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Uncategorised

Please find below all the articles that have been categorised as 'Uncategorised'.

Home working and Capital Gains Tax (CGT)

Working from home was slowly becoming more common before the Covid-19 pandemic; however, the various lockdowns restrictions meant that it increased exponentially in 2020 and 2021. Many employees have indicated that they do not wish to return to the office full-time, and employers appear to be willing to acquiesce to requests hybrid working patterns. As a result, working from home is likely to be here to stay. Much of the tax related guidance surrounding homeworking that has come to the fore in the wake of the pandemic relates…

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Inheritance Tax (IHT) – a problem with taper relief

Making gifts of value during an individual’s lifetime is a tried and trusted way of reducing the exposure to IHT. Many people are aware of the so-called "seven-year rule", which provides that a potentially exempt transfer (PET) becomes fully exempt as long as the person making the gift is still alive on the seventh anniversary of the date the gift was made. Of these people, some will be aware that there is a partial relief where the person making the gift dies before the seventh anniversary, but after…

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Christmas: how does hospitality and gifts affect the VAT return?

The Omicron variant of Covid-19 saw new guidelines issued by the government in December. However, at the time of writing no lockdown, circuit breaker or otherwise, has been announced. As a result, many businesses will be going ahead with plans for hosting parties for staff and clients. Some may choose not to due to concerns, but may still give festive gifts, for example to the biggest spending customers during the previous year. All these things have VAT implications.

Starting with entertainment, the input tax incurred on any hospitality can…

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Latest news round up

A number of suggested reforms to the CGT have been accepted by the government. In May 2021, the Office of Tax Simplification published a report that included 14 recommendations. The government’s response was published on 30 November. While any major changes, such as aligning CGT rates with income tax were ruled out, five of the OTS recommendations have been accepted. Some of these are concerned with improvements to guidance or access to the CGT service, but some technical changes will also be made.

Firstly, the window for…

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Let property: improvement v repair

The tax rules property businesses have changed considerably since 2010, for example the restriction of relief for financing costs to the equivalent of a basic rate tax reducer (at best). Almost all these changes have been made with the aim of making property letting less attractive. This makes it all the more important to ensure legitimate deductions are correctly identified and claimed.

One area where there is often confusion is the issue of whether work done on a property constitutes a repair, in which case the cost is allowable…

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EIS – FTT considers risk to capital condition

The enterprise investment scheme (EIS) is a collection of tax incentives aimed at encouraging private investment into younger trading companies. EIS is well established; however, the rules have been subject to various changes and additions over the years.

In summary, the reliefs available on a qualifying investment are:

– income tax relief of 30%;
– capital gains tax reinvestment relief;
– capital gains tax exemption for the EIS shares themselves;
– automatic share loss relief against income (subject to adjustment for income tax relief given).

Of course, as the reliefs…

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Using the Import One-Stop-Shop for low value sales

The old low value import VAT threshold of €22 was abolished in June 2021. All exports (which now include sales of goods to the EU) are subject to VAT. Where the total value of the shipment doesn’t exceed €150, the seller can opt to charge VAT at the point of sale in order to avoid the customer needing to pay import VAT in their member state, which can lead to delays.

The new Import One-Stop-Shop (IOSS) can be used for these sales, which can simplify reporting. If a business…

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Latest news round-up

The first tax sites in the Freeports announced at the Spring Budget have now been designated, meaning that businesses operating within them can now access some of the reliefs.

The sites are located in three of the eight Freeport sites; namely Humber, Thames and Teeside as follows:

– Humber – Hull East and AMEP
– Teeside – Teesworks East and West, and Wilton International
– Thames – Dagenham, Tilbury and London Gateway

As a brief reminder, the tax breaks now available will include 100% first year allowances for plant and…

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Avoiding wasted capital losses

There were rumours that CGT rates were going to be increased at the Budget. These eventually proved to be incorrect, but there are still commentators that feel it is only a matter of time before changes are made with the huge COVID-19 related borrowing to finance for years to come.

As a result, many individuals may be contemplating selling assets to lock in the existing rates. Some may have already done this ahead of 27 October without seeking advice. As a result, a refresher on the way relief for…

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Discovery assessments: time limits, the staleness concept, and Finance Bill changes

The discovery assessment provisions in s. 29 of TMA 1970 permits HMRC to make an assessment for underpaid tax in certain situations. The time limit for raising the assessment depends on the behaviour that led to the underpayment. The standard time limit is four years from the end of the relevant tax year, but this increases to six years in cases of carelessness. Where there has been deliberate behaviour leading to an underassessment, the time limit is 20 years.

A discovery assessment is a valuable tool in HMRC’s arsenal,…

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