The long-awaited independent review of the controversial loan charge has now been published, along with the government's response. These documents provide some much-needed clarity for taxpayers caught up with the charge. Background The 2019 Loan Charge broadly imposes a tax charge on disguised remuneration loans from 1999 that remain outstanding at 5 April 2019, effectively bringing years of disguised remuneration into charge in 2018/19. Therefore, the loan charge had the punitive effect of up to 20 years' tax becoming payable in one year. HMRC argued this was justified as a strong stance needed to be taken against tax avoidance schemes. However, MPs and various action groups have stated the charge was retrospective in nature and ...

In March 2018 we published a blog on the case of Christa Ackroyd Media Ltd v HMRC at the first-tier tribunal (FTT). In short, the FTT found that former BBC ‘Look North’ presenter Christa Ackroyd was caught by the IR35 anti-avoidance rules and was therefore an employee rather than a freelance contractor through her personal service company, Christa Ackroyd Media Ltd (“CAM”). The FTT stated that where individuals are engaged through an intermediary (in this case CAM) under hypothetical contract terms that would represent employment by the end user if engaged directly, the intermediary must treat their monies received as income and operate PAYE. The FTT asserted that a test of overall control and mutuality of obligation were r...

On a sale of shares, proceeds of the sale may be paid in full on completion. Alternatively, part of the proceeds may be paid on completion, with the balance becoming payable at one or more future dates. In the latter case, there may be certain performance conditions attached to the future proceeds (typically related to the financial performance of the company) that must be met in order for the vendor to receive further payment. The latter case is commonly called an “earn out”, and there are several tax points to consider when negotiating a sale of shares to ensure that the earn out is practical and tax effective for the parties involved. Why Consider an Earn Out? There are numerous reasons to have an earn out as part of a share...

The 2019 Loan Charge The 2019 Loan Charge was introduced by the Finance (No 2) Act 2017. The charge means that all employment related loans entered into on or after the 5th of April 1999 which remain ‘outstanding’ (i.e. no settlement agreement has been reached with HMRC) on the 5th April 2019 will be chargeable to tax as employment income in the 2018/2019 tax year. Employment loans were most common in the late 1990s and early 2000s and the vast majority involved employers providing funds to employee benefit trusts ("EBTs") that would then loan the money to the employee on the understanding that it would never need to be repaid. In the Rangers case, the Supreme Court largely dismissed the effectiveness of these types of schemes ...

In this two part series, we’ll be looking at the tax advantages of company share schemes for directors looking to reward, retain, and incentivise their staff. In Part 1 we looked at Company Share Option Plans (“CSOPs”) and Enterprise Management Incentive schemes (“EMIs”) which are more common with SMEs. In this part, we’ll be looking at Share Incentive Plans (“SIPs”) and Save As You Earn schemes (“SAYEs”) which can often be more appropriate for larger companies. As we discussed in Part 1, providing employees with shares directly can come with significant tax and National Insurance Contribution ("NIC") costs as well as cash flow problems for the employees receiving shares. Tax Advantaged Share Schemes for Empl...

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...

In our two part series, we'll be looking at the tax advantages of company share option schemes for directors looking to reward, retain, and incentivise their staff. In brief, a share option gives a recipient the right (but not the obligation) to acquire shares in a company in the future. This can give employees the chance to share in the growth of the company, providing strong incentives, whilst being very cost-efficient from the company’s perspective as well. In this part, we'll focus on two of the more common schemes used by SMEs: Company Share Option Plans (“CSOPs”) and Enterprise Management Incentive schemes (“EMIs”). The second part will examine Share Incentive Plans ("SIPs") and Save As You Earn schemes ("SAYEs"). ...

HMRC’s position with regards to the taxation of of cryptocurrencies or cryptoassets (such as Bitcoin, XRP/Ripple, Ethereum) has been an evolving area, as the wide range of forms and uses of these assets can make it difficult to determine the nature of a transaction, and therefore how a transaction should be taxed. Previous guidance on the matter provided that the taxation of cryptoassets very much depended on the circumstances of the transaction in question. Whilst the same is still true, HMRC has recently issued more detailed practical guidance for individuals, which may provide more clarity going forward. What is a Cryptoasset? HMRC has confirmed that they do not consider cryptoassets to be currency or money. In a report undert...

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...

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,...