FINANCE
Hear it from the experts …
Taxes and commercial properties
There are several types of taxes relating to commercial properties. Below are a few that need considering when acquiring a commercial property:
Stamp Duty The rules changed in April 2016, and there are now three rates of Stamp Duty Land Tax on the purchase of a commercial property: 0 % on the first £ 150,000; 2 % on the next £ 100,000; 5 % on the amount above £ 250,000.
VAT Generally, VAT is not charged on rent, and no VAT is recoverable on expenses such as repairs. But, with commercial properties, the landlord normally applies to HMRC to ' opt to tax ' the property- which means VAT is charged on the rent. It is then reclaimable on expenses. When an ' option to tax ' the property has been made, VAT has to be charged on the sale of the property, If the new purchaser is just going to use the property as business premises, then it can recover the input VAT charged via its VAT Return without needing to‘ option to tax’ the property. But if the new purchaser intends to rent the property out, then it should‘ opt to tax’ or it will be unable to recover the VAT on the purchase.
Capital Gains Tax When owned by a company, any Capital Gain on the eventual sale of the property is reduced by an Indexation Allowance( allowing for inflation) and then taxed at the Corporation Tax rate( currently 20 %). When it is sold by an individual, or jointly, Capital Gains Tax is charged at 10 % and / or 20 %( depending on other taxable income) – after deducting the Annual tax-free allowance( currently £ 11,100 per person). Entrepreneurs’ Relief is generally not claimable against the sale of properties.
Capital Allowances As well as claiming capital allowances( to reduce Income tax / Corporation tax) on fixtures and fittings within the commercial property, a landlord can also claim capital allowances( writing down allowances at 8 %) on‘ integral features’. These include the cost of electric, water and heating systems – so it is important to be able to identify their separated out costs to help a claim to be made. Peter Bromiley ACA AMS Accountancy Ltd
Watersheds aid legacy sale
The sale of a prestigious Swindon tyre firm to a large group represents the conclusion of a‘ family legacy’.
Bell Silencer Services was established in 1977 by engineer, the late Ron Bell, and over the last 20 years has become one of the country’ s leading independent tyre and exhaust suppliers. The company sells tyres and exhausts for the every day car as well as elite sport cars, including Ferraris and Aston Martins, and is renowned for its skilled craftsmen.
The tyre and exhaust centre, based in Hooper Place, Old Town, has now been sold to private equity-backed Micheldever, a national tyre supplier based in Winchester, Hampshire, thanks to negotiations led by Swindon-based corporate finance specialists Watersheds.
Christine Bell, wife of the man who built up the company, said:“ When my husband started considering retirement it was always his aspiration to sell it to Micheldever, so this sale represents the conclusion of a family legacy for us.
“ We are now looking forward to seeing the company grow as part a bigger national group.”
The deal was concluded in just over four months and was orchestrated, managed and concluded by Watersheds. Lawyers from Thrings solicitors also provided expert support.
Jessica Painter, a Partner at Watersheds, based in Bath Road, said:“ The negotiations were concluded swiftly and efficiently and all parties involved were delighted with the outcome.
“ The name of the company will be retained and the sale will also see more direct resources being invested into growing the business, cementing its future in high-quality service and high performance product range.”
Micheldever Tyre Services( MTS) was founded in 1972 as a part-time venture providing car servicing and tyres. Micheldever Group is the largest independent wholesaler, distributor and retailer of tyres in the UK, selling six million tyres nationwide, which is around 20 percent of the total UK market.
The group is continuing its expansion drive, having acquired 27 fast fit centres in the last nine months.
To find out more about Watersheds offering visit: www. watersheds. ltd. com
Ask AMS Advice for small businesses AMS Accountancy Ltd. 01793 818400
What expenses can I claim against my rental property income?
Mortgage interest is claimable in full( After April 2017 there will be restrictions)
Management charges / commission to letting agencies Property repairs – but not“ improvements”
Renewals of fixtures on a like-for-like basis( modern equivalents are acceptable)
Maintenance costs and decorating – including gas safety certificates; Advertising for a tenant and obtaining / drafting a tenancy contract; Buildings / contents insurance
Council tax, water rates, service charges etc. if the landlord incurs these
Replacing furniture / white goods / furnishings on a like-for-like basis Travel costs to a rental property for inspections / repairs Accountancy! Peter Bromiley ACA
www. ask-ams. co. uk @ AMSAccountancy www. ams-accountancy. co. uk
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12 THE BUSINESS EXCHANGE 2016