Business Tax Insider Monthly Newsletter

Many business owners are familiar with business asset disposal relief (BADR), which offers individuals a capital gains tax rate of 10% on net chargeable gains, up to a lifetime limit of £1 million.

Mark McLaughlin looks at business asset disposal relief for capital gains tax purposes, and when a company’s activities might be non-trading to a ‘substantial’ extent. 

CTA 2010, s 455 is a key anti-avoidance weapon for owner-managed companies. Without it, owner-managers could easily sidestep a tax charge by arranging for their company to lend them funds (as opposed to paying a taxable bonus or dividend). However, CTA 2010, s 455 levies a (refundable) tax charge when a close company makes a loan to a participator (i.e., shareholder or loan creditor) or one of their associates (such as a spouse, parent, grandparent, child, grandchild, brother or sister). 

Peter Rayney provides a handy FAQ guide on trips and traps with loans to shareholders of closely-controlled companies.

You may receive dividend income if you have invested in shares. You may also receive dividends if you have a family or owner-managed company and extract profits in the form of dividends. 

Sarah Bradford highlights the increase in the rates of dividend taxation applying for 2022/23 and considers what this means for investors and those extracting profits as dividends.

With the new tax year now in effect, most owner-managed businesses (OMBs) will have reviewed or will be in the process of reviewing their remuneration strategies.

Alan Pink takes a fresh look at the perennial question of profit extraction by company owners in the light of recent tax changes.

At first sight, it seems like an odd question: “what is the optimum salary I can receive?” For most people, the answer is clear: “as much as my employer will pay!” But the considerations are very different for people who own and manage their own business, because people in this position have a choice as to the type of income they take. 

Alan Pink considers the impact of recent changes in tax rates and rules on the ‘optimum’ salary for owner-managers.

Loans to director shareholders are a common occurrence in family and personal companies. However, to prevent directors having the use of the money indefinitely without paying any tax, provisions exist which levy a tax charge (under CTA 2010, s 455) on the company where the loan is outstanding on the date for which the corporation tax for the period in which the loan is made is due. 

Sarah Bradford highlights the forthcoming increase to the rate at which section 455 tax is charged on outstanding ‘loans to participators’ and examines the implications of the rise.

Research and development (R&D) tax reliefs for small and medium-sized enterprises (SMEs) are some of the most valuable incentives available in the UK tax regime. 

Lee Sharpe looks at recent developments in research and development (R&D) tax reliefs.

The timing of credits (e.g., cash repayments) to an overdrawn director’s loan account (DLA) can be important. It will determine (among other things) the tax year into which the repayment falls, which can affect benefit-in-kind charges on the director; or whether a tax charge arises for the company under the ‘loan to participators’ rules for closely-controlled companies and due date for payment (or repayment) of the ‘section 455 tax’ liability.  

In his second article on director’s loan accounts, Mark McLaughlin looks at two circumstances where HMRC might challenge loan account repayments.

This article looks at recent developments that target the individuals behind a company (or limited liability partnership, which is strictly a ‘body corporate’), and can make them personally liable for the company’s tax debts. 

Lee Sharpe looks at important legal developments allowing HMRC to pursue certain individuals for their company’s tax debts.

In preparation for the introduction of making tax digital for income tax self-assessment (MTD for ITSA), the rules that determine which profits of an unincorporated business are charged to tax for a particular tax year are being reformed. 

Sarah Bradford looks at the forthcoming changes to the  rules that determine which profits are taxed for a particular tax year.

In what has turned out (not entirely surprisingly) to be a controversial move, the present government has announced an increase of 1.25% in National Insurance contributions (NICs) rates, ostensibly to cover increased care costs. 

Alan Pink looks at ways of mitigating the recently announced increase in National Insurance contributions rates or even avoiding the charge altogether.

It is common in family and owner-managed companies for director shareholders to withdraw funds which are debited to a director’s loan account (DLAs) with the company. 

Director’s loan account credits: It’s all in the timing!