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The capital gains tax rules on gifts between spouses as being at ‘no gain/no loss’ apply until the end of the tax year of separation. Ideally therefore, the transfer of any jointly held assets should be made some time before the end of the tax year in which separation took place in order to be fully exempt. The asset (which could include the main residence) will be valued as at the date of the gift rather than the 50% share of the original cost. Thus an ‘uplift’ in the value ... Continue Reading

LITRG is promoting the Ministry of Justice’s efforts to design an online service for tax appeals based on real user needs. Volunteers are invited to get involved. Introduction The Low Incomes Tax Reform Group (LITRG) has recently been in touch with the Ministry of Justice (MOJ), as plans are under way to create an online appeals service for people challenging decisions by HMRC. As part of their work, the MOJ is looking for volunteers to attend a workshop about how the new service should be ... Continue Reading

Taxpayers seeking to obtain in excess of £50,000 of otherwise unlimited income tax reliefs in any one year are restricted in their claim to the higher of: 25% of their total income, or £50,000. One of the tax reliefs is property tax loss relief, which is available for offset against total income – most commonly where some or all of the loss is attributable to capital allowances. The ‘capped’ loss will not be wasted as it can be relieved by offset against the owner’s ... Continue Reading

Anyone buying property to let out on a long-term basis will most likely be deemed an investor, whereas someone buying to refurbish then sell, whether resulting in a gain or not, may be deemed to be trading or dealing in properties and be taxed accordingly. The two factors to consider are intention (the reason for purchase) and whether the transaction has the characteristics of being a trade. If it can be shown that the property has been purchased for its income, then the fact that it was sold as ... Continue Reading

Where a taxpayer owns a property as his or her main residence but is obliged to live elsewhere in job-related accommodation, the property could be deemed not eligible for Principal Private Residence relief. However, the relief will apply when, during the period of ownership the taxpayer: resides in other job-related accommodation; and intends to occupy the first property as his or her only or main residence at some time. This ‘job-related’ provision is only possible if it is necessary ... Continue Reading

There is a limited concession to extend Principal Private Residence (PPR) relief should the owner not move into his or her only or main residence on purchase. This covers situations where the owner: buys land on which the house is to be built; has the house altered or redecorated before moving in; remains in the first property whilst it is still on the market, provided that when that property is sold the second property becomes the owner’s only or main residence. In these circumstances, ... Continue Reading

Under the 'Replacem ent Furniture' Relief landlords of all residential lets (except furnished holiday lets) whether partly furnished or unfurnished, are able to claim a deduction for the capital costs of replacing such items as furniture, furnishings, appliances and kitchenware provided by the landlord for use by the tenant. No deduction is permitted for the initial cost of the furnishings, or to the extent that any replacement expenditure is actually an enhancement. A replacement will be regarded ... Continue Reading

HMRC are proposing to limit the range of benefits in kind (BIKs) that attract income tax and/or National Insurance contribution (NIC) advantages when provided as part of salary sacrifice arrangements. Background In the view of the Low Incomes Tax Reform Group (LITRG), and particularly in the current economic climate, it is understandable that some employers and employees would want to enter into a salary sacrifice arrangement in exchange for other benefits. LITRG therefore has strong reservations ... Continue Reading

Search engine results for ‘contacting HMRC’ might include adverts for paid call recording services. LITRG explains how you may not need them because HMRC provide the service for free. Introduction If you type ‘contact HMRC’ or something similar into a search engine, you may spot paid-for Ads for call recording services (Ads are the boxed adverts displayed around the unpaid-for ‘organic’ search engine results). These services offer to record your call to HMRC. ... Continue Reading

The rental profit or loss incurred from a property held jointly (or held within a partnership business proper) need not be allocated in the same proportion as the underlying ownership. The owners can agree a different split as they see fit, the proportion referring to profits and losses only and not necessarily to the underlying proportion of ownership. Further information and calculations can be found in HMRC's Property Income Manual Section 1030.Profit Allocation – CalculationThe purchase ... Continue Reading