Do you have farming clients?

A notification from gov.uk has just popped into my Inbox and I think it’s worth sharing on this forum.

Farm payments if there’s a no-deal Brexit

The notice explains how payments under the present EU’s Common Agricultural Policy (CAP) would be affected in the event of a no-deal Brexit. You may want to share this update with your farming clients who benefit from EU grants.

Those businesses affected will effectively continue to receive payments after 31 October from the UK government under the terms of the UK government’s funding guarantee. This UK funding is only guaranteed until the end of 2020.

The notice continues:

Defra, and the devolved administrations, are preparing domestic legislation (under the Withdrawal Act) to ensure the UK has the ability in law to continue operation of payments in a ‘no-deal’ scenario. This legislation preserves the EU law as it currently stands, and ‘fixes’ the legislation so that it is operable after the UK leaves the EU.

The domestic legislation will require beneficiaries to conform to the same standards as they do currently, to receive payments. This will include on-site inspections to UK farms receiving payments, which will continue as normal.

All of these rules and processes will remain the same until Defra and the devolved administrations introduce new agriculture policies, either through the Agriculture Bill, or an Agriculture Bill in one or more of the devolved parliaments.

The government has pledged to continue to commit the same cash total in funds for farm support until the end of this parliament, expected in 2022. This includes all funding provided for farm support under both Pillar 1 and Pillar 2 of the current CAP. This commitment applies to the whole UK.

Hopefully, if we have a change in government before the end of 2020, they will honour this pledge. Interestingly, this comment is followed by:

This notice is meant for guidance only. You should consider whether you need separate professional advice before making specific preparations.

It is worth noting that the guarantee referred to in this article would seem to apply to other, non-farming, EU funding in place before we leave the EU.

What to do next?

Clearly, we should be seen to be active in keeping clients up-to-date on these issues. If you missed my email yesterday, you may want to consider sending out the update I wrote for your clients, and which is available for download at the foot of yesterdays post. There is a small charge of £30 plus VAT to access the client update, but I have included ideas to make best use of the material including social media copy. If you want to order, and there are no copyright restrictions, simply complete this order form.

 

Are you prepared to lose clients?

There are circumstances, usually beyond our control, that determine when a client ceases to be a client. The most obvious is an untimely visit by the grim reaper. This aside, the reasons for loss of business usually falls into two categories:

  1. Dissatisfaction with the service you provide or the price you charge, or
  2. Other issues.

In this post I’d like to consider the impact of one of these other issues.

Other issues for losing clients

How long is a piece of string? Retirement, sale of a business, moving out of area, insolvency, “had enough”, sickness, other family matters, and that old chestnut: deteriorating market conditions.

Regarding the last of these, are there any upcoming changes that might trigger a downturn in economic activity?

In passing, you may have noticed a lot of comment recently regarding the protracted debate about our exit from the EU. I will avoid the use of the “B” word as it’s now a bigger turn-off than “tax” and I would like you to finish reading this copy…

Contenders for the leadership of the Conservative Party are both, seemingly, committed to the possibility of a no-deal outcome come 31 October, how might that impact your clients’ businesses? And whilst you may consider that talking down economic prospects is either politically or practically inadvisable, what if – regardless of our personal opinion – we really are on the verge of a dislocation (a slow-down) in economic activity?

Optimists will say any slow-down will be temporary and the upside, when it arrives, will more than compensate for any post-exit blues. Pessimists will lean towards an increasingly depressed and extended period of recession with no apparent light at the end of the tunnel, and certainly not in our lifetimes.

Are you prepared to lose clients?

When did you last survey your clients to see who has active trading links with the EU and has concerns about our withdrawal from the EU? More importantly, wouldn’t it be prudent to draw up a list of these clients and contact them to offer a business health check?

As far as I can see, this is a win-win outcome. Attending to structural weakness now (cash flow, solvency, profitability planning, risk assessments) has no downside. Left unattended, any downturn will tempt insolvency and loss of income, whereas assessing risk and strengthening the Balance Sheet, will not only assist clients to have a better chance of surviving bad-times, if the good-times roll they will be first out of the starting blocks. First come is best served.

I can help

I have added two resources to the Landmark site in recent months. They are:

  1. Brexit information packs (assuming a no-deal outcome), videos and risk assessment tool for your website: see here, and
  2. Fee Builder, includes promotional material for business and personal financial health checks: see here.

I suspect that those of us who are content to ride out this issue – it will just be a minor blip – will temp not only fate, but also the longevity of their active client list.

Nothing like a good blurt

As many of you will be aware I edit the news copy for Informanagement. As part of this brief I also contribute blog articles. Last week I wrote about the amount of advice we professionals tend to give-away. The post is reproduced below.

How much advice do you give away?

There is a difference between flagging up an issue that could be a problem and offering a solution.

Most professionals sell solutions and so offering advice without agreeing that you be paid for giving that advice seems to be counter intuitive, and yet most professionals seem to do this.

Why is that?

Would you willingly sanction a loss of earnings for your practice?

Perhaps advisers just surrender to age old desires to be liked or respected? It is likely that during a thirty year career, accountants let slip valuable advice, let’s say twice a week, forty-eight weeks a year. If we estimate the value of each slip at say £75, this would amount to a thirty year loss of income amounting to £216,000. If we factor in the possibility that staff are prone to the same largess, the lost revenue quickly becomes a sizeable retirement pot.

Take a step back

The key to closing this drain on fee income is partly to acknowledge that it happens and secondly to rethink exchanges with clients or prospects. There will always be a temptation to demonstrate that you are smarter than your competition and this is a sound way to impress prospects and retain your clients. So, if you are going to avoid blurting out the solution to problems in order to stand out from the crowd, how can you do this without giving advice away for free?

Give yourself time to consider

A possible strategy, apart from biting your tongue, may be convert the blurt into an acknowledgement that you may possibly have the answer required, but you need to check out a couple of issues, and you will get back to them the next day. When you subsequently respond, you could say that you can fix the presented problem, but you will need to invest “x” hours to do so and your fee would be £xx. Follow up quickly with a cost/benefit statement that will convince them your fee is worth paying.

The place to start is to consider how much advice you give away. By all means keep your clients informed, this is a brilliant way to stimulate interest in your services, but don’t be tempted to blurt out the solutions.

Food for thought.

And, if you are considering an alternative supplier for your practice news feed to clients or staff, take a look at Informanagement’s offerings on their website. Or contact Laurence Vogel, Laurence.Vogel@informanagement.co.uk.

 

Cash flow and insolvency

Life raft against blue sky

Last week I wrote a short blog post that was distributed to Landmark’s Online Copy subscribers; this service provides two draft blog/newsletter articles a week. The topic was insolvency and how small businesses can still find themselves technically insolvent if cash flow unexpectedly dries up, even if on paper their net asset position is positive.

The article is reproduced below. Feel free to use this. I recommend that you edit the copy slightly if you post to your website as this will avoid search engines treating the text as generic.

What exactly is insolvency?

The dictionary definition of insolvency is less than illuminating, it is:

The state of being insolvent…

Listed synonyms provide more detail:

bankruptcy · liquidation · failure · collapse · ruin · financial ruin · ruination · pennilessness · penury · impecuniousness · beggary · administration · receivership · folding · pauperdom

What these explanations do not provide is a definition of the state of insolvency. A simple definition could be the insolvency occurs when we are unable to meet our obligation to settle debts by the required due date.

In a business sense, a firm can be said to be insolvent its assets are less than its liabilities, but even this definition does not quite hit the spot.

Imagine that you use all your available cash reserves to purchase stock. To place this in a current context, you might consider this as a strategy to avoid supply line issues in the event of a no-deal Brexit.

You have no issue with doing this as you are owed a significant sum by your major customer that will restore your cash flow before bills and salaries are due at the end of the month.

But what happens if your customer is suffering cash flow issues and is unable to pay?

On paper, your business will be solvent. As long as your delayed payment from your customer does not become more serious, in time your cash flow will be restored, but how will you pay your bills at the end of the month?

Without private funds that you can introduce to see you through this impasse or the support of your bank, how will your staff and other creditors respond if you have to go cap in hand and explain there will be a delay in paying them?

Cash, liquidity, really is king, and lack of cash can actually place your business in the same position as an insolvent firm.

If you are concerned that you may be skating close to a cash flow crisis or a deeper insolvency, please call so that we can help you figure out your available options. For certain,  pretending that all will work out well in the end may not be the best strategy to apply.

Take a look at our Online Copy Service

If you would like to access more written material for your newsletters or website, take a look at the Landmark Online Copy service.

 

Who do you turn to?

In practice, we all have occasions when we need the support of other professionals to deal with a difficult client issue. We collect these support contacts and they provide a necessary backup when our own skill sets are challenged.

Would you be willing to share these contacts?

In an attempt to provide Landmark’s users with a fairly comprehensive directory of these contacts, I have created a Support Directory on the Landmark site.

Would you be willing to share your expert contacts and I will approach them to see if they would like to take a slot?

No-one is an island

We all need help from time to time, and for me personally, this was especially evident during my two extended periods as a sole practitioner.

Do you specialise?

Have you developed skills in specialist areas and would you be interested in helping other practitioners who need assistance in these areas? If yes, then perhaps we should discuss adding your firm to the support directory. Give me a call, or take a look at the Support Directory information page

Always expect the unexpected

What are the challenges to our fee income 2019-20 and beyond?

Grudge purchases

For most business owners it is hard to place a value on costs that merely keep Her Majesty’s government off their backs: filing annual accounts and tax returns. This annual compliance chore is often completed well after the accounts period end date  and is a fait accompli.

Fait accompli is an interesting phrase. It is defined as “a thing accomplished and presumably (presumed) irreversible”. In other words, any advice we as advisers give – on these historic numbers – will be received as a “I told you so” remark. What clients need is something relevant what they are doing now.

As far as we can ascertain there are no upsides to after-date compliance work other than meeting filing deadlines and tax payment deadlines.

What percentage of your fee income is pure compliance?

This is an interesting question.

Most practices, especially smaller practices, will likely have a significant proportion of their fee income generated from the supply of pure compliance services.

If so, and if you accept that clients, by and large, see your fees as a grudge purchase, then it makes sense to take a fresh look at the services you offer and consider how to transform fees into services that have perceived value.

What are valued purchases?

The phrase “value added” has been bandied about in our profession for many years. It was sold by practice development pundits in the 1990’s and beyond as a way to increase fees by repackaging compliance work and representing to clients – for vastly increased fees – as “Business Builder” or specialist tax-mitigation services.

For the average, smaller business owner, being exhorted to buy tax planning or business development services is rather like selling leather seat options to a car owner that just wants a seat cover to hide the mess his kids have made – and will continue to make.

What is actually required is a strategy to transform ALL the services we offer, and that we are paid for, as offering the client value, and importantly, value that seem relevant and appropriate to their circumstances.

The way forward?

If you want to engage in this process, to transform grudge into valued, take a look at the ideas I have shared in my Fee Builder workbook and associated features. In my opinion if you stick with the “grudge” services, you will likely continue to leach fees to less qualified practitioners, and to accounting package software developers, who will soon be adding an annual accounts and tax return facility to their offerings.

The door is steadily closing on markets that we have traditionally considered to be our sole domain, and there is no future in relying on the past for inspiration.

Read more on this topic:

Add new income streams to your practice

 

Add new income streams to your practice

AI and the mechanisation of manual processes are likely to lead to downward pressure on the pricing of repetitive services.

No where is this more apparent than when considering the delivery of compliance services to clients. Your fees for preparing accounts and returns to meet HMRC and Companies House obligations are generally considered to be “grudge purchases” by your clients.

The demise of pure compliance services

Will this automation of compliance activity continue to drive down prices? In my opinion, yes it will. The solution is to side-line accounts preparation and tax return submission into a free service!

Fee Builder 2019-20

I have recently written a workbook that illustrates how this can be done.  The workbook includes eleven strategies for re-creating existing services, and creating a number of new recurring services.

One of the strategies promotes the repackaging of bookkeeping, compliance work and periodic reviews as a Business Fitness and Planning Review service. A description of the service would be something like this:

We can take over all your paper-work chores, produce regular management accounts, deal with any issues arising and handle your VAT and payroll filing requirements. And if you sign up for this service, we will produce and file your annual accounts and business tax return FREE OF CHARGE.

This places the value and cost on the benefits instead of just dealing with pure compliance obligations.

The workbook also promotes a new look at the following services that can be reviewed annually:

    • TAX PLANNING REVIEWS
    • COMPANY SECRETARIAL SERVICES
    • CGT FORECASTING AND PLANNING REVIEW
    • IHT FORECASTING AND PLANNING REVIEW
    • BUSINESS EXIT PLANNING

And the following “new” service delivery ideas:

    • PERSONAL “END OF LIFE” OR DISABILITY PLANNING
    • PERSONAL FINANCIAL ACCOUNTING REPORTS
    • GDPR REVIEWS
    • BUSINESS SYSTEM CHECKS, and finally
    • REGIONAL TAX PLANNING

Also included in the Fee Builder bundle

Fact sheets that highlight the above, that you can adopt and send to clients and prospects as part of your marketing campaigns, and an updated copy of my TAX PLANNING ROAD MAP for 2019-20. This latter publication has a wealth of check lists and draft emails that can be used to approach businesses, personal tax clients and property owners about tax planning opportunities.

I will also give all purchasers of Fee Builder 30 minutes of my time to settle on at least one application of the ideas shared that can be integrated into your service offerings for 2019-20.

Interested in Fee Builder?

Visit our Fee Builder page for more information about the product.

Obviously, I cannot disclose too much detail online otherwise the intellectual property that makes up this service would be compromised. If you are still uncertain if Fee Builder would be of value to your practice call me anytime on: 07879 896073.

Bob Edwards – April 2019

MTD for VAT video promotion

As part of the Landmark Tax Box service, our April 2019 video covers the MTD for VAT changes from 1 April 2019.

Do you offer an MTD for VAT service to clients?

If yes, and if you promote the service on your website, why not acquire the rights to have a branded copy of this video displayed on your website?

According to published research, video content is more likely to capture the attention of site visitors than text. Adding video content will also beef-up your profile with the search engines.

Do you have a YouTube channel?

Out Tax Box videos will help you build a useful series on your YouTube channel, and if you don’t have a channel as yet, use the MP4 files that we provide as part of the Tax Box service to create one for your practice.

You can link the videos to your Twitter, Face Book and other social media outlets.

Introductory offer – 50% discount

Each quarterly video costs £260 plus VAT for the branded version and £195 plus VAT for a generic version.

The Tax Box service is provided on an ongoing subscription basis, but you are free to cancel this subscription at any time.

If you are willing to try out this service, and if you sign up before 1 April 2019, we will discount your MTD for VAT video subscription by 50% – this offer is for new subscribers only.

This reduces the cost of the April 2019 video to £130 plus VAT for the branded version and £97.50 plus VAT for the generic version.

Watch video here

This is the pre-release version of the MTD for VAT video, your copy would be branded – your logo and contact details are added – if you select the TaxBox plus option prior to publication. The reference on the title bar to Tax Box would be removed.

Complete online order form to secure your 50% discount

Complete before 1 April 2019 to qualify for 50% discount

The order form will not display the discount, you will automatically receive the reduced price if you submit the order before 1 April 2019.

Opportunity knocks, again

OPPORTUNITY: a time or set of circumstances that makes it possible to do something. The opposite of which is usually described as misfortune, tragedy and failure.
PESSIMIST: is a mental attitude in which an undesirable outcome is anticipated from a given situation.
OPTIMIST: is inclined to be hopeful and to expect good outcomes from a given situation.
I my opinion these three words shape the way we react to a changing business environment and it is worth pausing to reflect on where we fit on the sliding scale?

Opportunity/Optimist

This is one extreme position. With these beliefs there is always a tendency to “look on the bright side of life”, to search for outcomes that prove the belief that there is always win-win outcome to any given situation. At it’s most effective, this combination drives innovation, it’s a creative force. At its most ineffective, this combination would have us drive off the white cliffs confident in the belief that the cliff edge is an illusion and the road continues into the wide blue yonder.

Misfortune/Pessimist

At this extreme, we cannot cope with the idea of a constructive outcome, the downside risks are the only criteria that seem to hold water. Pessimist would not even get in the car, they would simply watch the unfortunate spectacle unwind and feel an agreeable sense that the universe has once again proved that misfortune, tragedy and failure have prevailed.

Where do you sit on this scale?

Take a few minutes to consider where you sit on the seesaw that determines your reaction to changing circumstances.

I like the analogy of the seesaw. It’s easy to conceptualise that at either extreme we experience the most movement: for movement you could substitute the range of our feelings or the inability to appreciate an opposite point on view. In fact, there is point, a fulcrum point, half-way between the two, where there is relatively no movement, and this, I believe, is where we need to sit when making decisions about our future courses of action.

If we are optimistic and opportunistic in outlook we should draw breath and see if the opposite point of view offers any constructive checks and balances that will allow us to reach a sensible conclusion. And the same process would apply to the pessimists if they drew breath and took stock of the optimists point of view.

Taking a fresh look at current challenges

This week, the outcome of the Brexit conundrum should be decided. Next month, MTD for VAT kicks off. Next year, we may see MTD rolled out to embrace the upload of accounts data. Eventually, I am sure that HMRC will pursue Pay as You Go – quarterly payment – of self-assessment liabilities. There is a LOT of change in the air for the accountancy profession and it’s time that practitioners lifted their heads from the daily grind, aware of their tendency towards the above dichotomy, and figure out just how they are going to respond.

Fee Building

In conjunction with feedback from practitioners, I am writing a planning resource that firms can use to rise to these challenges. It examines the possibilities to re-frame existing, recurring – and mostly compliance – services, and add a bunch of new recurring services. I am hopeful that my approach will prove useful, and profitable, to both the optimists and pessimists out there…

I should have this ready to launch before the end of this month.

– posted by Bob Edwards, 12 March 2019.

 

Support services for professional practices

The Landmark Support Directory – where you can find third-party support for a variety of issues – is starting to fill. There are presently nine firms represented.

Present service support available

Topics covered include:

Easy to use CA claims calculator

The first to sign up, the Capital Allowance Review Service, has recently posted a blog article covering how tax payers can reduce taxable income by claiming capital allowances. There is a useful link at the end of the post to an online “Claims Calculator“. Worth a look as this would provide you with an estimate of CA’s available for a wide variety of capital acquisitions by clients.

Could you provide colleagues with support on specialist topics?

Do you, or could you, provide specialist support to firms on complex tax issues or other professional service matters?

Take a look at the Support Directory here.

If you are interested in adding your details to the directory, information on how to do this and the costs involved can be accessed here

 

Need help?

All of us need help to identify our strengths and weaknesses and use this information to grow and prosper in today’s challenging business environment.

If you are just setting up a new practice or have reached a glass ceiling in the development of an existing practice I may be able to help.

Why objectivity is critical

A professional practice is a reflection of the skills and ambition of its owners. Unfortunately, what we lack as individuals is the ability to be objective, to see ourselves and our practice as others see us. This is the barrier that most practitioners never consider and it can have dire consequences.

For example, in the constant rush to deal with clients’ affairs we rarely give much thought to the development of new income streams for our practice beyond the need to meet the compliance demands of the businesses and individuals we act for, and yet the seeds of many of those additional income streams are already sown.

Unravelling and releasing potential is mostly a matter of identifying opportunities, and these opportunities need to be relevant and readily communicable to clients and business prospects. You can’t sell processes, you can sell benefits.

Like an objective assessment of your practice?

If you would like to work on your practice can I suggest that you call me to discuss how I may be able to help you develop a grounded development plan for your business.

Initially, we just need to discuss options to see if a collaboration would be appropriate. Email bob@landmarkpd.co.uk or call me anytime 07879 896073.

How much would this cost?

If we decide that there are realistic opportunities to explore, benefits for your practice, I will book a day’s appointment with you. I will charge an initial booking fee of £500 plus travel costs which is payable in advance and is non-refundable. The balance of my fee, £1,500 plus VAT would be payable at the conclusion of our consultation and is subject to the following guarantee.

I do offer a guarantee.

I will give you an opportunity to assess the ideas and benefits we have discussed mid-day and if you consider there is no value for your practice then no further fees will be payable and I will leave. Thus far, no practitioner I have worked with in this way has called in this guarantee.

 

Are you interested in referrals?

From time to time I have received requests for advice from business owners and private tax clients as a direct result of my existing internet activity. Thus far I have been content to pass on the majority of these enquiries to firms that I know and respect; I no longer have an interest in expanding my remaining small-scale practice.

I suspect that this process will increase in frequency during 2019-20 as I am launching a weekly news-feed targeted at building an opted-in mailing list of business and property owners and high value private client individuals in the UK.

A sprat to catch a mackerel

The news-feed (the sprat) will be in the form of a weekly tax or business development tip that aims to intrigue readers rather than offer advice. As a footnote I will encourage the posting of comments or requests for more information.

These requests will then be made available to firms who are interested in converting the request into a new client appointment.

Would you be interested in accessing the referrals I create?

So that the process does not become a lottery, I intend to build a list of firms that would like to be given access to these requests for advice. Each comment from a potential new client will be directed to a firm where I believe there is a good fit. I will consider location, specialist services offered and other relevant matters.

What sort of new clients are you targeting?

This is probably one of the key questions I need to know, so that I only direct appropriate requests in your direction. No point in offering you a building contractor enquiry if you have no interest in the CIS or the building sector generally.

Send me an email if you are interested

Email bob@landmarkpd.co.uk if this sounds like a project you would like to join. I am prepared to create the enquiries, filter these and direct them to the firm I feel is best placed to offer advice. In the first instance I will simply send you the enquiry without any personal contact information included.

I will be charging a small introducer’s fee when I subsequently release the prospect’s contact details. No other fees are chargeable by Landmark.

I will shortly be building a new page on the Landmark site with full details of how the scheme will work in practice. If you want to get your foot in the door, and at the top of my referrer’s list, email with your initial answers to the following questions:

  1. What sort of clients (client sectors) do you not want to acquire for your practice?
  2. What sort of clients (client sectors) are you targeting at present?
  3. What is your location.
  4. Are you only interested in local approaches or UK wide?

Reply direct to my email address: bob@landmarkpd.co.uk.

 

 

 

 

 

What’s next? Life after the SA deadline

MTD, Brexit, year end tax planning 2018-19, what’s next? I’d like to offer a few suggestions.

Road trip 2019

I have opened up a number of slots in my diary and I’d like to visit and brain storm ideas with you, developing new ideas for your practice during 2019. In my experience there is no better way to open up new opportunities than allocating time to see what possibilities there are to increase practice earnings and improve client services.

What’s in this for you?

Having had almost thirty-five years in full time practice I could hopefully inject a little objectivity into your planning? Sometimes it’s hard to see the wood for the trees, compliance is a hard task master.

Hopefully, at the end of our discussion, you will have a number of ideas that you can start to implement immediately. Specifically, you could identify:

  • cross-sales opportunities with clients,
  • new products and services you can offer clients and prospects,
  • new ideas for selling and marketing these options,
  • upcoming changes in legislation that offer scope for increasing the range of recurring “compliance” services.

What’s in this for me, for Landmark?

As you have probably noticed most of my marketing activity revolves around my Insights newsletter. Whilst this is effective in reaching large numbers of practitioners, and quickly, there is no substitute for a face-to-face conversation.

It is much easier for me to demonstrate the relevance of what Landmark offers by linking our services to specific practice issues: over reliance on compliance activity, no time to think about practice development, and so on…

How much would a visit cost?

On the basis that our initial conversation may or may not produce a positive outcome for your practice I am offering my time free of charge.

However, I am based in North Yorkshire, so depending on your location, and depending on how many other practitioners I can visit in your area, I would ask for a contribution to my travel costs. I would agree a figure with you prior to fixing a date and time.

How do I organise a visit?

Call me – 07879 896073 – or email a time when you would be free to speak and I’ll call you.

Are you claiming the new Structures and Building Allowance for clients?

The following post is provided by one of our Partner firms The Capital Allowance Review Service (CARS). It has been edited for the benefit of professional readers. See more about the services offered to practitioners on CARS’ Partner Page. The article that follows covers the structures and buildings allowance and was posted to CARS’ website December 2018.

Introduction

As even failing businesses have come to understand, allowances and tax credits allow a business to survive even when they’re not profitable. By claiming the credits the government allows for the investments you’ve made in building commercial or business related structures, you can save on costs. With structures and buildings allowance, you get tax relief to grow and expand your business, even helping to fund building new structures later on.

Here is everything you need to know when putting together your claim for structures and building allowance.

Understanding Your Qualifications

The structures and buildings allowance (or SBA) is one of the most significant changes in capital allowances in many years. Since the end of the industrial buildings allowance era, there has not been anything significant that could replace that allowance. The structures and buildings allowance is acting as a direct replacement for this previous allowance in several regards.

New construction on non-residential buildings is the primary qualifier for this kind of allowance. The allowance is offered over the course of 50 years at an annual rate of 2%. It’s available for new properties that meet a specific kind of criteria, with the land element being ineligible for this allowance.

Assets such as plant, machinery, fixtures and fittings are not eligible for SBA, nor are integral features.  These items continue to qualify for capital allowances, including the Annual Investment Allowance (AIA) and will continue to be calculated separately.

Get Prepared Now

This relief and allowance program has come into effect for projects that commence after the end of October 2018. Take the time to research the measure because the provisions for commencement are complex and unique. There are anti-avoidance measures that keep taxpayers from manipulation of the relief.

If you’re thinking of moving a few statements in your contract around to fall within the window for relief, pump the brakes! You could end up in trouble or disqualifying yourself from future relief.

If you entered into your contract before October 29, 2018, including any preparatory work, you might be disqualified. The physical construction works need to be agreed upon after that date if you want to ensure that you can qualify for this relief.

The relief becomes available from when the building or structure is bought into use.  There are further rules to consider if the building ceases to be used for a period of time.

The Features of Relief

If you want to see relief from this allowance, you need to get to know what the main features are. If you haven’t signed off on your next contract yet, you can consider this allowance before you start a new project.

Be aware that new commercial structures and buildings can fall under the terms of this relief. If you’re creating a new conversion or doing some renovations, you might be able to claim SBA.

The UK construction industry is seeing some huge changes. If you’re building in the UK or overseas, you can still potentially make a claim as long as you pay UK taxes.

Your 2% over a 50-year period will be limited to what it costs you to actually build the structure or the building. However, these costs can extend to demolition, land alterations, and any direct costs that create an asset in the first place. Whatever it takes to bring the asset into existence, that could apply.

The Limitations of Relief

When you want to make your claims, you need to be aware that there are some limitations to this relief.

A claim begins from when the building or structure is bought into use.

The rights over your land or any land costs aren’t eligible for relief. The costs that you pay to get planning permission aren’t covered either.

You may be asked to show documentation of your interest in the land you have. If there’s no purchase over the land that your building is constructed on, you might not able to claim relief.

Don’t expect residential dwellings to qualify for this relief. Even if you’re holding a mixed-use property where most of the structure is used as commercial, the part that is residential is prohibited and an apportionment will apply.

Renovating or converting a structure or building makes things complicated. If you’re doing so to make it a qualifying asset under these terms, you may end up qualifying for a separate relief.

If you’re unsure about the kind of relief that you’re going to qualify for, speak to us!

Structures and Buildings Allowance Brings Growth to Cities

With the help of the structures and building allowance, investing in cities has never been easier. Former booming urban environments can once again come to life with this kind of investment.

This allowance allows a lucrative return on investment. It encourages growth and risk-taking where it matters in the commercial sector. A growing number of small-scale investors see this allowance as an opportunity to get involved in the construction industry and invest in new ways.

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