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Rent a room scheme

Although Budget 2017 announced that the Government intends to review the rent-a-room scheme, it currently remains a tax-efficient way of letting out a spare room. Broadly, HMRC’s rent-a-room scheme is an optional exemption scheme, which allows individuals to receive up to £7,500 of tax-free gross income (income before expenses) from renting out spare rooms in their only or main home. The exemption is halved where the income is shared with a partner or someone else. Broadly, as long as income is below the annual threshold, it does not…

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VAT: zero-rating of adapted motor vehicles

Finance Act 2017 introduced legislation designed to end perceived abuse of the VAT relief on substantially and permanently adapted motor vehicles for disabled wheelchair users.

The amended rules, which took effect from 1 April 2017, now specify a limit on the number of vehicles within a specified period of time that an individual can purchase under this relief.

An eligible individual will be able to purchase one vehicle every three years. There are some instances when this limit can be exceeded, so if an individual’s car is written off or…

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Working from home

Over recent years, it has become increasingly popular for employers to allow their employees to work from home, and in doing so, pay an amount to cover any additional household costs incurred. What are the tax implications of such expenses for the employee?

Broadly, no tax liability will arise where an employer make a payment to an employee for reasonable additional household expenses, which the employee incurs in carrying out duties of the employment at home under ‘homeworking arrangements’.

‘Homeworking arrangements’ are arrangements between the employee and the employer under…

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Best Foot Forward For Admiral Swansea 10k and JCP Swansea Half Marathon

Our payroll manager, David Phillips, is leading a Morgan Hemp team through their paces, in preparation for a duo of challenges this summer to raise money for Golau Cancer Foundation.

David is leading a team of ten Morgan Hemp staff, who are in training as we speak to take on the Admiral Swansea 10k on September 24th, as part of a series of fundraising events to say thank you to Golau Cancer Foundation.

David will also lace up for the JCP Swansea…

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CGT annual exemption: use it or lose it!

Capital gains tax (CGT) is normally paid when an item is either sold or given away. It is usually paid on profits made by selling various types of assets including properties (but generally not a main residence), stocks and shares, paintings, and other works of art, but it may also be payable in certain circumstances when a gift is made.

The most common method for minimising a liability to capital gains tax is to ensure that the annual exemption is fully utilised wherever possible. Whilst this is relatively straight-forward…

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IHT: main residence nil-rate band

From April 2017, each individual spouse or civil partner will be offered a residence nil rate band (RNRB), which is designed to help pass on a home to ‘direct descendants’, including children or grandchildren, tax-free after their death. The rules governing the inheritance tax (IHT) nil rate band are complex and it is always recommended that prior professional advice is considered.

Phasing in of RNRB

The RNRB is being phased in over a four-year period as follows:

– £100,000 in 2017-2018
– £125,000 in 2018-2019
– £150,000 in 2019-2020
– £175,000 in 2020-2021

Broadly, the…

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Reform of landlords’ taxation?

The government’s plans to allow landlords to use the cash basis for tax purposes were confirmed in the 2017 Spring Budget, but although the proposed legislation was included in Finance Bill 2017, it did not appear in the much reduced Finance Act 2017, which received Royal Assent on 27 April 2017. It is likely that the proposals have been temporarily shelved, pending the outcome of the General Election, and are expected to reappear in a second Finance Bill later this year. If the provisions are subsequently enacted, they…

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Brexit legislation update

The House of Commons Library has published two research briefing papers entitled Brexit timeline: events leading to the UK’s exit from the European Union and Legislating for Brexit: the Great Repeal Bill.

The Brexit timeline paper provides a timeline of the major events leading up to the referendum and subsequent dates of note, looking ahead to expected events as the UK and EU negotiate Britain’s exit. The Queen’s speech at the State Opening of Parliament, scheduled for 19 June 2017, will include the Great Repeal Bill in…

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Automatic enrolment for pensions

To encourage workers to start building up retirement benefits, the Pensions Act 2008 introduced certain reforms requiring all employers to offer workplace pension schemes and to enrol eligible workers into their schemes. These reforms are commonly known as the ‘automatic enrolment’ provisions. Automatic enrolment is currently being phased in, starting with the largest UK employers – eligible employees should have been enrolled by 1 February 2018 at the latest. By October 2018, all existing employers will be required to offer workplace pensions to eligible workers.

Broadly, ‘eligible workers’ are…

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VAT Flat rate scheme: changes take effect

The VAT flat rate scheme (FRS) is used by many small businesses to help simplify their VAT reporting obligations. Businesses could often gain a cash advantage from using the scheme, but this advantage has been significantly curtailed from 1 April 2017, particularly in relation to service-related businesses. Whilst the FRS continues to operate, many businesses will no longer find it economical to use.

Broadly, the FRS is a simplified VAT accounting scheme for small businesses, which allows users to calculate VAT using a flat rate percentage by reference to their…

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