I was just thinking earlier today that it was so nice that the days were drawing out. The daffodils are coming out and tonight I was sure I could see swallows swooping about in the twilight. It must be Spring. That used to mean I would be off to a tax conference but these days they tend to be online so not trips away and I just have to sit at my desk and watch and listen to the speakers. I know that it makes a lot of sense, but I always enjoyed my trips away.

It’s quite funny but so many people think that the end of the tax year is going to be busy for us. We are genuinely busy but that has nothing to do with the end of the tax year. 31 January has been a more significant date for us for the last few years but that is also due to change. MTD is just around the corner and that will change things dramatically. More about that in due course.

I had an interesting discussion this week. It is one that I have quite frequently. Now, as you will no doubt appreciate, nobody likes paying tax, of any amount and any description. I know plenty of business owners who would rather buy more equipment than pay tax. I keep saying that it is always cheaper to pay the tax but it is so ingrained in people that they will do anything (almost) to avoid paying tax.

The basic facts are that you must spend much more than the tax you are going to save. Assuming you qualify for capital allowances on the equipment, the tax saved is only the cost of the equipment multiplied by your marginal tax rate. You never save £1 on tax for every £1 that you spend on equipment, and you generally save less than half the cost of the equipment in tax. Now, if you need the equipment, then the tax relief is a bonus but, in my view, you should never buy equipment to save tax.

What I was told this week was that you can look at the piece of equipment, but you cannot see the tax. Agreed, but your bank balance will be healthier and as everyone knows Cash is indeed King. It is the lifeblood of any business. It does not matter how profitable you are, if you run out of cash, you probably don’t have a business.

Spring has traditionally been a time for planning and scheming, plotting the course of your business for the coming months and years. We are certainly doing plenty of projections. We are also seeing a lot of people wanting to plan their finances going forward. This has in part been prompted by the changes to IHT and in particular the £1M restriction of Agricultural Property Relief and Business Property Relief. It seems to be exercising minds now. Farmers seem to have been more vocal, but the changes will in fact impact on most small business owners. If your business, or your interest in that business, is worth more than £1M then you may be affected. You probably want to get some advice on the impact of the forthcoming changes

However, there does seem to be a lot of stress associated with these changes. Some small farms, particularly in remote areas, are comfortably below the new cap. Given that, a husband and wife each have a £1M limit plus their lifetime allowances. They can cover £3M in assets and no IHT.

But there are plenty of others who will be caught. It will be interesting to see if there are any relaxations in the Chancellors statement on 26 March. Most people seem to be quite pessimistic and resigned to the imposition of this new tax regime. Time will tell.

Between Trump and his tariffs, his attacks on his allies and all the tax changes we are seeing, life is not without its stresses just now and is unlikely to get any easier anytime soon. At the end of the day, we all have to make ends meet and chart the best course we can. But it will always be the case that most financial issues are resolved by a good dose of profit. It’s just going to get that bit harder. But, if you have been in business for a while, you know or should know, what is to be done. If you are new to the business, speak to people who have experienced it all before. It will save you from learning too much the hard way.

But, short of someone dropping a bomb on us, we will all survive, one way or another. You do what you can and see where the road takes you. But remember the old saying “The old dog for the hard road.” Most roads are going to be hard over the next few years so draw on experience to get you through, either your own or that of someone who has travelled that road before.

Anyway, enjoy the swallows.

Alan E Long

The Long Partnership

07770 738770