Team Harbour Key enter the last month of this tax year extremely busy, with the change of Government in the summer and the October Budget generating a lot of work, as clients cope with changing tax rates, and an ever-growing complicated tax system. This is in addition to dealing with our client compliance requirements, and the annual pre-year planning we provide our corporate clients, with 31 March being the most popular year end.
We have several transactions running that clients are wishing to complete before the end of the tax year, to beat the increase in the Business Asset Disposal Relief rate of tax from 10% to 14%. One of the interesting points, that has arisen from a number of these transactions, is the number of clients who have referred to the level of work in dealing with due diligence (where the incoming buyers look at every aspect of the business, including the soap brand used in the bathroom). No one anticipated the level of detail required, the follow-up queries, the ongoing updates, and the tight time frame. This serves as a valuable lesson for anyone looking to sell their business—one we will revisit in the future!
Despite being busy, in February we supported a local beer festival (held in a church!), in aid of the Cheltenham Samaritans Charity, by way of sponsorship and attendance (having to sample the goods). Samaritans are volunteers available 24 hours a day to provide confidential emotional support to anyone who may be experiencing feelings of distress or despair.
With the tax year end approaching and changes announced in the October Budget, this newsletter concentrates on considerations, and possible actions before the end of the tax year.
PRE-TAX YEAR END PLANNING
If you have not done so already, now is a good time to consider your financial position and check whether you have taken full advantage of the tax reliefs and exemptions that are available, as well as prepare for the new Tax Year (a little over 20 days away). This is more important this year, than in most years, because of a number of changes that are taking place. Take a look at our Tax Planning Checklist which can be found HERE!
CAPITAL GAINS TAX
For those who have sold their business, or part of their business since 6 April 2024, following the changes to Capital Gains Tax in the October Budget (main rate increased to 24% on the day of the Budget, and the 10% Business Asset Disposal Relief rate increasing to 14% from 6 April 2025), anti-forestalling measures were introduced. The measures were introduced to prevent individuals making decisions in the future based on tax rates before the Budget.
This means that individuals who have completed share for share exchanges or receive loan notes (pre or post Budget) need to consider if they wish to file an election before 5 April 2025 with HMRC to claim the lower rates of Capital Gains Tax before the end of the tax year (5 April 2025). We have contacted our clients who we believe this may impact, but if you feel this impacts you or you need to discuss, please call our office. The elections need to be filed by 5 April 2025, and the only way to file will be by post, as there is no online system, so time is limited.
NON-UK DOMICILED INDIVIDUALS
Again following changes in the Budget, for those individuals who are non-UK domiciled until the concept is ended, there are again planning opportunities that need to be acted upon. We have emailed those clients that we believe should review and consider their position. More details can be found HERE!
INHERITANCE TAX PLANNING
The Budget announced several forthcoming changes to the inheritance tax regime, two valuable reliefs that currently mean the majority of business owners and farmers do not pay inheritance tax on the value of qualifying assets on their death, or a gift. These reliefs from April 2026 are to be restricted significantly, and although the farmers have galvanised and are protesting the changes, many trading businesses owners have not realised that they are also impacted by the announcement. More information and planning considerations can be found HERE!
ELECTRIC VEHICLES (“EV”) CAR TAX
A survey of 2,000 UK car owners carried out by used car retailer Motorpoint found that 83% of EV owners were unaware that they are likely to have to pay more vehicle excise duty (VED) tax from April 2025 or must start paying road tax. EVs currently benefit from a road tax exemption. From April 2025 onwards this is changing, and EV owners will be charged up to £620 in road tax, a measure announced in the 2022 Budget. New EVs will be charged £10 for the first year’s tax, up from £0, while those priced under £40,000 (when new) will be charged £190 per year from the second year. The most expensive EVs costing over £40,000 will be charged £600 per year from the second year, including the £410 ‘expensive car supplement’.
We know that many of our clients drive EV due to their tax efficiencies for company car benefits, and other tax benefits, so please don’t forget you need to tax it!
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