We entered the 2024/25 fiscal year on 6 April and now is the perfect opportunity to take advantage of the allowances, reliefs, and exemptions that your business can claim within the next 12 months.

“These can give you a distinct tax advantage over your competitors and reduce your overall expenses significantly,” says Nimesh Patel, Tax Partner.

“The best way to manage and apply for these is through your accountant and tax adviser – we can streamline the process considerably and guide you on which ones to apply for and when.”

However, if you are yet to engage an accountant, here are some of the many options we’ll be advising clients on this year.

The VAT registration threshold has increased

The threshold for VAT registration has risen from £85,000 to £90,000 from 1 April 2024, as part of the Chancellor’s attempt to support small businesses in the Spring Budget.

“This change will simplify your tax compliance and may mean that you can defer your VAT registration,” says Nimesh Patel, Tax Partner.

“You may need to reassess your growth strategies in light of the new threshold and strategically plan for when you register for VAT as a result.”

Registering for VAT before your turnover reaches the threshold can allow you to reclaim VAT on your business expenses, enhancing your cash flow and presenting your business as more established to potential clients and suppliers.

Business investment advice

The Annual Investment Allowance, which remains at £1 million this year, enables you to immediately deduct the cost of assets from your profits.

Full expensing also allows you to fully deduct the cost of qualifying new plant and machinery from your taxable profits in the year you make the investment. Until 31 March 2026, you can take advantage of this to significantly reduce your taxable income and tax bill by writing off 100 per cent of these investments immediately.

“This is especially valuable if you’re investing in plant machinery, as it allows for a full deduction in the year of purchase, effectively reducing your taxable profit.”

Additionally, “it encourages you to accelerate your investment plans, promoting growth and innovation within your business,” says Nimesh Patel, Tax Partner.

Equally, R&D tax relief can help you promote innovation, reducing your taxable profits, but it is important to be aware of the merged schemes that are now in place.

The combined scheme of R&D Expenditure Credit (RDEC) and Enhanced R&D Intensive Support (ERIS) supersedes the previous RDEC and Small and Medium-Sized Enterprise (SME) schemes.

Under this merged regime, companies, regardless of size, will receive an above-the-line credit, except for R&D-intensive SMEs​, which will qualify for an enhanced rate.

The merged scheme has reduced the R&D intensity threshold from 40 per cent to 30 per cent for accounting periods beginning on or after 1 April 2024.

This makes it easier for more SMEs to qualify for enhanced support if their R&D expenditure constitutes at least 30 per cent of their total expenditure.

Moreover, a one-year grace period is available for companies that fail to meet the 30% intensity threshold but have done so in the previous year, allowing them to continue claiming enhanced support​​.

Similarly, looking into the future, investments in digital and green technologies may offer future tax benefits and allow you to claim Enhanced Capital Allowances against your profits.

A note on salaries, bonuses, and dividends

“Balancing remuneration types can significantly reduce your tax burdens, with the NIC reduction from 6 April affecting optimal salary and dividend structuring,” says Nimesh Patel, Tax Partner.

As with all other forms of remuneration, it’s best to discuss this with your accountant or payroll specialist before you proceed.

Compliance considerations this tax year

The Making Tax Digital (MTD) scheme means that, from April 2026, all unincorporated businesses will need to submit digital records and quarterly submissions when their income exceeds £50,000.

However, we are advising that our clients prepare for this change early and employ MTD-compliant software before the deadline date and before they reach the £50,000 threshold.

The Spring Budget also brought in added compliance considerations through the “basis period reform.”

Nimesh Patel, Tax Partner says; “Basis period reform will also align unincorporated business’s income assessment with the tax year and increase your need for comprehensive reporting and documentation procedures.

“In 2024/25, properly transitioning and understanding these new compliance requirements is going to be crucial for businesses.”

Is this the year for incorporation?

“Incorporating – becoming a limited company – can lead to lower Corporation Tax rates and flexible tax planning and many of our clients are now considering this as a tax mitigation strategy.

“This is a great way for sole traders and partners to reduce their Income Tax liabilities by paying Corporation Tax instead,” says Nimesh Patel, Tax Partner.

Incorporated companies with profits of up to £50,000 pay a Corporation Tax rate of 19 per cent, while those with profits over £250,000 face a higher rate of 25 per cent.

Profits falling between these amounts enter a tapered rate system, where marginal relief applies, effectively creating a gradual increase in the tax rate from 19 per cent to 25 per cent as profits rise.

“This tiered system makes it crucial for you to manage your profitability to optimise your tax liabilities.”

Don’t forget that managing dividends and salaries within a limited company also further optimises your tax liabilities.

Speaking to your accountant

The best way to reduce your expenses this tax year, and remain compliant throughout, is to speak to your accountant at the earliest opportunity.

We can help you reduce your tax liabilities and plan efficiently for the year ahead.

Please get in touch for more information or tailored guidance based on your business’s unique circumstances. 

The post Corporate tax planning strategies for this tax year appeared first on Grunberg & Co.

Specifically, and most importantly, sole traders and partnerships must pay Income Tax on profits, with rates ranging from 20 to 45 per cent depending on your income level.

• Personal Allowance (up to £12,570) = zero per cent
• Basic rate (£12,571 to £50,270) = 20 per cent
• Higher rate (£50,271 to £125,140) = 40 per cent
• Additional rate (over £125,140) = 45 per cent
• The income band need to take into account the loss of the personal allowance for higher income individuals.

You must also pay Class 2 and Class 4 National Insurance Contributions, based on profits.

For the tax year 2023/24, Class 2 NICs are £3.45 per week for self-employed individuals with profits of £12,570 or more per year.

• Class 4 NICs are charged at 9 per cent on profits between £12,570 and £50,270, and 2 per cent on profits over £50,270. The 9% class 4 NIC rate is expected to reduce to 8% in 2024/25.
• If turnover exceeds £85,000 (going to £90,000, as announced in the Spring budget), you must also register for, and charge, VAT.

Ways to mitigate your taxes

As a sole trader or partnership, you have fewer ways to reduce your taxes than limited companies.

(More on changing business structure in the next section).

However, there are a few mitigation strategies open to you.

• Utilise the trading allowance: The first £1,000 of income from self-employment or casual services is tax-free, known as the trading allowance. This can be useful for very small businesses or those with minimal expenses.
• Capital Allowances: Capital allowances enable you to write off the cost of tangible capital assets against taxable income, effectively reducing the amount of your profit that is subject to tax. The rates and types of allowable assets vary, including main rate items like environmentally friendly machinery and equipment. Most businesses, regardless of size, can claim capital allowances.
• Annual Investment Allowance (AIA): The AIA permits businesses to deduct the full cost of qualifying capital expenditures from their profits before tax, up to a limit of £1 million. This allowance covers most types of plant and machinery, excluding cars, and is available to sole traders, partnerships, and limited companies. The AIA is particularly advantageous for businesses making significant investments in assets, as it can lead to substantial immediate tax relief.
• VAT schemes: If applicable, consider registering for VAT and choosing the most beneficial VAT scheme for your business, such as the Flat Rate Scheme, which can simplify VAT reporting and potentially reduce VAT liabilities. This scheme applies to businesses with a turnover up to £150,000 customers are charged VAT at 20% but a lower flat rate is payable to HMRC. The amount of input VAT recoverable is restricted under the scheme so it suits businesses with a low level of expenses.To fully understand these strategies, and for tailored guidance on applying for them, you should always consult with an accountant.

Remember, mistakes on your tax returns – accidental or otherwise – including on reliefs and allowances, are frowned upon by HM Revenue & Customs (HMRC).

Time for a different business structure?

The choice of business structure – sole trader, partnership, or limited company – can have significant tax implications for your business.

Limited companies often enjoy lower tax rates compared to individual taxation rates but come with additional compliance requirements.

The decision should be based on a detailed analysis of your business’s specific circumstances.

The Government offers advice on choosing a business structure but as always it is important to consult with your accountant who can tell you about the specific benefits of each choice.

We can walk you through business restructuring and tell you which option is best for your specific circumstances.

Please don’t hesitate to get in touch if you require advice on your taxes.

The post Tax planning for unincorporated businesses (sole traders and partnerships) appeared first on Grunberg & Co.

We have created a handy guide to help explain the ins and outs of business mileage for employees. 

Rules for tax 

There are currently two separate schemes that are used to deal with these mileage expenses: 

1. One for tax relief 
2. One for National Insurance relief  

If your employee uses their own vehicle for business journeys, you will pay MAPs – Mileage Allowance Payments. 

You are allowed to pay your employee a certain amount of MAPs each year without reporting them to HMRC. 

This is called an ‘approved amount’. 

This table helps to explain more: 

For example, if your employee travels 12,000 miles business miles in their car, then the approved amount for the year would be £5,000 (10,000 x 45 pence plus 2,000 x 25 pence). 

To calculate this, you need to multiply your employee’s business travel miles for the year by the rate per mile for their vehicle. 

It is important to remember that even if your employee more than one vehicle in a year, it is all calculated together.  

What do I need to report and pay? 

For anything above the ‘approved amount’ you must: 

• Report on form P11D 
• Add anything above the ‘approved amount’ to your employee’s pay, and deduct/pay tax as normal 

For anything below the ‘approved amount’, you will not have to report to HMRC or pay tax but: 

• Your employee will be able to get tax relief (this is known as Mileage Allowance Relief, or MAR) on the unused balance of the approved amount 
• You can make separate optional reports to HMRC of any unused balances under the Mileage Allowance Relief Optional Reporting Scheme (MARORS) 

Are there rules for National Insurance? 

As an employer, you might have to deduct and pay National Insurance on payments that relate to relevant motoring expenditure (RME). 

This includes: 

• MAPs 
• Payments that would be MAPs, but are paid to a person other than your employee, for their benefit 
• Any other cash payments you make to your employee towards the use of their vehicle 

If you do not already know, there is an aspect of business travel mileage that is called the ‘qualifying amount’. 

This means there is a certain amount of RME that will be exempt from reporting to HMRC or paying National Insurance. 

How do you work out the qualifying amount’? 

To calculate this, you will need to multiply your employee’s business miles in the earning period by the rate per mile. 

 For example – if your employee drives 1000 miles in their van, and you pay an amount of RME to cover this, then the qualifying amount for the earnings period will be £450 (1,000 x 45 pence). 

What to report and pay for RME 

If the RME you provide to your employee in the earnings period exceeds the qualifying amount, then you will need to add the excess to their other earnings for that earnings period. 

This is done when you are calculating Class 1 National Insurance (but not as PAYE tax) through your payroll. 

If the RME is below the qualifying amount, you have: 

• Nothing to report 
• No NI to pay 

You should know that there’s no MAR for NI, and you cannot carry forward the difference between RME and the qualifying amount to a later earnings period. 

Reporting your employee’s business travel mileage is important is it will help you to remain compliant with tax legislation and avoid possible penalties. 

If you would like to know more about how to report and pay your employee’s business travel mileage, contact us today. 

The post Business mileage for employees explained  appeared first on Grunberg & Co.

However, there are a few universally applicable advantages of outsourced accounting exist, which companies should take into account:

Economic efficiency

As inflation drives costs upward for many businesses, maintaining an in-house finance team can become expensive, especially when finance is not a core focus for numerous firms.

Choosing outsourced accounting can present a more cost-effective solution compared to having a dedicated internal finance team, helping to conserve precious resources and cut down on expenditure.

Valuable financial insights

Outsourced accountants can deliver critical financial analyses about your business.

Such insights are typically highly valued by lenders and investors, opening up potential financing and investment avenues.

An external accounting team can unlock these possibilities through efficient account management and in-depth financial scrutiny.

The latest technology

Outsourcing enables your business to take advantage of the most recent accounting software and tools without incurring related costs.

Moreover, advancements in communication and cloud accounting technologies enable seamless real-time collaboration with your outsourced team, thereby boosting your financial administration prowess.

Facilitating business expansion

Businesses undergoing rapid growth often outpace their existing financial management expertise and resources.

By outsourcing your accounting needs, you gain access to a larger talent pool and free up more time to concentrate on growth strategies.

Enhanced processes

Current CFOs and finance teams who are pressed to contribute to company decisions may lack the bandwidth to refine and streamline their accounting methods.

Partnering with an outsourced accounting team offers the chance to capitalise on their proficiency in setting up improved, compliant financial systems and processes, resulting in substantial time and cost savings.

Adaptability

Recruiting a full-time finance professional or financial director is a significant undertaking, and many companies may be uncertain about the enduring demand for these services.

Opting to outsource allows you to adjust the level of support needed based on your specific requirements.

Contact our team today for support.

The post The benefits of outsourced accounting appeared first on Grunberg & Co.

These will require a special category of planning permission for property owners – including you. 

If you own an Airbnb or other short-term let properties, you will be introduced to the new planning legislation. 

This is expected to come in by Summer 2024 – your potential non-compliance might lead to new fees and penalties. 

The background to the changes 

The aim of these changes is to provide local authorities and councils with more control over the number of short-term let licences issued.   

The market for short-term lets has expanded in past years, and more people are deciding to enter the field on a casual basis.  

Currently, an Airbnb host in the UK earns an average of approximately £6,000 per year.  

High demand and rapidly evolving trends, combined with industries that have lots of players, mean regulation has struggled to keep up with the short-term rental market.   

Critics have stressed the difficulty of managing the quality and number of lets in areas where the need for family housing is elevated.  

This has resulted in providers such as Airbnb, and Government bodies, being subjected to criticism by consumers for failing to maintain proper licencing and security.   

What are the new requirements? 

The Government will require all owners of new short-term lets in England to secure planning permission with their local authority to use their property in this way.   

It will also introduce a new use class to planning permission regulations – this is to avoid confusion with any existing classes.  

Any current lets will automatically be reclassified and will not require planning permission.   

New regulations will also introduce a mandatory national register to record all short-term lets in England.   

The Government has considered the potential for annual registration, plus a registration fee, but this has not yet been confirmed.   

How will these new regulations affect me and my short-term let? 

What property do you let and how often do you do so? 

How these new regulations affect you will depend on these factors. 

The rules will apply to owners of new lets and will not be reviewed. 

Therefore, they will not apply to properties that you already rent out.   

You might need to put off or reconsider the purchase of a new let, however this will depend on your individual situation.   

If you are a homeowner and let out your sole or main home for up to 90 nights per year, these new regulations will also not apply to you. 

The existing ‘change of use’ charges range from £120 to £258, with the majority set at £120, however the cost of planning permission has not yet been clarified so it is important you keep an eye out for updates. 

The mandatory register might also have some unexpected consequences for business owners.   

It is suggested that HM Revenue & Customs (HMRC) could have access to the register. 

Due to this, we must stress the importance of tax compliance for anyone operating a short-term let in England.   

Contact us for support  

Planning is crucial to maintaining compliance with new regulations. 

You must ensure that your business has the funds and other resources to meet these requirements.   

We will help you to plan around the additional costs of obtaining planning permission and any continuing compliance costs.   

If you operate your short-term lets as your main business or wish to grow a side business, we will also advise you on incorporating these compliance measures into your business plan.   

Don’t let your business become non-compliant. Get in touch with our team today.    

The post Are you a short-term let owner? You’re going to face new planning permission requirements  appeared first on Grunberg & Co.

This form is also used in conjunction with your primary SA100 Self-Assessment form. 

You can submit your SA107 alongside your SA100. 

Or, if you are using HMRC’s online service, this form will become part of your tax return. 

Reporting income gained from the estate of someone who has died, income gained from a trust, or income gained from a settlement, means you must remain compliant with legislation. 

Failure to do so can result in significant financial penalties. 

I’ve just obtained an income from a settlement – when will I need to use an SA107? 

You will need to file an SA107 if you have any of the following income: 

• Beneficiary of a trust/settlement – this means you must file if you have received or are entitled to income (this excludes income from bare trusts) 
• Settlor contributions – this is necessary if you have contributed money or assets to a trust or settlement 
• Income from deceased estates – if you have received income from an estate of someone who has passed away 
• Income from settlor-interested trusts – applicable if you are taxable on income arising to trustees where you, as a settlor, have an interest 
• Income to minor children – this is essential if your minor children receive income from a property you have placed in settlement, and you are taxable on this income. 

Once you have received this income (either from a trust, a settlement, or an estate), you need to ensure you understand the ins and outs of the SA107 form before you submit your Self-Assessment tax return to remain compliant and up-to-date with legislation set out by HMRC. 

How can I complete the SA107 form? 

If you file your Self-Assessment via paper, you will need to download the form and fill it out manually. 

If you file your Self-Assessment online, you won’t need to fill out and file an SA107 form. 

However, it is not possible currently to do this using HMRC’s online service – you will have to use an approved third-party accounting software to attach an SA107 to your tax return online. 

Using this method means you will be able to get an extended filing deadline, allowing you to correctly file your tax returns regarding your newly obtained income. 

It is crucial you report any tax correctly, using our advice to keep you on track. 

Filing and filling in an SA107 form might sound confusing but that’s because it is – the help of our experts will support you as you navigate through the complexities of an SA107 form. 

If you would like further information about an SA107 form, get in touch with us today. 

The post Are you declaring income and need to use an SA107? Here’s what you need to know  appeared first on Grunberg & Co.

In our experience, they can be a fantastic way of passing on your businesses to the next generation, who share the same passions and drive to see your organisation succeed.

Equally, for those looking to acquire a business, they offer several advantages where a deal can be struck with an existing owner.

However, they also bring tax implications for all the parties involved that are worth serious consideration.

To maximise the financial benefits of an MBO, effective tax planning is a must – and the sooner that this can be considered the better.

Our expert team can help you navigate the MBO process and minimise any tax liabilities that come with it.

Why not reach out to us today to find out how we can help you? Speak to us.

Understanding the tax implications of MBOs

An MBO can trigger various tax implications, including Inheritance Tax (IHT), Capital Gains Tax (CGT), Corporation Tax, Value Added Tax (VAT), and Stamp Duty.

We will assist in evaluating your MBO’s tax implications, ensuring you’re well-informed and prepared for every tax scenario that is applicable to your situation.

Capital Gains Tax and Business Asset Disposal Relief

One of the critical areas in MBO tax planning is CGT.

Where an owner has made a gain on the sale or transfer of the business or shares relating to it, they will be required to pay CGT, unless the gains are below the annual exemption threshold (currently £6,000, falling to £3,000 from April 2024)

Sellers can potentially benefit from Business Asset Disposal Relief which can reduce the Capital Gains Tax rate to 10 per cent on qualifying assets (subject to a lifetime limit of £1 million for individuals).

Contact us for a consultation to determine if you qualify for Business Asset Disposal Relief and how it can benefit your MBO.

Financing and structuring the MBO tax-efficiently

The structure of the MBO and the way it is financed can significantly impact tax liabilities.

In some cases, it may be necessary or prudent to space out the transfer of the business through the regular disposal of the original owners shares over time.

We can help analyse which structure offers the best tax outcome for your MBO, balancing the needs of buyers and sellers, while also guiding you through the various financing options (such as employee share schemes and loans), helping you understand the tax benefits and implications of each.

Utilising pensions in funding MBOs

Pensions can sometimes be used to fund MBOs in a tax-efficient manner.

Specifically, Self-Invested Personal Pensions (SIPPs) and Small Self-Administered Schemes (SSASs) are often utilised in this context.

These pension schemes can invest in a wide range of assets, including shares of private companies, which can be instrumental in an MBO scenario.

For instance, a SIPP or SSAS can purchase shares in the company that’s subject to the MBO, providing the necessary funds for the buy-out. This approach not only aids in financing the MBO but also brings significant tax advantages.

The contributions made into the pension are typically tax-deductible, and the growth of the investments within the pension is largely tax-free.

Planning for Inheritance Tax

IHT planning is another aspect to consider, especially in family-owned businesses undergoing an MBO.

Gifting shares is an effective strategy for IHT planning in the context of an MBO. By transferring shares to family members or trusts, you can reduce the value of your estate, lowering IHT liabilities.

Additionally, setting up trusts can further manage IHT obligations. Trusts allow you to place business assets or shares in a controlled environment, potentially reducing the IHT burden while maintaining some control over these assets.

Effective succession planning ensures a smooth transition of business ownership, while minimising tax liabilities. Life insurance policies, particularly when written in trust, can cover potential IHT liabilities without adding to your estate’s value.

Given that IHT laws and business valuations can change, it is important to regularly review and update your IHT strategies. IHT planning can help to utilise reliefs, such as Business Relief, before potential restrictions are applied to these reliefs in future.

Our view on MBOs

MBOs offer an excellent opportunity for business owners and their management teams alike, but they require careful consideration and planning to maximise potential outcomes for everyone involved.

If you are approached by your management team with an offer or think that you would like to pass on your business using this approach, then it is important you give it careful consideration.

Given the complexity of tax laws and the significant financial stakes involved, seeking professional advice is paramount.

Our experienced accountants and tax advisors can provide tailored advice, ensuring that your MBO is as tax-efficient as possible.

MBOs are a great option for business growth and succession, but tax implications of an MBO must be considered.

We can help you maximise the benefits of your MBO while minimising tax liabilities. Contact us today to discuss how we can support your MBO journey.

The post Tax planning for MBOs – Maximising benefits, minimising liabilities appeared first on Grunberg & Co.

In 2022/23, over 800,000 new businesses were registered nationwide, which is a 6.4 per cent increase on the previous period. SMEs are crucial contributors to wider economic health and their continued existence and growth is evidence of a thriving, innovative society.   

This means (in practice) that, if you’re ready, this may be the ideal time to set up your new business.   

How do you know if you’re ready? We’ve got you covered.  

What do you need to know when starting your business?  

There are multiple steps that you need to take before you take that all-important leap of opening for business.   

We’ll go over the six most valuable steps to building the foundations of a successful business that fully engulfs your vision:  

• Market and competitors  
• Business plans  
• Registering your business  
• Funding and cash flow
• Accounts and taxes  
• Networking  

These steps might look vaguely different depending on your sector and the nature of your business – but they’re always a good place to start.  

Create and understand your market  

This should be the first step for any entrepreneur looking to set up a successful business.   

Your business should meet a true consumer need and fill a noticeable gap in the market.  

Your unique selling point (USP) needs to be clear to you and communicable to your audience – offering your customers value from the first point of contact.   

Additionally, you’ll need to demonstrate a strong grasp of your USP if you’re seeking external funding and investment, so it is important to pin this down early.  

Ensure your business is registered  

There are two aspects to registering your business:  

1. Choosing a legal structure  
2. Telling HMRC and the Government about your business  

A legal structure means that you are either a sole trader, part of a partnership or running a limited company.   

Each structure has many benefits and drawbacks that will affect the taxes you pay, and whether you are personally liable for costs and debts.   

Once you have decided on this, you’ll need to register your business.   

If you’re a sole trader, you can do this through Self-Assessment, after which you’ll need to maintain financial records and submit through this system each year.   

For limited companies, you’ll need to register with Companies House with a registered address and SIC code, which defines what your company does.   

This creates an ongoing responsibility to submit accounts and Confirmation Statement at the end of each accounting period.  

Design your business strategy  

This is your opportunity to elaborate on your business ideas and put them down in writing.   

A business plan allows you to expand on your initial concept, as well as detailing:  

• Sales projections  
• Cash flow and financing  
• Your objectives  
• Potential issues and how you will address them  

You should spend a considerable amount of time on your business plan to ensure that it accurately reflects your ideas and the time you have invested.   

We can advise you on writing a comprehensive business plan that will set you up for success.   

Manage your finances accurately  

It’s important you get your accounting in place and streamlined as quickly as possible to avoid breaching any relevant legislation.   

This includes knowing what taxes you’ll be liable for, which might include:  

• Self-Assessment Income Tax – for sole traders and those in a partnership  
• Corporation Tax – you’ll likely pay the ‘small profits’ rate initially for companies with less than £50,000 in profit  
• VAT – if your limited company has revenue of £85,000 or more  

Failure to pay these, even for new businesses, can result in considerable financial penalties and reputational damages.   

You can stay on top of compliance by keeping your accounts up to date in collaboration with your accountant or finance team.    

Allow your network to grow  

No business is an island. Growing your network of fellow entrepreneurs and third-party suppliers is a great way to access peer-to-peer support and stay updated on developments in your sector.   

This also applies to building your online presence.   

In your business’s early days, it’s crucial you build your website and social media presence to enhance visibility of your brand and get consumers on board as soon as you’re ready for them.    

For advice on setting up a new business, please get in touch with our team today.  

The post Establishing a business: a comprehensive guide   appeared first on Grunberg & Co.

This can feel disheartening and frustrating, but it is important to remember there are multiple ways of securing the funds your business needs. 

Government grants and schemes 

The Government and local authorities offer various grants and schemes that are designed to support SMEs like you. 

Perhaps you want to develop your research, or you require support when exporting – whatever the reason, these grants can cover a range of wants and needs. 

You do need to remember, however, that the grants often come with specific eligibility criteria, so make sure your SME fits the requirements before you apply. 

For more information and to find the right grant for you, contact us today. 

There is also a scheme called the Recovery Loan Scheme (RLS) which is a government-backed initiative that was created to help small businesses during and after the pandemic. 

This scheme has now been extended to 2024, so get in touch today to speak with our experts. The RLS gives lenders a 70 per cent guarantee against the loan facility. 

For you, this means there is less risk to the lender not receiving back their investment so they are more likely to approve your business for a recovery loan rather than a business loan. 

EIS and SEIS 

These schemes were created to be Government initiatives that encouraged private investors to invest in fledgling UK businesses. 

This means that the risk that comes with investing in any early-stage business, by giving investors generous tax breaks, is significantly reduced. 

The criteria for SEIS-eligibility includes: 

• UK-incorporation 
• You have fewer than 25 employees 
• You have never received investment from a venture capital trust 
• You are not and have not been under the control of another company. 

The criteria for EIS-eligibility includes: 

• You are permanently established in the UK 
• You don’t trade on a public stock exchange 
• You are not under the control of another company, nor does another company own more than 50 per cent of your shares 
• You don’t plan on closing after completing a project (or series of projects). 

EIS and SEIS offer lots of tax incentives, including: 

• Income Tax relief – 50 per cent on SEIS investments and 30 per cent on EIS 
• CGT exemption – This applies to any gains that come from the sale of SEIS and EIS shares after three years. 
• Zero Inheritance tax – This tax does not apply to SEIS and EIS shares that you have held for at least two years. 
• Making a loss – If SEIS and EIS shares are sold at a loss, investors can offset the loss against their CGT. 

These schemes both make investing in startups and scaleups more appealing due to their tax benefits – investors who put more money into your SME will get a tax break on the money they invest. 

For investors, the biggest benefit is the amount of Income tax relief they receive through the two schemes. 

From April 2023, investors now receive a 50 per cent tax break on up to £200,000 they invest through SEIS every tax year. 

With EIS, investors receive a 30 per cent tax break on up to £1 million they invest through EIS every tax year. 

This makes your SME much more of an attractive prospect to investors, but only if you make SEIS shares available to investors before you start taking on EIS funding. 

Peer-to-peer lending 

Another alternative route to secure finance, outside of a traditional bank loan, is via peer-to-peer (P2P) lending. 

P2P lending platforms allow you to connect your business with investors who are willing to lend money – often via tax efficient investment schemes. 

This system bypasses the traditional bank and financial institution frameworks and allows you to borrow and access funds directly from the individual investor. 

This can be done through online platforms or websites – remember, if you are declined by one P2P lender it does not mean you have been declined by all. 

Asset finance 

You can use your business assets (equipment, property, vehicles etc) as collateral for a loan. 

The lender you choose will evaluate the value of these assets and provide a loan based on their assessed worth. 

You might also want to consider the option of exploring asset finance if you are looking for funding to purchase equipment or vehicles for your business. 

Then, your lender will use the asset as security for the loan, meaning there is a less perceived risk. 

It is important you know how to obtain funds for your business should your bank loan be rejected. 

If you would like to discuss alternative financial funds for your business, contact us now. 

The post I have been refused a bank loan for my business – What alternative finances can I use?  appeared first on Grunberg & Co.

While we can’t offer you financial advice on where to invest your savings, there are several tax considerations that can help you make more of what you earn.

Before you approach your golden years, it’s essential to have a clear plan in place to ensure that you can retire with confidence.

There are generally some steps that we recommend to our clients throughout their life that can provide a boost to them in retirement. We have gone over them in a little more detail here so you can formulate an effective retirement plan.

Obviously, pensions form the bedrock of most retirement plans.

There are mainly two types of pensions in the UK: the State Pension and private pensions, which include workplace pensions and personal or stakeholder pensions.

Your State Pension and why it’s insufficient 

The State Pension is provided by the Government and is based on your National Insurance contribution record.

To qualify for the full State Pension, you need to have 35 years of qualifying National Insurance contributions.

You can check your State Pension forecast here.

In April 2024, the State Pension is set to increase by 8.5 per cent, under the ‘triple lock’ policy.

The new flat-rate State Pension will rise to £221.20 weekly, and the basic State Pension for those eligible before April 2016 will go up to £169.50.

Despite this increase, the State Pension alone may not suffice for a comfortable retirement, so you should always consider it as part of a wider retirement plan.

Personal and workplace pensions

Workplace pensions involve contributions from both you and your employer.

If you are classed as a worker, are aged between 22 and State Pension age and earn at least £10,000 per year, then your employer should enrol you in a workplace pension scheme.

Personal pensions, such as self-invested personal pensions (SIPP), can be set up and paid into by yourself or your employer. These can supplement a workplace pension or form your main pension pot if you are self-employed.

You can contribute whatever you like to your pension and, so long as you are within the allowances, you will not pay tax.

The annual allowance is £60,000 per year for all your personal and workplace pension contributions.

For higher earners, the annual allowance is tapered, decreasing by £1 for every £2 of earnings above £260,000. This reduction continues until it reaches the lower limit of £10,000.

There can be a tax charge on individuals that make a level of contributions to pension schemes that exceeds the level of their relevant UK earnings (e.g. employment and self-employment income) in the tax year. Where an individual has no relevant UK earnings, then they are limited to tax relief on gross pension contributions of £3,600.

The money purchase annual allowance stops people from contributing more than £10,000 per year when they have accessed their pensions benefits.

If you exceed the annual allowance, the excess amount will be added to your other taxable income for that tax year and taxed at your applicable Income Tax rate.

From April 2024, the £1 million lifetime allowance will be fully abolished, ensuring that there is no upper limit on the amount you can put away before being taxed – subject to annual contribution falling below the annual allowance.

The tax benefits that your pension offers

When you contribute to a pension, the amount you put in is effectively topped up by tax relief.

For instance, if you are a basic rate taxpayer, for every £80 you contribute to your pension, the Government adds another £20 in tax relief, effectively making your total contribution £100.

It matches the Income Tax you would have paid on this when you initially received it.

The more you earn, the more tax you can save. So, a higher rate taxpayer, who has been taxed 40 per cent on their income, for example, would receive £40 for every £60 they contribute.

Additionally, the growth of your pension investments is largely tax-free. This contrasts with most other forms of investment, where returns might be subject to Capital Gains Tax or Income Tax.

When you start drawing your pension, up to 25 per cent of the total can usually be taken as a tax-free lump sum, offering a significant tax advantage.

The remainder of your pension is subject to Income Tax when withdrawn, but this is often at a lower rate, especially if your income in retirement is lower than when you were working.

All these tax benefits make pension contributions one of the most tax-efficient ways to save for retirement and we highly recommend that everyone has some kind of pension scheme in their later life plans.

Why you should consider investing in a Lifetime ISA

There are a few genuinely tax-efficient ways to boost your savings during your working life and Lifetime Individual Savings Accounts (LISAs) represent one popular way to do so.

LISAs can only be opened by those over the age of 18 and under 40 and you can only deposit up to £4,000 each year until the age of 50.

The real value of a LISA comes from the fact that the Government will add a 25 per cent bonus to your savings, up to a maximum of £1,000 per year.

You can withdraw from your LISA for either your first home, when you are 60 or over, or when you are terminally ill – early withdrawal for other purposes incur penalties.

Ultimately, these help you achieve your first home or retirement goals more effectively.

A quick note on business succession

Passing your business onto someone else is usually a better option than simply letting it die when you decide you no longer want to work.

(An exception to this is if you are a sole trader who does not employ anyone else).

Without a succession plan, a business may face challenges such as being sold under duress for less than its value or becoming directionless and at risk of failure.

As a result, you need to formulate a well-crafted succession plan that ensures the continuity of your business, your legacy and protects the financial interests of your family or other inheritors.

If you are planning to sell your business, different sale options such as cash purchases or instalment sales can have varying tax implications, both for you and the buyer.

Instalment sales can be particularly advantageous in spreading out your tax liabilities, especially if you are in a family business scenario.

We often recommend changing your business strategy from tax efficiency to maximising business value, which can lead to better offers from buyers but may also result in higher taxes in the short term.

Poor or absent succession planning can lead to financial loss, tax liabilities, and the potential collapse of the business, which is something you should avoid, even if just for your employees’ sake.

Inheritance Tax (IHT) planning

IHT can significantly impact the wealth you pass on, so it is important to take it into account when planning your retirement.

The current Nil-Rate Band is £325,000, so anything above this amount is taxed at 40 per cent. Please note that gifts before death can use up the Nil-Rate Band for up to 7 years when these gifts have not been structured to utilise other allowances.

However, there are exceptions to this.

The Residence Nil-Rate Band means that £175,000 of your primary residence is considered to be tax-free and is added onto your pre-existing Nil-Rate Band. So, if your estate contains a house that will pass to direct descendants, you are entitled to pass on £500,000 before IHT comes into play. The Residence Nil-Rate Band will be tapered for estates worth over £2 million.

Similarly, if you pass the entirety of your estate to a spouse, your Nil-Rate Band and Residence Nil-Rate Band are also included in their IHT calculations.

Because your spouse also has £500,000 to pass down tax-free, when you add your own thresholds and allowances to theirs, you create a scenario where you can leave £1 million to your loved ones without IHT taking effect.

If your estate is likely to end up being worth more than the combined allowances available, then we recommend you contact us to discuss strategies to ensure your wealth passes smoothly to the next generation without Inheritance Tax being levied (such as utilising gifting strategies, trusts, or other tax-efficient vehicles).

If you would like to talk about the fate of your business once you retire, please don’t hesitate to reach out to one of our team who can walk you through your choices and options.

Similarly, if you have any questions regarding your retirement and later life finances, we have the knowledge and expertise to answer them.

To speak to an experienced accountant, please get in touch.

The post Financial strategies to help you retire with confidence  appeared first on Grunberg & Co.