Enter Your E-mail

Capital allowances are treated as part of a trading loss for loss relief purposes, and so care should be taken to determine whether disclaiming these and shrinking the loss may actually leave you better off.This is because personal allowances are ignored in loss claims, so a loss carried back could be wasted if it is set against income that is already covered by personal allowances.Example:Arthur is self-employed and makes a loss for the current year of £25,000 including capital allowances ... Continue Reading

How does it work? The beneficiary has the right to receive an income for a defined period from the trust (usually for the remainder of the beneficiary’s life) but not the right to the capital held within the trust. Thus, rented property can produce the income but the property itself remains within the trust. The ‘interest’ will cease when a beneficiary becomes ‘absolutely entitled’ to the trust assets either on a death (for example on the death of a surviving ... Continue Reading

The Low Incomes Tax Reform Group (LITRG) welcomes the opportunity for everyone with an annuity to be put on an equal footing. Secondary annuities market Welcoming the Government’s proposals for the tax framework for the secondary annuities market which is intended to come into force next April, LITRG noted that this should put everyone, both pre- and post-pensions freedoms introduced last year, on an equal footing.  The proposals Those wishing to sell back a now-inappropriate annuity ... Continue Reading

The Enterprise Investment Scheme (EIS) is designed to help smaller higher risk companies raise finance by offering a range of tax reliefs to investors.Under the EIS, tax relief is available to individuals who subscribe for shares in an EIS company. Income tax relief is given at a rate of 30% on the cost of the shares, subject to a maximum investment of £1,000,000 per person per year. The shares must be fully paid up. The income tax relief is therefore worth up to £300,000 to the investor. ... Continue Reading

Mistakes in your tax return could mean that you have extra tax to pay and might receive a penalty notice, but there are rules governing the treatment of genuine mistakes. Introduction Getting your tax right is not always easy. Any mistakes can be picked up by HM Revenue & Customs and this could mean that you have extra tax to pay and might receive a penalty notice. But if you made a genuine mistake despite taking reasonable care, no penalty is due and you can appeal against a penalty notice. Where ... Continue Reading

If you are a small business it can be advantageous to join the VAT flat rate scheme for small businesses. Under the scheme you use a flat rate percentage to work out the amount of VAT you need to pay over to HMRC. You do not need to record VAT on sales and purchases separately and claim the difference. This can save a lot of work.The flat rate percentage depends on your business sector. The percentages are listed on the GOV.UK website (see the guidance at www.gov.uk/vat-flat-rate-scheme/overview). ... Continue Reading

Should a property letting business be run by one or more individuals who wish to transfer the property into a limited company then there will be a capital gains tax (CGT) charge on the transfer at market value. The CGT charge can be wholly or partly postponed by use of an ‘incorporation relief’ (‘hold-over’) claim where the exchange is wholly or partly for shares in the company.  The charge is deferred until the person transferring the business disposes of the company ... Continue Reading

There are various ways in which businesses can be structured, and it is important that the structure that is chosen is the right one for the business. There are four main options: sole trader; partnership; limited liability partnership; and limited company. The choice of business vehicle affects the type of taxes you pay, your liability for business debts and the legal and administrative requirements imposed on the business. It will also affect the way in which business decisions are made ... Continue Reading

If your self-employment comes to an end, either naturally or through the decision to incorporate, it pays to be careful as to the date on which you choose to cease trading as this can have a major bearing on the amount of tax payable in the final year.Example:If William chooses to cease on 31 March several years later, as his profits have grown and he is incorporating, then he will be taxed on 23 months’ profit in one year with very little in the way of overlap relief. If, however, he ceases ... Continue Reading

The ‘Non-Resident Landlords Scheme’ (NRLS) requires that where there is no UK-based representative/agent, the rent being paid directly to a landlord who lives outside of the UK, the tenant must deduct basic rate tax from the rent paid and pay the tax to HMRC on a quarterly basis. The calculation is of tax on the gross amount actually payable to the landlord (plus any payments made by the tenant where the payment is not a deductible expense). Tenants do not have to operate the scheme ... Continue Reading