New ISA to help first time buyers A new

New ISA to help first time buyers

A new type of ISA will provide a financial boost to people saving to buy their first home, the Chancellor has announced during his 2015 Budget statement.

For every £200 deposited into a Help to Buy ISA, the government has pledged to boost it by 25%. This means that first time buyers will receive £50 for every £200 they save towards their house.

There will be a maximum savings limit of £12,000 which would result in account holders receiving a savings bonus of up to £3,000.

Key information:
there is no minimum monthly deposit amount
the maximum monthly deposit amount is £200
account holders will be able to make a £1,000 initial deposit
accounts are limited to 1 per person rather than 1 per household.

Accounts will be available from autumn 2015 and will be open to first time buyers over 16 years-old.

Budget 2015 – Highlights

Budget Highlights

  • Income tax personal allowance to reach £11,000 by 2017
  • ‘Radical’ business rates review before 2016 Budget
  • New Personal Savings Allowance from April 2016
  • Digital tax accounts to replace annual tax returns
  • New Help to Buy: ISA for first time buyers
  • Increased flexibility for cash ISAs from Autumn 2015
  • Rules on annuities to be relaxed from April 2016
  • Pension lifetime allowance to fall to £1m from April 2016

If you wish to download our full 2015 Budget Report please visit our website

Social investment tax relief The social

Social investment tax relief

The social investment tax relief (SITR) offers investors upfront tax breaks and capital gains tax exemptions, similar to those given for buying shares in Enterprise Investment Schemes (EIS). Potentially you could reclaim one or more of the following, subject to various conditions:

Income tax relief: This is available at 30% of the amount you invest. There is no minimum investment limit but the maximum annual limit is £1 million.
Capital gains hold-over relief: You can defer payment of tax on a capital gain if the gain is reinvested in shares or debt investments that would also qualify for SITR income tax relief.

Capital gains disposal relief: If you’ve had income tax relief on the cost of your investment, and you dispose of your investment after you’ve held it for at least three years, any gain you make on your investment is free from capital gains tax.

SITR will be in place for investments made, or capital gains arising, in the period from 6 April 2014 to 5 April 2019.

It is available for investments by individuals (but not companies or partnerships) in ‘Social Enterprises’. In essence, the company or organisation in which the investment is made must provide services for the ‘benefit of society’, such as housing, community transport, youth organisations, sporting facilities or healthcare, so typically they will be charities or community benefit companies.

The Social Enterprise need not necessarily be in the UK, and there is no defined list of what qualifies, however there is a list of activities that do not qualify. The good news is that if you are an investor you will not need to worry about judging whether the recipient of your investment meets the conditions, because any organisation offering SITR qualifying investments to the public should have already gone through an HMRC clearance process in order to be able to do so.

This process has only been available to social investment organisations since July 2014, so the options for investment are currently limited, but the numbers are expected to grow.

When you make an investment, the Social Enterprise will give you a Compliance Certificate in respect of your investment in it, confirming they have met the conditions. You won’t be able to claim for any of the tax reliefs without such a certificate.

None of the reliefs is available if you have had relief for the investment under the EIS, the Seed Enterprise Investment Scheme or Community Investment Tax Relief.

There are numerous qualifying conditions and complications, so professional advice is essential. If you would like to discuss with us your eligibility to claim SITR please contact us on 020 7330 0000

New rules on overtime and holiday pay Em

New rules on overtime and holiday pay

Employers are being advised to review their employee holiday pay arrangements, following a recent landmark Employment Appeal Tribunal ruling that overtime should be taken into account when calculating holiday pay.

The ruling

Until recently, it was generally considered that only basic pay and overtime that was guaranteed to be paid counted for the purposes of calculating holiday pay. However, the Tribunal found that under the UK Working Time Regulations (WTR) holiday pay must also include pay for non-guaranteed overtime.

The ruling applies only to non-guaranteed, compulsory overtime – ie, overtime which an employee is contractually required to work but which the employer does not promise to offer, as opposed to overtime that is undertaken voluntarily.

The ruling applies to the first four weeks of holiday in a given holiday year, as provided under the EU Working Time Directive, and does not take into account any additional holiday provided under the WTR or an employee’s contract of employment.

The likely impact

Up to five million people currently work overtime in the UK and the ruling could potentially impact on many businesses. While it may yet be referred to the Court of Appeal, experts believe that the underlying principle is unlikely to change.

Furthermore, following the ruling businesses could also be vulnerable to claims for additional holiday pay to cover previous periods of compulsory overtime, although the Government has since announced new rules meaning that from 1 July, holiday pay claims can only be backdated for a period of two years. Until that date, workers will be able to make claims under the existing arrangements.

This is not the only case on holiday pay that has found its way to the courts. A recent European Court decision held that commission payments constituted an intrinsic link to an employee’s tasks he was required to perform. The payments therefore should also be included when calculating holiday pay.

Protecting your business

In the light of these recent rulings, business owners are advised to review their holiday pay arrangements with a view to minimising the potential financial impact of the changes. Some of the steps you may wish to consider taking could include:
making appropriate adjustments to ensure that compulsory overtime is included in calculations for holiday pay
considering the potential impact of any potential claims for past unpaid holiday
reviewing employment contracts to allow for voluntary overtime, as opposed to non-guaranteed overtime employing alternative staff resources, such as agency staff, to cover overtime needs.

This article is for general information only and you are advised to seek professional guidance before taking any action.

Social investment tax relief The social

Social investment tax relief

The social investment tax relief (SITR) offers investors upfront tax breaks and capital gains tax exemptions, similar to those given for buying shares in Enterprise Investment Schemes (EIS). Potentially you could reclaim one or more of the following, subject to various conditions:
Income tax relief: This is available at 30% of the amount you invest. There is no minimum investment limit but the maximum annual limit is £1 million.
Capital gains hold-over relief: You can defer payment of tax on a capital gain if the gain is reinvested in shares or debt investments that would also qualify for SITR income tax relief.
Capital gains disposal relief: If you’ve had income tax relief on the cost of your investment, and you dispose of your investment after you’ve held it for at least three years, any gain you make on your investment is free from capital gains tax.

SITR will be in place for investments made, or capital gains arising, in the period from 6 April 2014 to 5 April 2019.

It is available for investments by individuals (but not companies or partnerships) in ‘Social Enterprises’. In essence, the company or organisation in which the investment is made must provide services for the ‘benefit of society’, such as housing, community transport, youth organisations, sporting facilities or healthcare, so typically they will be charities or community benefit companies.

The Social Enterprise need not necessarily be in the UK, and there is no defined list of what qualifies, however there is a list of activities that do not qualify. The good news is that if you are an investor you will not need to worry about judging whether the recipient of your investment meets the conditions, because any organisation offering SITR qualifying investments to the public should have already gone through an HMRC clearance process in order to be able to do so.

This process has only been available to social investment organisations since July 2014, so the options for investment are currently limited, but the numbers are expected to grow.

When you make an investment, the Social Enterprise will give you a Compliance Certificate in respect of your investment in it, confirming they have met the conditions. You won’t be able to claim for any of the tax reliefs without such a certificate.

None of the reliefs is available if you have had relief for the investment under the EIS, the Seed Enterprise Investment Scheme or Community Investment Tax Relief.

There are numerous qualifying conditions and complications, so professional advice is essential. If you would like to discuss with us your eligibility to claim SITR please contact us on 020 7330 0000.

Setting up a property syndicate Although

Setting up a property syndicate

Although the property market in the UK has seen a downturn in recent years, putting money into property can still be a good choice for those wanting to invest or generate an income.

Property syndicates involve a group of investors combining their funds to make a joint investment in commercial or residential property. Here, we outline 5 legal and practical considerations to take into account when buying property with others.

Be clear about the aim

First, the aim of the syndicate will need to be clarified. Is the plan to retain property in order to generate rental income over a longer period (this would be treated as an investment for tax purposes)? Or perhaps to develop property in order to sell it on at a profit in a shorter time frame (where the company will be treated as trading)

Getting the business structure right

The business structure will depend on which approach is taken. A limited company, limited liability partnership or trust can all be used to formalise the investment. Anyone intending to set up a syndicate should take detailed advice on the best structure to use. Some investments could fall into the category of a collective investment scheme or alternative investment fund, which are formally regulated and require a qualified manager who is authorised by the Financial Conduct Authority.

Define roles of members

The role of individual syndicate members also needs to be defined. By ensuring that all syndicate members have a say in how the syndicate is run, you should avoid disagreements later down the line. You will still need to appoint others to handle other responsibilities, such as legal, accounting and letting services. A managing agent will deal with day-to-day issues regarding tenants, keep suitable records and if appropriate, distribute funds to members.

Legal documents

A number of additional key elements will need to be set out in a legal document.

This includes:
defining the type of property to be invested in
the length of investment
how much each member will be required to invest
whether additional lending will be sought.

Draw up clear rules

There will need to be rules that govern how the syndicate is run. The rules should cover:
how many of the syndicate will be required to agree to make decision
how profit and interest payments will be allocated (note that tax will be payable on net rental income)
a process for exiting the syndicate before the time agreed
how new investors will be chosen and admitted.
a procedure if any of the investors in the syndicate defaults on a payment – for example, do the others have the option to buy out the investor?
a statement to outline how or when the property will be sold.

Get help

At ABG we offer services to a wide range of property investors and syndicates, from large portfolios to single properties. Contact us to find out how we can help with an existing or planned property investment. Call or 020 7330 0000 email abglondon@abggroup.co.uk

Creative Sector Tax Creative Industry Ta

Creative Sector Tax

Creative Industry Tax Reliefs are a group of tax reliefs specifically targeted at Companies undertaking certain activities in the entertainment industries. There are 4 different groups of reliefs targeting specific industries and these are:-

• Film production (Film Tax Relief)

• Television production (Television Tax Relief)

• Video games development (Video Games Development Tax Relief)

• Theatrical production (Theatre Tax Relief)

The effect of the reliefs is to provide either an enhanced tax deduction for relevant qualifying expenditure or to give a repayable tax credit whereby the company can surrender a relevant trading loss to obtain a repayment directly from HMRC.

As with all tax reliefs there are detailed rules and conditions which must be met. There are restrictions for instance where a Company has made a claim to enhanced tax relief under the Research and Development legislation, but with up to a 100% additional tax deduction available the reliefs can be very valuable and the tax savings substantial.

If you wish to read more about Creative Sector Tax Relief you might like to read our full publication which is available on our website http://www.abggroup.co.uk.

If you would like to discuss your eligibility to claim Creative Sector Tax Relief please contact our specialist team on 020 7330 0000.