Shari'a-compliant financing arrangements (also known as Islamic financing arrangements) are designed to comply with Islamic law, and as such must adhere to a number of principles, including: Investment must not be in businesses related to alcohol, pork products, gambling, etc.; Sharing of profit & risk between at least two parties; Prohibition on interest; Investment cannot include extreme uncertainty or speculation; and No unjust enrichment. In light of the growing Islamic finance markets, in Finance Act 2005 the UK introduced specific provisions in order to deal with the tax treatment of certain forms of Shari'a financing. These provisions, known as the "Alternative Finance Arrangement" rules, aim to ensure that th...

With an ever-increasing demand for housing and a limited amount of land available, you may be considering whether a property could be built in your garden. Clearly, this could be very financially rewarding for you; however, there are some important tax considerations that you should bear in mind. This article will consider the potential capital gains tax and income tax implications of 1) selling part of your garden to a property developer, 2) self-building a property in your garden for onward sale and 3) self-building a property in your garden to let to tenants. 1)Selling part of your garden to a property developer If you sell part of your garden to a property developer who will develop the land and later sell the developed proper...

Prime Minister Boris Johnson has today announced the introduction of a new "Health and Social Care Levy" in order to fund health and social care. The new tax will apply UK-wide and be introduced in two stages: Stage 1 - 6 April 2022 Class 1 and Class 4 National Insurance contributions will increase by 1.25% points, and will therefore apply to employers, employees, and self-employed individuals. Those earning less than the Primary Threshold/Lower Profits Limit will not pay the levy. Furthermore, dividend tax rates will also increase by 1.25% points. However dividends received from shares held in ISAs will not be affected. Stage 2 - 6 April 2023 On 6 April 2023, the 1.25% National Insurance increase will instead be charged a...

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...

Business Asset Disposal Relief (“BADR”), formerly known as Entrepreneurs’ Relief, is a valuable capital gains tax (“CGT”) relief which may be available when you sell or give away your business. The effect of the relief is that a flat CGT rate of 10% applies on qualifying disposals (a reduction from 20% if you are a higher rate taxpayer). BADR can be claimed on qualifying gains up to a maximum lifetime limit of £1 million. Call us on 0113 887 8432 to discuss your situation.  What can the relief be claimed on? The relief is available when there is: A ‘material disposal’ of ‘business assets’; or A disposal which is ‘associated’ with a material disposal. What is a material disposal of business assets...

The implementation of the EU’s Fifth Money Laundering Directive in the UK has meant that more trusts are now required to register with the Trust Registration Service. All UK express trusts, including non-taxable trusts, are now required to register, unless they are specifically excluded. As you may have seen in our previous articles, there have been several delays to the upgraded TRS as it was originally meant to be implemented in summer 2021. However, several months later, HMRC have now announced that the new Trust Registration Service will be open for non-taxable trust registrations from the beginning of September. To find out further information about which trusts must register with the TRS, and those that are excluded, take ...

For those who rely on travelling between countries to perform their everyday employment duties, COVID-19 has caused even more uncertainty and disruption to their travel plans than the rest of the population. If your movements for work have been impacted by COVID-19 with travel restrictions preventing you from leaving the UK, the following article should help provide clarity on your liability to UK income tax on your earnings. Non-UK Residents HMRC have acknowledged that instances arise where a non-UK resident is restricted from leaving the UK due to COVID-19, and consequently carries on working in the UK unexpectedly. With the above in mind, HMRC’s guidance states that the UK will not tax the employment income of a non-UK residen...

The disposal of property is a chargeable event for capital gains purposes, therefore a liability to capital gains tax ("CGT") can arise. This is the case even if you swap your property for another property and no money changes hands. However, there is often overlooked CGT relief which applies where there is an exchange of interests in land which are jointly owned by two or more persons. For example, if a husband and wife are getting divorced and they are joint owners of two rental properties, roll-over relief may be available if the wife transfers her half of the first property to her husband in exchange for his half of the second property. The relief operates by treating the disposal as a no gain/no loss transaction, with the donee i...

In the upcoming years, taxpayers will not be issued with automatic penalties for the late filing of tax returns or the payment of tax. Instead, HMRC will issue "points" for missed deadlines, before a financial penalty is levied. It is intended that this new system will be fairer and only penalise those who persistently fail to meet their compliance obligations. The changes will apply to VAT customers for accounting periods beginning on or after 1 April 2022, and to those who submit self-assessment tax returns with business or property income exceeding £10,000 p/a for accounting periods beginning on or after 6 April 2023, and to all other self-assessment taxpayers from 6 April 2024. Current Rules (Self-Assessment) Under the current...

The housing market is currently booming with the average UK house price increasing by 10.2% for the year to March 2021. One catalyst behind this surge is thought to be the stamp duty holiday due to end on 30 June 2021. However, according to property market analysts, this surge may be short lived as house prices are expected to fall again post June after the stamp duty extension deadline, where the extension to the rate bands are expected to be in place until 1 October 2021. Please check our article on the Spring 2021 Budget for further information regarding this. Amongst those acquiring new properties will be landlords purchasing buy-to-lets. With this in mind, we’ve set out 3 top tips below to help landlords efficiently manage thei...