If the opinion polls are to be believed, which might be a bit of a stretch given their recent way-off-the-mark predictions (Paddy Ashdown’s promise to eat his hat after the close of polling at the last General Election springs to mind), then the gap between the two main political parties is now very small. This leads us to think more deeply about what tax planning might be required given the colour of the party in charge on 9th June.
If the Tory blue flag flies above Downing Street, there could be increases in tax at some point, as their manifesto no longer includes a promise not to raise taxes. Theresa May, and more particularly Philip Hammond (has anyone seen him recently?), felt the previous non-hike promise was too much of a constraint on policy–makers. No further details have been given over where tax rises might hit.
If, on the other hand, the red flag is flying, then we know that there will be tax rises at both a personal level and on corporate profits, to pay for Labour’s spending commitments. Personal taxes will rise for those earning more than £80,000pa, and the recent increases in Inheritance Tax thresholds will be reversed. Companies will see an increase in the rate of Corporation Tax on their profits from the current rate of 19% to 26%.
There is also uncertainty over the HMRC flagship policy of Making Tax Digital (MTD). Many of the proposals for MTD were removed from the last Finance Act, which was truncated when the snap Election was called. The change to the amount of tax-free dividends from £5,000pa to £2,000pa were also a victim of this action. It remains to be seen if either of these will be re-introduced in what is sure to be a second Finance Bill/Act of 2017 following the General Election.
Whichever party takes the reins of power, it will be necessary for taxpayers to make sure they keep an eye on their own personal circumstances, and how any tax changes might impact on them. It will no doubt keep us on our toes, and lead to a lot more tax changes, regardless of which party is in charge.
Want to grow your business fast? Considered a business acquisition?
Most business owners see the benefit in adopting a growth strategy. Sometimes though market forces make organic growth difficult and expensive. A much faster method of achieving growth targets is to bolt on other businesses through an acquisition.
You may choose a competitor whose sales you can absorb and strip out overheads. Your target might be complementary in that it offers something of use to your customers or vertically/ horizontally in your supply chain. Irrespective of the type for most a business acquisition offers the hope of growth. Many owner managers however, find the thought of an acquisition not appealing; too many problems, too much risk, too difficult to fund and too expensive.
At Nicholsons we partner with clients looking to acquire to help guide them through the purchase process every step of the way.
One piece of advice I often give is that deals don’t need to be Richard Gere in Pretty Woman style massive deals. I’ve recently worked on two acquisitions both with values of less than £25,000 but deals with values up to £100,000 can still generate good value.
Both of these recent deals offered integration benefits; sales and profit growth, customer cross selling opportunities, channel integration, economies of scale and a less than 3 year payback.
Smaller deals like this are often easier to complete. There are often smaller ego’s amongst the sellers (& their advisors) and whilst Due Diligence other pre purchase checks and legal documentation are still needed it can often be really focused on key areas which helps keep costs proportional to the deal size.
Sometimes buyer burnout in the deal process means that integration and day one planning is not effective. Smaller deals don’t drag on and there is plenty of energy left for integration planning. This is a real benefit of completing small deals because you can integrate them easily whilst keeping on top of the day job. Post purchase integration is where excellent business owners generate value and make acquisitions work so having more time on this area is a benefit.
So my advice would be. Don’t discount acquisitions as a means of achieving growth, but think smaller.
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