HLAS

As reported in an earlier newsletter, the OTS suggested simplifying IHT on lifetime gifts including reducing the period of potential exemption from 7 to 5 years. Such a change would mean that the donor would only be required to survive for 5 years following a gift for the transfer to be exempt from IHT. The OTS also suggested that the conditions for Business Property Relief might be tightened up by aligning the rules with the definition of a trading company for CGT. This relief currently provides 100% relief on the transfer of shares in an unquoted company. The suggested change [...]

This time last year businesses were preparing for important changes to the rules where workers supply their services via their own personal service companies. The start date was then deferred from 6 April 2020 to 6 April 2021. The new rules are scheduled to apply to large and medium-sized businesses as defined by the Companies Act. Those businesses will be required to consider whether or not the worker would be regarded as an employee if directly engaged and so deduct tax and national insurance from payments as if they were an employee. This change does not apply where the end [...]

2019/20 income tax, CGT, class 2 and 4 NIC liabilities should have been paid by 31 January 2021 unless you have agreed a payment plan with HMRC. Note that if the balance is still unpaid at the end of February 2020, a 5% surcharge penalty is added in addition to the normal interest charge unless a payment plan has been agreed.

Now that the UK has finally left the EU some taxpayers will start to see additional tax costs. One example is where UK residents own holiday homes in EU countries that they rent out for part of the year. Owners of EU rental properties may now be required to pay more tax in those countries, having previously benefited from a lower rate of tax for EU nationals. Those renting out Spanish properties for example will see the rate of tax they pay in Spain increase from 19% to 24%. There would be double tax credit relief for the overseas tax [...]

The Office of Tax Simplification (OTS) have been asked by the Treasury to review both Inheritance Tax (IHT) and Capital Gains Tax (CGT) recently which again suggests there could be changes to those taxes that may require pre-emptive planning action. Will CGT rates go up? The OTS report highlighted the mismatch between CGT and income tax rates which currently encourages taxpayers to prefer to take profits as capital rather than income. This potential opportunity has been addressed recently in the case of company liquidations where there is now a targeted anti-avoidance rule. There has also been increased scrutiny of share [...]

Emergency measures have been introduced at the border to be in place for at least one month in order to protect the UK against new variants. The list of countries, territories and regions from where people can travel to England and may not have to self-isolate is now suspended. From today, if travellers do not present proof of a negative coronavirus (COVID-19) test result, they may not be able to board to travel to England and could be fined £500 on arrival. Anyone arriving from the 18th January must self-isolate for 10 days and complete a passenger locator form. See:  [...]