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For some time it has been possible for employers to provide employees with vouchers enabling them to access childcare, and this benefit is tax-free up to a certain limit – currently £55 per week – but the rules for childcare vouchers are about to change, as James Bailey explains. Introduction £55 tax free is of course worth more to a 40% taxpayer than to a 20% taxpayer, and still more to a 50% ‘fat cat’, so you will be delighted to hear that HMRC have come up ... Continue Reading

LITRG considers whether tax jargon could be reduced by the UK adopting a similar idea to the USA’s recent Plain Writing Act. Introduction Over the years HMRC have carried out numerous research projects to assess the needs of their customers. The missing ingredient after these reviews has been to take the feedback and make it a reality, particularly when it comes to communicating with customers in a way that they can understand. Have the USA approached this issue in a better way? The ... Continue Reading

HM Revenue & Customs (HMRC) is launching a public consultation on a new system of compliance checks for 'Small and Medium-sized Enterprises', (SMEs), to bring about improvement in business record keeping. HMRC’s David Stephens seeks tax agents’ views. Business Records How good are your clients’ business records? This year [2011] HMRC is toughening up its approach to SMEs' record keeping, with the introduction of a new type of compliance check – a Business Records ... Continue Reading

Steve Allen of VAT Advisers Ltd provides some useful VAT pointers for charities. 1. Are you Operating as a Business? The fundamental question is - does my organisation operate as a business in any way? If it doesn't, you won't be able to recover any VAT on any of your costs. Despite seeming like a simple question there are grey areas that need to be taken into consideration. Examples include providers of funding who require services in return, such as local authority or government bodies. ... Continue Reading

In the current financial climate people are inevitably looking for ways to increase their household income. Sarah Laing points out that many are doing this tax efficiently by renting out a spare bedroom. Rent a Room Scheme The HMRC Rent-a-Room Scheme, which was introduced in 1992, is an optional tax exemption scheme that lets people receive gross (income before expenses) tax-free income of £4,250 per annum from renting out spare rooms in their only or main home. The exemption is not ... Continue Reading

After recent Government announcements, you cannot fail to be aware that it is introducing changes to pension tax relief. But what are they, and will they affect you? Robert Fraser of Tax Insider looks at the changes. Overview of Changes In summary, the headline changes are: The Annual Allowance is reducing to £50,000 from April 2011, and will be fixed until at least 2015/16; Tax relief will be at the marginal rate (i.e., up to 50%); There will be an ability to carry ... Continue Reading

Mark McLaughlin CTA (Fellow) ATT TEP considers why determining domicile status is seemingly getting more difficult. Introduction Determining a person's domicile can be a difficult task. It very much depends on the facts, with circumstances varying in each case. Many taxpayers and advisers would welcome the facility to agree a person's domicile status with HM Revenue & Customs (HMRC) in advance of submitting tax returns. Unfortunately, HMRC seems increasingly reluctant to do so. For ... Continue Reading

James Bailey considers a key tax question by would-be home owners.  Introduction One of the most frequent questions a tax adviser gets asked is “how long do I have to live in a property before HMRC will accept that it is my “main residence” and thus exempt from Capital Gains Tax when I sell it?” The question is fair but the answer is difficult. Example My own opinion is that there is no minimum period of time, and I give the example of someone who moves ... Continue Reading

Matthew Hutton, Presenter of the ‘Private Client Monthly Tax Update’ Webinars, reports on a recent case regarding Income Tax relief on loan interest paid. Context The relief provided by ITA 2007 ss 383/392 (formerly TA 1988 ss 353/360) for interest paid by investors on loans to fund acquisitions of interests in certain kinds of close company is a valuable one and serves important commercial purposes in developing such businesses and facilitating succession. These relieving ... Continue Reading

HM Revenue & Customs has issued a statement - Motor Trade Issues - which usefully provides a list of vehicles derived from car models, which HMRC will accept as being vans for VAT purposes. The benefit of being classified as a van for VAT purposes is that the Input VAT should generally be reclaimable, unlike cars - Car Derived Vans and Combi Vans. The statement also goes on to remind car dealers that, following the Nordania Finans decision last year, their position regarding claims for ... Continue Reading