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Mark McLaughlin looks at when a directors’ loan account is treated as being discharged. Directors’ loan accounts (DLAs) in owner-managed and family companies often become overdrawn. Possible tax consequences include: a tax charge under the ‘loans to participators’ provisions; if the shareholder is a director or employee, a benefit-in-kind charge under the beneficial loan rules; and if the loan account is released or written off, an income tax charge on the shareholder (and ... Continue Reading

Jennifer Adams considers the tax implications for landlords when a tenant leaves. All sources of rental income, be they commercial or residential lettings, furnished or unfurnished, or holiday lettings, are regarded as being derived from the same single property rental business (except for EU lettings, which are separate activities). Therefore, just because a tenant leaves, this does not necessarily mean that the rental business ceases. A rental business ceases when the last let property in a portfolio ... Continue Reading

Drive a harder bargain!    Mark McLaughlin looks at a possible let-out from an inheritance tax charge on certain asset transactions.   If an individual gifts an asset to another individual, it will generally be a ‘potentially exempt transfer’ (PET) for inheritance tax (IHT) purposes, unless a specific IHT exemption applies (e.g., for gifts between UK domiciled spouses).   A PET is provisionally treated as an exempt transfer when made, ... Continue Reading

Peter Rayney looks at the potential 33.75% tax charge that can arise on many management buyout deal structures.  The close company loan to participator tax charge (in CTA 2010,s 455)is a reasonably well-known part of our tax code.  Broadly, where a loan or advance is made to a shareholder – typically where an overdrawn director’s loan account arises – that has not been cleared or repaid within nine months of the company’s yearend, the company must pay ... Continue Reading

Sarah Bradford explains how to determine whether expenditure on replacing a roof is revenue or capital, and why it matters.  For tax purposes, all expenditure is not equal, and different rules apply to the treatment of capital expenditure and revenue expenditure.   Broadly, a landlord will be able to deduct revenue expenditure in calculating the taxable profits of their property business. By contrast, the treatment of capital expenditure is trickier. Depending on the nature ... Continue Reading

Lee Sharpe looks at the abolition of multiple dwellings relief, why it happened, and what options remain for landlords buying residential property. The Spring Budget 2024 on 6 March 2024 announced that multiple dwellings relief (MDR) from stamp duty land tax (SDLT) would be abolished for purchases from 1 June 2024, albeit with provisions to protect ‘slow’ contracts exchanged on or before Budget Day but not completed by 1 June 2024. The government reasoned that HMRC’s recent research ... Continue Reading

Sarah Bradford highlights tax exemptions which can be used to provide tax-free benefits-in-kind to employees.  The income tax legislation contains a number of exemptions for benefits-in-kind. By making use of exemptions, it is possible to boost an employee’s remuneration package tax-free.   This article highlights ten popular benefits-in-kind which can be made available to employees free of tax and National Insurance contributions (NICs), and without any employer ... Continue Reading

Mark McLaughlin reviews Trust Taxation and Private Client Tax Planning (5th Edition), by Emma Chamberlain OBE, with Matthew Harrison and Richard Wallington. Introduction Prior to my retirement as a tax consultant in 2021 to concentrate on my career as a tax author and editor, one of the most useful and well-thumbed books in my tax library for many years was Trust Taxation and Private Client Tax Planning (or Trust Taxation and Estate Planning, as it was then named). It was a frequently referenced ... Continue Reading

A higher rate taxpayer landlord taxed at 40% (or 45% if an ‘additional rate’ taxpayer) may be able to achieve some benefit from the 19% lower small profits rate of corporation tax by incorporating a company that collects the rental income on behalf of the landlord. Under this arrangement, ownership of the properties is still retained by the individual and a set amount is deducted from the rental income received into the company's bank account as a management charge. The balance of income ... Continue Reading

Peter Rayney shares some valuable pointers about succession planning based on a recent client experience.  Vincent was at home recovering from a very nasty bout of pneumonia. He had been hospitalised for over three weeks and had to spend his 64th birthday in a hospital bed. However, it was the first time that he had time to really think about his life and the future of ‘his’ property construction consultancy business, which he ran through his 100% owned company, Starry Night Consultants ... Continue Reading