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  • Writer's pictureRoger Cavendish

Buying a kennel or cattery business- what to consider

Kennels and catteries

Accounting and tax


Buying a kennel and cattery business can make a great lifestyle business, particularly for animal lovers. In this short article I have explained some areas on stamp duty, claiming tax breaks on the plant and equipment bought and keeping good accounting records.






Tax - Stamp duty


The stamp duty regime for non residential properties has changed since 16 March.

This applies to commercial properties such as kennel buildings.

Normally when buying the business, you would buy the kennel/cattery together with the main dwelling.

Therefore, you will have a mixed-use property that incorporates both residential and non residential.

The new rates are:

0-£150,000              

£150,000-£250,000 

Over £250,000         

0%

2%

3%


Residential property bands are similar, but the 2% kicks in at £125,000.


What can we do then?


Up until these changes, during the buying process the stamp duty would have been applied to the whole of the purchase transaction.

Eg. Peter buys a kennel business for £300,000.

The solicitor calculates 3% stamp duty, in other words £15,000.

The stamp duty land tax (SDLT) for mixed use property was determined by the band that the total consideration fell. In reality the residential building may have been valued at say £200,000. Therefore, the stamp duty charge would be £4000.

The business which includes the kennel buildings and goodwill is valued at £100,000 or less.

Based on this valuation there would be no stamp duty on the business and non residential property. So based on the table above there would be no SDLT on the kennels.

Total SDLT payable, just £4,000, a saving of £11,000.

 

 

Tax savings - Capital allowances


We cannot claim allowances for the building structure itself, however we maybe able to claim for certain integral features and plant within the business. This is often overlooked.

Eg. Cage costs, heating and ventilation systems. This is a complex area, but we can arrange for a free no obligation review of the premises. Provided capital allowances have not been claimed by the previous owner on the features, or plant within the building.

Due diligence

They say a business is only worth what somebody else is willing to pay. However your negotiation may be strengthened if you have analysed the business results.

The valuation of the business with invariably be determined by the historic accounts, they may also be based on part of the future projections and other factors.

We can investigate the results and use our benchmarking results of other kennel business and advise you of a fair value for the business backed up by hard numbers.


Already purchased?


We have specialized knowledge of the boarding kennels/catteries business. We know how much you can claim for and what will be acceptable to HM Revenue & Customs.


Book keeping and management accounts.


Struggling with your books and records, or worse maybe you haven’t got any records, just a bunch of receipts. Ok, so you may have some money in the bank but do you really know how your business is performing.

There are two reasons why it is best to keep proper books and records on a computer based software.

First is that the government is intending to force all businesses large and small to keep electronic records. Unincorporated businesses with takings of £30,000 year or more will be affected and will need to comply by 2027 and for more than £50,000, by 2026.

The second reason though is that keeping electronic information will enable you to monitor and evaluate your business performance. It also helps to keep year end accountancy fees down.

We can help you with this. Either by providing a regular book keeping service or training you to do it yourself. We encourage our clients to use a cloud based system for their book keeping.

They are designed to be easy to use, and we can both access the system at any time.

Whichever option you take we can provide regular profit & loss, balance sheet or cash flow information.

How about tracking different parts of your business. Which bit of your business is doing well?

Which expenses are a drain on your business and require attention?

In our systems we can track income and expenditure, by location.

Eg, a multi site cattery and kennel business grouped all of it’s income and expenditure. Whilst the business was profitable, it turned out that the cattery was loss making and certain locations had very variable results. 

By analyzing results in this way we could provide useful business information for decision making.




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