Archive for November, 2018

Are you in training for the Brexit Marathon?

Tuesday, November 6th, 2018

March 2017 was the date we declared we were going to exit from the EU. This set the deadline for our national drawbridge to be raised on the rest of Europe at the 29 March 2019. This is the first time we have separated ourselves from our largest trading partner since we joined the Common Market – the precursor to the EU – 1 January 1973.

It is useful, when considering the effective strategies we could employ to weather the changes that this process will likely create, to visualise the exit as running a marathon.

The comparison may seem to be a little left-field but bear with us.

If you have ever participated in a marathon you will have embarked on a fairly rigorous training program prior to running the race. In like manner, it may be prudent if you are running a business to get into shape before the Brexit transition starts next year. Whatever the outcome, a deal or no-deal conclusion, change will be upon us, and until we get used to the new paradigm, there will be a possible dip in economic activity.

We are all holding our breath, waiting for the politicians to reach an agreement, and hopeful that the outcome will lead to a positive increase in our international trading status with the rest of the world.

However, there is work we could engage in now that will prepare us in a positive way for whatever variety of Brexit is secured. In short, we could get into training, only this time to get financially fit, not race fit.

There are no downsides to this process. Even if there is a smooth Brexit you will be match fit and ready to hit the ground running, ready to take advantage of businesses opportunities as they become available.

At the very least businesses could:

  • Create an impact assessment if they import or export goods from and to the EU, and
  • Undertake a comprehensive balance sheet review. This would involve converting unused assets into cash and shortening the time it takes your business to transform sales into money in the bank.

We would request that all our readers seriously consider these options, unless they are already ahead of the game. We would be delighted to help.

Up to �1m tax break for investment in qualifying assets

Thursday, November 1st, 2018

The Chancellor picked out business investment as his preferred give-away to the business sector in his Autumn Budget 2018.

The Annual Investment Allowance is being increased from 1 January 2019, to £1m from the present base level set some years ago of £200,000. The increase is due to be available for two years, until 31 December 2020. At this later date the AIA will presumably return to the £200,000 limit.

The AIA allows for the 100% write down of qualifying asset purchases against business profits. For profitable companies, partnerships (excluding partnerships where one of the partners is a company or another partnership) and sole traders this is a generous tax break.

The AIA is available for most plant and equipment purchases. These include:

  • items that you keep using in your business, including commercial vehicles and cars if they are working assets, for example taxi cabs or driving school, dual control vehicles;
  • costs of demolishing plant and machinery;
  • parts of a building considered integral, known as ‘integral features’;
  • some fixtures e.g. fitted kitchens or bathroom suites;
  • alterations to a building to install other plant and machinery – this doesn’t include repairs.

The AIA is not available for purchases of:

  • cars that are not working assets;
  • items you owned for another reason before you started using them in your business; and
  • items given to you or your business.

Whether or not businesses will be encouraged to invest based on this additional tax break is another matter. It will not go unnoticed that the increases allowance is offered in the two years following our exit from the EU. It would be a brave, and perhaps rash business person that would make investment decisions in this transition period based purely on tax considerations.

If you are motivated to reconsider future investment in qualifying plant and equipment to take advantage of this £1m tax allowance can we suggest that you consider funding and return on investment considerations as well as possible reductions in your tax bill before signing on the dotted line. Please call if you would like our help.