Here are a few tax tips for businesses that are blooming in lockdown, writes Anna Gaston
Last week we wrote that despite the unfolding humanitarian crises there was still good news to be found in the way in which the general public have banded together to support charities, vulnerable people and the NHS.
This is undoubtedly true and if I was at first a little sceptical of the merits of applauding in my doorway every Thursday evening, getting to know my neighbours (from a responsible distance) and watching the growing community spirit on just my street has been a really positive experience.
This week, though, I wanted to applaud those businesses and individuals who have been facing tough times head-on and who are finding new ways to compete. Necessity is, of course, the mother of invention and I think we have all witnessed that first-hand over the past few weeks.
Related
For example, while I can no longer visit my favourite cocktail bar they are now operating a home delivery service! I cannot visit the theatre or museums but there are excellent online streaming programs or virtual tours available.
Gin distilleries are frequently turning their hands to hand-sanitisers; catering and hotel suppliers have found new markets in housebound domestic customers, and a number of firms have been dragged into a new era of work from home and investment in computer and IT systems.
A number of these changes to our lives could well prove to be successful and permanent, opening huge opportunities for entrepreneurs and business owners.
While some of these new ventures may be lockdown driven and temporary, it seems likely that a good number of the changes we now face will be with us for a considerable time to come, and our ‘normal’ working practices might be forever changed.
Content from our partners
There will be some whose innovations greatly enhance individuals’ ‘new’ lives, and to protect and nurture these budding businesses whose worth (financially and philanthropically) may be about to or have risen sharply in value. These innovators may now need to consider the establishment of holding structures such as trusts, new companies or partnerships, perhaps having obtained patents or trademark protection.
And believe it or not, one can’t do everything on Zoom (other video conferencing services are available), so bear in mind the simple power of attorney if you need another person to sign a deed or document on your behalf…
That said, some entrepreneurs who would otherwise have been disappointed in the recent reduction in entrepreneur’s relief for capital gains tax entrepreneur’s relief on the sale of disposal of a business from a £10 million lifetime allowance to a £1 million lifetime allowance, may find that the reduction is less of an issue given the current state of the market.
In any event, and given that we are at the beginning of a new tax year, now might be the time to consider making onward lifetime gifts to the younger generation, at a time when their need might be more immediate, and the potential capital gains tax bill somewhat smaller.
Finally, as I await my next delivery of industrial quantities of plants (delivery date unknown – my local garden centres have been overwhelmed) I wonder how many of us are pondering just how many leek seeds one must plant before the patio or window box counts as agricultural property for the purposes of inheritance tax relief.
And also whether the conversion of spare bedroom into a full-time work-from-home office has also converted our homes into a business property asset or affected its qualification for principal private residence relief for capital gains tax purposes.
Whilst few of us city dwellers are likely to be so lucky, there certainly could be opportunities for those with a bit more land who finally have time to consider making more use of their grounds or (for the very lucky) woodlands for their potential tax benefits.
Anna Gaston is Counsel at boutique private wealth law firm Maurice Turnor Gardner LLP
Read more
A trust lawyer’s tips for video conferencing
Listen: Divorce in the time of Coronavirus
Law firm’s new ‘separation model’ launched alongside Mariella Frostrup podcast
