How does a GCSE student fare in today’s corporate climate? I have a fifteen year old son who had a work placement in June with one of our clients. In turn we opened up our doors once again to a student from a local school for a week long placement here at Davis Burton Sellek Chartered Accountants & Registered Auditors. So was it a case of Yin and Yang or never the twain shall meet?

Today’s students are the future but are today’s businesses especially Chartered Accountants really geared up to motivating these bright young things? The younger generation are ambitious and want everything very fast. They use social media to talk and engage both at work and play.

Davis Burton Sellek’s work placement student was in fact a breath of fresh air – he fitted in so well he was treated like one of the team from day one. He came away not only with office skills and a basic understanding of accounts and bookkeeping but more importantly with a new found confidence and a yearning to swap law for accountancy!  And in turn we learnt what it takes to motivate a fifteen year old!

What we learnt was that in 2010 a business needs to be adaptable, interactive and have an ability to inspire younger staff. They look for managers who are clear and engaging but don’t tell them how to do something. Also, they want flexibility and transparency. Everyone is expected to embrace new technology and offer a collaborative and mentoring environment – even Chartered Accountants.

So if you want your Yin and Yang to be in sync, adopt the new management style or risk losing tomorrow’s stars to the new generation of business owners.

Have your say here… follow our tweets http://twitter.com/dbsellek or find us on www.davisburtonsellek.com/facebook

The recession has created an entrepreneurial boom with more than 1,000 businesses being created daily and we are seeing a similar trend in Sunningdale and across Surrey and Berkshire. According to the Federation of Small Businesses, half of Britain’s 5m businesses are run from home.

So you have the knowledge, the idea and the spare room but are you prepared for the paperwork associated with a business start up? You may find success comes quickly and that choosing a company structure, registering for tax, arranging insurance, bank accounts and complying with regulations appears daunting and confusing.

The first important decision is how should your company be structured. Should you be a sole trader or a limited company? Creating a limited liability company can bring legal and financial advantages, however you may find that running your business as a self-employed sole trader is more suited to your circumstances.

If you decide to become Incorporated (Limited) you’ll need to choose a name and register the business at Companies House. You can choose an accountant or formation agent to help with this process and use your accountant’s address as your registered offices. The taxman will then send you a form to register for Corporation tax which must be paid no later than nine months and one day after the company’s year-end. If you expect to earn over £70,000 a year you will also need to register for VAT and complete an annual return online.

It is good practice if you are a sole trader to open a bank account and for a limited company this is essential. A regular current account should suffice although banks will guide you towards a commercial account with associated advisory benefits in return for a fee. There are also various insurances a business needs to consider depending on whether you allow visitors to your business or if you are an accountancy, legal or IT consultancy you should consider professional indemnity insurance. If you employ staff you will need to seek advice on HR employment and legal responsibilities and decide whether you wish to handle payroll or outsource to your accountant who can save you costs in the long-run.

My advice to anyone thinking of starting their own business is seek the best advice from your business adviser/accountant before you start. It could save you money and avoid costly mistakes.

Well, the Chancellor’s Summer Budget wasn’t as bad as I expected and certainly not as bad as my Capital Gains prediction of 40%. Read on for my personal views and analysis of what it means for you and/or your business.

The Capital Gains Tax annual exemption of £10,100 still stands which is good news for investors. My advice is to allocate your annual exemption to post 22 June gains to obtain relief at 28% rather than 18%.

As for VAT – I was spot on with this big ticket rise so no surprises here.  This was always going to be a soft option for the Coalition. It could have been far worse with an increase on clothes or food which would have been painful for all concerned. There is of course no impact where supplies are business to business and the increase can simply be passed down the chain of supply. However this will be of little comfort to the retailer who will have to decide if he can charge the increase to customers or absorb it into his profit margin.

Business owners are getting a welcome tax break with cuts in the main Corporation tax over the next four years and even with the small reductions in the Annual Investment and other Capital allowances there is still a decent amount in the pot to play with.

There is big news on pensions in that the complicated rules due for introduction next April limiting relief to the basic rate for those earning over £150k are to be scrapped. However the principal that tax relief for higher earners should be restricted is still fully embraced, albeit that the method of restricting relief will be simplified by the introduction of a cap on contributions of somewhere between £30 – £45k.

You’ll be pleased to know that George Osborne plans a wider reform of the pensions system which will consider abolishing the requirement to take an annuity at age 75.

For my money it’s not the tax items which are the centrepiece of this Budget, it’s how the spending cuts will eventually filter through. The Chancellor is planning to cut £3 from spending and a £1 from tax in the public sector. For those working on Government contracts cuts in departmental budgets could cause a problem over time.

Something else to watch out for – the Chancellor didn’t mention in the Budget but he has plans to review Non-domicile taxation.  I’ll keep you posted on any developments here.

So all in all, not as bad as we feared and despite the cuts still scope for businesses to grow and individuals to invest.

Read the Summer Budget here

Rewarding and interesting as this job is (frequently seen on a par to that of a jet pilot or minor celebrity) my ego has not been unbruised by the notable lack of interest in my debut into the blogosphere, despite several scintillating articles and a Twitter campaign that would have left Stephen Fry sobbing into his keyboard.

I intend to use this newfound anonymity to full advantage, starting with my pre Summer Budget predictions!

Firstly, I see good news on the horizon for investors as those Stock Market and Eurobond capital losses will now be relieved at 40% or perhaps even 50% instead of the existing miserly 18%.

As an additional gesture of kindness the Clegaroons also intend to reduce the Capital Gains Tax exemption to reduce the trauma of seeing good tax relief go to waste, unused at the end of the tax year.

The Controlled Foreign Companies rules are also due for revision in my opinion, so the few multinationals that have been remiss enough not to have realised their profits in tax havens will not have to pay tax anyway. In the event that your company cannot obtain a Belizean work permit fear not – as the tax hacks are predicting a fall in the main rate of Corporation Tax from 28% to 25%.

However our friends the “Non Doms” don’t appear to be enjoying the same favour as companies, which is all a bit confusing when you’re talking about attracting inward investment! Currently an individual who has a non UK domicile doesn’t pay tax on their overseas income for their first seven years of residence in the UK but must pay £30,000 per year for the privilege thereafter. But maybe not for much longer say the jungle drums. For my money this looks a bit odd alongside the company rules and I’m sure this will be a subject for a “full and frank discussion” between our illustrious leaders.

Last but not least of course there’s VAT; will it go up? Well do fish swim I say, do bears romp in the woods? To these perplexing questions I am unsure of the answer but I bet that VAT goes up by at least 2.5%.

Anyway I’ve managed to reach the bottom of the page now and as you can only take so much fun I’m off to the Bullingdon, I hear it’s smashing!

Follow 22nd June Budget with live tweets at http://twitter.com/dbsellek

Download the Tax Return Aide-Mémoire here

But is that the stench of burning rubber from the spinning wheels of the new coalition government as they launch from the start line, or from a day one u turn that would give Mrs Thatcher whiplash?

In case you’re wondering what I’m on about this time, I am referring to the change of position on tax policy that we are now presented with, compared to the original manifesto pledges of the two members of our new coalition Government.

If the stories that are reaching the news wires today convert into statute, we have the following changes:

• No reversal of the employee National Insurance rise as pledged by the Conservatives  (although the commitment will still be honoured for businesses)
• No increase in the nil rate band of IHT
• No Lib Dem mansion Tax
• A rise in the rate of Capital Gains tax from 18% to 40%

In addition and to support the above, any pledges to attempt to control public borrowing through efficiency savings only have been dropped, paving the way for future tax rises of which VAT seems a very likely contender.

So while I may not have been able to predict the outcome of the election, at least I got one thing right and that was regardless of the outcome I wasn’t going to be any better off for it.

Oh well – at least we’re all in it together!

With the general election less than 24 hours away, it suddenly occurred to me that while a great deal has been written about tax and fiscal policy arising as a result of any one party forming a Government, very little has been said about what the tax landscape might look like in the event of a hung parliament.

Although the last time anyone had to consider this I was running around the play ground in short trousers, the simple answer to this would appear to be that all of the parties bicker and barter over decisions and policies until they all get fed up with it and call another election. But in the meanwhile some attempt will have to be made at running the country, so I have taken a little time to see what common ground exists in the manifestos of the three main parties that might form the basis of tax policy.

The first thing to catch my eye is that all parties are promising “fairness”, LOTS of fairness which in my experience is political code for you’re about to wave goodbye to more of your hard earned cash! To their credit the Lib Dem and Labour manifestos are more committal on the subject stating that taxes will rise whereas the Conservatives propose the reversal of the planned NIC rises and a package of measures to support small business, while trying to bring the country’s borrowing under control through efficiency savings.

While all parties have undertaken to find public sector efficiencies, the problem here, as any accountant will tell you, is that you can only go so far with cost cutting before you reach a point beyond which you can go no further and until UK Plc can trade its way out of the doldrums the only recourse a future Prime minister will have is to increase taxes.

Without putting myself or you the  reader through the ordeal of regurgitating all of the current figures on the economy and borrowing, let’s just say the problem is big (the biggest in fact since the last war) so any tax rises will have to be big. Although we have seen recent tax rises for the very wealthy this will not recover enough revenue to fix our problems and a very broad based tax rise in VAT, Income Tax or National Insurance will be necessary to raise the necessary cash.

It’s anyone’s guess of course, but for my money I would expect one of the first significant tax hikes to be an increase in the rate of VAT. This is because it has not been ruled out in any manifestos and could perceivably be sold to the electorate given it doesn’t apply to essential items such as food and children’s clothing etc, it doesn’t affect registered businesses who reclaim VAT and of course the consumer has no ability to avoid this tax.

What else awaits us will remain to be seen although it seems difficult to see how we will not be entering a period of austerity. In the interests of neutrality I wish all of the parties good luck – it looks like they’re going to need it!

Download the Tax Return Aide-Mémoire here

At last some good news! A victory for businesses and consumers as the government was forced to cancel three planned tax rises in order to fast track the finance bill following the 2010 Budget. Labour back-tracked and dropped their planned end to tax relief for furnished holiday lets, the proposed new phone tax and the 10% tax rise on cider. 

What the 2010 Budget means to you

Call me on 01344 620495 or send an email for the latest Budget advice.

There were few surprises and on the whole this was a good Budget for small businesses and entrepreneurs. There were no further bombshells for higher earners in terms of direct taxation although there is a stealthy increase in Inheritance Tax (via the nil rate band being frozen for the next four years) and a new top rate for Stamp duty. Read my Budget highlights below.

How will the 2010 Budget affect you or your business – call me on 01344 620495 or email your enquiry

Read the full Budget 2010 Report here

Individuals

• Personal allowances still being withdrawn from April 2011 for those earning £100,000 or more
• No changes to 50p income tax rate rise from this April
• No change to Pension restrictions affecting those earning £130,000 or more
• No further increase to National Insurance due to rise 2010/11
• Income tax rates frozen for non high-earners
• Freeze on Inheritance Tax for a further four years
• Increase in ISA allowance from £7,200 to £10,200 from April
• Stamp duty waived for first time buyers up to £250k for two years
• Stamp duty increased to 5% for those purchasing £1m homes

You and your business

• Capital Gains tax remains at 18% (for now) but planning in this area is strongly recommended as I still anticipate this party coming to an end sooner rather than later!
• More relief for Entrepreneurs when you come to sell - doubling of relief which means you only have to pay 10% tax on first £2m of business assets disposed of.
• No change to 21% Corporation tax rate which is good news for businesses
• Time to pay tax scheme extended to next parliament
• Reduction of business rates from October means lower tax for small to medium sized businesses
• New UK Finance for Growth company overseeing financial support and funding for businesses. Includes new funding for fast growing businesses
• Doubled Investment Allowance for small businesses which means up to £100k of capital expenditure can be relieved in the year of purchase – get spending.

Watch this space for Budget highlights on Wed 24 March. Follow my Budget tweets on http://twitter.com/dbsellek Call me on 01344 620495 or visit Taxation for top tax saving tips before 5 April.

In the meantime, here are my top Budget predictions:

Corporation tax to remain static I don’t envisage any changes to Corporation tax as companies are the government’s building blocks for re-structuring the economy.

The Chancellor deferred the increase of Corporation tax from 21 to 22% in the Pre-budget and I think this will happen again in the Budget. The small companies’ tax rate applies to all qualifying companies with profits of no more than £300,000. 

The main rate of Corporation Tax kicks in when company profits exceed £1.5m and at 28% looks expensive internationally so I don’t expect any increase here.

Contact Mark Busby on 01344 620495 or email your Enquiry - for advice on running a tax-efficient business.

No change to Capital Gains

Capital Gains Tax is hotly tipped to increase in the near future as it is currently misaligned with income tax rates. If you are considering selling any assets then best to do so before the Budget. Make use of any Capital Gains allowance (£10,100) before it expires on 5 April.

Don’t forget you can double your Capital Gains allowance to £20,200 by sharing any capital gains with your spouse. You can register investments in joint or sole names and married couples and civil partners can share income 50:50 by simply registering title in joint names. Transferring assets to your spouse if they are lower earners has additional benefits too. Make use of their personal allowance (£6,475) and your spouse’s basic rate tax band at 20% on earnings up to £37,400.

The absence of any change to CGT is seen by many commentators to be linked to the forthcoming election. So once this has passed changes to tax are anticipated. By acting now it is possible to fix your CGT rate to 18% even if you still want to keep possession of the asset.

Contact Mark Busby on 01344 620495 or email your Enquiry - for more information on fixing your CGT rate.

Freeze on personal allowance and basic tax rates

Personal allowances and the basic rate band have been kept the same for two years now and it would not surprise me if this continued into 2011/12 despite the resurgence of inflation. This would provide a stealthy way to increase taxes and alleviate some of the pressures that must exist on the Chancellor to push up the basic rate of income tax.

Contact Mark Busby on 01344 620495 or email your Enquiry - for the latest personal allowance and tax rates.

For sole trades and partnerships with accounting years ending on 31 March/5 April, if you have budget left over or need to purchase capital equipment (up to £50,000) then do this before your year end. Spending in this tax year means you will receive tax relief this January rather than having to wait two years. It makes for a sensible tax planning strategy for sole trades and partnerships given that income tax rates are double those of companies.

Call Mark Busby on 01344 620495 or email your Enquiry on tax saving tips and loss claims.