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VAT FRS temporary rate reductions confirmed

In the Government’s Summer Update on 8 July 2020, the Chancellor announced a six-month reduction in the VAT rate on supplies of food and non-alcoholic drinks from restaurants, pubs, bars and cafes, as well as to supplies of accommodation and admission to tourist attractions.

The rate cut from 20% to 5% took effect on 15 July 2020 and will be in place until 12 January 2021 to support businesses and jobs in the hospitality sector across the UK.

Many smaller businesses use the VAT flat rate scheme (FRS) as it…

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Reduced property transaction charges

Recent research revealed that property transactions fell by more than 50% in May and house prices have fallen for first time in eight years. In an attempt to help boost the housing market, a temporary reduction in stamp duty land tax (SDLT) in England and Northern Ireland has been introduced. The Scottish and Welsh Governments have also announced corresponding reductions to Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT).

SDLT

The nil rate band threshold for SDLT payments on residential property has been temporarily increased from £125,000…

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CGT reporting deadline

Under new rules capital gains tax (CGT) on disposals of UK residential property must be reported by 31 July to avoid a penalty.

Finance Act 2019 made certain changes regarding payment of CGT, which took effect from April 2020 and broadly align the position of UK residents and non-UK residents. From 6 April 2020, a UK resident who sells a residential property in the UK will have 30 days to tell HMRC and pay any CGT owed. Failure to notify HMRC within 30 days of completing a sale may…

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Managing LISAs on death or terminal illness

Lifetime ISAs (LISAs) continue to provide a tax-efficient savings vehicle for investors as there will be no income tax to pay on interest earned and no capital gains tax to pay on subsequent profits arising on the money invested. Up to £4,000 a year can be invested in a LISA, with the government providing a 25% bonus on contributions at the end of each tax year up to the age of 50.

LISAs can generally held by an individual who:

– is 18 years old or more;
– is under 50…

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Advisory fuel rates update

HMRC publish rates that can be used by employers wishing to pay their employees the cost of fuel for business journeys in company cars (or, where the employer initially pays for all fuel, for reimbursement of private mileage by company car drivers to their employers). Hybrid cars are treated as petrol or diesel cars for this purpose.

HMRC’s guidance on fuel-only mileage rates for company cars confirms that employers are not obliged to use advisory fuel rates. Where an employer wishes to use them, they only apply where the employer:

– reimburses…

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Business asset disposal relief update

The Spring Budget 2020 announced a significant restriction on future availability of entrepreneur’s relief (ER) for individuals who dispose of all or part of their business, individuals who dispose of shares in their personal company, and trustees who dispose of business assets.

Broadly, the changes will increase the amount of tax payable by a business sold at a profit of over £1m. For potential sale profits at or around this limit, careful planning may be needed to extract value from the business prior to sale, for example through increased employer…

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FTT publishes practice statement on ADR

The First-tier Tribunal (FTT) has published a practice statement setting out its practice in appeals against HMRC decisions where the parties wish to engage in Alternative Dispute Resolution (ADR) after an appeal has been made to the Tribunal.

What is ADR?

ADR aims to provide an alternative way of resolving tax disputes by using an independent facilitator, who mediates discussions between the taxpayer and the HMRC caseworker in an attempt to resolve the dispute.

ADR can be used before and after HMRC have issued a decision that can be appealed against,…

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Change to partial exemption VAT treatment

HMRC have released guidance on changes to their policy for businesses who supply goods by way of hire purchase agreements.

Brief 8 (2020) explains HMRC’s suggested method for apportionment of VAT incurred on overheads following judgment in Revenue and Customs Commissioners v Volkswagen Financial Services (UK) Ltd (Case C-153/17) (VWFS) for businesses who supply goods by way of hire purchase agreements.

Background

VWFS, a finance house, provided credit to customers who wanted to purchase a vehicle. It operated by purchasing the car from the dealer at the same time as providing…

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GUIDANCE FOR OUR CLIENTS – CORONAVIRUS (COVID-19) UPDATE 7 – Furlough/Coronavirus Job Retention Scheme – 8th June 2020

It was announced on 29th May 2020 that the furlough scheme (also known as the Coronavirus Job Retention Scheme) would be extended along with changes to how the scheme would operate. Further details are expected to be published on 12th June however, furloughing decisions may need to be made prior to the 10th June. With that in mind, we would like to bring these key dates to our client’s attention.

10th June 2020 – Final date by which an employer can furlough an employee for the first time (furlough…

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Tax-efficient savings update

As the new tax year progresses, now is a good time review some of the tax-efficient savings incentives available which may help maximise potential returns.

Help-to-save

The Help-to-Save scheme offers working people on low incomes a 50% bonus, rewarding savers with 50p for every £1 saved. Over four years, a maximum bonus of £1,200 is available on savings of up to £2,400. Savings limits are flexible and it is not necessary to pay in every month to get a bonus.

How much is saved and when is up to the account…

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