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...

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...

Entrepreneur’s relief  ("ER") is a valuable relief from Capital Gains Tax ("CGT") which, when available, restricts the tax rate to a flat 10% on up to £10 million worth of lifetime gains. The 2018 Budget announced changes to the conditions for obtaining ER, and in light of the new rules it may be worthwhile for taxpayers to dispose of relevant assets before 6 April 2019. Minimum Qualifying Period ER applies to disposals of: shares in a trading company; (the whole or part of) a business; assets in association with the sale of a business; assets from a solvent company that has ceased trading. For disposals involving shares, the shareholder would need to work for the company and hold at least 5% of the ordinary s...

Whether a property is residential or non-residential for Stamp Duty Land Tax ("SDLT") purposes is not always clear cut, and this will affect the tax payable and also the reliefs/exemptions that might apply. Residential rates can be as high as 15% (where the 3% surcharge applies), whilst non-residential rates top out at 5%. Mixed use properties (used for both residential and non-residential purposes) are subject to non-residential rates. In light of the different rates and reliefs that can apply, it is crucial that the nature of the property is correctly identified at the time of purchase. HMRC has recently clarified their views and guidance on what constitutes residential property for SDLT purposes - some of the points discussed ar...

If you have recently received a PAYE coding notice from HMRC, you may be wondering what it means and what you should do with it. This can be a complex topic, and if you are confused you are certainly not alone. Therefore, the aim of this blog is to help you to understand your coding notice and any actions that you may need to take. PAYE Firstly, PAYE stands for “Pay As You Earn” and is the system that is used by your employer to deduct tax directly from your wages or salary. In order to ensure that your employer deducts the correct amount of tax, HMRC issues a PAYE code to your employer (and to you through a coding notice) to provide the relevant information. The PAYE coding notice essentially tells you your tax code and explains ...

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...

The latest battle before the Court of Appeal (CoA) between a South African diver and HMRC has thrown up interesting questions about how far UK law can affect the interpretation of its double tax treaties with other countries. The CoA’s 2-1 judgement in favour of the diver overturned a previous decision in favour of HMRC by the Upper Turbinal and restores the decision of the First-Trier Tribunal (FTT). In light of the split decision, HMRC may try to appeal to the Supreme Court so taxpayers relying on the UK’s various “deeming” provisions for tax may wish to keep abreast of this case. Background Fowler was a South African diver working in the North Sea. Under a specific relief in the UK’s domestic tax law, income fr...

Often when making a donation, a charity will ask whether Gift Aid can be claimed on the donation. There are certain tax advantages and reliefs to making Gift Aid donations, which are explained in more detail below. Basic Operation of Gift Aid Gift Aid is a tax incentive that allows UK registered charities (and charities registered in other EU member states, Norway, Iceland, and Liechtenstein) to claim the basic rate tax (currently 20% in 2018/19) back on the donation from HMRC. For example: Assume a taxpayer wishes a charity to receive a total of £100. The taxpayer will actually give the charity £80 and the charity will then claim back the £20 from HMRC. Tax Relief – Higher Rate/Additional Rate Taxpayers Further tax reli...

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 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 ...