In our previous blog Taxpayer Clears Hurdles for BPR on Livery Business (12 September 2018), we discussed the First-Tier Tribunal (“FTT”) case of The PRs of the Estate of Maureen W.Vigne (Dec’d) v HMRC. In this case, the courts found that the services provided to horse owners (such as providing horses with hay which was grown on the land and removing horse manure from fields, daily health checks of each horse, worming, etc.), in addition to the provision of land for grazing and stabling purposes, were sufficient for Business Property Relief (“BPR”) to be available. Consequently, this allowed part of the estate to benefit from 100% relief from inheritance tax. However, an appeal against this decision was made by HMRC to the U...

Whilst you may be entitled to a State Pension once you reach retirement age, you may wish to have additional funds in order to support you. Pension funds aim to provide you with a further source of income to draw on later in life and are oftentimes a tax-efficient way to save for your retirement. This is because not only can you receive tax relief on payments made into your pension, but growth within the pension is also tax free. With this in mind, please read on for our summary of the taxation of pension contribution. Maximum Contribution & "Relevant Earnings" Firstly, the maximum contributions you can personally make into your pension in a year is the greater of £3,600 and 100% of your "relevant earnings". Relevant ear...

In the 2018 Budget, the Chancellor announced changes to the conditions for Entrepreneurs' Relief ("ER") which will restrict its availability to certain shareholders. Previous Rules Prior to the budget, ER was available on the sale of shares in a trading company provided that for a period of 12 months up to the date of disposal: The seller was an employee/office holder of the company; and The company was their "personal company". Personal company was defined as a company in which you held at least 5% of the issued ordinary share capital and 5% of the voting rights. Changes 1. Extension of Qualifying Period to 24 Months The first change announced was that from 6 April 2019, the minimum period throughout which the co...

As announced in Budget 2018, the government has revived controversial plans to increase probate fees in England and Wales that were scrapped before the 2017 General Election. What is Probate Probate (or more accurately a "grant of representation") is the process by which a deceased’s personal representatives get recognition from UK courts that they are legally entitled to deal with a person’s assets and liabilities (collectively known as their “estate”) after they have died. Probate isn’t always required. For example, estates that are small enough or contain simple assets like cash can sometimes be managed without probate. However, personal representatives for larger, more complex estates or those with land or foreign ...

In the Budget 2018, it was announced that the government is set to introduce a package of measures aiming to reduce the administrative burdens on charities. Key changes include: 1. Increase in Small Trade Exemption Charities that undertake small-scale trading activities that do not relate to their primary purpose may qualify for relief under the "Small Trade Exemption". Where this relief is available, income falling within the limits will be exempted from corporation tax. From April 2019, the Small Trading Tax Exemption limits will be increased as follows: Current Limits Annual Charity Income Maximum non-primary purpose trading Under £20,000 £5,000 £20,001 - £200,000 25% of annual turnover Over £...

In Dieno George v HMRC, the First-Tier Tribunal (FTT) denied a claim for entrepreneurs’ relief (ER) by a chief executive on a 6.9% shareholding in the limited company. The case highlights the importance of meeting the exact conditions of the legislation, even where circumstances might suggest that such conditions are met and that the relief may be obtained. Background Mr George (the taxpayer) was recruited by Thornton & Ross Limited (the company) in October 2001, successfully working to expand the company’s business and obtaining the position of chief executive in Mach 2002. The taxpayer subscribed £999,996 for 600 C Ordinary shares in the company in 2005, and a further £10,000 for 1547 D Ordinary shares in 2008. These ...

Deciding if/when to incorporate your business is an important consideration that many entrepreneurs will face in the life-cycle of their business. Before a decision can be made as to whether incorporation is right for you, it is important to be aware of what a limited company is, and how it differs from operating as a sole trader/partnership. What is a limited company (Ltd)? A UK private limited company is a separate legal entity, with its own assets and liabilities. When operating as a sole-trader or a partnership, assets and liabilities of the business will belong to the individual or partner. Companies are owned by shareholders through the issue of shares. If you own shares in company (which may be purchased from another shar...

Here are some of the highlights from the Chancellor of the Exchequer's 2018 Budget (published on 29 October 2018): Personal Tax The Personal Allowance will be raised to £12,500 and the Higher Rate Threshold (i.e. the amount that an individual can earn before paying higher rate tax) to £50,000 in April 2019 – a year earlier than planned. These levels will remain the same in 2020/21, and then increase by CPI going forward. The final exemption period for Principal Private Residence Relief (PPR) which provides Capital Gains Tax relief on the sale of your home will be reduced from 18 to 9 months. Under the current PPR rules, where you have let a property which at one point was your home Lettings Relief may be available to reduc...

Principal Private Residence ("PPR") relief is one of the more widely known tax reliefs and can exempt an individual from capital gains tax ("CGT") on the sale of their home. The level of PPR relief available is calculated by reference to the “period of ownership” and the “period of occupation” on a pro rata basis. With this in mind, where an individual has lived in their home as their main residence throughout the period of ownership, then a liability to CGT should not arise on a sale. In HMRC v Higgins (2018), the Upper Tribunal considered when the period of ownership commenced for an off-plan purchase of an apartment. The UT reversed the First-Tier Tribunal’s decision and held that the period of ownership started from t...

If you incur expenses in relation to your employment and you are not reimbursed by your employer, then you may be able to claim tax relief on the costs incurred. If your work-related expenses meet the relevant conditions, then they can be deducted from your income and therefore reduce your total taxable income and your liability to tax. In general, work-related expenses can only be deducted from your income if they are incurred "wholly, exclusively and necessarily" in the performance of the duties of employment. In the UK, the Courts have traditionally taken a very restrictive approach in what expenses can be deducted for tax purposes. Therefore, unless an expense is incurred in actually carrying out the duties of your profession,...