The Conservative Liberal coalition’s emergency Budget was described as “courageous” and “decisive” by international think tank, the OECD.

The Budget had promised to be tough, delivering cuts in public spending and tax rises intended to start what was expected to be a long journey to pull Britain out of an economically challenging position. George Osborne said in the speech that this was a Budget that would “pay for the past and plan for the future”.

The measures George Osborne delivered, focused primarily on cuts in the public sector, including a review of public sector pensions to be lead by John Hutton, together with tax rises which will hit every tax-payer in the country and the massive overhaul of welfare benefits.

Rather than make this an exceptionally long post the following is a summary of the key points from one of the partners we associate with.

Budget Summary

Thanks to Hayward Wright Ltd for their permission to reproduce it.

We always welcome your feedback and comments.

When creating articles for this blog, I do tend to reflect on what is fairly high on our radar at any particular point in time and over the past months we have had our fair share of enquiries from businesses that choose not to declare all of their trading incomes, and it is rare that we will ever be able to help them.

In the belief that under declaring actual incomes, especially with cash based retail businesses will mean that the business owner will pay less tax, they fail to understand that when they want to borrow money, this failure will mean that they will not get the support that they desire.

Prior to what we now call the ‘Credit Crunch’ there were a significant number of lenders who would allow a business owner to ‘self certify’ his income and that they had the capability of repaying any borrowing they took out.  The result were a lot of businesses that did achieve that, but emerging from the woodwork over the last 2 years have been those that were never earning what they were declaring and got into difficulties.  Is it no wonder therefore that lenders are now asking more questions?

It only takes an analysis of an individual’s income and expenditure to see that these figures do not tally, as the level of expenditure cannot be justified or supported by the income that is actually being declared, and to expect that lenders will not cross reference these figures with the accounts that are submitted would be naïve in the least.

We are constantly advising potential applicants who seem to have no qualms about this is that we will not be able to deal with them unless they are honest in their dealings and employ the services of a good accountant to work with them, as the better ones are very skilled at mitigating any tax liability anyway.

As a reputable organisation we are obliged to have a robust policy on money laundering and have the means of reporting our suspicions.  What businesses need to understand is that money laundering is not all about ‘white powder’ and other ‘iffy’ substances and their trade, but any undeclared or black economy dealings that are operating from the point of view of evasion.  Property is a classic scenario where some of these things take place, so expect to be scrutinised.

Just remember avoidance (using a good accountant) is legal, evasion is illegal, and unless applicants come clean they will need to arrange their funding elsewhere or take their chances with the private lenders who may not have our, and most reputable brokers, scruples.

Following my earlier blog item relating to the fact that from the IoD’s figures nearly 60% of businesses have failed in their applications for funding , a new phenomenon is emerging, being that of organisations that promise the earth and rarely deliver, only after having parted the client with a significant amount of their cash!

Commonly known as Advance Fee Fraud this is where an unscrupulous broker (or claim to be a broker) promises access to an eye watering array of financial deals that really get the juices going, what with “advances up to 85% LTV” “rates from 1% above bank rate” “no credit checks” and so on, all of which are patently unrealistic in the current credit climate, but the downside is a significant upfront fee for the “broker” to go to work for you.  However a few weeks or months down the line they fail miserably, but the fees were “non- refundable”.

The National Association of Commercial Finance Brokers (NACFB) of which we are Full Members have been actively campaigning to stamp this out and welcome all reports of this sort of activity whether from their own members or those not affiliated with them, as the aim is to maintain the reputation of the brokers that don’t promise pie in the sky but will work diligently to get their clients the best deal available.

Commercial brokers are, for the time being anyway, able to operate in an area that is not covered by strict FSA regulation, the downside is that anyone could set up shop tomorrow and start trading with few skills or knowledge to bring to the table, apart from a tremendous ability to convince would be borrowers to part with large upfront fees.

Do we charge fees, most definitely, as it allows us access to lenders who would not normally pay us any introductory fee?  What we do achieve due to our “bulk” application approach, where we can introduce a much larger amount of business to a lender over time are slightly better terms than if he were to go to his bank direct, often covering our fees within the first year.  We also charge a proportion of that fee at the outset but that is a nominal amount just to cover our costs and not the £5,000, £10,000 and even £20,000 up front fees we have come across recently. 

We rely on our reputation and having been around for the last 20 years we still want to be here in 20 years time so our fee structure is geared to successfully delivering an offer on the basis we have already outlined with our clients.

Just remember, when it comes to wonderful deals, if it seems too good to be true, it probably is.

The following information was provided by one of our partners as their interpretation of the main points of the March 2010 Pre-Election budget.

The Chancellor has now set out his fiscal stall prior to the expected general election in May. As forecast there is a modicum of electioneering in the speech!

This report focuses on some of the tax changes we can now expect. We will also have further changes to deal with after the election.

PERSONAL TAX ANNOUNCEMENTS

Changes to Stamp Duty Land Tax (SDLT)

First time buyer’s concession

One of the more politically charged announcements today was the introduction of a new relief for first time home buyers which will exempt them from Stamp Duty on a property purchase up to £250,000 – this is effective for transactions taking place on or after 25 March 2010 and before 25 March 2012. This additional relief is partly funded next year by the increase in SDLT on more expensive property sales.

To qualify all of the following conditions will need to be met:

1. The individual or individuals jointly purchase a major interest in land which is wholly residential, and

2. The consideration is more than £125,000 but not more than £250,000, and

3. The individual(s) intends to occupy the property as his/her or their only or main residence and has or have not previously purchased such an interest or its equivalent anywhere in the world.

New rate of Stamp Duty for expensive properties

From 6 April 2011 a new 5% SDLT rate will be applied to residential property sales where consideration exceeds £1m.

Income tax rates and thresholds

The changes to tax rates and thresholds announced in the pre-budget report last year have been confirmed, including the advent of the 50% income tax rate for tax payers with taxable earnings in excess of £150,000 per annum.

A reminder of 2010-11 position is set out below:

• the basic rate will remain at 20%;
• and higher rate will remain at 40%;
• the additional rate will be set at 50%;
• the basic rate limit will remain at £37,400;
• the starting rate limit for savings will remain at £2,440;
• the personal allowances will remain at their 2009-10 amounts.

From 2010-11 the additional 50% rate will apply to taxable income above £150,000.

From 2010-11 the amount of the personal allowance will be gradually withdrawn for all individuals (regardless of age) with “adjusted net incomes” above £100,000. The rate of reduction is £1 for every £2 above the income limit.

NIC rates and thresholds

Apart from minor adjustments to the Lower Earnings Limit for 2010-11, NIC rates and thresholds remain as in 2009-10.

The previously announced combined increase of 1% in the main rates of NIC will be effective for 2011-12.

Pensions

The restriction of tax relief for tax payers earning in excess of £150,000 per annum is confirmed. This will take effect from 6 April 2011.

The Registered Pensions Scheme 2010-11 Lifetime Allowance of £1.8 million and Annual Allowance of £255,000 will continue to apply at these levels for a further five tax years, i.e. up to and including the tax year 2015-16.

Furnished Holiday Let Property

As previously announced the special tax concessions offered to owners of qualifying Holiday Let Property will cease from 6 April 2010. From this date, income from such property will be taxed in the same way as income from other property rental businesses.

Inheritance Tax

The current Nil Rate Band of £325,000 will be frozen at this level for all tax years up to 2014-15.

Company Car Tax changes

A new 10% car benefit rate will be introduced on 6 April 2012 for all company cars with emissions up to 99g/km.

Additionally, from 6 April 2010 to 5 April 2015 there are two further changes to the chargeable benefit in kind for company cars and vans with zero emissions or emissions up to 75g/km. These are:

• the first change is full relief from the chargeable benefit in kind on company cars and vans which cannot produce more than 0g/km CO2 engine emissions under any circumstances when driven.
• the second change reduces the chargeable benefit in kind on company cars which have an approved CO2 emissions figure of exactly 75g/km or less, to 5% of list price.

Tax Credits

A number of changes to tax credits were announced including:

1. From April 2012 an increase in the child element of £4 per week for 1 and 2 year olds.

2. From April 2010 awards for fixed period childcare costs (such as claims of a few weeks during the school holidays) will be averaged and paid over that fixed period rather than averaged over a year. This will enable families to receive all the financial support towards their childcare costs they are entitled to receive for these periods when they need it.

3. From 6 April 2011, people aged 60 and over will qualify for Working Tax Credits if they work at least 16 hours a week.

4. As announced at the 2009 Pre-Budget Report and confirmed at Budget on 24 March 2010, from 6 April 2010:

• the Child element in Child Tax Credit will increase by £20 above earnings indexation to £2300 per year. An increase of £65 per year overall;
• the disabled elements of Child Tax Credit will increase by 1.5%;
• the elements of the Working Tax Credit (except the childcare element) will increase by 1.5%;
• maximum amounts for child care, family and baby element for Child Tax Credit, the income disregard, the first and second tax credit threshold and the withdrawal rates remain unchanged; and
• the income threshold for those on child tax credit only rises to £16,190.

From 12 April 2010:

• Child Benefit rates and Guardians Allowance will increase by 1.5%.

BUSINESS TAX ANNOUNCEMENTS

Annual Investment Allowance

At present it is possible to write off the full cost of up to £50,000 of capital expenditure on qualifying assets. This limit is doubled from 1 April 2010 (for corporation tax) and 6 April 2010 (for income tax) to £100,000.

First Year Allowance

The temporary first year allowance of 40% ceases to apply on 1 April 2010 (corporation tax) and 5 April 2010 (income tax).

Tax incentive for British Video Games industry

The Government is to seek State Aid Approval to introduce a new tax relief for the UK video games industry. Consultations on the shape of the new relief will begin later this year.

Losses – carry back

Corporation tax

The temporary extension of trading loss carry-back from one to three years for losses up to £50,000 continues for company losses arising in accounting periods ending between 24/11/08 and 23/11/10.

Income Tax

The temporary extension of trading loss carry-back from one to three years for losses up to £50,000 continues for the 2008-09 and 2009-10 tax years for unincorporated businesses; consequently this relief for income tax purposes will cease 5th April 2010.

Corporation Tax Rates

For the Financial Year commencing 1 April 2011, the small profits rate of corporation tax remains at 21%.

For the Financial Year commencing 1 April 2011 the main rates of corporation tax are set at 28%.

VAT increased registration and deregistration limits

The taxable turnover threshold, that determines whether you should be registered for VAT, will increase from £68,000 to £70,000 from 1 April 2010. The taxable turnover threshold that determines whether you could apply for deregistration will be increased from £66,000 to £68,000 on the same date.

Business Payment Support Service

This service which allows you to negotiate extended payment of your tax dues, including VAT, Corporation Tax, Income Tax and NICs and PAYE, is to continue.

HMRC will require businesses seeking Time To Pay (TTP) arrangements for arrears of £1m or more, to provide an Independent Business Review (IBR) in support of their request. It is expected that the new requirement will be implemented from April 2010 and HMRC will informally consult on how this will work.

There will be no change for other businesses.

Capital Gains Tax

There was speculation prior to the Budget that the CGT rate would be increased to close the gap between the present 18% capital gains tax rate and the more punitive income tax rates which peak, from 6 April 2010, at 50%.

Surprisingly there is to be no increase and as an unexpected bonus the lifetime limit of gains that can be covered by Entrepreneurs’ Relief is to be doubled, from £1m to £2m.

The present annual exempt amount for individuals of £10,100 is unchanged for 2010-11.

Anti-avoidance legislation

There are the usual spate of complex issues which are coming under HMRC scrutiny – this includes closer exchange of information with certain off-shore tax havens that have benefited a particular high profile individual recently!

One of the more relevant areas of proposed legislation is with regard to Employee Benefit Trusts and similar arrangements. HMRC consider these as being used to disguise payments of remuneration with a consequent loss of tax and National Insurance. They have declared their intention to introduce anti-avoidance legislation to take effect from 6 April 2011.

Fuel Duty

The expected increase of 2.76p per litre in fuel duty that was due to be implemented on 1 April 2010 is now to be phased in as follows:

• 1 April 2010 increase of 1p per litre

• 1 October 2010 increase of 1p per litre

• 1 January 2011 increase of 0.76p per litre

This Budget sets out the action the Government is taking to promote long-term sustainable growth.

These changes will may well affect you and your business, if they do don’t hesitate to contact us for further clarification how this could affect you.

Prospective clients often find their way to us as they have approached their own bankers to support their borrowing requirements and are astounded after years of loyalty to the bank concerned, their applications are being rejected.  Indeed according to the Institute of Directors “… nearly 60% of businesses seeking bank finance in 2009/10 were rejected by their bank”.

According to research from a credit reference agency often used by the banks and the Forum of Private Business (FPB), a fifth of all small business owners who have been refused a loan are completely in the dark about why they were rejected.

The most common reason given to businesses that are told why their loan was denied is inadequate security. More than 40% were given this reason but the lenders are not pursuing the government backed opportunities to get around issue.

Computer Says NO!

A further 30% were dismissed because the sector they operate in is deemed “high risk”, while 27% are let down by their credit score. 

The former is difficult to challenge because it is subjective and we have no access to the lenders own level of experience in the relevant sector, we can only rely on general business sentiment and I think in certain circumstances that is all the lender’s underwriter is doing. 

The latter is again difficult to challenge as despite what an individual business’s (or the owner’s/director’s) credit score is, the lender sets the threshold level to suit their purposes.

Martin Williams, managing director of credit reference agency Graydon UK, said: “It is vital that business owners and managers enter into a conversation with their bank in order to find out where their perceived business challenges lie. This will allow them to address these issues in future applications, considerably improving their chances of securing funding”. 

We would add here that this is an admirable approach but one often where one comes against a brick wall as your own bank contacts (the ones you got on well with before) are now so divorced from the underwriting process they are often in the dark themselves as to the thinking behind the decision as to be in a difficult position to advise.

We always suggest that some form of feedback is obtained why the refusal of support was given, and indeed we ask for it if it is not volunteered, but unless we were the originators of the application, the lenders will not tell us and it is up to the business owner themselves to get the right answers, and if they feel they are out of their depth here, we can help.

Phil Orford, chief executive of the FPB, said business owners needed to make sure they were presenting proper financial information, but also called on the banks to provide detailed reasons when loan applications are turned down.

“We have entered a new business landscape where a more collaborative approach between businesses and banks is required if the future of enterprise and the economy is to be a healthy one,” he said.

“Securing finance is the main priority of the vast majority of small businesses. Economic conditions remain extremely tough and, even when the economy does recover substantially, growth finance will be important to allow them to keep up with demand.”

Our aim at CFA is to ensure that all viable applications are presented in a format that the lender will understand, with all the background information we know will be sought and explore the options open to the applicant moving forward.  We are generally successful in obtaining a workable lending solution, but only because we have done our homework and preparation first to ensure we are painting the right picture, and of course do not waste everyone’s time submitting applications to lenders who patently have no appetite for our applicant’s business.

We can help at the early stage in preparing a robust business plan that not only looks at the strengths and weaknesses of the proposal, but goes deeper into the micro and macro opportunities and threats that need to be addressed.

If you have had a challenge, working with your existing bank, give us a call and let us see if we can help.

It appears, finally, that someone has woken up to the fact that the lenders bailed out by the UK Taxpayer are not delivering on their promises to support the SME sector with business borrowing.

I was tickled by a comment on the BBC news this morning (09/02/10) from a spokesman from Lloyds Bank claiming that they are not lending to businesses as much as they agreed because no one is applying to them.  This is wildly off the mark as our experience has proved to us with banks making it fairly difficult to submit any proposition with a better than even chance of getting past their underwriters.

I am old enough to remember when the local bank manager had authority to grant facilities and as they lived on the doorstep they had their finger on the pulse of how their branch interacted and supported their local business customers.  They understood businesses and worked with them to move forward.

Times changed as the business lending function was centralised and faceless individuals made all the decisions and the idea of the old “Bank Manager in the Cupboard” (Midland Bank ads back in the 70/80s) went out the window.  It was at least starting to revert to the local Business Development Manager (BDM) having a much more hands on approach to local lending, when the common complaint at the time was that these people just got to the point where they understood your business and they were moved on to greater things and you have to tell your story all over again to someone new.

Then came the Credit Crunch (as we have all decided to call it now) and gradually the banks slimmed down their BDM teams and took any small link between small business and the bank decision makers away as EVERY transaction now has a tortuous task through the underwriting process.

We have always aimed to answer these faceless underwriter’s questions before they even get to ask them and that does mean having to garner much more background information from the client than was ever needed in the past, and these decisions being made about supporting small business are being left to individuals who firstly have never ever run a business in their life (I have always thought it would be a good idea for bankers to be seconded to industry for a portion of their development to see how the other half functions) and rarely if ever would lose their roles by saying no to an application.  After all they are only “protecting the Bank’s shareholders”.  The skill is in saying yes, and this skill is not being exercised as often as it could be.

The claim is that they are indeed still lending but at what price?  Definitely higher margins of at least 200bp above previous norms, double the fees, 40 – 50% shorter terms, much lower LTV’s and it is only the very good companies that can live with these.

My argument is that providing serviceability can be assured with a reasonable amount of headroom and the applicant is clean and paid for, the lenders should be looking to do everything in their power to help and deliver on the commitments made to the Government when they were bailed out in the first place.  They are in the risk business after all, and the rewards are very good now.

It just reminds me of Mark Twain’s apt definition “A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain”, well it has been raining but the sun is coming out again so let’s start sharing those umbrellas as promised.

The following was posted on Commercial Introducer.com

Fitch Ratings says that it expects European banks’ commercial real estate (CRE) exposures to remain a material credit issue through 2010, and refinancing will be a particular concern in 2011 and 2012 when a high volume of property loans fall.

This may lead to further negative rating action on European banks relating to their commercial real estate exposure, though action is likely to be limited in scope.

Gordon Scott, Managing Director in Fitch’s Financial Institutions team, says:“Many banks have not yet reported substantial losses on their CRE portfolios, despite significant declines in asset values in certain markets and segments. This is partly due to timing and serviceability, as long as loans are being serviced banks are unlikely to report the loan as non-performing.

“However, with a large proportion of loans in negative equity, Fitch expects pressure on borrower cash-flows and increasing loan covenant breaches to result in further losses.”

Corporate defaults typically peak after economic contraction ends, suggesting that loan losses (which themselves will lag default) may not peak until into 2010. Lenders may be protected to varying degrees by their underwriting standards, particularly those whose exposure is in good locations, with good quality tenants, and longer leases.

Loans written prior to 2006-7 at lower loan-to-values (LTVs) will be better placed to withstand additional pressure. A prolonged period of economic weakness and/or further asset value declines could result in a significant rise in defaults.

Scott says:

“Banks are adopting a more conservative approach in terms of new underwriting and pricing of commercial property loans. Many banks are also under significant pressure from regulators, shareholders, politicians and other market participants to de-risk their balance sheets, which has potential to reduce the overall supply of credit to the sector.

“All of these factors will severely limit borrowers’ refinancing options for the wave of European property loans with high LTVs that mature in the four years from 2010.”

Irish banks’ commercial property exposure remains very high relative to tier 1 capital, and they are particularly exposed to development finance. In the UK, exposure has risen sharply since the early 1990s and is high relative to tier 1 capital at the two state-backed banking groups (Royal Bank of Scotland Group and Lloyds Banking Group, both rated ‘AA-’/Outlook stable) though recent capital-raising initiatives will reduce this.

Spanish banks’ CRE lending has quadrupled since 2002. Most medium and large sized cajas (regional savings banks) and medium sized universal banks have high exposure to the property sector (around 30% of total lending) making them vulnerable to further adjustments.

In Germany, CRE exposures also represent a high proportion of tier 1 capital at many Landesbanks and specialist property lenders. Exposure to the most stressed markets – the US, the UK and Spain – may pose a serious challenge for individual banks’ asset quality. More than 40% of German banks’ CRE exposure is international, according to Fitch.

Rating action is possible for banks that Fitch considers to be most exposed to downside risk from continued adverse market developments, particularly if in the agency’s opinion loan impairment reserves appear inadequate and/or capital appears to lack sufficient buffer to deal with potential problems.

It should be noted, however, that many of the European banks most exposed to CRE already have low or weak Individual ratings; while their stronger Issuer Default Ratings are driven by support. This is likely to limit the number of potential negative rating actions.

The report, “Banks’ Exposure to European Commercial Real Estate,” is available at www.fitchratings.com. Fitch is undertaking a more detailed bank-by-bank analysis and will provide further commentary as more data is available.

The following is a distillation from the various accountancy contacts we work with and hopefully summarises the main themes discussed by the Chancellor.

Pre-Budget Report December 2009

The Chancellor’s speech held few surprises and included the expected windfall tax on bank bonuses. Spending cuts and tax increases were announced to fund the recent bail out of the banking sector and reflate the economy. A summary of the expected changes to tax, National Insurance and VAT follows.

Tax changes announced

Bank Payroll Tax

This tax will only affect bonuses paid directly, or via an intermediary, that exceed £25,000. The report describes the various banking institutions that will be included. All of our High Street banks and Building Societies are going to be affected as are asset managers, hedge funds, private equity and other similar businesses. The various terms published in the PBR are set out below:

• Rate of tax to be applied 50%
• Legislation will include anti-avoidance provisions
• Will apply to all discretionary and contractual bonus awards from 9 December 2009 to 5 April 2010. There will be an exception for contractual bonus entitlements where the payer has no discretion as to the amount of the bonus because of a contractual obligation existing at the time of the Chancellor’s announcement.
• Bonus is defined as including cash, benefits or loans.
• The Bank Payroll Tax will be payable on 31 August 2010.

The PBR also states that Bank Payroll Tax will not be taken into account when calculating the bank’s profit or loss for corporation tax or income tax purposes.

Research and Development Relief

Presently, to qualify for R & D relief, intellectual property associated with an R & D claim has to be owned by the company making the claim. This restriction is to be abolished for accounting periods ending on or after 9 December 2009.

National Insurance

Increases from 6 April 2010

• The Lower Earnings Limit will increase by £2 a week to £97 per week
• The special Class 2 rate for Volunteer Development Workers will increase by 10p to £4.85 per week.
• All other NIC rates are unchanged.

Increases from 6 April 2011

The main rates of NIC will be increased by an additional 0.5% over and above the rate increases announced in the Pre Budget Report 2008. The increased rates will be:

• Class 1 and Class 4 main rate NICs, 12% and 9% respectively
• Class 1 employer rate 13.8%
• The additional rate of Class 1 and Class 4 NICs, 2%.

Capital Gains Tax adult placement carers

From 9 December 2009 any person who disposes of a residential property that has been partly set aside for use under a local authority adult placement scheme, will not have their private residence relief restricted for capital gains tax purposes.

Pensions – Restricting tax relief for high income earners

This will affect individuals with incomes of £130,000 or over who, on or after 9 December 2009, change:

• their normal pattern of regular pension contributions; or
• the normal way in which their pension benefits are accrued;

and whose total pension contributions/benefits accrued exceed the special annual allowance of £20,000 a year (or in some circumstances £30,000).

Please call if you would like us to quantify the effects of this change should you be affected.

Inheritance Tax nil rate band freeze

The promised increase in the nil rate band in 2010-11 to £350,000 has been withdrawn. It will remain at current levels, £325,000.

Legislation is also to be introduced to cover the avoidance of IHT using certain trust arrangements involving property. This will only affect transactions entered into after 9 December 2009.

Shared Lives Carers – new tax relief

From 6 April 2010 a new tax relief is to be introduced for Shared Lives Carers who:

• provide accommodation, care and support for up to three individuals who have been placed with them under a local authority Shared Lives placement scheme; and
• share their home and family life with the individuals placed with them under the Shared Lives scheme.

The new relief will be available per household and will consist of:

• £10,000 fixed amount per tax year;
• £200 per week (or part week), per placement aged under 11; and
• £250 per week (or part week), per placement aged 11 or over.

If income from the caring activity does not exceed the tax free allowance for the year, carers will be exempt from tax on their earnings from Shared Lives Care.

If income exceeds the tax free allowance carers can choose to pay tax on:

• Their total receipts less the tax free allowance, or
• Their actual profits applying the normal tax rules for businesses.

Furnished Holiday Let (FHL) property

From 6 April 2010 for individuals and 1 April 2010 for companies, the expected withdrawal of the special tax rules, as announced in Budget 2009, for FHL property is confirmed.

From these dates earnings from these properties will be treated the same as other property businesses.

If you own property presently benefiting from the favourable FHL rules there is a short window of opportunity to take advantage of the existing rules. Well worth a visit to discuss your options with us, if you have not already done so.

No car tax for electric vehicles

From 6 April 2010 the company car tax charge for company car users who drive a car propelled solely by electricity will be reduced to 0%.

A similar reduction to 0% will apply to drivers of electric vans.

The measure for cars and vans is introduced for 5 years and may well lead to an increase in interest in electric company cars as tax free perks.

Increase in fuel benefit charges

From 6 April 2010 the figure used as the basis for calculating the benefit of private fuel for the use of a company car is set at £16,900, this is to be increased to £18,000.

The equivalent figure used to set the basis for private fuel in vans increases from £500 to £550.

100% Allowance for electric vans

If you purchase a new electric van after 6 April 2010 (income tax payers), 1 April 2010 (corporation tax payers), you will be able to claim a 100% capital allowance.

The vehicle must be unused, not second hand.

The allowance is subject to the Government confirming that the facility is allowable State Aid.

VAT flat rate scheme changes

The flat rate scheme percentages are to be revised from 1 January 2010 to reflect the reinstatement of the 17.5% VAT rate on 1 January 2010.

Please note the rates will not return to those used prior to the December 2008 change to 15% VAT. A new table of rates should be available soon on HMRC’s web site which will take into account the rate change and other data about VAT liabilities in each sector.

Surveyors expect to see rent rises in the New Year as the number of rental properties coming onto the market fell for the first time since January 2008, says the latest RICS Lettings Survey.

The following from the RICS Website -

Shortage of new instructions bolsters rental outlook

• Tenant demand picks up speed but the new instructions net balance turns negative for the first time since the early part of 2008
• Downward pressure on rents appears to be easing with the forward looking rent expectations series moving smartly back into positive territory
• London is leading the turnaround in rental expectations followed by the North and the South East

Tenant demand for residential property picked up speed in the three months to October. A net balance of 16% more surveyors reported a rise in new tenant lettings over this period compared with 11% in the previous three months.

Within this aggregate figure, demand picked up particularly sharply for the renting of houses; the positive net balance in this sector of the market jumped from 6% to 22%.

Meanwhile, the net balance of respondents recording a rise in demand for flats remained unchanged, albeit still in positive territory, at 12%. More significantly, the latest survey shows the new instructions net balance to have fallen for the first time since the early part of 2008.

The Full Link to the RICS Survey download 

The following article is reproduced from The Telegraph Online

Investors pile into commercial property as Isas sales hit record levels, say the IMA

Commercial property was the most popular sector in October as investors renewed their appetite for Isas, according to the Investment Management Association.

By Paul Farrow
Published: 2:29PM GMT 01 Dec 2009

Investors have renewed their appetite for commercial property having endured dreadful returns for the best part of three years.

According to the Investment Management Association, the property sector was the highest selling sector in October, accounting for £367.6 million of net retail sales – the highest since May 2007. Property funds have seen positive net retail sales for seven consecutive months. It is in stark contrast to last November and December when property was the lowest selling sector.

The IMA added that gross Isa sales (£965m) were the highest ever for any October – and the highest monthly figure outside the Isa season since June 2000.

The demand for property has coincided with an upturn in performance. British commercial property posted the third consecutive monthly capital growth in October, at 1.9pc, according to the IPD UK Monthly Index. Since the market’s upturn, which began modestly in August, UK commercial property has produced a compounded 3.2pc capital growth. This has reduced the fall since the trough in July 2009 to -42.4pc, as measured by the IPD UK Monthly Index.

Tens of thousands of investors were persuaded to buy into commercial property at inflated values in 2006 and 2007, only for prices to come crashing down. Many funds fell in value by more than 40pc.

Funds that invest in actual bricks and mortar are not exactly the most liquid of investments, as the credit crisis showed. The crisis brought property deals to a halt, causing liquidity to dry up. Falling fund values triggered a rush for the exits as investors tried to withdraw their cash. Many funds imposed “exit fees”, suspended trading or introduced a notice period to stem outflows.

But investors appear to have put the turmoil behind them and money has been pouring in. So much so that last month it emerged that Hermes Real Estate and Threadneedle Property Investment were staggering cash inflow into their open-ended institutional property funds so that fund mangers were not under pressure to invest.

Billions of pounds, many of which is coming from overseas, is targeting UK commercial property after a sharp fall in asset values since summer 2007. However, investors have been left frustrated by a lack of quality assets on the market as cash-call bolstered property companies avoid selling into a distressed market and banks take their time to unwind distressed portfolios.

This had caused Threadneedle to halt new allocations to the Threadneedle Property Unit Trust, which grew from £310m at the start of the year to more than £400m at the end of the September. The fund had reached its maximum liquidity limit of 20pc, and therefore new cash will not be taken until the fund has made acquisitions.

“All the money that went out of the fund has come back,” said Don Jordison, managing director at Threadneedle Property.

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