< Previous40 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk TAX New Capital Gains Tax Rules to watch out for on the sale of Residential Property Landlords will no doubt feel they have been dealt a bad hand over the past couple of years. An array of changes to taxation, together with more regulation in renting properties, has left many to consider the future of their property business. Two new changes on the horizon will add to the need for landlords to plan ahead, the first of which is a steep increase in when Capital Gains Tax (CGT) is due on the sale of residential property. If you are selling residential property you will soon only have 30 days to pay your tax. The government have decided they want to receive the tax on residential property sales much sooner and therefore from 6 April 2020, UK residents who dispose of UK residential property will need to pay CGT and submit a CGT return, within 30 days of completion of the sale. For example, if a sale completes on 1 August 2020, the CGT will be due on 30 August 2020. Currently taxpayers have either 10 or 22 months to pay CGT, so this is a significant change and there will be penalties and interest charged for failure to comply with these rules. The new rules apply to individuals, trustees and personal representatives and there are some exemptions in place with certain sales, for example the sale of your main residence. Non-Residents already fall within this regime and from 6 April 2019 this was extended to apply to direct and indirect disposals of all UK land (whether or not a gain arises). In addition to this, many landlords have rental properties which were once their main residence and have subsequently been let out. Where conditions are met, they could benefit from significant tax savings under reliefs known as Principal Private Residence Relief and Lettings Relief. Changes to Principal Private Residence Relief and Lettings Relief Currently if you let a residential property you have once lived in and decided to sell it, you could benefit from up to £40,000 lettings relief (£80,000 if joint owners and you both lived in the property) to reduce your taxable gain. This has been a valuable relief for many years, and is especially helpful to those couples who each had their own home, and then moved into one and rented the other. However, from 6 April 2020 you will only be able to claim this relief if you are still living in the property at the time of letting. This could therefore have a significant impact on landlords who have banked on this relief reducing their CGT exposure. It is worth noting, there are no transition rules. Lettings relief doesn’t continue to be available for the period up to 6 April 2020, it is simply removed altogether and therefore many will argue this is a brutal withdrawal of this relief. In addition, current rules are that the last 18 months of ownership of a property that is or has once been your main residence are always deemed to be exempt from capital gains tax, even if you did not live in the property during this time, and this is being reduced to 9 months at the same time. If you rent out a room in your main home then there are separate rules which provide tax relief of up to £7,500 and these should be explored to optimise your tax position. If you let out property that was your main home, then it is important to review how these changes impact you. What should you do? Landlords have faced so many changes over recent years with the restriction of mortgage interest relief, additional Stamp Duty Land Tax and the new regime for Non-Residents to name a few. The new CGT payment regime and changes to relief of properties once lived in and then let, is a further cash-flow blow. If you own property and you haven’t yet received tax advice to understand how the maze of changes will impact you then get in touch. Our tax team specialise in helping landlords and property developers and are well placed to advise. By Jennie Brown, Tax Partner at Streets Chartered Accountants. 40-41.qxp_Layout 1 03/03/2020 10:31 Page 140-41.qxp_Layout 1 03/03/2020 10:31 Page 2East Midlands Business Link spoke with Glynis Wright, a leading divorce lawyer and Head of Practice at Leicester’s Glynis Wright & Co Family Solicitors and President of the Leicestershire Law Society, about how a business can be affected in the event of divorce and what steps businesses and individuals can take. 42 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk GLYNIS WRIGHT & CO Q&A How can businesses be affected in the event of a divorce? It is a fact that 42% of all marriages fail and complex negotiations then take place to achieve a settlement of the matrimonial assets. But did you know that businesses are regarded as matrimonial assets just as much as houses and pensions? As a divorce lawyer that specialises in this area, I am commonly faced with disbelief from my clients who are business owners when they learn that their business interests must be taken into account even where the other spouse is not a shareholder. For some, this is their worst nightmare because the business shares could be the most valuable asset in the marriage. When it comes to the divorce process, how exactly do business interests get dealt with? In the first instance, the business is likely to be valued. Usually, the company accountant will be requested first to provide their view as to what the shares are worth. However, this valuation is frequently disputed by the other spouse who usually argues for an independent accountant to value the shares. Since valuing a business is an art rather than a science, it is not uncommon for two accountants to produce two different valuations which makes the divorce settlement even more complicated. Which accountant is more accurate than the other? In the most complex or intractable cases where compromise or agreement fails, court proceedings are issued for a judge to decide. If an agreement can be reached about what a business is worth, the problem then arises as to how the other spouse’s claims against the business can be settled. The matter of how much liquidity exists within the business is scrutinised. Consideration has to be given to the rights of other shareholders and whether they may oppose business capital being drawn out as this could significantly impact on future growth plans. If liquidity is an issue, then we look to see if the claims against the business can be settled by offering the other spouse more than 50% of what we lawyers call the “copper-bottomed assets” of the marriage such as houses or cash in the bank in order to preserve the business interests intact. This is called “off-setting”. Much more commonly, if the marriage is a traditional one where one spouse is the breadwinner and the other spouse is the main carer of children, it may be possible to agree that spousal maintenance gets paid to the other spouse (on top of child maintenance) instead of capital out of the business. Since spousal maintenance is funded by dividend income received by the breadwinner, it is often argued that if a capital payment for the business was made in addition to spousal maintenance, this would be “double-counting” meaning that the other spouse should get one but not both of these benefits. In many divorce cases, business interests will be settled by offsetting or by paying spousal maintenance, but it really does depend on how much the business is worth. The greater the value of the business, the more likely it is that it will not prove possible to protect the business entirely against matrimonial claims and share transfers or share sales have to be considered. Is there anything business owners can do to protect their assets ahead of a possible divorce? The answer is yes. If you are contemplating marriage, you should consider entering into a pre-nuptial agreement that ring- fences the business interests. Pre-nuptials can still be set aside by the Court but there is no doubt that they carry far more weight, if properly drafted, than they ever have before. You should also think very carefully before gifting shares to the other spouse during the marriage. Accountants usually advise gifting shares for the tax benefits that arise, but it can also strengthen the other spouse’s arm in relation to the business if there is a divorce. What you need to do is carefully weigh up and decide whether you wish to opt for the tax advantages, or whether you prefer to play it safe just in case the marriage breaks up leaving you with the problem of regaining control of the shares. Q&A Glynis Wright, Head of Practice, Glynis Wright & Co Family Solicitors 42-43.qxp_Layout 1 03/03/2020 10:36 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 43 GLYNIS WRIGHT & CO Q&A Think hard before making the other spouse an employee of the business. Sometimes business owners think that they can simply terminate their spouse’s employment on divorce, but this is not true. A spouse will have exactly the same rights as any other employee and you may be faced with having to pay redundancy and/or the need to enter into a compromise agreement with your spouse before the employment can be terminated. Finally, what you must not do is seek to change anything within the business if you think you are going to face divorce e.g. transferring shares to a family member for safekeeping. Any changes would probably be picked up on a forensic analysis of your business and could get you into really hot water if the other spouse satisfies a Judge that you made those changes in order to defeat their claims. The Court can impose stringent penalties for this kind of conduct. All in all, this is a highly complex area of family law. If you are a business owner and you need to find out more, take advice from a family lawyer who specialises in finance settlements on divorce. To find out more, visit www.glyniswright.co.uk, email contact@glyniswright.co.uk, or call 0116 2385680. 42-43.qxp_Layout 1 03/03/2020 10:36 Page 2© SHUTTERSTOCK.COM / LAYMANZOOM The right side of the law The right side of the law 44 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk LEGAL 44-46.qxp_Layout 1 03/03/2020 10:37 Page 1Given business law is a complex and nebulous branch of legal services, the quality and effectiveness of the advice and assistance a company receives can directly impact its future trading and endeavours. To put it another way, if a company opts for the cheapest option available, they can be putting themselves in jeopardy. Fortunately, companies can be checked out online to ensure they’re fully compliant, and with online aggregators and review services, it’s easy to see reviews other companies have left for a firm. Companies can also use the Legal 500 to make more informed decisions. Although having quality and respected solicitors on side will help to safeguard a business, it’s by no means a silver bullet and businesses must ensure they not only have a good understanding of business law and legislation but remain compliant. Here we explore some of the biggest and most pressing legal services offered to businesses. Employment law Employment law is an umbrella term regulating the relationship between employers and employers from recruitment right through to exit. Within that it describes what employers can expect from employees, what they can ask of employees, and employee rights at work – things such as working time, holiday entitlement and pay. Businesses also need to bear in mind what they can and can’t ask about its employees. Diversity in the workplace is to be celebrated, with safeguards in place such as the Equality Act, in which people of all race, genders, ages and sexualities are treated fairly, and job applications asking applicants to supply this information if desired. But employers must be mindful around issues of sexuality and gender, especially with the rise of trans visibility both in society and the workplace. If a company – or even its employees – ask another worker if they’re trans etc., that employee may well pursue litigious action. Equally as big a topic of late is sexual abuse and misconduct in the workplace which has entered a tipping point in the wake of #MeToo. Although the movement was focused on Hollywood and the behaviour of disgraced movie mogul Harvey Weinstein, it has since spread to many other areas, including workplaces across the UK. As in all aspects of business law, employers must be cognizant of forthcoming changes and legislation so they can prepare and take steps to ensure compliance. Examples include the government’s new immigration policy which functions on a points- based system similar to the model used in Australia. Employers wanting to hire someone from Europe will need to comply with these new policies. Another forthcoming change is the government’s plan to make any part of a termination payment over £30,000 subject to employer NIC. Although it was delayed from April 2018, it becomes law from April 6. Also coming into effect from this date is the Parental Bereavement (Leave and Pay) Act 2018 which became law in September last year. It gives employees who lose a child under the age of eighteen, or who suffer from a stillbirth from the twenty-fourth week of pregnancy, the right to two weeks leave as a ‘day one’ employment right. It will be pay the same statutory rate as other family friendly rights, such as maternity leave. Intellectual property Intellectual property (IP) not only refers to products or services produced by a company, but that company’s identity. IP can be the literal lifeblood of a business, so it pays to go with the best legal services and advice they can afford. Solicitors specialising in IP can offer a range of services, whether that’s IP disputes or strategy, or management and protection for patents, trademarks, domain names and designs etc. There are three steps recommended by government in the event a company needs to defend its IP and take action if it’s being infringed. Firstly, a company is advised to get the other party www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 45 LEGAL 46 Á 44-46.qxp_Layout 1 03/03/2020 10:37 Page 2to stop using their IP or come to an agreement, such as a license. Secondly, a company can use mediation or another type of dispute resolution, or, lastly, take legal action should the other steps fail. Advice can be sought from solicitors at any stage, though they are only legally required for the third. As IP disputes fall under injunction-based law, they must be handled by a specialist IP dispute lawyer supported by commercial litigation colleagues. Disputes are handled in separate courts whose rules and expectations have little in common with those of other courts, and IP disputes often involved associated contractual disputes and specialist applications requiring the input of commercial litigation colleagues into the team. IP infringement covers a wide variety of occurrences such as counterfeiting, to using a similar packaging design, or the appearance of trademarks and symbols that come close to existing branding. Companies should be aware, however, that not everything can or should be trademarked. In 2008, for example, Cadbury attempted to trademark the colour purple, but was thwarted by Nestlé. It could not trademark the Pantone 2865c purple used on its Dairy Milk wrappers because it did not meet the requirements of what could be trademark, and the company are hardly alone in this. Solicitors can be a company’s sword and shield when it comes to IP disputes, in instances when it’s their own IP that has been infringed, or if they are the ones being accused. Data protection and privacy law Data protection issues have an impact on most HR activities from recruitment and employee record keeping, to performance monitoring and references. But it’s also becoming an increasingly hot topic in business with the rapid evolution of digital technology. Consequently, changes in legislation have occurred in order to keep up. In May 2018, General Data Protection Regulation (GDPR) came into force and replaced the previous Data Protection Act 1998. GDPR affects how organisations gather, store and use data and individual rights over access to information. Augmenting this legislation is the forthcoming ePrivacy Regulation which will provide greater regulation of electronic communications within the European Union. Once it comes into law, it will replace the EU’s existing ePrivacy and Electronic Communications Directive 2002 which was implemented in the UK back in 2003. Despite the European focus of the legislation, Brexit is unlikely to have much of an affect. Experts say this is because UK companies will likely want to continue to do business in EU countries and will therefore adopt these regulations either fully or in part. For now, all adopted EU regulations continue to apply in the UK until the end of the Brexit transition period on Thursday December 31. The moral is that businesses will continue to face even more regulatory burden going forward and so they must be prepared. Solicitors can advise on a range of data protection laws – including preventing breaches and violations – but the onus is on business leaders to ensure they have a working understanding of their responsibilities and liabilities under data protection law and take the appropriate steps to ensure compliance. Solicitors can help to defend against allegations of unlawful data breaches, for example or, if a company has breached data laws, how best to handle and engage with the situation. When it comes to business law, it pays to be cautious. 46 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk LEGAL © SHUTTERSTOCK.COM / WRIGHT STUDIO 44-46.qxp_Layout 1 03/03/2020 10:37 Page 3FEATURES Factory Automation Spotlight Office Solutions Healthcare Refrigeration Family Business REGULARS Commercial Property Corporate Hospitality Motoring Watch out too for the latest news from across the region in every sector Next month in April 2020 - Deadline 18th March Visit us at www.eastmidlandsbusinesslink.co.uk where you’ll find the latest news as it breaks – and why not subscribe to our newsletters so you can have. the latest news emailed to your inbox 47.qxp_Layout 1 03/03/2020 10:38 Page 1Speed and style The new crop of license plates launch this March and continue through to the end of August. New cars bought and registered between these dates will be sporting one of these new 20 series plates. So what new cars are launching and being showcased during this period? 48 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk AUTOLINK 48-51.qxp_Layout 1 03/03/2020 10:40 Page 1There’s an exciting release schedule for cars over the coming months, from the Porsche 718 GTS rolling out in April, to the new Aston Martin DBZ arriving in summer. That’s to say nothing of the luxury electric offerings ahead such as the Audi e-tron GT and the Ford Mustang Mach-E, an electric SUV inspired by the Mustang – both arriving later this year. Here we profile some of the biggest and most highly anticipated launches coming up. Chevrolet Corvette Stingray C8 For the eighth version of the iconic Corvette, the engine has been moved from the front and moved to the middle. It might ruffle a few feathers among diehards, but rest assured, this is the most powerful Stingray ever produced. It’ll use a naturally aspirated 6.2-litre V8 engine with 495bhp taking it from 0-60mph in 2.9 seconds and with a top speed of 195mph. Fans will also notice the sheer difference in design from previous generations with only a single part carried over from its predecessor. It’s a sleek re-design with hidden door handles for a cleaner appearance and improved aerodynamics. Its looks stylish as both a coupe or a convertible but it’s the latter where drivers will have the most rewarding experience. The interior isn’t like anything you’ve ever seen in a Corvette before with an attractive cockpit designed for an immersive driving experience. There are three seat combinations to pick from so drivers can be assured there’ll be a set-up that’s right for them. Traditionally, Corvettes are confined to left-hand drive markets, but it’s understood that the right-hand versions of the C8 are expected to arrive in the UK not long after it goes on sale in the US this spring. Jaguar F-Type Believe it or not, the Jaguar F-Type turns eight this year. Needless to say, it was in need of an upgrade and the 2020 version is more than just a facelift – this is a complete overhaul with new exterior design and new interior technology and trim. Outside, the body is lean and elegant and, inside, there’s state-of-the- art driving systems. With a new high- resolution 12.3” Interactive Driver Display, drivers have easy access to media, phone and navigation. The interior and body are all well and good, but what about under the hood? The biggest surprise is the disappearance of the V6. Instead, the 2020 model will come with a choice of either two 5.0-litre supercharged V8 power levels, or the continuing entry-level 2.0-litre Chevrolet Corvette Stingray C8 50 Á www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 49 AUTOLINK 48-51.qxp_Layout 1 03/03/2020 10:40 Page 2Next >