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Inheritance tax (IHT) is charged on the value (assets less liabilities) of a person’s estate on death. The first £325,000 is exempt (the ‘nil rate band’) and the balance is taxed at 40%. Inheritance tax planning – property   • Transfers between spouses/civil partners are exempt from IHT, therefore, if property is left to the surviving spouse/civil partner there will be no IHT due on the first death but may be on the second death.    • If ... Continue Reading

Mark McLaughlin CTA (Fellow) ATT TEP warns that interest from joint bank accounts may not be taxed as intended. Introduction Bank or building society accounts are often held in the joint names of two or more individuals, most commonly spouses or civil partners, or possibly between family members such as father and daughter. The question which arises for Income Tax purposes is: how much interest is taxable on each account holder? The legislation dealing with the Income Tax liability ... Continue Reading

Peter Vaines of Squire Sanders highlights yet another case where HM Revenue & Customs have wrongly tried to impose penalties for the late payment of tax. We have yet another case before the Tribunal (CED Limited TC 2633) in which HMRC have imposed a penalty because payments of PAYE were not made on time because of postal delays. [ See also Postal Delays and Reasonable Excuse - Ed. ] The taxpayer said that he always sent his cheque for the tax on the 18th of each month so that it would ... Continue Reading

Government Spending Review measures include using commercial debt collection agencies to target tax credits error, fraud and debt. LITRG fears claimants will be pursued for debts caused by the system. Introduction As part of the measures announced in this week’s Spending Review, the Government will target £95 million of tax credits ‘error, fraud and debt’ by engaging debt collection agencies and paying them by results. But using commercial debt collection tactics to ... Continue Reading

The Low Incomes Tax Reform Group (LITRG) is encouraging students and school or college leavers to check they are not overpaying their taxes. Introduction Students often pay too much tax on their earnings. This summer, taking into account the recent abolition of the form which previously allowed students to get paid for holiday work without income tax being deducted at source (the P38(S))1, they may pay even more tax than in previous years. With the academic year just finishing and students ... Continue Reading

Expenses for repair and maintenance incurred prior to the first letting income received may be allowable provided certain conditions are met; namely that: •    the cost is for the replacement of worn or dilapidated items; •    the property was in a fit state of repair for use in the letting business prior to its actually being let; •    the price paid for the property was not substantially reduced to take into account its dilapidated state of repair; •   ... Continue Reading

TW Ed wonders if anyone comes out of the tax avoidance debate unscathed.  Nobody wants to pay more tax than they have to, right? That, or more correctly “to pay only the amount of tax required by law”. It is such a fundamental and automatic assumption that it underpins the advice of almost all tax professionals, almost without thought. And yet in Hypocrisy Abounds: Chancellor Accuses Labour of Double Standards, the Chancellor appears to have cast that notion aside in a ... Continue Reading

LITRG welcomes the move to 0300 numbers for HMRC’s VAT, National Insurance, income tax and self assessment helplines. These should result in better services for taxpayers on low incomes. Background The combination of 0845 numbers, long waiting times and pay as you go (PAYG) mobiles (often used by people on low incomes) can mean that calling HMRC can be disproportionately costly for taxpayers. Ofcom consultation in 2011 LITRG looked at how much it costs to ring HMRC on 0845 ... Continue Reading

Mark McLaughlin CTA (Fellow) ATT TEP points out that HMRC business economics exercises on cash based businesses need to be looked at carefully. Introduction Owners of cash-based businesses are, on the face of it, a ‘soft target’ for enquiry by HM Revenue and Customs (HMRC). This is particularly the case if the trader has not kept full business records. A lack of business records can, for example, open the way for HMRC to conduct business economics exercises. The results ... Continue Reading

I must admit to being a trifle astonished at last week's events, for various reasons. Astonishing #1 It seems, for instance, that some people - people who should know better - know no shame. See, for instance, Hypocrisy Abounds: Chancellor Accuses Labour of Double Standards. Mr. Osborne has helped further muddy the waters of public debate by demanding that the Labour party pay the notional personal tax liability of one of its key donors, merely on the basis that the donor could have paid ... Continue Reading