Tax Insider Newsletter Bundle

IHT: A long tail

Many taxpayers have heard of a ‘seven-year rule’ for inheritance tax (IHT) purposes. It is widely assumed that lifetime gifts escape the IHT net if the donor survives at least seven years after making the gift. 

Mark McLaughlin points out that lifetime gifts can have a much longer knock-on effect for inheritance tax purposes than many people assume.

Although it was originally recorded in use in the 1900s, the expression ‘side hustle’ has been increasingly used in the present century. Various definitions can be found, but generally this will be along the lines of an activity carried out for income to supplement that received from a main source.

Richard Curtis reminds those with secondary sources of online income that they may be subject to tax or National Insurance contributions liabilities.

VAT: Entertaining overseas customers

VAT incurred on goods or services used for business purposes can normally be recovered as input tax. However, tax on the provision of business entertainment cannot normally be recovered. 

Andrew Needham looks at the VAT recovery position on the entertainment of overseas customers.

Disincorporation: Some practicalities

In my article in last month’s Tax Insider, I explained why it may now be fiscally attractive for some owner-managed businesses to disincorporate. Here are some further considerations.

Kevin Read discusses some key issues to address when considering the disincorporation of a business.

Payrolling becomes a reality from 2026

On 16 January 2024, there was a HMRC ‘simplification update' announcing the mandation of payrolling benefits-in-kind (BIKs) from tax year 2026/27.

Ian Holloway discusses the October 2024 Autumn Budget confirmation consigning forms P11D and P11D(b) to the legacy dustbin – Almost. 

Company payment of director's personal expenses: What’s the tax position?

Directors of small companies, especially those with prior experience of self-employment, often overlook the distinction between company funds and personal finances. 

Jennifer Adams considers the tax position should a company pay a director's personal expenses.

Losses on loans to traders: Not all plain sailing!

The capital gains tax (CGT) legislation in TCGA 1992, s 253 (relief for loans to traders) provides for capital gains tax (CGT) loss relief where an individual has lent money to a ‘trader’ which has been used for the purposes of the trade but where the debt has become irrecoverable. The trader could be a company or an unincorporated business but must be trading or preparing to trade.

Ken Moody looks at capital loss relief for loans to traders and (as usual) finds a few ‘quirks’ to chew over in the legislation and the related HMRC guidance.

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