The provision of living accommodation to an employee can potentially be a taxable benefit. The rules discussed below also apply to living accommodation provided for a member of an employee’s family or household by reason of their employment. The way that the benefit is taxed depends on whether the accommodation is job-related or non-job related, as well as other factors relating to the accommodation itself. Job-related Accommodation Where job-related accommodation is involved, there will be no charge to tax in the following circumstances: The job-related accommodation is ‘necessary’ for the proper performance of the employee's duties (e.g. caretakers on call outside normal working hours or agricultural workers who live o...

What is Stamp Duty? Stamp duty is a tax on 'instruments' relating to UK shares or securities, or if the 'instruments' are actually executed in the UK. Please note that the UK does not include the Channel Islands or the Isle of Man for these purposes. Where there is 'consideration' payable on the transfer of shares, there will normally be the requirement to pay stamp duty and submit a stock transfer form within 30 days of the 'effective date' of the transfer. Failing to have a stock transfer form correctly 'stamped' by HMRC is an offence and can lead to large penalties and interest imposed by HMRC. If shares are transferred electronically with no instrument, stamp duty will not apply but stamp duty reserve tax will be payable (c...

Beware of the IHT Trap – Gifts With Reservation of Benefits Planning to give away an asset but still plan on benefitting from it? The Gifts with Reservation of Benefits rules (“GWROB”) are an anti-avoidance provision introduced to prevent avoidance of UK Inheritance Tax (“IHT”). This article discusses the GWROB rules and certain exceptions where the GWROB rules will not apply. Please note that this article does not discuss the Pre-Owned Asset Charge rules. What are the GWROB rules? Traditionally, where a person makes a gift of a property (and is not a chargeable transfer or an exempt transfer), this will cease to be part of their estate if the donor survives 7 years from the gift. This is also known as a Potentially Ex...

Domicile has historical routes for being known as one’s ‘home’. It is very important to understand your domicile status as this can have a number of tax consequences, especially in relation to UK Inheritance Tax (“IHT”). This article sets out where an individual can be deemed to be domiciled in the UK for IHT purposes and what this means for taxpayers. Please note that this article specifically relates to IHT and does not discuss Income Tax or Capital Gains Tax. What is Domicile? Domicile is a common law concept and can broadly be described as an individual’s permanent home and where they plan to live permanently or indefinitely. For further information on what domicile is and the different types of domicile, please tak...

A recent First Tier Tribunal ("FTT") has ruled that flapjacks cannot be classed as cakes for the purposes of UK Value Added Tax (VAT). This means that the supply/sale of such foods will be subject to VAT at the standard rate (currently 20% in 2022/23 tax year). The case echoes similarities to the 1991 VAT tribunal case concerning Jaffa Cakes: United Biscuits (LON/91/0160), which found that Jaffa Cakes were in facts cakes (rather than biscuits) for VAT purposes, and therefore the supply of such items was zero rated for VAT (VAT at 0%). VAT on Food Generally the supply of food for VAT is zero rated, meaning suppliers are not required to charge VAT on such items. However there are several exceptions to this rule, where the supply of f...

What is a share for share exchange? A share for share exchange takes place when one company issues shares to a person in exchange for shares in a different company. If the specific conditions in the relevant legislation (TCGA 1992) are met, then the share for share rules will apply. However, this will need careful analysis. What is the effect of the share for share rules? The effect of the share for share rules is that the person’s old shares are effectively swapped for the new shares issued to them. There is no disposal by the person for Capital Gains Tax (“CGT”) purposes and therefore no CGT payable. The new shares effectively ‘stand in the shoes’ of the old shares – this means that they have the same base ...

UK tax legislation is often complex and not always easy to interpret, and taxpayers typically want to know the tax considerations of a transaction in advance. To assist with this uncertainty, taxpayers can apply for clearance from HMRC on the tax treatment of certain transactions before the relevant transaction or event takes place. What is a Clearance?  Clearances are broadly defined as written confirmation of HMRC's view of the application of tax law to a specific transaction or event, where the taxpayer can rely on this verification in most circumstances. Our previous blog discusses where HMRC will not give clearance. Clearance applications to HMRC can come under: ‘Statutory clearances’ – the tax treatment of certain...

Spring has arrived in the UK, and along with longer sunny evenings and flowers coming into bloom, the Government has released it's Spring Statement 2022. Many of the announcements are in response to rising cost of living/fuel prices/energy bills. We have rounded up the key tax highlights. Income Tax and National Insurance Contributions (“NICs”) From July 2022, for Class 1 and Class 4 NICs, the National Insurance Primary Threshold and Lower Profits Limit will increase from £9,880 to £12,570, aligning them with the personal allowance for income tax. It is estimated that this will save a ‘typical’ employee over £330 in the year from July. From April 2022, self-employed individuals with profits between the Small Profits Th...

Plug-in electric vehicles offer a wider variety of ‘refuelling’ options for drivers, including charging at home, at work and at public charging stations. When reclaiming the cost of charging for business travel, there are some unique tax considerations for fully electric cars. The Advisory Electric Rate (AER) Electricity for a company car is not considered ‘fuel’ and therefore, no fuel benefit charge will arise. HMRC publish advisory rates for businesses to use for the re-imbursement of mileage in company cars. These rates will be used where a company is reimbursing its employees for business travel in company cars but also when employees are required to repay the cost of fuel for private travel (more discussed below). Furt...

In a recent appeal to the First Tier Tribunal (“FTT”) by well-known TV presenter Adrian Chiles, it was ruled that the Intermediaries Legislation (known as IR35) did not apply. This was a significant success for the taxpayer – indeed, just over £1.7m of PAYE and NICs were at stake. This blog will consider the deciding factors in this case and the relevance of these for future cases. The decision of the case can be read here. What is the Intermediaries Legislation (IR35)? In summary, the Intermediaries Legislation (found in ITEPA 2003 and known as “IR35”) is applicable where an individual provides services through a Personal Service Company (“PSC”) and thereby avoids PAYE and National Insurance. It is necessary to con...