax, many existing unincorporated businesses will be turning themselves into limited companies in order to try and shelter profits at lower rates of tax than would be possible had they remained sole traders or partnerships. In other words, there will be a rush to incorporate not dissimilar to that which occurred in the early 2000s so that taxpayers can enjoy the advantage of extracting business profits via dividends more tax-efficiently than would otherwise be possible.
My own view is that the reinstatement of an apportionment procedure for close companies would have little or no effect on this latter situation other than perhaps forcing some business owners to distribute more profits than they were otherwise minded to do. Nor would it deal satisfactorily with the problem of the disparity between income tax and capital gains tax rates.
Although I do not personally like the idea (nor would many of my clients!), there is no doubt in my own mind that the most effective approach to discouraging owner-managed companies from pursuing the low salary high dividend routine which has been widely practised in the past is to introduce an additional levy on dividends and other forms of unearned income similar to the investment income surcharge which was abolished by the Finance Act 1984. A charge of, say, 15% on investment incomes above a specified threshold would almost certainly put a stop to tax planning of this sort.
This year's budget will be held on 24 March 2010. Commentary from Robert Jamieson, partner with Mercer & Hole and past President of the Chartered Institute of Taxation.
The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Robert you can contact him at robertjamieson@mercerhole.co.uk or call 020 7353 1597.
We will be blogging on Tax Plus Blog andSME Plus Blog on Budget day. If you do not already subscribe to our blogs click here for Tax Plus Blog or here for SME Plus Blog to ensure you get our comment and analysis as and when it happens.
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