Deciding whether to incorporate your business in the UK involves evaluating several key factors:

Limited Liability Protection

Incorporating as a limited company creates a separate legal entity, safeguarding your personal assets from business debts and liabilities. This means your personal finances remain protected if the business faces financial difficulties.

Tax Implications

Operating as a limited company can offer tax advantages. Companies pay Corporation Tax on all trading profits at a maximum rate of 25%; for smaller companies, this rate can be as low as 19%. Additionally, dividends distributed to shareholders are not subject to National Insurance, potentially providing a more tax-efficient method of remuneration.

Administrative Responsibilities

Incorporation brings increased administrative duties, including:

• Regulatory Compliance: Registering with Companies House, filing annual accounts, and submitting confirmation statements are mandatory.
• Record Keeping: Maintaining detailed financial records is essential to meet legal obligations.
• Costs: Expenses include registration fees and potential professional services for compliance.

Professional Image and Credibility

A limited company structure can enhance your business's credibility, potentially attracting more clients and investors. This formal structure often instils greater confidence among stakeholders.

Business Growth and Investment

Incorporation facilitates business expansion by allowing:

• Equity Sharing: Issuing shares to raise capital from investors.
• Succession Planning: Simplifying ownership transfer, ensuring business continuity.

Conclusion

Incorporating your business offers benefits like limited liability and potential tax efficiencies but comes with added administrative responsibilities. It's crucial to assess your specific circumstances, financial goals, and the current economic environment. Please call if you need help considering your options.

Health professionals providing medical services may be exempt from VAT if their work falls within their registered profession and primarily protects, maintains, or restores health. HMRC outlines specific exempt services, including diagnosis and treatment.

The VAT liability of goods and services provided by registered health, medical, and paramedical professionals, can be a complex area of tax law. HMRC’s guidance provides clarification on the definition of medical services and outlines the specific health services performed by registered professionals that are exempt from VAT.

If a health professional, as defined by HMRC, provides services, those services are generally exempt from VAT, provided that both of the following conditions are satisfied:

1. The services fall within the profession in which you are registered to practice.
2. The primary purpose of the services is the protection, maintenance, or restoration of the health of the individual concerned.

For VAT purposes, the definition of medical services (including medical care and treatment) is limited to those that meet the second condition outlined above. This includes services such as the diagnosis of illnesses, the provision of analyses of scans or samples, and assisting a health professional, hospital, or similar institution in making a diagnosis.

HMRC provides examples of services that are considered to meet the primary purpose of protecting, maintaining, or restoring a person’s health. These include:

• Health services provided under General Medical Services (GMS), Personal Medical Services, Alternative Provider Medical Services, General Dental Services, and Personal Dental Services contracts
• Sight testing and prescribing by opticians (limited to England, Wales, and Northern Ireland)
• Primary and secondary eye examinations (limited to Scotland)
• Enhanced eye health services
• Laser eye surgery
• Hearing tests
• Treatment provided by osteopaths and chiropractors
• Nursing care provided in a patient’s own home
• Pharmaceutical advice
• Services involving the diagnosis of an illness or the provision of analyses of samples that are a key part of a diagnosis

Additionally, certain insurance or education-related services may also be exempt from VAT, regardless of their primary purpose, as they could qualify under other independent exemptions.

The Bank of England’s Monetary Policy Committee (MPC) met on 5 February and in a 7-2 vote decided to reduce interest rates by 25 basis points to 4.5%. The two remaining members voted to reduce the rate further to 4.25%. This was the third interest rate cut since August 2024.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest will be reduced to from 7.25% to 7%.

These changes will come into effect on:

• 17 February 2025 for quarterly instalment payments
• 25 February 2025 for non-quarterly instalments payments

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on will also decrease by 0.25% to 3.50% from 25 February 2025. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Separation and divorce can create tax implications, particularly Capital Gains Tax (CGT) on asset transfers. New rules from April 2023 extend the ‘no gain/no loss’ period, helping spouses manage tax efficiently. Private Residence Relief may also apply.

When a couple separate or divorce, their focus is typically directed towards the emotional and practical aspects of the process. However, it is essential to recognise that alongside the emotional challenges, there are significant tax considerations that can arise from the transfer of assets. These tax implications, if not properly managed, can lead to unintended financial consequences for one or both parties involved.

One of the key tax issues that arises during separation or divorce pertains to the application of Capital Gains Tax (CGT) on the transfer of assets between spouses or civil partners. Notably, the CGT rules that govern disposals of assets during separation and divorce underwent significant amendments for transactions occurring on or after 6 April 2023. Under the revised regulations, the period within which separating spouses and civil partners can transfer assets on a 'no gain/no loss' basis was extended to up to three years from the date they cease living together. An unlimited period for making such transfers is allowed if the assets in question are covered by a formal divorce agreement, ensuring that no immediate CGT liabilities arise.

In addition to the revised CGT provisions, there are specific rules that apply to individuals who continue to hold a financial interest in the family home following separation. These rules are particularly relevant when the home is eventually sold. In such instances, individuals may be eligible to claim Private Residence Relief (PRR), which can exempt them from paying CGT on the sale of the property, provided it meets certain qualifying criteria.

In the midst of divorce proceedings, it is also crucial for both parties to consider reaching a financial settlement that is as mutually agreeable as possible. In situations where the couple is unable to reach an amicable financial agreement, the court may intervene to issue a 'financial order.' This legal order will outline the distribution of assets, financial support, and any other relevant arrangements.

Tax on rental income from jointly owned property depends on ownership shares, unless part of a partnership. Married couples default to a 50/50 split unless they notify HMRC of a different income allocation based on actual ownership proportions.

When property is jointly owned with one or more individuals, the taxation of rental income depends on whether the rental activity is considered a partnership. Simply owning property together does not automatically qualify the arrangement as a partnership.

If the jointly owned property is not part of a partnership, the allocation of any profit or loss from the jointly owned property is typically based on each person's ownership share in the property. However, the co-owners can agree to divide the profits and losses differently than their ownership proportions, so it’s possible for one person to receive a larger or smaller share of the profits or losses than their share in the property itself. For tax purposes, the profit and loss share must reflect the actual agreement made by the owners.

In cases where the joint owners are married or in a civil partnership, the profits and losses are generally treated as being divided equally between them, unless:

• The entitlement to the income and the ownership of the property are split unequally between the spouses or civil partners, and
• Both parties must inform HMRC that they wish the division of profits and losses to align with their respective ownership shares in the property.

If these conditions are met, the profit and loss distribution will follow the agreed-upon ownership percentages, rather than the default equal split for married couples or civil partners.