Catherine Vickery, rural tax specialist at accountant Old Mill, said she was surprised that taxes were not hiked more sharply. “There were even some extra giveaways, which was amazing.” However, Mr Osborne did announce drastic changes to Capital Allowances, Capital Gains Tax, Income Tax and VAT, all of which would affect rural businesses.

“One of the key changes is the reduction in the Annual Investment Allowance, from £100,000 to £25,000 from April 2012. The writing down allowance for capital expenditure over that level will also be reduced, from 20% a year to 18%.” Although businesses would still receive the same level of tax relief, it would be spread over a longer period of time. “If you do have major expenditure coming up, make the most of your £100,000 annual allowance in each of the two tax years before this change comes into force.”

From midnight yesterday (22 June), Capital Gains Tax (CGT) rates increased to 28% for higher rate taxpayers – considerably lower than the 40-50% rate many expected. Lower rate taxpayers would retain the existing 18% rate, with gains over and above the higher rate income tax threshold of £43,875 levied at the new 28% rate.

“Anyone selling or gifting assets could face higher CGT rates – but those selling an entire business will benefit from the higher band for Entrepreneurs’ Relief,” said Mrs Vickery. The threshold increased from £2m to £5m, under which gains would be taxed at 10%.

Those renting furnished holiday lets were pleased to hear of plans to reinstate tax reliefs like Capital Allowances on furnishings, offsetting losses against other income, and Entrepreneurs’ Relief upon sale of the business. “A lot of people, in the West Country in particular, run holiday lets as a business, and deserve the same tax relief as any other business.”

Another benefit for local businesses would be the planned holiday from National Insurance (NI) for new business enterprises, she added. “Start-up businesses outside London and the South East are to be exempt from NI for first 10 employees, up to £5,000 per person. That equates to a tax break worth up to £50,000 for 400,000 businesses over three years – a valuable encouragement for brave new ventures.”

A £1000 increase in the personal allowance for Income Tax would save lower rate taxpayers £200 a year, while falling Corporation Tax rates, from 28% down to 24% for large companies, and 21% to 20% for small companies, were also to be welcomed, said Mrs Vickery.

However, the increase in Value Added Tax (VAT), from 17.5% to 20% from 4 January 2011, would make the cost of living more expensive. “Given that just a year ago we were at 15%, that is quite a steep rise. It will add to the cost of almost everything, and will make cash flow more difficult for VAT-registered businesses.

“That said, we were prepared for swingeing allowance cuts and steep tax rises in this Emergency Budget. Many of the proposals made by George Osborne were less onerous than expected. Rural businesses now need to ensure they understand the implications of such wide-ranging changes, and take professional advice to mitigate higher tax bills in the future.”

For more information contact Catherine Vickery on 01935 426181, or e-mail: catherine.vickery@oldmillgroup.co.uk.

The firm, which also has offices in Shepton Mallet, Yeovil and Exeter, merged with long-established Devizes accountants LE Bull and Co almost a year and a half ago but has expanded considerably since then and needs a new base to accommodate the increase in staff.

“When we merged with LE Bull and Co in November 2008 we had 12 office-based staff in Devizes, this has now grown to 19 and with a need to increase to 25 in the short term the existing offices are bursting at the seams,” explains Mike Butler, Finance Partner at Old Mill.

He continued, “We are moving to the Challymead Business Park in Melksham, where the modern offices will enable us to continue to grow and provide a home for up to 40 staff.”

Mike says the move will enable Old Mill to provide services to a much wider range of local businesses.

“We will now be able to make our proactive accountancy services available to all Wiltshire businesses, large and small and across all sectors of industry,” he said.

“And with the addition of newly appointed IFA Paul Heaphy we will also look to expand the financial planning team that we set up in the region this summer.”

Paul Neate, the partner in charge of the Melksham office, says although he will be sad to leave Devizes, he is looking forward to the challenges that lie ahead.

“We had spent nearly 18 months searching for an alternative office in town but unfortunately there was just nothing suitable available,” he said.

“We will be very sad to leave our offices in Devizes where I personally have worked for 30 years, but look forward to continuing to provide a high level of service to our loyal existing clients and from that base serving many new friends in the future.”

Old Mill Managing Partner Jolyon Stonehouse comments, “We have been enjoying rapid organic growth, increasing both income and headcount by more than 10% each year since the management buy-out. However we now feel it is appropriate to enhance our business further by merging with LE Bull and Co. Their client base fits well with our own, and they share our philosophy of providing first class client service while being an outstanding place for staff to work. We are excited by the prospect of a Wiltshire office which will help us serve our considerable number of existing clients in the county and provide a base to further grow our business there.”

All members of the staff of L E Bull and Co will be taken on by Old Mill and there are expansion plans for the office as Old Mill introduce their full range of client services.

Paul Neate senior partner of Bull and Co observes “The synergies between the two companies are excellent. We specialise in looking after farming clients and the Old Mill rural services teams are already the leading supplier of accounting services to West Country agriculture.  Our existing clients will be able to benefit from the specialist tax and financial services advice that is part of the Old Mill package. .”

Paul will become a partner in the Old Mill Rural Services team and John Smith, his fellow L E Bull and Co partner, will become the Senior Manager in the Rural Service team.

Old Mill already operates from offices in Shepton Mallet and Yeovil and earlier this year launched a full service offering office in Exeter.

From July 1 2008, Fuel Advisory Rates for company provided petrol vehicles with an engine size of 1400cc or less will go up 1p to 12p, for diesel, the rise is 2p up to 13p. For vehicles with engine sizes up to 2000cc, the rise is 2p for both petrol and diesel, going up to 15p and 13p respectively. And for larger vehicles, petrol reimbursement has gone up from 19p to 21p and diesel from 14p to 17p. (See table below for full rate information).

But, for those who drive their own cars, the AMAP (Approved Mileage Allowance Payments) hasn’t changed, in fact, at 40p for each business mile up to 10,000 and 25p for each over 10,000, it has remained static since 2002.

Despite the fact that evidence from both the RAC and the AA suggest that the true cost of private mileage is now 50p, and many groups are actively lobbying the Government for a long overdue increase, HMRC says its research shows that no changes are necessary in the foreseeable future, and this says Andrew Wholey, tax consultant at Old Mill Financial Services, means that employees undertaking business mileage in a private vehicle are losing out.

“Due to the fact that Government has refused to raise the AMAP, many employees undertaking business mileage in their private car incur actual costs in excess of the rate at which they can be reimbursed by their employer,” said Mr Wholey.

“While employees who drive company owned vehicles have seen regular increases over the years – 50 per cent since 2002 – it is an entirely different story for employees who do not benefit from the use of a company car and have to pay all their own running costs – not just fuel, but tax, insurance, depreciation and any other costs associated with running a car.

“This group are really losing out due to the fact that the AMAP – which is supposed to take all the costs of running a car into account – has not seen an increase in six years, despite the fact that in that time, the cost of fuel has risen from 74p a litre in June 2002 to 118p a litre now.”

And, says Mr Wholey, this situation is made worse still where instead of adopting the AMAP, employers use the lower Fuel Advisory Rates for reimbursing the cost of fuel and business mileage undertaken in an employee’s private car. Employers too, are trying to contain costs and this practice is increasingly common.

“In this situation,” he explains, “it is left to the employee to claim a tax deduction on their personal tax return equal to the difference between the two contrasting rates.

“This can be a daunting prospect for some, and many simply don’t bother. But they should, because, for a higher rate tax payer undertaking 6,000 business miles, the difference between the 40p AMAP and the 15p Fuel Advisory Rate is 25p per mile – an annual tax save of £600.”

Although, says Mr Wholey, an increase in the AMAP is long overdue, in the meantime he advises employees who drive their own vehicles that are only being reimbursed using the lower Fuel Advisory Rates (or another rate, lower than the AMAP) to at least ensure that they benefit from the additional tax relief they may be entitled to.

“Claiming back the difference between the Fuel Advisory Rate and the AMAP isn’t as complicated as they may think and in this way they can mitigate the impact of a “double whammy” as the costs of fuel continue to escalate,” he said.

Ends

Previous Rates

Guy, who qualified as a Chartered Accountant in 1990, worked as a Corporate Finance specialist for six years with a top 4 accountancy firm before joining Old Mill’s Exeter branch in 2005 to set up a new Corporate Finance team for the South-West.

Not only has Guy been instrumental in the establishment and success of that team, but he has also played a significant part in the development of the Exeter office as a whole.

Since his appointment, the Exeter office has expanded significantly and can now offer a full service thanks to corporate finance specialists, tax experts, an accounts and audit team, rural and farm accounts specialists and independent financial advisors. Old Mill financial services is the largest independent firm of IFAs in the region and one of only a few with Corporate Chartered Financial Planner status.

“Guy’s successful expansion of Old Mill’s service offering from Exeter has led to his well deserved elevation to partner,” says managing partner Jolyon Stonehouse.

“Guy has been instrumental in the creation of the Old Mill Corporate
Finance service for the whole of the South West, allowing all three of Old Mill’s branches – Exeter, Shepton Mallet and Yeovil to benefit from his hard work. Having Guy on board as a Partner is excellent news as his promotion allows his respected expertise to benefit the business and the region as a whole.”

Guy says he is delighted with his promotion. “I am really looking forward to my new role as Partner and the challenges it will bring,” he said.

“Since I started at Old Mill, the Exeter office’s offering has changed significantly; we have brought together quality accounting, tax and financial services in order to provide an integrated service for our clients and I am excited about taking the business further forward still.”

Having worked in both large and small firms, Mark has broad experience in corporate finance. “I have been lucky to have a really varied career; literally working on everything from helping an individual to acquire their first ‘lifestyle’ business, through to working on the Stock Exchange listing of a FTSE100 company,” he said.

In leaving London, Mark went for a complete change by joining a regional firm, and had a real impact on the company, developing its corporate finance business in the smaller end of the market. With his move to the Old Mill Group, Mark says he is looking forward to working with some bigger clients once more. “Due to the nature of corporate finance, it is difficult to get in to the bigger deals if you are a small firm. Joining Old Mill gives me the opportunity to work on larger transactions again.”

Mark may be the new boy, but there is one person he knows well already; Director of Corporate Finance Guy Eggleton, who joined in August 2005, is a former colleague.

“I am looking forward to working with Guy again,” said Mark. “we used to do deals together when we were both at Ernst & Young. Guy’s emphasis is on lead advisory assignments, and I specialise in due diligence and transaction support work, so together we will focus on growing Old Mill’s Corporate Finance services.”

Mark lives in Okehampton with his wife and their young son.

Ends.

High resolution photograph of Mark Neath (181KB)