Tax Insider Newsletter Bundle 

Trust or limited company?

When considering making an investment, two of the main issues are a good return and an exit strategy. As well as the performance of the investment itself, how to hold it is another matter. Personal income tax rates and those on subsequent capital gains tax (CGT) on disposal, and potentially inheritance tax (IHT), may make holding something personally an unattractive option.  

Chris Thorpe looks at which vehicle an investor should use. 

Unincorporated trading businesses are going through their biggest tax change for a generation, with the switch to a tax year basis of assessment replacing the ‘basis period’ system for 2024/25. The tax year 2023/24 is a transition year with special rules. Further change is now on the way. 

Kevin Read explains why some trading businesses face a big decision. 

Main residence exemption and the required ‘quality of occupation’

The exemption from capital gains tax (CGT) for a dwelling that is the taxpayer’s ‘only or main residence’ is an important one for homeowners. The value of the exemption means that some may be tempted to claim it on properties that may not clearly fall within its parameters. We must therefore look at what is meant by an only or main residence. 

Richard Curtis considers the capital gains tax only or main residence exemption and the required ‘quality of occupation’. 

VAT: DIY billing!

Usually, it's the supplier who issues a VAT invoice; but in some circumstances, the customer prepares the invoice instead and gives the supplier a copy. This system is called 'self-billing'.  Any business can use this procedure, so long as certain conditions are met.  

Andrew Needham looks at the workings of the self-billing system and how it can be helpful for businesses. 

How will planning can help to reduce inheritance tax liabilities

In April 2023, the National Will Register reported that 42% of adults in the UK had not made any provisions for their estate distribution in the event of death. 

Moneeza Siddiqui looks at how will planning can help to reduce inheritance tax liabilities. 

Employee expenses: Are P11D returns finally no more?

The strict application of the rule for allowable expenses would require all expense payments to employees to be treated as employment income, leaving the employee to claim relief for the allowable part separately. In addition, an employer is required to notify HMRC of all expenses paid to an employee, even if the employee incurs the expense on the employer’s behalf.  

Jennifer Adams reviews the current use of form P11D and asks - is the form finally no more?

Where there’s a will!

No-one likes to think about their death, so it is perhaps understandable that many people put off drafting their will, and some die without having made a will. 

Mark McLaughlin looks at the importance of making a will, and some inheritance tax and other implications of intestacy. 

Q&As with Arthur Weller

Still beneficial to benefit?

There is scope for directors of owner-managed companies to maximise their remuneration package in a tax-efficient way by utilising benefits-in-kind (i.e., goods or services provided by the company either for free or at a reduced cost). Generally, the cost of providing a benefit is a tax-deductible expense for the company as a cost of employment, whilst the benefit can be either taxable or exempt for the director. 

Joe Brough looks at benefits-in-kind commonly provided to directors of owner-managed companies, and considers whether these are still beneficial, and outlines traps to avoid. 

A painless extraction? Family company remuneration

As the 2023/24 tax year draws to a close, directors of personal and family companies should be reviewing the profits they have taken from their company so far in the tax year and considering whether it would be worthwhile to extract further profits before the end of the tax year on 5 April 2024. 

Sarah Bradford considers what might constitute an optimal profit extraction strategy for 2023/24. 

Business contracts and agreements: Think them through!

Contracts and agreements sometimes state one thing but mean another. When a taxpayer asks HM Revenue and Customs (HMRC) to treat an event or transaction as the parties intended, as opposed to in an unintentional way based on an inaccurately or imprecisely drafted contract or agreement, HMRC’s response is invariably that the tax treatment must follow the terms of the contract or agreement, even when the tax consequences are unexpected and more costly to the taxpayer. 

Mark McLaughlin highlights the importance of ensuring that business contracts and agreements are drafted carefully to avoid unexpected and expensive tax consequences. 

Limited companies versus LLPs

This table takes a bird’s eye view of the approach to taxing companies versus taxing limited liability partnerships (LLPs):  

Lee Sharpe compares and contrasts the treatment of limited companies and limited liability partnerships

Q&As with Arthur Weller

Form 17: Tips and traps

There are complications to the Form 17 procedure for married couples and civil partnerships. The regime applies only to legally married couples and civil partnerships, where the spouses, etc., are living together as a couple during the tax year (ITA 2007, ss 836, 837). 

Lee Sharpe looks at some of the intricacies of Form 17 for spouses and civil partners.

Extracting profits from a property company

Changes in the ways that unincorporated landlords receive relief for interest costs in relation to residential lettings have led to an increase in corporate landlords. There are some tax advantages:  interest and finance costs incurred in relation to residential lets are deductible in full in computing the property company’s profits for corporation tax purposes; and the highest rate of corporation tax at 25% is significantly lower than the highest rate of income tax at 45%. 
 
Sarah Bradford explores how profits can be extracted from a property company for personal use in a tax-efficient manner.

Ten years on: Has the let property campaign had its day?

Think back to 2013; David Cameron was still Prime Minister, HMV had collapsed, Andy Murray won Wimbledon, and HMRC announced the start of the let property campaign (LPC).  

Jennifer Adams considers whether the ‘Let property campaign’ has been a success for HMRC and asks whether it will still be around ten years from now. 

Deduction of costs for CGT on  disposal of  investment property 

For capital gains tax (CGT) purposes, in determining a gain (or loss) when an individual disposes of an asset such as a buy-to-let investment property, certain incidental costs can normally be deducted in calculating the taxable gain (or allowable loss), in addition to the cost of acquiring the property.  

Mark McLaughlin looks at the deduction of costs for capital gains tax purposes on the disposal of an investment property by an individual. 

Q&As with Arthur Weller