HMRC plans to send 14,000 "nudge" letters to individuals it believes may have made a taxable residential property disposal in 2018/19 but did not report it on their self-assessment tax return, thereby encouraging taxpayers to come forward and bring their affairs up to date. On the sale of residential property, capital gains tax may become payable on the gain. The taxable gain is calculated by taking the sale proceeds and deducting the original cost, the associated costs of disposal/acquisition, any costs incurred on enhancing the value of the property, and the annual exempt amount (£11,700 for 2018/19). If the taxpayer had lived in the property as their main residence throughout their period of ownership, then Principal Private Resid...

With the offer of quality accommodation at a cheap price and a convenient online booking system, Airbnb has become a very popular choice for those looking for somewhere to stay during a weekend away or even an extended holiday. The increased popularity of the site has created a great opportunity for those with an apartment or spare room to easily generate some extra income. However, these people may not have earned money in this way before and they may therefore not be aware that this is taxable rental income that they may need to report to HMRC. Airbnb has just announced that it will provide HMRC with the details of the individuals who let out property on the site and the rental income that they have received. The information provide...

Last month, the Chancellor of the Exchequer Rishi Sunak announced that as part of the Government’s ‘Winter Economy Plan’ taxpayers who complete self-assessment tax returns can now defer their tax liabilities using HMRC’s formerly established Time to Pay self-service facility. Following the announcement, HMRC have now confirmed more details about the practicalities of the scheme. One of the Government’s previous measures was that taxpayers who were required to make payments on account for 2019/20 following submission of their 2018/19 tax returns (i.e. those with a tax bill of above £1,000 or those who had paid less than 80% of all tax owed) in July 2020 could defer this payment until January 2021 if they have been affected b...

Following yesterday’s cancellation of the proposed autumn budget, the Chancellor of the Exchequer Rishi Sunak spoke in Parliament today (24.09.20) to address the next phase of the Government’s economic support during this crisis, dubbed their ‘Winter Economy Plan.’ The chancellor began his speech on a positive note, stressing that the UK is in a better economic position than in March, however he emphasised the need for more financial provisions to accompany the realisation that the virus will remain prevalent for months to come. The measures outlined today can be summarised as follows: 1. Jobs Support Scheme (JSS) The JSS will replace the furlough scheme (officially known as the Coronavirus Job Retention Scheme) ...

Earlier this month, the Government announced a new COVID-19 aid measure aimed at businesses who are required to close as a result of local lockdowns. In light of recent outbreaks of coronavirus, local lockdowns and restrictions have been introduced in high incidence areas. As a result of these new rules, some businesses (e.g. hospitality venues) will be restricted in the services that they can offer and may be required to shut their doors. Going forward, where a business is forced to temporarily close due to local lockdowns or targeted restrictions, they can make a claim to receive a grant of up to £1,500 per property every three weeks. Each payment will be made for a 3-week lockdown period, with each 3-week lockdown period triggerin...

In our previous article Protect & Thrive - Asset Protection & Holding Companies (30 March 2020) we looked at the benefits of inserting a 100% parent company above a trading subsidiary. But what happens when a group decides to simplify and rationalise its structure instead? This article focuses on situations where there are a number of holding companies above one or more trading companies and looks at the reasons why a group may choose to streamline its structure and the different options available. Benefits of a Simpler Structure A group structure may have arisen as a result of one or more management buy-outs and/or capital reduction demergers, rather than a direct conscious choice by the directors. Each company is required ...

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...

Making Tax Digital (MTD) represents a series of efforts by the government to make it easier for individuals and businesses to keep on top of their tax affairs and get their tax right. The rules will mean that individuals and businesses will need to keep digital records, and send regular updates to HMRC. Certain announced changes have been postponed by the government in the past. This article provides an update of the latest position for businesses and individuals. VAT Since 1 April 2019 (1 October 2019 for some more complex businesses), MTD for VAT has required that businesses with turnover over the VAT threshold (£85,000 in 2020/21) keep their records in a digital format, and submit their VAT returns using software. In practice t...

It is common for business/financial decisions to be guided by the tax treatment of the transaction. However, in light of the tax legislation's complexity taxpayers may seek advance assurance before the event takes place to guarantee that the expected tax implications will indeed apply. In light of this, it is possible to write to HMRC to request advance clearance of the tax treatment of certain transactions. The tax legislation provides for clearances for certain arrangements (i.e. statutory clearances), and HMRC also provides a non-statutory clearance service for areas where the rules do not otherwise provide for it. The most common transactions that we as a firm seek clearance from HMRC include: Share-for-share exchanges Pu...