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,...

The Confederation of British Industry ("CBI") has submitted its recommendations to the Treasury on how to tackle the UK's skills shortage and encourage productivity and investment in business. After highlighting that the UK has the lowest level of business investment as a proportion of GDP in the G7, the CBI asked the Chancellor to use to Budget to assure businesses that the Government is committed to taking action to boosting UK competitiveness. A selection of the CBI's key demands have been provided below. 1. Capital Allowances The CBI has recommended that the Annual Investment Allowance ("AIA") for capital allowances is increased to £500,000 for two years to boost innovation and UK competitiveness. It is thought that this i...

It is generally accepted that the writing-off or release of a director's loan in a close company is taxed as a distribution in the director's hands. However, this treatment will not apply where the loan is written-off or released in satisfaction of a performance-based bonus, as demonstrated in the recent First-Tier Tribunal ("FTT") case of Esprit Logistics Management Ltd and Others v HMRC (2018). Directors' Loan Accounts ("DLA"): The Basics It is common practice for a director of a close company to have a current account within the company's books, where amounts they are entitled to from the company are credited and amounts taken out are debited. Where a director has an outstanding loan with a close company which is not repaid with...

In Pimlico Plumbers Ltd v Smith, the Supreme Court has upheld the decision of the Court of Appeal that former self employed plumber Mr Smith (the taxpayer) was in fact a ‘worker’ of Pimlico Plumbers Ltd (Pimlico), and is therefore entitled to bring claims against Pimlico in relation to his status as a worker for the company. Background The taxpayer, a self employed plumber and heating engineer, worked for Pimlico between August 2005 and April 2011. Pimlico conducts a large scale plumbing business in London. After suffering a heart attack, Mr Smith made a request to Pimlico that his working schedule be reduced from 5 days to 3 days per week. The request was denied, and Mr Smith was subsequently dismissed. The taxpayer issued ...