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"). ...

Business Property Relief (BPR) and Agricultural Property Relief (APR) are reliefs that can significantly reduce or offset an Inheritance Tax liability. In previous blogs (see Related Articles below) we have discussed BPR and the issues involved in determining whether this relief is available. This blog will instead focus on APR and the definition of "agricultural purposes". What is APR? APR is available on certain transfers of property. The property can be transferred either as a gift during the individual’s lifetime or on their death. In order for the relief to apply, the following conditions must be met: 1) The property must be agricultural property. This is defined as agricultural land or pasture which is situated in the...

A corporate restructuring takes place where a company and/or a group of companies undergo a process of reorganising the ownership structure for the benefit of the business. Common reasons for a restructuring include a change of ownership, mergers (i.e. merging two or more separate companies into one), and demergers (i.e. the separation of a company into two or more smaller companies). From a tax perspective, the term “reorganisation” is not defined in the legislation. However, it is accepted that it refers to a company organising its share capital in a different way. Where the transactions in a reorganisation meet certain conditions for tax purposes, the reorganisation is not treated as involving a disposal of the original sha...

With less than 6 weeks to go until most VAT registered businesses are required to comply with MTD, there is still concern that not enough progress has been made on making business owners aware of the new rules. Only 1 in 200 eligible businesses have already signed up to MTD, and HMRC has published research indicating that as at December 2018, 1 in 5 businesses required to join hadn't even heard of it. Adrian Rudd, Chair of the joint CIOT/ATT Digitalisation and Agent Strategy Working Group has said "We note that by far the most common way those who are aware of MTD have been made aware is by their tax adviser or accountant. We and our members will continue to do what we can to raise awareness over the months ahead but it is likely tha...

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...

Directors claiming to provide services outside the scope of PAYE to their companies should consider the case of Petrol Services Ltd v HMRC in which the First-Tier Tribunal (FTT) found that payments to two directors were effectively remuneration liable to income tax and NICs under PAYE. Background Petrol Services Ltd (PSL) carried on a petrol business. The company had two directors who didn’t receive remuneration directly but did have separate “consultancy agreements” under which they were entitled to a set amount each month and required to work up to 15hrs per week. In practice PSL had no employees and the petrol stations were sublet to shop and carwash tenants who paid rent and collected payments for PSL. The two dir...

It was announced in the Budget 2018 that the government was introducing a new Structures and Buildings Allowance ("SBA") for costs incurred in relation to the construction, conversion, and/or renovation of non-residential structures and buildings. Effective from 29 October 2018, the SBA is available on the construction, conversion, and/or renovation costs relating to non-residential structures located in the UK or overseas. The SBA is given at an annual rate of 2% on a straight-line basis for a fixed 50-year period from the date the structure comes into use.  Interestingly, there will not be a system of balancing charges or allowances on a subsequent disposal of the asset, and the relief will run regardless of ownership changes. ...

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 ...

What is a charity? In order for an organisation to be legally recognised as a charity in England and Wales, it must be: Established for "charitable purposes" only; and Be subject to the control of the High Court's charity law jurisdiction. 1. What is a "Charitable Purpose"? A charity will have a charitable purpose where it is set up to benefit society. Typical charitable purposes include: relieving poverty; advancing education; protecting the environment; advancing religion; animal welfare; and protecting human rights. An organisation will not have a charitable purpose where it has a political purpose, where the purpose is unlawful or against public policy, or intended to serve a non-charitable purpose. Furthermore, t...

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...