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