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It is often more tax-efficient for private, family companies to pay dividends to shareholders rather than a salary or bonus especially if the shareholder is a basic rate taxpayer as the tax rate is lower at 7.5% when the tax charge on salary or bonus is 20%. However, a company can only pay dividends out of its “distributable profits” which are defined as being the company’s profits after corporation tax has been paid. This definition means that even if the bank account is in credit ... Continue Reading

Written by Jennifer Adams for Tax Insider For tax purposes the operation of a furnished holiday let (FHL) is not a business, rather, it is deemed to be an income investment. Despite this, FHL are treated as trading with taxable income being calculated  using the normal rules and as such FHL have some tax advantages over other types of lettings so long as the FHL meets certain qualifying conditions.  The reliefs available under the special FHL rules which are not available to ... Continue Reading

BKL looks at how simple changes to one's financial affairs can save substantial amounts of Inheritance Tax When a life insurance policy pays out, the default position is that the value forms part of the estate of the deceased. If Inheritance Tax (“IHT”) is chargeable on the estate, that means that up to 40% of the insurance pay-out goes to the Exchequer in tax. However, this charge can almost always be avoided by writing the policy in trust.  According to figures recently published ... Continue Reading

Peter Vaines looks at Personal Service Companies and IR35, HMRC requiring security deposits against tax liabilities, and the acquisition date for CGT purposes when looking at PPR relief for the main residence. Personal Service Companies Hot on the heels of the decision of the Upper Tribunal in Christa Ackroyd last month, we have yet another decision on the application of the intermediaries legislation – but with an opposite result: Canal Street Productions Ltd v HMRC [2019] UKFTT 647 ... Continue Reading

BKL looks at the key changes to taxing capital gains on property coming in April 2020. Introduction On 6 April 2020, capital gains tax (CGT) on property is changing. This is likely to have a significant effect on the amount of tax you hand over to HMRC following a property disposal.  There will be three significant changes to the current legislation: Lettings relief Currently: if a property is at some stage an individual’s main residence and also has a period when it was let, there ... Continue Reading

RSM's George Bull looks at recently-announced powers to grant HMRC protection from claims that it could not automate penalty decisions and similar processes.                                  The UK has been paying taxes since well before electrically powered computers arrived on the scene. Come to think of it, the UK has been paying taxes since way before electricity was discovered.  ... Continue Reading

RSM UK's Susan Ball reports that HMRC has been reviewing public sector engagements, with possible implications for the private sector from April 2020. Over recent months we have been hearing about HMRC activity in reviewing the current operation of the off-payroll rules in the public sector ahead of the new changes from 6 April 2020, which will impact both the private and public sectors. It has also recently emerged that NHS bodies are within the scope of this.   Back in April 2017 we learned ... Continue Reading

Where a property is owned jointly, the tax treatment depends upon a number of factors not least as to whether the owners are married and whether the property is owned "jointly" or as "tenants in common".  By default, rental profit from property owned jointly by spouses/civil partners is taxed 50:50 irrespective of the underlying proportion of actual ownership. If it would be more tax efficient for a different profit split (e.g. where one owner is taxed at basic rate and the other at higher ... Continue Reading

RPC Solicitors' Robert Waterson and Constantine Christofi on the government's broad plans to allow HMRC to make individuals personally liable for company debts using Joint Liability Notices. Introduction Draft legislation for the Finance Bill 2019/20 includes provisions allowing HMRC to make directors and other persons involved in tax avoidance, evasion or ‘phoenixism’ jointly and severally liable for a company’s tax liabilities, if there is a risk that the company may enter insolvency. ... Continue Reading

BKL Tax provides a useful summary of some of the key GGT changes to property disposals from April 2020.  On 6 April 2020, capital gains tax (CGT) on property is changing. This is likely to have a significant effect on the amount of tax you hand over to HMRC following a property disposal. There will be three significant changes to the current legislation: Lettings Relief Currently: if a property is at some stage an individual’s main residence and also has a period when it was let, ... Continue Reading