TAX BONANZA FOR CIVIL ENGINEERS AND CONSTRUCTION COMPANIES City Accountants (London) Ltd comes up with 7 New Tax Saving Ideas for Civil Engineers and Construction Companies The Brexit vote has opened up a monumental change in the tax system which is about to unfold and Civils need to start to plan for this opportunity now. Corporation tax is likely to reduce to 15% to make the UK competitive with other countries. This will give civil engineers advantages with service companies and practice incorporation. Opportunities abound for civils in CGT and IHT. Depressed asset values will assist Civils passing on wealth to their children at minimal tax cost. Civils will need to act fast on this one! Brexit will make wholesale economic changes in construction. This provides a
wonderful opportunity for young civils to set up a fresh new practice in competition with their elderly established colleagues. Without the hangover of burdensome loans, they should provide some stiff local competition to their well-established professional colleagues! 1. Great Time to Open A Professional Practice There has never been a better time to open a new ‘value for money’ Practice, right next door to an existing Professional Practice saddled with their high overheads and debts. Civils that are looking to start a new Professional Practice from scratch can now look forward to an additional 50% Tax Relief on the costs of set up. This is achieved using the Governments Seed Enterprise Investment Scheme (SEIS). As an added bonus there is no Capital Gains Tax on this business when you sell it. Terms and Conditions apply.
This involves a special Tax Claim at HMRC but is well worth the trouble as the Tax Savings can be significant. 4. How Civils can Claim a Research & Development Super Deduction Innovative civils involved in new engineering or construction ideas can now claim a ‘Super Deduction’ in their accounts. This includes staff, materials and equipment costs and expenses which are uplifted by 130%. It never ceases to surprise me how many Civil Engineers this applies to. Basically Research & Development can include anything that makes your Practice different; new construction techniques, computers or even your own idiosyncratic way of doing AutoCAD. 5. Buy To Lets For Your Children When transferring Buy-To-Lets to your children, a Capital Gain often arises. With a depressed housing market post Brexit, now is a good time to transfer properties to children thus avoiding higher taxes later. 6. Tax Wrinkles Converting Properties Into Flats
Civils can make specific provisions for bad debts and conservatively value stock and work in progress. This will reduce their practice profits and tax payable.
Many an engineer have spotted the potential of buying a large, cheap property discounted post Brexit and converting it into flats. Setting up as a property developer or moving into the property as your principal private residence can massively reduce CGT when you sell.
3. Income Tax Losses Waiting To Be Grabbed
7. Limited Companies For Property Developers
2. Reduce Practice Profits
Civil Engineers who have lost money investing in unquoted Limited Companies, can now claim the loss on shares against their earnings and consultancy profits.
Post Brexit opportunities abound for picking up cheap development properties in Metropolitan areas. A Special Purpose Vehicle (SPV) can be set up for one off property development to claim all the development expenses you incur. The favourable entrepreneur relief rate of 10% CGT should apply when you sell.
City Accountants (London) Ltd are Specialist Construction Accountants based North of London. They advise on a wide range of Construction Tax issues and regularly write for the Construction Press. City Accountants have over 20 years’ experience in Construction and Civil Engineering Accounts and are recognised for their proactive approach to Taxation in construction and business problems. Phone 01438 722224 or email: kate@dentax.biz
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