Tax Insider Newsletter Bundle

Uneducated guesswork!

Taxpayers are required to notify HM Revenue and Customs (HMRC) of their liability to tax within certain time limits, such as where the taxpayer first becomes liable to pay tax, or conducts (or intends conducting) a business that needs to be registered with HMRC. 

Mark McLaughlin warns that allowing HMRC to estimate income can be costly for taxpayers.

The past few decades have seen a substantial increase in the number of property owners who let one or more houses to tenants, driven in part by relaxations in lending, rising property prices and some tax advantages. 

Richard Curtis provides an overview of the main taxes on let property.

The introduction of VAT on private school fees

Andrew Needham looks at the introduction of standard-rated VAT on private school fees.

Prior to the 2024 general election, the incoming Labour government had announced its intentions to introduce VAT on private education. An announcement to this effect was subsequently made to Parliament by the Chancellor on 29 July 2024 and the publication of Revenue and Customs Brief 8 (2024). 

New employees, NICs and mistimed payments

It is a reality for payroll departments that, sometimes, they are not always advised of a new starter until after payroll cut-off. Operationally (and depending on the values involved), they will pay the amount due but not paid as backpay in the following pay period, together with the employee’s regular salary. 

Ian Holloway considers National Insurance contributions calculations when a new employee starting after payroll cut-off is paid backpay with the following period’s total salary.

Yes, but what about the trade benefit?

A company purchase of own shares (POS) has always seemed to me a bit of an oddity for tax purposes. The consideration paid for the buy-back is a distribution for both company law and income tax purposes, like a dividend. However, if certain tests (at CTA 2010, ss 1033–1042) are met, we pretend that the payment is a capital distribution in respect of shares (within TCGA 1992 s 122).  

Ken Moody considers the all-important ‘trade benefit test’ when considering a company purchase of own shares.

Tax planning for clearing overdrawn directors loan accounts

Directors of owner-managed and family companies invariably have a director’s loan account (DLA) where transactions between the director and company are recorded. 

Jennifer Adams considers alternative methods for clearing an overdrawn director's loan account.

Trusts and children: Do they go together?

As part of succession planning and considering what happens to the family silver, minor children may often be the only successors. The problem is that under English law, minors cannot own property – they cannot own bank accounts, shares of land, property or companies. 

Chris Thorpe looks at circumstances where trusts can benefit children.

Q&As with Arthur Weller

Dividends or bonuses? We can work it out!

Consider the following scenario:

'On a wintry sunny morning, Alan was reviewing his company’s January 2024 management accounts. Alan was the sole director and 100% shareholder of Llandudno Hotels Ltd, which operated two large hotels in Llandudno. The business was on course to healthy pre-tax profit of around £650,000 for the year ended 31 March 2024. Alan had been planning to pay himself a substantial ‘bonus’ before the year-end'. 

What does Alan do?

Peter Rayney examines an owner-manager’s cash extraction following the numerous tax and National Insurance contributions changes.

Use them or lose them: 2023/24 tax allowances

As the tax year draws to a close, it is prudent to review one’s 2023/24 tax allowances and consider whether there is scope for utilising any unused allowances so they are not lost. 

Sarah Bradford explores options for using 2023/24 tax allowances so they are not wasted.

Record-keeping in a digital age

Lee Sharpe looks at taxpayers’ record-keeping obligations in light of HMRC’s inexorable march to digital everything (almost).

Historically, HMRC has been quite relaxed about whether original records must be maintained or digital facsimiles (scans, etc.). 

Trap for business owners seeking CGT incorporation relief

HM Revenue and Customs (HMRC) recently commenced a ‘One to Many’ campaign, targeting taxpayers who incorporated property businesses in the tax year 2017/18 but reported no capital gains tax (CGT) liability in their tax returns on the basis that ‘incorporation relief’ applied in full. 

Mark McLaughlin highlights a potential trap for business owners seeking capital gains tax incorporation relief.

Q&As with Arthur Weller