Category Archives: Accountancy Advice

LIQUIDATING A COMPANY – IS IT A CAPITAL GAIN?

One of the anti-avoidance measures being introduced by the latest Finance Bill potentially changes the way that certain payments to shareholders will be taxed. This may result in payments following some company liquidations being taxed as dividends instead of capital gain. The Government is concerned that the new higher rates of income tax that have applied to dividends since 6 April 2016 may tempt some shareholder / directors to extract value built up within their companies in a capital form, rather than paying out the retained profits as dividends. This is because capital gains are generally taxed at a lower rate than income, possibly as low as 10% where entrepreneur’s relief is available. For example, a higher rate taxpaying shareholder receiving £100,000 on the liquidation of his company would pay £32,500 (32.5%) if the anti-avoidance applies, whereas...

HMRC making Digital Records Compulsory by 2018

Making tax digital – It would be easy to read the government’s manifesto about the future of tax administration “Making Tax Digital” as merely a vague policy document. While it’s just an outline it spells out changes that will have serious consequences for many businesses. Who will it affect? – Unincorporated businesses with income of £10,000 per year or more, which don’t currently use software to keep financial records, will be required to do so. It seems that companies will have to use digital record keeping no matter what the level of their income. The new regime will include landlords who receive rents etc of more than £10,000 per year. Which software? – The good news, if you can call it that, is that the government will provide free apps to help businesses. However, reading between the...
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