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Tax relief is available for interest on loans where the money borrowed is used for certain qualifying purposes. Buying shares or lending money to a close company is a qualifying purpose, as long as the associated conditions are met.A close company is one that is under the control of five or fewer participators or any number of participators if those participators are directors. Many family companies are close companies.Relief is available for interest paid on a loan to buy ordinary shares in a close ... Continue Reading

If you bought an asset and sold it at a loss then it is possible that you made a capital loss (e.g. if you invested in a start-up that failed or bought an investment property that went down in value, then this may well apply to you).Capital losses can only be relieved against capital gains and if there are no gains in the year of the loss, the loss can be carried forward. However, if gains are incurred during the year that the loss was made, the loss is first set against the other gains for the year, ... Continue Reading

The Low Incomes Tax Reform Group (LITRG) is urging people to claim back tax deducted from savings income in past years now that they have received their P60s. Background Up until 6 April 2016, financial institutions like banks and building societies had to deduct 20 per cent basic rate tax from interest paid to individuals’ accounts, unless the person was a non-taxpayer and registered to have interest paid gross. This would have been done using form R85 for UK resident savers who were non-taxpayers ... Continue Reading

The ‘Non-Resident Landlord Scheme’ (NRLS) requires persons who act as ‘representatives’ (agents) for the landlord to deduct basic rate tax from the net rent collected (less expenses paid) unless the agent has authority from HMRC to pay the landlord gross.The tax is paid on a quarterly basis and an information return is submitted. An annual return must also be submitted by 5 July after each tax year-end and a certificate issued to the landlord confirming tax paid.Example:John ... Continue Reading

Where a person’s earnings fall between the lower earnings limit for Class 1 National Insurance purposes (£112 per week for 2015/16) and the primary earnings threshold (£155 per week for 2015/16) they are deemed to have paid National Insurance Contributions at a notional zero rate. Consideration should be given to paying a small salary which falls within this range. The benefit of this is that it preserves their contribution record and entitlement to the state pension and certain ... Continue Reading

In April 2016 the new National Living Wage was introduced, increasing the minimum wage for some, but possibly having an adverse effect for those claiming Carer’s Allowance. LITRG explains. Background In April 2016 the new National Living Wage was introduced, which saw the minimum wage for those aged 25 or over increase from £6.70 to £7.20 per hour. While this is good news for most low-paid workers, it may have an adverse effect for those claiming Carer’s Allowance. Here ... Continue Reading

The fuel benefit charge is very expensive and it may be the case that you can pay more tax on the fuel than on the company car. This will be the case where the list price of the car is less than the fuel multiplier (£22,100 for 2015/16). You may also find that you pay more in tax for the benefit of private fuel than you actually spend on fuel for private mileage. There are various ways to reduce the tax payable in respect of fuel: Changing to a company car with a lower emissions rating will ... Continue Reading

Relief is available on borrowings to fund a loan to a close company. However, relief is denied if the funds are returned to the borrower.Example:Christopher is a director of a close company in which he owns 80% of the shares. Three years ago he lent the company £50,000, funded from his savings.Chris now wishes to extend his home and wants his money back. He knows that he can obtain interest relief for a loan to a company but not for a loan to extend his home. He therefore borrows £50,000 ... Continue Reading

Sell the property, downsize and make a cash gift to a donee out of the proceeds. The amount of the gift needs to be sufficient to reduce the taxable estate to below the exempt amount, the remaining money being used to purchase a less costly property. The gift of cash is a deemed potentially exempt transfer (PET) for inheritance tax (IHT) charge purposes and there will be no ‘Gift With Reservation Of Benefit’ problems as there is no retained benefit. However, the donor does have to live ... Continue Reading

When commencing self-employment, choosing an accounting date (the choice of year-end) can be crucial in determining whether low profits are taxed twice or high profits are taxed twice.It will also determine the level of overlap relief carried forward and utilised on a future change of date or on cessation.When determining an accounting date, it may be considered easiest if accounts are made up to 31 March or 5 April in the first tax year so as to eliminate any chance of an overlap profit and to maximise ... Continue Reading