Tag Archives: tax

Finance and Banking, News

NatWest launches tax calculator for businesses following Budget

NatWest has today launched a new online tax calculator, which will allow UK businesses to identify and calculate additional tax incentives that may be available via super-deduction or annual investment allowances, to assist them with business investment planning.

The launch follows the announcement of “super-deduction” in the Spring budget which allows companies to claim up to 130% deduction against profits for any new and unused plant and equipment purchased between 1 April 2021 and 31 March 2023, to help stimulate business investment and promote economic growth and recovery from the pandemic.

Yesterday’s Autumn Budget confirmed the retention of the £1 million annual investment allowance until 31 March 2023. This was due to drop back to £200,000 at the end of this year meaning the extension provides further help to businesses across the UK to invest and grow.

Powered by Swoop, the bank’s new tax calculator complements the grant finder tool which was launched in February 2021 to help UK businesses search for grants to help them manage the ongoing impacts of the COVID-19 pandemic. The tool has had more than 15,000 hits, and NatWest continues to provide this service free of charge to support businesses to achieve their growth and sustainability ambitions.

Both tools are available free of charge to any business online through the NatWest, Royal Bank of Scotland, Ulster Bank NI and Lombard websites. Upon completion of some simple questions, applicants can either review grants matched to their business, or understand potential tax savings applicable as a result of investment in plant and machinery.

Ian Isaac, Managing Director, Lombard Asset Finance, NatWest Group said:

“The government’s decision to increase tax incentives both by way of extending the £1m Annual Investment Allowance until March 2023 in the recent Budget, and introducing the super-deduction scheme, will help businesses to stimulate business investment and increase productivity. With businesses now looking to build back better, grow, diversify and become more sustainable, it’s essential we continue to provide them with the practical support to help achieve these ambitions.

“We’ve worked with Swoop on the tax calculator tool which offers business leaders access to the information they need to understand the tax benefits they may be entitled to when investing in qualifying assets. This development follows the success of the grant finder tool which has now been made more widely available to help more businesses benefit.”

Andrea Reynolds, CEO of Swoop said:

“Swoop was built to help SMEs learn about and access the support they need more easily. Working with NatWest Group is an opportunity to reach a huge number of businesses which will benefit from the ‘super-deduction’, ensuring that the help offered by the government actually reaches those who need it most. I can see how this approach will create win-win situations across the value chain and boost the UK’s economy as we go into 2022.”

NatWest’s grant finder service and tax calculator is now live at www.business.natwest.com

Law, News, South East

Rising tax burden threatens South East growth

As businesses continue to focus on recovery from the pandemic and speculation on the contents of the forthcoming Autumn Budget continues, Grant Thornton UK LLP’s latest Business Outlook Tracker finds that one in three (31%) mid-market businesses believe the increased tax burden is a top threat to the growth of their business.

The survey of 605 mid-market businesses in October 2021 showed that the increased tax burden was considered as big a threat to the market as digital security and cyber risk.

Businesses have already been hit this year with the upcoming rise in corporation tax to 25%, announced in the March Budget, and the recent announcement of a rise in National Insurance from April 2022 to help fund the health and social care sectors.

With changing tax policy placing ever greater strain on business finances, the survey found that the policies the mid-market would most like to see introduced by government to support business growth are led by measures to improve infrastructure (32%) and incentives for employers to invest in skills attraction and development (31%).

Backing for low carbon business strategies (30%), measures to level up the UK economy with more devolved powers (30%) and simplification of UK business tax systems (30%) all scored highly.

John O’Mahony, the practice leader for Grant Thornton’s Gatwick team, which covers Surrey, Sussex and Kent, commented: “There is never a good time to raise taxes but businesses around the South East will fear that’s inevitable. I’m sure what the community wants to see is a careful balancing act from the Chancellor. UK Plc is currently batting a perfect storm of issues from supply chain disruption, rising tax burden, lack of talent, increasing energy prices and rising uncertainty as we move towards winter.

“To gain the confidence of UK businesses, the government will need to show that they are able to deliver a clear path to, not just recovery, but also growth. As our research shows, businesses have long favoured a simplified UK tax system but, as the tax burden grows, we are yet to see any progress in this area.”

With COP26 on the horizon and the publication of the government’s Net Zero Strategy this week, it’s encouraging to see that policies around low carbon business strategies are a priority for the mid-market. We know from previous research that only 51% of mid-sized businesses have a net zero carbon strategy in place. To shift the dial in this area and to engage the market effectively in taking action, policy setters need to share clearer guidance that helps businesses to integrate net zero strategies into their operations, ensures the mid-market has access to funds and projects, and consolidates relevant reporting frameworks and standards.

News

Trust steps in to save Greyhound rescue centre

A popular greyhound rescue centre facing closure due to the coronavirus pandemic has been handed a £10,000 lifeline thanks to a Shropshire-based charitable trust.

Hector’s Greyhound Rescue, based in Shrewsbury, was left with enough funds to survive only eight more weeks before the Heather North Charitable Trust stepped in with a donation to help secure the future of the centre.

A volunteer-led charity of 22 years, Hector’s works to help rescue retired racing greyhounds that could otherwise face being put down and has re-homed more than 50 greyhounds just this year.

Having seen more than 12 months of typical fundraising activity cancelled due to the coronavirus pandemic, the rescue centre is now on the road to recovery after receiving support from the Heather North Charitable Trust.

It is the latest donation by the Trust, which was established in 2018 to assist animal charities across England, having previously awarded funds to Cats Protection, Guide Dogs for the Blind and The Mare and Foal Society.

Clive Pointon, Chair of the Heather North Charitable Trust and Head of Wills, Trusts and Tax at Aaron and Partners solicitors, said: “When Hector’s reached out to the Trust and explained the gravity of the situation, we knew it was an opportunity to make a real difference and we felt it was important to do what we could to ensure the rescue centre could continue its fantastic service for greyhounds across the UK.

“The Trust was established with the aim to provide funding to protect, maintain and support the development of animal charities, and we’re proud to count Hector’s amongst those we’ve helped at such a vital time.

Hayley Bradley, Trustee at Hector’s Greyhound Rescue said: “What an amazing donation this has been for Hector’s Greyhound Rescue. It’s been so gratefully received as it has been a battle through the pandemic to find the money needed to carry on saving dogs and promoting the plight of the greyhound. This donation truly has made a huge difference to saving dogs’ lives.”

News

Tax evasion can be combatted by prefilling deductions on tax returns

Limiting the deductibility of expenses can help fight tax evasion, according to new research by the University of Cologne.

The study, conducted by Professors Michael Overesch, Martin Fochmann, Tobias Kölle and Frank Hechtner, looked into tax evasion and how policymakers can fight it.

They analysed three anti-tax evasion methods: the tax laws that regulate which expenses are deductible, the method of limiting deductible amounts to certain maximum amounts, and prefilling deductions on tax returns.

The results revealed that limiting tax evasion by disallowing deduction of certain expenses is an ineffective method – instead a tax evasion shift effect is observed.

Furthermore, the researchers found tax evasion through the overstatement of deductions is barely reduced.

However, the study revealed that limiting the deductibility of expenses, through prefilled deduction, avoids this tax evasion shift, therefore is an effective method to fight tax evasion.

“Tax returns with prefilled deductions represent a relatively new method. For example, electronic tax return programs fill in the current tax return with the previous year’s figures for initial guidance. Furthermore, automatic data exchange between tax authorities and employers, social security institutions and banks can enable prefilling of tax returns,” says Professor Overesch

When compared to blank forms, the study revealed that prefilled deductions increased tax compliance considerably. Particularly, the level of item specific tax evasion decreases – especially for items that are favoured for tax evasion.

The researchers say that for political decision makers, the prefilling of deduction in the tax return could therefore represent an effective method to reduce tax evasion.

“The current method of limiting the deductibility of expenses requires democratic justification in each individual case, whereas prefilling only requires a change in the administrative process and is essentially already performed by tax return software. More importantly, however, the disallowance or limitation of deductibility is a lump sum solution that also affects tax bills of honest taxpayers. Whereas prefilling does not have any of these negative consequences on honest taxpayers,” says Professor Overesch.

The study was published in the Journal of Business Economics.

Appointments, Law, News

Senior appointment for Aaron and Partners’ Contentious Estates team

The Wills, Trusts and Tax department at legal firm Aaron and Partners has announced a senior appointment to help meet increasing demand from private clients.

Vlad Macdonald-Munteanu joins as a Senior Associate, specialising in contested wills, trusts and estates. The new hire adds a range of experience to the firm, having specialised in the resolution of contentious probate matters for the last six years and being listed in both the Legal 500 and Chambers & Partners directories – two coveted industry guides.

Vlad’s appointment will see him help to deal with high value and complex claims for a wide range of clients. He is known for taking a personable approach and has successfully pursued claims in the High Court and Court of Appeal, as well as resolving matters through a variety of alternative methods.

“I’m very pleased to be joining Aaron and Partners and to be part of a team that is already so well regarded,” said Vlad.

“The Wills, Trusts and Tax team at Aaron and Partners has an outstanding reputation for delivering outcomes that focus on clients’ needs and I’m looking forward to being able to strengthen the services they offer and enable us to help even more clients across the country.”

Clive Pointon, Partner and Head of Wills, Trusts and Tax at Aaron and Partners said, “We’re very pleased to welcome Vlad to the team. His appointment comes following increased demand of new instructions and additional work for clients seeking expert advice in contentious probate matters.”

Vlad will be working remotely from Cardiff but will be supporting the firm’s Chester and Shrewsbury-based teams following a rise in enquiries and instructions relating to contested estates probate.

He is also a member of The Association of Contentious Trusts and Probate Specialists (ACTAPS) – a forum for leading specialists in contentious trust and probate work.

Clive added: “Vlad has a fantastic reputation and a wealth of experience in dealing with complex claims, and with remote working much more prevalent, we’re delighted that he will now be supporting our teams in Chester and Shrewsbury, as well as growing our offering in South Wales too.”

App News, Finance and Banking, News

Nearly three quarters of people confused by government financial support for small businesses

At the end of last week, the Chancellor announced improvements to the winter support package to help small businesses struggling in the crisis. However, research from Tommys Tax app has revealed that nearly three quarters (73%) of people find the support from government ‘confusing’ and 85% say that the new package is still not enough.

On the Self Employed Business Support Group on Facebook, managed by Tommys Tax, many of the 11.5k small business owners in the group ranted about the new grant being a ‘disgrace’, as the support covered just 40% of their average monthly trading profits across three months, (with a limit of £3,750 in total), while many said they still weren’t eligible for any support at all.

With talks of tax rising by up to two or three percentage points soon, 55% of people thought they would really struggle to pay the extra costs, with 4% saying they would stop working completely as they could get more money on benefits.

Tommy McNally, Tax Expert and Founder of Tommys Tax says: “The new measures are welcomed as an improvement, but 40% still leaves the self-employed struggling to survive and too many (around a third) will be excluded due to the eligibility criteria. Small businesses and freelancers have seen their income drop dramatically during the pandemic. It’s a tough situation for everyone, but my clients believe they’re being treated unfairly compared to others. When you look at how little they’re still being offered, I have to agree with them.”

Tommys Tax was founded in 2015 and has since secured a total of £20 million in tax refunds for clients. They launched their free app in April 2020 and it so far has helped over 10,000 people. On average, they currently secure refunds of £3,000 for those on PAYE and £2,800 for the self-employed.

Tommy concluded: “It’s great that the government is helping small businesses but with the prospect of a rise in tax, they need to do more or we’re going to see a huge number of small businesses closing for good, which is not only bad for the economy, but devastating for individuals and their families who have worked so hard over the years.”

Tommys Tax App gives business owners all the tools they need to manage their finances – including bookkeeping, invoicing, tax calculators and the ability to get a tax refund that can come within as little as 72 hours.

Tax

Many tax breaks are pointless, say Researchers

Tax concessions amounting to billions are not effective and should be abolished, according to research by the University of Cologne.

The study, conducted by FiFo Koln, ZEW Mannheim, ifo Institute and Fraunhofer FIT, evaluated a total of 33 German tax breaks that add up to 7.4 billion euros.

Tax benefits are important, broadly applicable and potentially efficient instruments for creating incentives for private activities and for promoting policy objectives.

However, Dr Michael Thoene, Head of the Fifo Institute for Public Economics at the University of Cologne, says,

“of the 33 tax breaks in Germany, 10 measures got an overall rating ‘weak’ because they were found to fall short of their expected objectives, therefore, they need to urgently be fixed or abolished completely.”

“The tax losses examined for the individual measures range from just under one million to well over one billion euros a year,” says Sven Stoewhase, head of Fraunhofer Institute’s quantification team.

The tax breaks mainly include reductions and exemptions that are provided for energy, electricity, car and income tax and they were rated against a framework that assesses them for: relevance, effectiveness, sustainability, transparency and monitoring.

The authors suggest that tax benefits must be monitored with particular vigilance to ensure that they don’t miss their purpose or lead to dead weight effects. Otherwise governments are losing billions unnecessarily.