As we are moving further into the 2021-22 tax year we are starting to see the light at the end of the pandemic tunnel, which means now is the best time for you to review and refresh your financial affairs. Now is the time for business owners like yourself to maximise the tax benefits available to you for further capital investment and innovation, and right here is the perfect place for you to start. Here are Samera’s Tax Top Tips for Dentists and Doctors. Our tips offer valuable insight and inspiration for you and your business to grow.
1. Stamp Duty Holiday
The stamp duty holiday extension has been confirmed and will apply to all residential property buyers. This means that you will not have to pay stamp duty on the first £500,000 of your property if you complete the transfer legally before 30 June 2021. From 1 July 2021 to 30 September 2021 the nil band will be £250,000. The nil rate band will then return on 1 October 2021 to the standard amount of £125,000.
If you are in the midst of transferring or acquiring a residential property, or even considering it, due to this stamp duty holiday you may want to accelerate matters before the stamp duty returns and your potential savings wither away. Accelerating your purchases or transfers will enable you to achieve the most stamp duty savings. Get in touch with our advisors for further information.
2. Super deduction and the SR Allowance
The super deductions and special rate first year allowance (SR allowance) temporarily increases reliefs for companies within any sector on qualifying expenditure on plant or machinery from 1 April 2021 to 31 March 2023. The super deduction introduced in 2021 was the biggest business tax cut in modern British history. This recent capital allowance and the SR allowance gives companies up to 130% tax relief on the qualifying cost of the capital investment. These allowances are only available for companies, not for any self-employed businesses or partnerships.
Both these enhanced capital allowances are in addition to the existing ongoing Annual Investment Allowance which already gives relief for costs of qualifying plant and machinery up to £1M in the tax year of purchase.
It is important to note that certain assets do not qualify for relief such as cars or second-hand equipment but the majority of brand-new plant machinery and equipment for use in your trade is likely to qualify. These are reliefs where the date of expenditure is important for the assets to qualify so businesses will need to maintain records of dates of acquisition especially for larger projects that span between the allotted dates (1 April 2021-1 April 2023).
3. Capital Taxes Planning
Although many rumours have been floating around leading up to the March Budget, no changes have been made. However, it is the view amongst many of our tax professionals that the increase of tax with Capital Gains Tax (CGT) is hanging in the balance and is only a matter of time before it will be increased.
If you are currently considering whether to transfer or sell any assets, it may be a good idea for you to get ahead and start to accelerate such sales and transfers in light of potential CGT changes that are imminently forthcoming.
4. Use of a Family Trust
This tip is particularly useful if you are looking to undertake asset protection or Inheritance Tax Planning (IHT) – otherwise, at the event of your death, HMRC could be entitled to IHT at the rate of 40% of your assets. Inheritance tax alone raised a record of £4.9bn in the last financial year.
You can control a family trust by yourself and it can hold assets for any of your family members including your children with distributions purely made at your discretion. Doing this can remove the value out of your IHT estate therefore, reducing your estate to a more manageable value. Your estate includes everything you own and the trust can help you keep a lump sum outside of your survivor’s estate to ensure it is not subject to IHT. The use of a trust could also protect your family legacy in various ways.
Certain assets are able to qualify for 100% relief from IHT upon transfer into trust. If you have a very large and complicated estate, the sooner you start planning, the better. An efficient IHT plan involves gifting assets during your lifetime instead of one large trust at the end. Each person can generally transfer upto £325,000 into trust without incurring any tax charges upon entry.
5. Research and Development
The Research and Development tax credit scheme is one that countless companies are still not making use of. This scheme is the main source of government support in the UK for innovative companies. If you can demonstrate that your expenditures went towards research and development costs (by definition by HMRC of what expenditure you can claim), then you will be able to claim on it. Many eligible businesses can claim benefit from additional tax relief of up to £24.70 for every £100 of qualifying expenditure. There is now no minimum expenditure on qualifying for R&D required to make a claim for tax credit.
If you have used any sort of science or technology or used a particular service for a project or a problem in your business that needed specialist help to fix, you may have a potential claim. If you are unsure whether your project might qualify for this valuable relief, get in touch with one of our professional advisors.
Book a Consultation
To find out more about your tax options and what Samera can do to help you, book a virtual consultation with one of the Samera Finance team.
To find out more, check out our Learning Centre, full of articles and webinars covering how to buy, start, grow and sell medical businesses, or book a free consultation.