Capital Gains Tax
Capital Gains Tax has seen the most far reaching changes in 10 years in this year’s Finance Bill. No longer chargeable at rates linked to Income Tax, there are winners and losers. Winners will include higher rate taxpayers investing in non-business assets who previously paid at rates of between 24% and 40%. They now enjoy 18%. Income tax basic rate taxpayers could fare worst on finding their rates increased from as little as 5% to 18%.
This new 18% rate of CGT can be mitigated by Entrepreneurs Relief, reducing this to 10% on the first £1m of lifetime qualifying business disposals. £80,000 is therefore available and should not be lost by hasty, ill conceived, or lack of planning. Considerations such as transferring shares to a spouse or other family members, or stripping a company's profits by dividends before disposal need careful consideration. As always, if you are contemplating the disposal of your business, talk to your accountant at least 12 months beforehand.
Preparing for a Downturn
"Recession" is an emotive word, and one that without care becomes a self-fulfilling prophecy.
A good commercial lawyer offers far more than just legal advice to his commercial clients. Here Nigel Stratton of Berry & Berry solicitors offers some thoughts on facing up to economic slow-down.
The current changes in our business and indeed private financial environment do not necessarily indicate an approaching recession, but are factors that should be considered now in our day to day business and personal lives.
It is a salutary lesson to realise that there is a generation who have not had to face up to these recent economic circumstances before. Perhaps those who are older and wiser (?) and have seen it all before are better prepared – but perhaps not!
The current economic circumstances have been compounded in their effect by sixteen years of stability and growth and in recent times a fairly benign climate of low interest rates, an increasing shift to investment in property (with the attendant belief that values only ever rise) and an increased level of historically cheap debt in both the personal and business arenas. So, the rapid reversal has been all the more difficult to digest.
See the right hand column for our key advice.
Inside this issue:
Preparing for a downturn: A quick analysis of good economic strategies
Capital Gains Tax: Geoff Smith of Larkins outlines new key differences
Wealth Creation Specialist - October 2008 Newsletter
In preparing for a downturn I offer the following
tips:-
1. Don't over react – try to understand where the demand is price sensitive and don't give away profits through discounts and price reductions unnecessarily.
2. Define and recognise those who are essential members of your team and reward them accordingly. At the same time review your employment terms and prepare carefully for any changes in working practices that may prove necessary.
3. Consider in advance how you will discuss the changes in economic circumstances with employees, customers, suppliers and financiers.
4. Know what your costs are and how to reduce them.
5. Don't see your bank as the enemy. Produce accurate management accounts and discuss them with your financiers.
6. Take control. Develop a strategic plan. Know where you are going. Plan to demonstrate this.
7. Once again, "Cash is King". Make sure you have the best cash management approach.
8. Play the "What If Game". Things change fast in a downturn. Always prepare a Plan B.
9. Act now. Don’t wait. Review and take action. Be ahead of the game. Be ahead of your competitors. Be successful – even in "recession".
"… there is a whole generation who have not had to face up to these recent economic circumstances before".
1. Don't over react – try to understand where the demand is price sensitive and don't give away profits through discounts and price reductions unnecessarily.
2. Define and recognise those who are essential members of your team and reward them accordingly. At the same time review your employment terms and prepare carefully for any changes in working practices that may prove necessary.
3. Consider in advance how you will discuss the changes in economic circumstances with employees, customers, suppliers and financiers.
4. Know what your costs are and how to reduce them.
5. Don't see your bank as the enemy. Produce accurate management accounts and discuss them with your financiers.
6. Take control. Develop a strategic plan. Know where you are going. Plan to demonstrate this.
7. Once again, "Cash is King". Make sure you have the best cash management approach.
8. Play the "What If Game". Things change fast in a downturn. Always prepare a Plan B.
9. Act now. Don’t wait. Review and take action. Be ahead of the game. Be ahead of your competitors. Be successful – even in "recession".
"… there is a whole generation who have not had to face up to these recent economic circumstances before".
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