Business asset disposal relief (BADR) is a very popular relief for individual business owners, offering a capital gains tax rate of only 10% on chargeable gains from qualifying business disposals, subject to a lifetime limit of £1 million (for 2022/23). A ‘business’ for BADR purposes means anything which is a trade (or profession/vocation), and is… Read More »
Many landlords set up companies to own investment properties. There are several possible reasons, such as increased flexibility of company ownership compared with owning interests in properties personally, and the ability to extract profits by dividends. Financing property acquisitions via a company might be through company borrowings. Alternatively, company owners may borrow funds to invest… Read More »
Assets such as an investment property are sometimes jointly held in the names of a married couple (or civil partners). Generally, the couple is treated for income tax purposes as beneficially entitled to the property income in equal shares (the ’50:50 rule’) (ITA 2007, s 836). Example 1: The 50:50 rule Carl and Denise are… Read More »
HM Revenue and Customs’ (HMRC’s) power to make discovery assessments is a formidable tool. The ordinary time limit for HMRC to make income tax or capital gains tax discovery assessments is four years after the end of the relevant tax year. However, a 20-year extended time limit applies in cases of ‘deliberate behaviour’ by taxpayers.… Read More »
For individuals who own businesses or an interest in them, business property relief (BPR) is a valuable relief from inheritance tax (IHT). BPR potentially provides relief at 100% (or 50%) on ‘relevant business property’ (e.g. shares in an unquoted company carrying on an eligible activity). However, BPR is subject to certain conditions. Failure to satisfy… Read More »
Business property relief (BPR) offers inheritance tax (IHT) relief of 100% or 50% on a transfer of value attributable to ‘relevant business property’. Some taxpayers make the mistake of assuming the tax treatment of an event or transaction where a substantial amount of money is at stake, instead of seeking professional advice, or at least… Read More »
Tax relief is available to individuals for contributions paid to a registered pension scheme, where certain conditions are satisfied. HM Revenue and Customs (HMRC) considers ‘paid’ generally means the contributions must be of a monetary amount, such as cash or bank transfer (NB a possible exception applies for ‘eligible shares’ relating to SAYE schemes or… Read More »
The inheritance tax (IHT) exemption for ‘normal expenditure out of income’ is extremely generous. There is no fixed upper monetary limit; a transfer of value (e.g. a cash gift) is exempt to the extent that it satisfies the exemption conditions. Furthermore, a gift that satisfies the conditions is immediately free of IHT. This is a… Read More »
Trusts can be created for many reasons, including tax planning. Whatever the reason, the tax implications of creating and running a trust need to be considered in advance. For example, professional advice is not always obtained; or if it is, the advice might not be complete or correct. Errors or misunderstandings about the tax treatment… Read More »
Taxpayers are sometimes issued with information notices requiring them to provide HM Revenue and Customs (HMRC) with information and documents ‘reasonably required’ to check the taxpayer’s tax position (or to collect a taxpayer’s tax debt). ‘Possession or power’? However, there are various restrictions on HMRC’s powers. One such restriction is that HMRC can only require… Read More »