Question: My company’s lease has recently expired. Although we wish to |remain in occupation, we haven’t got round to finalising a new lease with the landlord. Is there anything I need to do in the meantime?
Suzanne Hooks, a solicitor in A&L Goodbody Northern Ireland replies:
If you were occupying the premises for the purpose of your business on the contractual expiry date in your lease, then you will have the protection of the Business Tenancies (Northern Ireland) Order 1996.
Your landlord will have to take steps to bring your lease to an end, and until then, you are ‘overholding’, which entitles you to occupy under the terms of your lease indefinitely.
Tenants need to be aware of the Stamp Duty Land Tax (SDLT) implications in respect of overholding and lease renewals. Once you remain in occupation following the expiry of your lease, you will automatically have been deemed to have extended the original term of your lease by a further year.
Even if you did not have to pay SDLT on the grant of the lease, the effect of this extension may now bring you above the minimum threshold for SDLT. SDLT is calculated by reference to a formula which is based on the annual rent and the term of the lease.
If you paid SDLT on the grant of your lease, or the extension now puts you above the minimum threshold, you must submit an SDLT Return within 30 days of expiry of the lease.
This will be the case for each subsequent year you overhold until a renewal lease is granted.
Credit will be given for the tax originally paid, however you will be required to pay the difference within 30 days of the date (or the anniversary of the date) the period of overholding begins, failing which automatic penalties will become due and interest will accrue.
If the term of the renewal lease is backdated so as to dovetail with expiry of the original lease, you will be entitled to claim overlap relief in respect of the SDLT paid for the period of overholding.
Question: Can you explain the Government’s Enterprise Investment Scheme, and how it can benefit me as a business owner?
Stephen Hill, senior partner of S Hill and Co Investment Advisors, replies:
The Enterprise Investment Scheme (EIS) is basically another legitimate tax incentive break that the Government gives to high-earners to stimulate investment in participating British enterprises.
It is an effort to close the ‘equity’ gap that developing enterprises regularly face.
It’s positioned as a ‘win-win’ situation for the individual investor, the EIS enterprise recipient, and ultimately the UK economy, as the investor maximises his or her tax incentives to lower the liability by saving for the future, while the enterprise gets much-needed capital with the anticipated boost to the economy over the medium to |long term.
According to the EISA, the trade body for the EIS industry, it is a “government scheme that provides a range of tax reliefs for investors who subscribe for qualifying shares in qualifying companies”.
The EIS scheme offers a different and complementary set of tax breaks to those offered by Venture Capital Trusts (VCTs) in particular, and is now the only UK tax efficient scheme to offer Capital Gains Tax (CGT) |Deferral.
With the anticipated change to tax relief on pensions, investors may wish to consider alternative investments, such as EIS and VCTs, alongside their pensions.
In essence, investing in an EIS scheme will bring the investor a 20% income tax relief — which could be very useful today for anyone earning over £100,000 per annum.
Along with that is up to 18% capital gains deferral, unlimited Inheritance Tax relief (for after two years of holding), and carries investment limit from £30,000 to £500,000 for a minimum holding period of three years.
However, there needs to be a cautionary note. Like any investment, you need to |be aware that your investment can |increase and decrease over the investment period.
This is a complex scheme and there |are a wide range of companies offering this.
Venturing into this on your own without expert help from your accountant and independent financial advisor would be foolhardy.