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Stamp duty and business
property
The increase in the initial Stamp
Duty Land Tax threshold to £120,000 was one of the headlines of the Spring
Budget for individuals, but how does it impact on businesses?
Since 1 December 2003, Stamp Duty
Land Tax (SDLT) has applied at different rates for residential and commercial
(non-residential) property.
Purchasers of freehold commercial
property only pay SDLT once the value of the land and buildings exceeds
£150,000. Where the commercial property was situated in one of 1,997
designated disadvantaged areas in the UK, no SDLT was paid at all, until
Budget Day. This exemption for disadvantaged areas was withdrawn with
immediate effect from 17 March 2005.
Residential property located in a
disadvantaged area is still exempt from SDLT up to £150,000. But remember,
SDLT is not a graduated tax: if the purchase price is just £1 over the
initial threshold (£120,000 or £150,000) SDLT is due on the whole property
value, at applicable rates of between 1% and 4%.
The method of calculating SDLT for
leased property does not use this system, so a more proportionate amount of
duty is paid on the acquisition or alteration of a lease.
Business Premises
Renovation Allowance (BPRA)
As a partial ‘sweetener’ for
businesses who find the SDLT exemption withdrawn, the Government introduced
BPRA, a new tax relief for renovating or converting business property in
designated disadvantaged areas.
The building can be owned or leased
but must have been vacant for at least 12 months. The owner or leaseholder
will be able to claim 100% of the capital costs incurred in bringing the
property back into business use, as a first year capital allowance.
BPRA will apply to all types of
business property: offices, shops, hotels, factories and even to agricultural
buildings. However, the start date for this new tax exemption has not been
announced, as the scheme must first be granted clearance by the EU that it is
not illegal state aid.
... STOP PRESS ...
Revenue and Customs combined
The former Inland
Revenue and HM Customs and Excise have been combined into a single
department: HM Revenue & Customs (HMRC). See www.hmrc.gov.uk.
Pensions ‘A-Day’ – 6 April 2006
From 6 April 2006
many of the regulations governing pension funds will change, and existing schemes
will be simplified. The exact rules will become clearer nearer the time, but
for now you should seek professional advice on your options.
Couple lose Section 660A appeal
In April, Geoff
and Diana Jones of ‘Arctic Systems’ lost their landmark appeal case against
HM Revenue and Customs, over the tax treatment of businesses owned by a
husband and wife, where one spouse is more active in the business than the
other, and income is transferred between the two. The ruling could affect the
tax planning of some, but not necessarily all, family-run businesses. Contact
us for more advice.
REMINDERS FOR YOUR DIARY
July
6 Last
day to file Taxed Award Scheme Returns, file P11Ds, P11Dbs and P9Ds. Issue
copies of P11Ds or P9Ds to employees
Deadline
for relevant third parties to give non-employees information on benefits or
expenses they have provided to them in 2004/05
14 Due
date for income tax for the CT61 period to 30 June 2005
19/22* Quarter 1 2005/06 PAYE remittance due
Final
date for payment of 2004/05 Class 1A NICs
31 Second
self assessment payment on account for 2004/05
Annual
adjustment for VAT partial exemption calculations (April VAT year end)
Liability
to 2nd £100 penalty arises for 2004 Tax Return still not filed
5%
surcharge on any tax unpaid for 2003/04
August
2 Last
day for notifying car changes in quarter to 5 July – P46 (Car)
31 Annual
adjustment for VAT partial exemption calculations (May VAT year end)
September
30 Deadline for submission of the 2005
Tax Return if you wish the HM Revenue & Customs to calculate the tax or,
if you are an employee, you wish to have a 2004/05 balancing payment of less
than £2,000 collected through your 2006/07 PAYE code
End
of CT61 quarterly period
Business and personal planning need
not be left until the end of the tax year - talk to us now about tax and
financial strategies for you and your business.
* All employers with more than 250
employees must make their payments of PAYE Tax and NICs electronically, by
either BACS or CHAPS. Payments previously due by the 19th must now be clear
by the 22nd.
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