On 18 June 2019, PD Tax travelled to The Hollies for a day of volunteering in partnership with Leeds City Council. A favoured walking destination of Lord of the Rings author JRR Tolkien during his time in Leeds and the rumoured inspiration for Middle Earth, the Hollies is a Victorian villa with extensive grounds and woodland. The house and its 30 acres of land were given to Leeds City Council in 1921 by George Brown, in memory of his son who was killed in the First World War. The grounds then became a public park. Equipped with our wellies, gloves, shears and tree poppers, we cleared paths, chopped down trees and generally made the park a more enjoyable place to spend time. We even managed to dodge the rainy weather of the previ...

HMRC has recently sent out a batch of letters to taxpayers who they believe have offshore assets, income or gains. If you have received one of these letters or if you have offshore assets, read on to find out what this letter is and how you may wish to respond to it. As part of the Common Reporting Standard (CRS) and the automatic exchange of information between jurisdictions, HMRC has received its first set of information and has been made aware of UK taxpayers who have overseas assets. Some of these taxpayers have been approached in the first batch of letters and another batch is due to be sent out this week. The letter does not mean that HMRC suspects that tax has not been declared, nor have they assessed whether an additional liab...

Certain taxpayer expenditure can qualify for tax relief, and these amounts are known as deductible payments. The payments are deducted from income when calculating taxable income, effectively saving tax at a taxpayer’s marginal rate. For example, if a taxpayer pays tax at a marginal rate of 40%, they will  have saved 40p for every £1 of the payment they pay in the tax year. Interest paid on qualifying loans is a deductible payment, however there is a cap on the amount that may be relieved each tax year.  The total amount which can be deducted is the greater of £50,000 or 25% of adjusted total income (being total income less payroll giving and gross pension contributions paid). Qualifying Interest Where a loan is a qualify...

Venture Capital Trusts ("VCTs") represent a tax efficient way for investors to unitise their investments across a number of qualifying entities. A VCT is actually a company which is quoted on a UK stock market.  That company in turn owns shares or equity, or lends money to unconnected trading companies. New shares listed on the stock market attract better tax benefits than shares which are bought on the stock market.   The tax benefits for newly listed shares are as follows: 30% income tax relief on annual investments of up to £200,000. This tax reducer can reduce a tax liability to zero, but cannot in itself create a repayment.  The individual must hold the VCT shares for more than 5 years to consolidate this. There is n...

In the case of  The Queen on the Application of T M Jimenez v FTT (2019), the Court of Appeal overturned the High Court's decision and held that HMRC has the power to issue an information notice to non-UK residents, thereby strengthening its ability to tackle cross-border tax avoidance. Background Mr Jimenez, a UK national with a Spanish passport, left the UK to live in Cyprus and then the UAE. It was common ground that he had been a UK taxpayer for some of this time, however the precise period was in dispute and his tax position was under investigation by HMRC. HMRC issued a notice under paragraph 1 of Schedule 36 Finance Act 2008 to Mr Jimenez's address in Dubai requesting information regarding his affairs, including details ...

Capital Allowances are a form of tax relief that can be claimed by traders when they incur expenditure on “plant and machinery”. They can be deducted from the tax adjusted profit for the accounting period, thereby reducing the taxable trading profit. However, the definition of what constitutes “plant and machinery” is a contentious issue and one that is discussed in a significant amount of case law. The case law, along with the Capital Allowances Act 2001 and HMRC practice, suggests that an asset qualifies as “plant” if it has an expected life of two years or more and has a clear function in enabling the activities of the business to take place. Buildings and a number of other structures are specifically excluded from t...

Changes introduced by the Finance Act 2019 (FA-2019) address inconsistencies between the tax treatment of tangible fixed assets (e.g. cars, vans, machinery, buildings) and intangible fixed assets (e.g. goodwill, intellectual property). The new provisions bring the intangible fixed assets rules more in line with those applying to tangible fixed assets. Degrouping Charge A degrouping charge may apply where a company (Co A) acquires assets from another group company (Co B) on a no gain/no loss basis, and Co A leaves the group within 6 years of acquiring the asset. The effect of a degrouping change is that Co A is deemed to have disposed of and reacquired the asset at market value immediately after the asset was acquired, thereby crea...

Seafarers’ Earnings Deduction (SED) is a valuable UK tax relief for those working at sea.  However SED has an important (and less well-known) restriction which claimants should also understand as it could leave them worse off by potentially thousands of pounds. Seafarers’ Earnings Deduction (SED) SED can reduce the tax payable by UK or EEA resident seafarers who work aboard a ship. The relief isn’t available to Crown employees or non-UK/EEA residents. In order to claim the relief, a seafarer must have worked on a ship and spent a certain amount of time (known as an “eligible period”) outside the UK. Certain vessels and fixed installations aren’t treated as “ships” (e.g. oil rigs), therefore those working in thes...

From 1 April 2019, the National Living Wage (i.e. the statutory minimum for workers aged 25 and above) was increased by 4.9% from £7.83 to £8.21 per hour. Likewise, the National Minimum Wage for younger workers and apprentices also increased above inflation. The minimum wage was introduced in April 1999 to guarantee minimum standard for pay for workers. However, the National Minimum Wage Regulations ("NMWR") can be complex and care should be taken to ensure that your business does not unintentionally breach the rules. In particular, additional consideration should be made where employees are required to be at their workplace before their shift starts, where staff purchase their own workwear, or where you facilitate a salary sacrific...

The provision of company shares can be a valuable tool in incentivising key members of staff to remain with the company long term and actively grow the company’s business and increase profits. HMRC has several approved employee share schemes, each with their own tax advantages for the employee and employer/shareholders. However, certain conditions must be met by the employer/employee in order for these schemes to qualify and therefore they are not always commercially viable. Growth shares are a practical option, especially where the company shares already have significant intrinsic value. What are Growth Shares? Suppose that a company wishes to incentivise one of its managers to stay with the business and continue to contribut...