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Uncategorised

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

Gift aid problems

Most people give to charity in one form or another at some point. This could be by donating unwanted clothes, books, and so on to the local charity shop. They can also be a cash donation via a site like Just Giving, or they may be ongoing payments by direct debit – commonly for qualifying memberships such as the National Trust, or English Heritage etc.

In light of the impact of Covid-19 on finances it is a good idea to review these arrangements now in order to…

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Non-resident SDLT surcharge now in effect

Since 1 April 2021, any non-UK resident purchasing UK residential property are liable to a 2% surcharge where the property is located in England or Northern Ireland, and cost more than £40,000. This applies to both individuals and companies.

The definition of “non-UK resident” for the purposes of the surcharge has a different meaning than for income tax and CGT, both of which are determined by the statutory residence test (SRT). For SDLT purposes, an individual will be non-UK resident if they were not present in the UK for…

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Latest news round up

Finance Bill amendments

Following the Budget in early March, the current Finance Bill was published on 11 March 2021. Since that date, a number of amendments have been made. Of the most significant, the following stand out in particular.

A clause in Schedule 2 that explicitly included furnished holiday lettings in the provisions for the temporary extension to loss relief has been deleted. When the bill was first published, some commentators pointed out that further changes to the law would be required because FHL businesses are not eligible to use…

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Making Tax Digital

From 1 April 2021, all compulsorily VAT-registered businesses that submit electronic VAT returns are required to digitally link the business records to their VAT returns. This must be done by using HMRC approved bookkeeping software. This can include spreadsheets prepared in Microsoft Excel, or similar software, but the key point is that the data must flow automatically from the initial manual input to the VAT return. HMRC does not accept that the use of cut-and-paste or copy-and-paste to move information between software programs, or within different parts of…

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Debt factoring and VAT

Due to the coronavirus, many businesses are experiencing cash flow issues as their customers struggle to make payments in good time. A range of banks offer debt factoring as a way of improving the cash flow position. However, there are VAT considerations that should not be overlooked.

Debt factoring is the term used for any one of a number of arrangements that involve transferring the right to payment of invoices to a third party, e.g. a bank. The business invoices its customer in the usual way, the bank then…

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Student loans for 2021-22

Starting from 6 April 2021, there is a new type of undergraduate student loan that employers need to be aware of when operating payroll – the Plan 4 loan (SLP4). The new plan type has been necessary due to the Scottish government amending certain details regarding repayment, including the increase of the earnings threshold. SLP4 will apply to all new and existing Scottish borrowers. This means that Scottish borrowers that were in repayment before 6 April 2021 using the Plan 1 (SLP1) arrangements will need to be moved…

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Latest news round up

Off-payroll working

The extension of the off-payroll working rules to medium-sized and large organisations finally took effect on 6 April. The responsibility for making an employment status determination for each engagement where the worker’s services are provided through an intermediary now rests with the client receiving the services, i.e. the engager/hirer for affected entities.

The rules now apply to all public sector clients and, from 6 April, private sector companies that meet 2 or more of the following conditions:

– the annual turnover of more than £10.2 million;
– the company has…

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Tax relief for loans used for businesses

There has been an unprecedented amount of support for businesses struggling due to Covid-19. However, back at the start of the crisis there were delays in the various schemes being set up. Additionally, a high number of newer businesses were completely ineligible. Many company owners used personal borrowings to help keep the business afloat and pay employees, as banks pulled credit products from the market.

Let’s take a simple case study of a company owner who has two employees. She and her husband (not involved with the company) remortgaged…

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Dealing with an overdrawn Directors Loan Account

Many companies use 31 March as the accounting reference date. As such, now is a good time to review the position of directors’ current accounts for close companies.

It is a common misunderstanding that if the company charges a commercial rate of interest on any loan made to the participators or employees there are no tax consequences. In fact, whilst doing this does protect against a benefit in kind arising, there is a further consideration for the company.

A charge arises under CTA 2010, s. 455 where amounts are owing…

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Loss relief extension

The Budget saw an announcement that the loss relief provisions available to both unincorporated business and companies are to be temporarily extended. There are differences in the way this will operate between the two types of business vehicle.

Unincorporated businesses

The affected rules are those in ITA 2007, s. 64, i.e. “sideways” loss relief. This permits a trader to set off losses suffered in a tax year against general income of the same year, the preceding year, or both years. This is not automatic, and must be claimed or…

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