HLAS

The Intellectual Property Office (IPO) has issued a warning for businesses to beware of unsolicited payment requests. There has been a recent upsurge in these bogus requests being reported. The unsolicited request may ask for payment for trademarks, designs or patent services. Following payment, the ‘services’ may not be provided, or may not have any benefit to the payer. Invoices may also request payment for services at a much-inflated price that are available directly from the IPO at a much lower amount, or even free of charge. The IPO say that the payment request will usually come from an organisation [...]

Draft legislation has now been published for the government’s plan to end the VAT exemption for private school fees. The government is also legislating to remove private schools from being eligible for business rates charitable rates relief. Because business rates policy is devolved, the business rates policy change will only affect private schools in England. VAT policy, however, is reserved and so the VAT changes will affect private schools across the UK. The current situation for VAT Currently, private schools, as regulated education providers, qualify as exempt from VAT. This means no VAT is currently charged on private school fees. [...]

On 29 July 2024, the Chancellor announced that from 1 January 2025, all education services and vocational training provided by a private school, or a connected person, for a fee will be subject to VAT at the standard rate of 20%. Boarding services provided by a private school or a connected person will also be subject to VAT at 20%. Draft legislation issued on 29 July 2024 specifies that fees invoiced or paid on or after 29 July 2024 and before 30 October 2024 will be treated for VAT purposes as a supply taking place on the later of: (a) [...]

The government has issued draft legislation to abolish the special tax treatment of furnished holiday lettings (FHL) effective from 6 April 2025 for individuals (1 April 2025 for corporation tax). This change will remove the tax advantages currently received by FHL landlords in four key areas by: Applying the finance cost restriction rules so that loan interest will be restricted to the basic rate of Income Tax. Removing capital allowances rules for new expenditure and allowing relief when domestic items are replaced. Withdrawing access to reliefs from taxes on chargeable gains for trading business assets. No longer including this income [...]

The State Opening of Parliament took place on 17 July, and the King’s Speech outlined the measures the government intends to introduce in the next parliamentary session. Apart from mentioning the proposal to remove the VAT exemption for private school fees (which we covered in a previous edition of this newsletter), there was little said about measures affecting tax for businesses and individuals. Instead, we must wait for the Labour government’s first budget to learn about their tax plans. The budget is scheduled for 30 October 2024.

Employers may cover the cost of certain social events for staff without creating a tax liability, thanks to a statutory exemption provided certain conditions are met. This used to be a concession but is now enshrined in law. The exemption applies to an "annual party or similar function" as long as it is available to all employees or generally to those at a particular location. During the Covid-19 pandemic, HMRC confirmed that a 'function' could include a virtual party, where employers were unable to host a traditional party with employees physically present. A key condition is that the cost per [...]

Tax-Free Childcare accounts can be utilised to pay for approved childcare for children aged 11 or under, or 16 if the child has a disability. This can include summer holiday clubs or childminders. The account can also cover nursery fees, breakfast or after-school clubs during term-time, and out-of-school activities. Opening a Tax-Free Childcare account is quick and easy and can be done at any time of the year. Families who have not yet registered should check their eligibility and apply online today. For every £8 paid into an online account, they will receive an additional £2 from the government. This [...]

It has recently been reported that over half a million taxpayers paid a marginal income tax rate of 60% in 2022/23, a rise of 23% from the previous year. This marginal rate applies when an individual’s adjusted net income falls between £100,000 and £125,140, where every £2 of income over £100,000 reduces the £12,570 personal allowance by £1, such that it is fully eroded at £125,140. Planning to Mitigate the Problem The definition of "adjusted net income" is the individual’s total taxable income minus personal pension payments and charitable payments under Gift Aid. Such payments can effectively save income tax [...]

The previous government included plans to end non-domiciled tax status at the Spring Budget and replace it with a 4-year foreign income and gains (FIG) regime. The new government have now announced their intention to continue with these plans, while ending some advantages for existing non-domiciled individuals. What the change in tax status will mean Preferential tax treatment based on domicile status will be removed for all new FIG arising from 6 April 2025. This means that foreign income and gains will all be taxable in the UK where you are classed as residing in the UK, not just that [...]

Last week, the government updated the remit for the Low Pay Commission (LPC), now requiring it to consider the cost of living when recommending minimum wage rates. Additionally, the LPC has been directed to reduce the gap between the minimum wage for 18-20-year-olds and the National Living Wage, with a long-term goal of eliminating age bands entirely and implementing a single adult rate. Each October, the LPC provides recommendations to the government on minimum wage rates for the following April. The updated remit retains this schedule, giving businesses time to plan for any wage increases. Along with the cost of [...]