The recent First Tier Tribunal (“FTT”) case of Szymusik v HMRC [2020] raised some interesting questions about the eligibility criteria for claiming Seafarers’ Earnings Deduction (“SED”) – But what is SED? And who can claim it? This article will answer these questions, whilst also discussing what we can learn from Szymusik’s case. What is Seafarer’s Earnings Deduction?  The SED is an amount which employed seafarers can deduct from their employment earnings when calculating their UK tax liability - it is not available to seafarers who are self-employed. Who can claim it? In relation to the SED, a seafarer is someone whose employment consists of the performance of duties on a ship, including tasks which are incid...

The Coronavirus pandemic has not only endangered the health of the UK, but it has also had a huge impact on the economy. This financial strain has led to many people choosing to give up/use some of their income to support: 1) Businesses or employers; or 2) Charities. But what are the tax implications of these acts of generosity? Supporting a business or an employer People are showing support for a business or an employer in several ways such as: 1) waiving salary or bonuses before they are paid; 2) waiving dividends; or 3) giving salary or bonuses back to a business or employer after they have been paid. The tax treatment of this support depends on which route is taken (i.e. 1, 2 or 3). 1. Waiving salary or bonuses before they are...

Many businesses have carried out new activities during the ongoing Coronavirus pandemic or alternatively were forced to temporarily suspend all trading activities. In light of the above, HMRC have recently updated the section in their Business Income Manual which relates to ‘Crisis-driven changes to trading activity’ to now cover the potential specific impacts of the Coronavirus pandemic on trading activities. This blog will cover the main changes: 1. New Trading Activities During COVID-19 & Lockdown When a business carries out an entirely new activity which is completely unrelated to its previous activities, then this will usually be treated as the commencement of a separate trade. However, if a business starts carry...

This article will cover the Stamp Duty Land Tax “SDLT” relief that may be available to you if you purchase a subsidiary dwelling alongside a principal dwelling. Normally if you purchase an additional residential property which will not be used as your main residence, an SDLT surcharge may be applicable. The surcharge increases the basic rates of SDLT by 3%, meaning that more SDLT will be payable. However, a purchase of more than one dwelling may be treated as the purchase of a single dwelling for SDLT purposes if one or more of the dwellings is subsidiary to the principal dwelling. This is applicable if: The subsidiary dwelling is within the same building as, or in the grounds of, another dwelling purchased in the same transa...

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...

Where an individual buys a property suitable for use as a dwelling (e.g. a residential property) and they already own another dwelling worth at least £40,000, then a 3% SDLT surcharge may become payable. This surcharge is known as the Higher Rates on Additional Dwellings (‘HRAD’). In some circumstances the individual may become eligible for a refund of the surcharge if: the new property is purchased as a replacement for the individual’s main home; and their former main home is sold within three years of the purchase of the new home. Earlier this month HMRC confirmed that the refund will also be available to individuals who sell their former main home outside of the three-year time limit, provided that they were unable to s...

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...