UK tax legislation is often complex and not always easy to interpret, and taxpayers typically want to know the tax considerations of a transaction in advance. To assist with this uncertainty, taxpayers can apply for clearance from HMRC on the tax treatment of certain transactions before the relevant transaction or event takes place. What is a Clearance?  Clearances are broadly defined as written confirmation of HMRC's view of the application of tax law to a specific transaction or event, where the taxpayer can rely on this verification in most circumstances. Our previous blog discusses where HMRC will not give clearance. Clearance applications to HMRC can come under: ‘Statutory clearances’ – the tax treatment of certain...

The division of marital assets is a difficult time for most couples undergoing separation/divorce/dissolution, and little thought may be given to the potential tax implications that can arise. This article seeks to highlight some of these tax issues, and potential planning to help mitigate the potential tax charges and ensure that a larger pool of assets remains for apportionment between the parties. Capital Gains - Tax Year of Separation The transfer of assets between spouses/civil partners who are 'living together' in the tax year, is at no gain/no loss for capital gains tax. Individuals will be treated as living together unless they are separated under a Court Order or formal Deed of Separation, or they are separated in circumstanc...

During the 2020/21 tax year, many individuals and businesses received state grants in order to support them during the COVID-19 pandemic and associated lockdowns. HMRC has issued a reminder that taxpayers (including sole traders and partnerships) must remember to include grants or payments received from coronavirus support schemes in their self-assessment tax returns. This is particularly relevant given the pressing 31 January 2022 deadline. COVID-19 support grants and payments include: Self-Employment Income Support Scheme (SEISS) Coronavirus Job Retention Scheme (CJRS) Other COVID-19 grants and support payments, including self-isolation payments, local authority grants, and Eat Out to Help Out. Failure to include all t...

In our previous blog we discussed HMRC’s consultation on reforming Basis Periods for unincorporated businesses (e.g. sole traders and partnerships) and the changes to the rules being considered. In the Autumn Budget 2021, it was confirmed that the proposed changes to the rules will be introduced with effect from the 2024/25 tax year. In order to allow for this, the 2023/24 tax year will be a ‘transition year.’ In summary, the changes will mean that businesses will be taxed on profits arising in the tax year. Accordingly, businesses with a period of account that does not match the tax year will have to make an apportionment to identify the profit or loss arising in a specific year. For further details please see our previous blog...

On 27 October 2021, Chancellor of the Exchequer Rishi Sunak announced a number of key spending pledges and tax changes. We have set out some of the highlights below: Businesses From April 2023, the qualifying expenditure definition for R&D tax relief will be expanded to include data and cloud costs. It was stressed that R&D will be refocused to ensure that the relief benefits the UK, hinting towards relief being restricted for R&D activities performed overseas. Further details regarding the government's plans for R&D, including tackling abuse of the relief and improving compliance, will be set out later in the autumn. The increase in the main rate of corporation tax from 19% to 25% was confirmed, and will apply fr...

The UK Government provides tax reliefs to incentivise and encourage companies who are entrepreneurial and come up with innovative ways to progress and develop technological advancements, especially tax reliefs for Corporation Tax. This article discusses the Patent Box regime which benefits companies who exploit intellectual property (“IP”) rights, and will be particularly useful for companies with the rise of Corporation Tax to up to 25% from 01 April 2023. The Patent Box: A Brief Introduction The UK Patent Box tax regime operates by applying a deduction to the Corporation Tax bill, effectively reducing the tax rate on profits from the use of patents or other similar IP rights to 10%. This is compared to the current Corporation T...

From April 2022, in order for individuals to renew certain licences they will be required to prove to HMRC that they have completed a "tax check". These new rules, which apply in England and Wales, will apply to the following licences: Taxi Driver Licences; Private Hire Vehicle (PHV) Driver Licences; PHV Operator Licences; Mobile Collector Licences for Scrap Metal Dealers; and Site Licences for Scrap Metal Dealers. Individuals looking to renew their licences will be need to complete an online check to confirm that they are registered for self-assessment. The aim of the measure is to ensure that applicants have complied with their tax obligations. The introduction of this tax check is one of the latest tools that HM...

Shares and granting share options are often provided to motivate and retain key employees but there are often circumstances such as where shares are provided to family and friends for a domestic purpose. The recent case of Vermilion Holdings Ltd v HMRC [2021] CSIH 45 highlights the importance of considering whether shares are received ‘by reason of employment’ as this can have tax consequences. Securities and Securities Options The rules regarding receiving shares ‘by reason of employment’ govern both securities and securities options. The definition of ‘securities’ under legislation includes shares, rights under a contract of insurance (other than excluded contracts of insurance), debentures, debenture stock, loan stock,...

Earlier this year, we published The Price is Right: Valuing Trading Companies (8 February 2021) which provided an overview of the various methodologies and principles typically used to value unquoted trading companies. In this article, we will set out how we value property investment companies and the kind of factors that must be considered in order to reach a robust valuation. When might a valuation be required? In our experience, valuations of property investment companies are typically required in the following circumstances: Inheritance tax planning Sale or transfer of shares Matrimonial proceedings Family Investment Companies It's important to note that this is not an exhaustive list, and a valuation may be requi...

Following the release of our recent blog Structures and Buildings Allowance – Capital Allowances (published 30 June 2021), HMRC have published a policy paper on a proposed additional requirement for preparing an allowance statement. The allowance statement is required to make a claim for Structures and Buildings Allowance (“SBA”) and this proposed amendment will have effect once the next Finance Bill 2021-22 receives Royal Assent. In order to make a claim for the SBA, the current requirements that the allowance statement must meet are as follows: Details of the building or structure; The date of the earliest contract for the construction of the building or structure; The amount of qualifying expenditure incurred on its c...