The word ‘Crypto’ by its definition has the meaning ‘hidden’ or ‘secret’. In a new ‘nudge’ campaign, HMRC appears to be alerting taxpayers that there could be undeclared tax on the disposal of their cryptoassets. At the end of October 2021, HMRC’s Wealth External Forum issued a briefing that they will be sending ‘nudge’ letters from November 2021, to taxpayers who they believe have held cryptoassets, and to highlight the potential tax implications. Examples of the letters sent can be found here. Over the last couple of years, HMRC have conducted a number of ‘nudge’ letter campaigns including targeting taxpayers to review their non-domicile tax position and income from rental properties. Why have HMRC sent ...

The 31 January 2022 deadline for taxpayers to file their 2020/21 tax returns is quickly approaching. In light of this, HMRC announced on 6 January 2022 that late filing and late payment penalties will be waived for one month for Self Assessment taxpayers who are yet to submit their 2020/21 tax returns. The announcement was made as a result of the extra pressures taxpayers and their agents are facing this year with COVID-19. HMRC have acknowledged that COVID-19 could be affecting some taxpayers’ ability to file their tax returns by the 31 January deadline. Although, official HMRC department figures at the date of the announcement show that out of the 12.2 million taxpayers who are required to submit a tax return, nearly 6.5 million t...

The division of marital assets is a difficult time for most couples undergoing separation/divorce/dissolution, and little thought may be given to the potential tax implications that can arise. This article seeks to highlight some of these tax issues, and potential planning to help mitigate the potential tax charges and ensure that a larger pool of assets remains for apportionment between the parties. Capital Gains - Tax Year of Separation The transfer of assets between spouses/civil partners who are 'living together' in the tax year, is at no gain/no loss for capital gains tax. Individuals will be treated as living together unless they are separated under a Court Order or formal Deed of Separation, or they are separated in circumstanc...

In the recent case of Crippin v HMRC [2021], the taxpayer (Mr Crippin) was successful in his First Tier Tribunal appeal in relation to claiming Private Residence Relief “PRR” on an annex. This blog will discuss this case and its relevance for those who may be disposing of similar assets. Background In 2006, Mr Crippin purchased a house named ‘Loaningdale’ and an adjacent annex named ‘Bothy’ for him and his family. Mr Crippin and his partner were not married. In 2009, Mr Crippin submitted a planning application to construct an ancillary accommodation above Bothy (and the double garage attached to Bothy). This was named ‘Benko,’ and this eventually became a three-bedroom flat with a kitchen/living area and bathroo...

Dave Clark (“Clark”), former sports presenter for Sky Sports, had his IR35 appeal dismissed at the First-Tier Tribunal (“FTT”) resulting in a tax liability of over £281,000. The case turned on whether his working relationship with Sky fell within the IR35 intermediaries legislation, otherwise known as ‘off-payroll working’. The judgment can be found here. What is the IR35 intermediaries legislation? The Government introduced this legislation in 2000 to prevent tax avoidance from workers who offered their services through a limited company or a partnership in order to reduce or avoid PAYE and National Insurance Contributions (“NIC’s”). One of the main aims of determination is to ask: "if the intermediary did not ...

The autumn budget was presented by the Chancellor of the Exchequer on Wednesday 27 October 2021, where for the most part few changes to the tax rules in the UK were announced. However, it was acknowledged in the budget that changes would be made to the Capital Gains Tax (CGT) Payment for Property Disposals (PPD) service rules. For further details on what the CGT PPD service rules are and whether they may apply to you, please consult our previous blog which provides details of this service. PPD Service Deadlines Previously, the government introduced new reporting requirements for UK residents disposing of residential property on or after 6 April 2020, where it was established that the deadline for taxpayers to report the disposa...

Landlords who let Furnished Holiday Lets (FHLs) can benefit from certain tax advantages. The rules that apply to FHLs are distinct and separate from the rules applying to the letting of residential property more generally. Furnished Holiday Lettings – Conditions For a property to qualify as an FHL in the tax year, all of the following conditions must be satisfied: The property is furnished. The property is located in the UK or the European Economic Area (EEA). The property is available for commercial letting as holiday accommodation to the public for at least 210 days in the relevant period (typically the UK tax year). Of the 210 days, the property is actually let out for at least 105 days as holiday accommodation. ...

During the 2020/21 tax year, many individuals and businesses received state grants in order to support them during the COVID-19 pandemic and associated lockdowns. HMRC has issued a reminder that taxpayers (including sole traders and partnerships) must remember to include grants or payments received from coronavirus support schemes in their self-assessment tax returns. This is particularly relevant given the pressing 31 January 2022 deadline. COVID-19 support grants and payments include: Self-Employment Income Support Scheme (SEISS) Coronavirus Job Retention Scheme (CJRS) Other COVID-19 grants and support payments, including self-isolation payments, local authority grants, and Eat Out to Help Out. Failure to include all t...

The 'backpacker tax' was introduced in January 2017 for individuals working in Australia on certain working holiday visas. The tax applied a 15% tax rate on all income earned up to $37,000. This was contrary to the $18,200 tax free threshold that applies to Australian residents. In effect, working holidaymakers in Australia were subject to higher rates of tax in Australia than Australian residents. The Case Following a challenge by the taxpayer, the Australian Federal Court found in a ruling in October 2019 that the backpacker tax could not lawfully be applied to citizens of the UK, the US, Germany, Finland, Chile, Japan, Norway and Turkey. The case was subsequently appealed, however the High Court has now reaffirmed the orig...

In our previous blog we discussed HMRC’s consultation on reforming Basis Periods for unincorporated businesses (e.g. sole traders and partnerships) and the changes to the rules being considered. In the Autumn Budget 2021, it was confirmed that the proposed changes to the rules will be introduced with effect from the 2024/25 tax year. In order to allow for this, the 2023/24 tax year will be a ‘transition year.’ In summary, the changes will mean that businesses will be taxed on profits arising in the tax year. Accordingly, businesses with a period of account that does not match the tax year will have to make an apportionment to identify the profit or loss arising in a specific year. For further details please see our previous blog...