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If you rent out a property, which was at one time your PPR, you will qualify for the lettings relief.This can be worth up to £40,000 against the gain realised on the disposal of a property.Note that this relief is per person, so if property is held jointly it can attract up to £80,000 relief.Unrepresented taxpayers frequently miss out on this relief.Example:John and Mary sell their investment property, which has been let out and which at one time used to be their main home.They qualify ... Continue Reading

Where you have more than one property it is possible to choose which one is your PPR at any given time, provided the elected property is used as a home. However, a person can only have one PPR at any one time.By ‘flipping’ the properties, it is possible to maximise relief and ensure that the last 18 months for each PPR qualify for relief (see Tip 85.Example:John has a flat in the city that he bought for £100,000 in April 2000. In April 2003 he buys a family home in the country for ... Continue Reading

If you let a property furnished, it may be beneficial to delay spending money on replacing furnishings until on or after 6 April 2016. This is because 2015/16 is the last year for which the 10% wear and tear allowance is available (see Tip 81). The allowance, which can be claimed regardless of whether items are replaced in the year is to be replaced by a deduction for the actual costs of replacement from 2016/17. Delaying the replacement of furnishing until the 2016/17 tax year will allow you to ... Continue Reading

A review of the Anson decisions and practical implications following HMRC’s recent Business Brief, by Morgan, Lewis & Bockius UK LLP. Introduction Delaware limited liability companies (“LLCs”) are regularly seen in international corporate groups.  Their treatment is flexible for US tax purposes, as by default they are treated in the same way as partnerships, although they are able to elect to be treated as a corporation for US tax purposes.  No such elective regime ... Continue Reading

The Lords have refused to pass the Government’s legislation seeking to cut tax credits significantly from April 2016, voting in favour of two amendments before they would approve the changes.    Background After a lengthy debate, which included as much discussion about the role of the House of Lords as the actual impact of the tax credit cuts, the House of Lords voted in favour of two amendments requiring the Government to take certain steps before they would approve the changes. ... Continue Reading

The Low Incomes Tax Reform Group (LITRG) welcomes the publication of a government amendment to the Finance Bill which will help protect vulnerable taxpayers who HMRC believe owe them money. Background The amendment to the Schedule of the current Finance Bill dealing with ‘Enforcement by deduction from accounts’ (also known as ‘Direct recovery of debt’) states that: "Before deciding whether or not to exercise the power [to recover debt directly from a taxpayer’s bank ... Continue Reading

The LITRG is calling on HMRC not to pursue individual workers for underpayments arising from their involvement in arrangements between engagers of their labour and intermediaries, such as umbrella companies. Introduction LITRG is responding to HMRC’s consultation on restricting tax relief for travel and subsistence for workers employed through employment intermediaries. The Government is proposing to remove tax relief for home to work travel and subsistence expenses for workers who are: supplying ... Continue Reading

An introduction to the principles and potential benefits of the VAT Flat Rate Scheme, by accountants Howlader and Co. What is the VAT Flat Rate Scheme? HMRC introduced the Flat Rate Scheme (FRS) in 2002 to simplify the VAT accounting process for small businesses. Under the scheme, your business pays a fixed percentage of its turnover at the end of the VAT period (usually quarterly, although annual VAT accounting is still an option) rather than calculating VAT on a transaction-by-transaction basis. How ... Continue Reading

LITRG have produced a quick reference table to help tax credit claimants see their potential losses from April 2016. Background Most tax credit claimants will have their working tax credit (WTC) and child tax credit (CTC) reduced from April 2016 after the Government announced changes to the working tax credit threshold and taper rate in the Summer Budget. Unless you are a tax credits expert, these changes may have passed you by. Summer Budget tax credit changes The LITRG article published on ... Continue Reading

Joint ownership exists where two or more persons own property that is let. The individuals are taxed on their share of the annual profits or gains made.Individuals who purchase property jointly intending to rent for the long term are ‘joint investors’. Joint owners of property purchased with the intention to sell after restoration are likely to be in a ‘trading partnership’ and each be taxed as a self-employed ‘property dealer’.The difference between owners who ... Continue Reading