The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
The taxation of corporate debt in the UK is complex. There are several different sets of rules governing the amount and timing of tax deductions available for interest and other amounts relating to corporate debt. These include:
the loan relationships regime
transfer pricing requirements
the corporate interest restriction
Of these, only the loan relationships regime is likely to apply to the typical owner-managed business (OMB) and is outlined briefly below.
The transfer pricing rules contain a number of exemptions such that, in practice, they are unlikely to apply to the typical small OMB. The rules do not apply to all small and medium-sized enterprises (SMEs), ie enterprises with fewer than 250 employees and turnover of no more than EUR 50 million, or assets of no more than EUR 43 million. Dormant companies are also excluded from the regime. Although note that from 6 April 2019, the profit fragmentation rules may apply instead. These operate in a similar manner to the transfer pricing regime, and will ensure that where profits of a UK business are diverted to an offshore entity that pays l
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‘Hold-over’ relief allows for the deferral of a gain that would otherwise arise in relation to a disposal. No capital gains tax (CGT) is due in respect of the disposal, but the base cost of the asset for the transferee for the purpose of a future disposal is reduced by an amount equal to the gain
Maintenance payments are payments made by a taxpayer to their former or separated spouse for the maintenance of that former spouse or their children. To obtain any tax relief for maintenance payments, one of the couple must have been born before 5 April 1935 and the payments must be made by virtue
The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are
Expenditure of a capital nature is not allowed as a deduction when calculating trading profits. Expenditure of a revenue nature is allowable, provided there is no specific statutory rule prohibiting a deduction and the expenditure also satisfies the wholly and exclusively test. See the Wholly and
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