On the 8th July 2020, Rishi Sunak (the Chancellor of the Exchequer) set out the next round of financial provisions aimed at counteracting the contraction of the economy due to the impact of coronavirus. The headline policies from the fiscal event, dubbed a 'mini-budget,' are as follows: 1.Furlough Funding Eased - The furlough scheme will gradually wind down before concluding at the end of October. Currently, the Government pays 80% of wages up to £2,500 plus associated National Insurance contributions (NICs) and pension contributions leading to a maximum grant of £2,804 per employee. However, there are several changes proposed in the coming months to ease this finance: August - Employers will now need to pay employers NICs a...

The case of Sambhi v HMRC (2020) provides a useful reminder of the "temporary workplace" rules for the purposes of income tax relief on travel and subsistence costs. In this case, the First Tier Tribunal ("FTT") dismissed the taxpayer's appeal and held that a change in the average travel time of 30 minutes or in travelling expenses of £14 were not "substantial" enough to qualify for relief. Temporary Workplace: An Introduction The cost of commuting from home to your workplace is not deductible as an expense against your employment income. This is because it is not a cost wholly, exclusively, and necessarily incurred in the performance of your employment; rather it is a cost incurred to put you in the position of being able to perform...

In the Spring Budget it was announced that new legislation would be introduced to clarify the computation of Top Slicing Relief (TSR) for gains made on or after 11 March 2020. HMRC have since announced that these new rules will apply by concession for all gains arising in the 2019/20 tax year. What is Top Slicing Relief? In the absence of TSR, a taxpayer who has historically paid income tax at a lower rate could be catapulted into the higher and/or additional income tax rates on insurance policy gains. This is because whilst the gains accrue over a number of years, they are only subject to income tax in the year of a chargeable event (such as the death of the life assured, or surrender of the bond). TSR therefore mitigates this hig...

Parents and caregivers can claim for Child Benefit, which is a tax-free payment calculated by reference to the number of eligible children in the household. Since the introduction of the High Income Child Benefit Charge (HICBC) in 2012, many taxpayers have been caught out by the charge, resulting in the issue of penalties by HMRC. Indeed, the failure to notify HMRC of the liability was so widespread that last year HMRC reviewed the penalties and confirmed that they would be cancelled if they met a number of conditions. Ramsdale v HMRC (2020) In the recent case of Ramsdale v HMRC (2020), the First Tier Tribunal considered whether being unaware that your partner was claiming Child Benefit was a reasonable excuse for failing to notify...

HMRC have issued detailed guidance regarding how the coronavirus job retention scheme will work in practice. How Much is the Grant? Employers can claim: the lower of; 80% of furloughed workers regular wage, or £2,500 per month associated employer NICs on that subsidised wage, and minimum automatic enrolment employer pension contributions on that subsidised wage This gives a maximum grant per employee of £2,804 per month (£2,500 salary + £245 Employer NIC + £59 automatic enrolment pension contribution). For salaried employees; the employee’s actual salary as at 19 March 2020 (excl. commission and bonuses) should be used to calculate the 80%. However, originally the amount needed to be calculated using the emp...

On 26 March 2020, the Government announced a much awaited support package for self-employed individuals and partnership businesses that have suffered a loss of earnings due to COVID-19. Eligible individuals will receive a grant of up to 80% of their average monthly trading profits, up to a cap of £2,500 per month. Initially the scheme was set to run for a 3 month period (March to May). However, as this scheme is designed to match the support given to furloughed individuals, it is thought that it will be extended to end of October to match the extension of the Job Retention Scheme announced by Rishi Sunak on 12 May 2020. So far, only those who work in the construction or manufacturing industry have been encouraged to go back to wor...

In this ‘pause from normality’ it is important to keep your tax compliance guard up. The period we are going through is not a ‘tax holiday.’ If the quality of your tax compliance drops, then the existence of Covid-19 will be no excuse for inaccuracies or negligence later down the line when faced with an HMRC enquiry, nor is it likely to be an excuse for late returns unless you become seriously ill. The reality of this is exemplified by the fact that people are still receiving loan charge settlement letters (which require a response in 30 days) during this time. Our advice: Understand the specific tax payment holidays and reliefs that exist through Covid-19 and apply them to the best of your ability. Prepare cash-...

The Upper Tribunal has found that Mr Davies, Mr McAteer and Mr Evans-Jones (the taxpayers) could not benefit from the Motive Exemption or Treaty Relief in relation to overseas property income subject to UK tax under the Transfer of Assets Abroad rules. Transfer of Assets Abroad Rules  The transfer of assets abroad (TOAA) rules were brought in in their original form for income tax in 1935, and extended to capital gains tax (CGT) in 1965. The rules are complex and far reaching, but in short they may apply where non-UK resident companies or trusts are created which can benefit UK-resident individuals. An income tax charge will apply to the individuals where the following conditions are met: There must be a transfer of assets by ...

In line with government guidelines, large swathes of UK workers are currently working from home.  Whilst there are a range of expenses you may be able to claim depending on your specific circumstances, this blog is aimed at those of you who own a limited company and are running the business from home. Rather than claiming the flat rate of £6 per week (£26 per month) under the simplified expenses rules, it may be more beneficial to instead rent out the personal work space in your home to your limited company. Under this arrangement, where the rent charged is equal to costs (see below), then no taxable rental profits will arise. Furthermore, provided that the rent is charged at no more than the market rate then the rental payments ma...

As of 6 April 2020, disposals of residential property and the Capital Gains Tax (“CGT”) charged must be reported and paid within 30 days of the completion date. This will be completed through the new CGT on UK property service, which will be accessible through www.gov.uk from today. The new rules apply to individuals, personal representatives and trustees (i.e. not companies). Prior to 6 April 2020, if a taxable gain arose when a UK resident disposed of an interest in UK residential property, this had to be reported through a Self-Assessment tax return. This meant that the disposal and Capital Gains Tax (“CGT”) had to be reported and paid by 31 January following the tax year in which the disposal took place. Under the new ru...