Company Tax 

Corporation tax

 

With thousands of happy company clients, we have truly learnt what businesses want. Our expert tax consultants are determined to ensure you receive every legitimate allowance, deduction and exemption you are entitled to. 

 

Corporation tax regulations and reliefs are continuously changing. We make it our business to stay on top every change, opportunity and problem, so that our clients are ahead of the rest. As a client of Bambridge Accountants you can expect expert technical guidance that is focused on saving you money and keeping you in accordance to tax regulations.  


VAT TAX

 

Many who are required to pay corporation tax will also be subject to VAT. Our expert team of accountants love what we do. Through our years of expertise in tax we have helped thousands of clients save thousands and thousands of pounds of their hard earned money. VAT is often an overwhelming and confusing area for self-employed workers and businesses. Our specialist team will keep you inline with all relevant statutory regulations, while ensuring you are not paying a penny more than you have to. 


RESEARCH & DEVELOPMENT TAX RELIEF

 

Research and Development (R&D) relief is a corporation tax relief that may reduce your company or organisation's tax bill. 

There are still companies not claiming this hugely valuable tax relief, or not taking its full benefit. 

 

R&D covers companies in virtually every industry which are undertaking some form of innovation; this will include companies operating in the software, internet and communications fields.

From April 2012, the tax relief on allowable R&D costs is 225 per cent - that is, for each £100 of qualifying costs, your company or organisation could have the income on which corporation tax is paid reduced by an additional £125 on top of the £100 spent.

 

Alternatively, where a company is lossmaking, the R&D tax relief can give rise to tax repayments of as much as 25% of the cost, even where no corporation tax has ever been paid. This can help the start up with cash-flow which can be used to fund further R&D. 

 

Companies are missing out on claiming R&D relief because they do not fully identify those activities or costs which qualify for the relief. If you would like to find out whether and to what extent your company and activities are eligible, please do get in touch with us.

 


BOOKKEEPING

 

Our team of expert accountants are experienced with a huge range of accounting software and are proficient in managing a portfolio of work which requires reporting to various deadlines. Our years of experience have lead to the development of accurate and organised processes that limit against any errors on your financial documentation. Each client has a dedicated bookkeeper who oversees and manages processes to ensure that you receive a premium bookkeeping service. 


EIS and SEIS

 

EIS and SEIS are two tax relief schemes available to companies. Which scheme is most appropriate for your company can depend on the size of your business and what phase of growth the business is in.

 

 

What is EIS?

 

Enterprise Investment Scheme (EIS) is a scheme developed to help small high-risk trading companies raise finance by offering tax reliefs to investors who subscribe for new shares.

 

For companies to qualify for the scheme certain conditions need to be met for up to 3 years from the time of the investment as not doing so can end up in tax relief not being given to investors or if this has already occurred, withdrawal of the relief.

 

Requirements

 

·       Shares must be unquoted at the time when they are issued and there must be no prearrangement for the shares to eventually become quoted on a recognised stock exchange.

 

·       Another company cannot control a company wishing to qualify and cannot control any subsidiaries it has. The value of gross assets should not exceed £15m before the share issue and £16m after. It must have at least 250 employees at the time of the share issue and 500 if it is a knowledge intensive company.

 

·       It must have a permanent establishment in the UK. Within 2 years of the share issue all money raised must be used by the company or by a 90% qualifying subsidiary solely for the purpose of a qualifying activity. It can carry on some excluded activities (for example dealing in land, commodities, financial instruments and goods other than in an ordinary trade of retail or wholesale distribution) however this can only be a maximum of 20% the company’s total activities. 

 

·       Qualifying companies and their subsidiaries cannot take more than £5m of EIS or other risk investment in a year. No more than £12m can be taken in total; this amount is £20m for a knowledge intensive company.

 

Requirements for Investors

 

·       An investor cannot have a connection with a company in order to claim relief. Having a financial interest in a company can make someone connected. If an investor holds more than 30% of the share capital or voting rights and is entitled to more than 30% of the assets in the occurrence of closing down the company then he/she will be deemed as having a connection by financial interest. This condition is for 2 years before and 3 years after the issuing of the shares, if not 3 years after the start of qualifying trade if this is later.

 

·       Investors cannot be partners, directors or employees of the company as this is deemed an employment connection. This limitation has the same time window as a connection through financial interest.  However, there is an exception for directors who are Business Angels who do not receive remunerations who may qualify for Income Tax relief. If they become a paid director during the 3-year window the tax relief will not be withdrawn as long as the remuneration is reasonable.

 

 

Requirements for Shares

 

·       When the shares are issued they must be paid up in full in cash and they must not be full-risk ordinary shares nor be redeemable.

 

·       An investor cannot acquire the shares in question using a loan offered on terms and conditions that would not have been in place for any other shares.

 

·       There must not be arrangements in place for the investor that would protect him/her from the usual risks associated with investing in shares and there must be no strategic alliances where the company owners agree to similarly invest in each other to obtain the tax relief.

 

 

Tax relief

 

EIS offers potential relief in Income Tax, Capital Gains Tax (CGT) and Inheritance Tax (IHT).

 

Income tax reducer

 

For Income Tax a reducer of 30% is used against the lower of the cost of shares or £1m.  For shares issued before 6 April 2011 the reducer is 20%. Carry back of relief is available for one tax year provided the limit was not exceeded that year.

 

EIS Reinvestment Relief

 

For CGT relief, EIS Reinvestment Relief is available to defer all or part of a capital gain arising on any asset as long as the proceeds are reinvested in EIS shares. The amount that can be deferred is the lower of the gain, the amount reinvested and a specific amount claimed. Unlike for Income Tax relief there is no limit. A gain will be charged when the shares are sold.

 

Where there are losses, this is allowable even if the shares were not owned for the full 3 years. An investor can claim to use the loss against net income instead of a capital loss.

 

2017/18 tax year

Income Tax relief

30%

Limit for relief

£1m

CGT deferral relief limit

 

 

Business Property Relief

 

Business Property Relief (BPR), a relief available from IHT, applies to lifetime gifts and shares in the death estate as long as it has been owned for 2 years.  If the beneficiary becomes entitled to the shares on the death of a spouse or civil partner, the 2 years after the investment is made counts towards the requirement.  In some cases if the investment lasts less than 2 years relief is still available.

 

If the shares are sold before the end of the 3 year period, claw back will be the lower of the original incomes tax reducer and if made a loss, sale proceeds x rate of the initial relief. Any gains that were previously deferred will now become taxable in year of sale. In instances where a fraction of the shares were sold, only that fraction of the gain is taxable.

 

EIS3 forms are used to claim the relief. A claim cannot be made until they receive the EIS3 form from the issuing company and this can be done 5 years from 31 January after the end of the tax year when the shares were issued.

 

 

 

About SEIS

 

 

Seed EIS (SEIS) helps very early stage companies therefore the tax reliefs are greater.

 

Company Requirements

 

·       Another company cannot control a company wishing to qualify. The company’s gross assets should not exceed £200k or exceed a limit of 25 employees at the time of the share issue.

 

·       Qualifying companies cannot take more than £150k of SEIS or other risk investment in total. This total includes other de minimis state aid received in the prior 3 years.

 

·       At the point of investment any trade carried on must be less than 2 years old and the company must not have carried on any other trade before this. Within 2 years of the share issue all money raised must be used solely for the purpose of a qualifying activity. Former funds raised through the EIS or Venture Capital Trust (VCT) schemes are prohibited. A minimum of 70% of funds raised on any shares issued before 18 November 2015 has to be spent before any EIS shares are issued.

 

Requirements for Investors

 

·       Once again an investor cannot have more than 30% of the share capital or voting rights, this will be from the incorporation date up to 3 years after the share issue.

 

·       Investors cannot be associates or employees of the company, up to 3 years after the share issue. However, for SEIS a director is not deemed connected as an employee but would be deemed if owned more than 30% of the shares in the company.

 

Tax relief

 

For Income Tax a reducer of 50% is used against the lower of the cost of shares or £100k.

 

SEIS Reinvestment Relief exempts 50% of the capital gain arising on any asset from CGT. The 50% exemption is on the lower of the gain on any asset, amount of income tax relief claimed and any other amount.

 

2017/18 tax year

Income Tax relief

50%

Limit for relief

£100k

CGT deferral relief limit

50%


CREATIVE INDUSTRY RELIEFS

'Creative industry tax reliefs' are a group of five corporation tax reliefs that allow qualifying companies to claim a larger deduction, or in some circumstances claim a payable tax credit when calculating their taxable profits.

Film Tax Relief was introduced in April 2007 and two additional reliefs were introduced in April 2013. These are Animation Tax Relief, High-end Television Tax Relief.  A fourth relief for Video Games Development was introduced on 1 April 2014. Finally, Theatre Tax Relief was introduced on 1 September 2014.

1. FILM TAX RELIEF

Your company will be entitled to claim Film Tax Relief (FTR) on a film as long as:

the film passes the culture test - it is considered a 'British film'

the film is intended for theatrical release

at least 25% of the total production costs relate to activities in the UK

the first day of principal photography took place on or after 1 January 2007

 

2. ANIMATION TAX RELIEF

Your company will be entitled to claim Animation Tax Relief (ATR) on an animation programme if:

the programme passes the cultural test - a similar test to that for Film Tax Relief but within the European Economic Area

the programme is intended for broadcast

at least 51% of the total core expenditure is on animation

at least 25% of the total production costs relate to activities in the UK

 

3. HIGH-END TELEVISION TAX RELIEF

Your company will be entitled to claim High-end Television Tax Relief (HTR) on a programme if:

the programme passes the cultural test - a similar test to that for Film Tax Relief but within the European Economic Area

the programme is intended for broadcast

the programme is a drama, comedy or documentary

at least 25% of the total production costs relate to activities in the UK

the average qualifying production costs per hour of production length is not less than £1million per hour

the slot length in relation to the programme must be greater than 30 minutes

4. VIDEO GAMES DEVELOPMENT RELIEF

The relief enables companies to be eligible for a payable tax credit worth 25% of qualifying production costs.

A cultural test will need to be met to claim the relief - certification is being administered by the BFI.

We can help and advise companies on the initial and final certification (including what costs you are allowed to claim).

5. THEATRE TAX RELIEF

The relief enables companies to be eligible for a payable tax credit worth between 20 and 25% of qualifying production costs.

If you are touring the production, the repayable tax credit will be 25% of the qualifying expenses. Other theatre productions can claim a repayable tax credit of 20% of the qualifying expenses.

Conditions:

 - at least 25% of the core expenses must be incurred in the UK or remainder of the EU

 - the theatre company must also be responsible for producing the content of the shows

The tax credit will be claimed through the company's tax return for the period.

 

For advice, guidance and facts about the Creative Industry Tax Reliefs, please contact us.