Business Tax Insider Monthly Newsletter

Many family and owner-managed companies grow to a stage where surplus funds retained from healthy trading profits are invested in significant income-producing investments. Typically, these range from residential or commercial properties to listed share portfolios. 

Peter Rayney explores how to shield investment assets away from trading risks. 

A company is a separate legal entity, distinct from the shareholders that own it. Consequently, if the directors and shareholders want to use the profits made by the company for their personal use, they will need to extract those profits first. There are various ways in which this can be done; some are more tax-efficient than others. 

Sarah Bradford considers options for extracting profits from a company in a tax-efficient manner in the 2024/25 tax year. 

HMRC requires the homogenisation of taxable profit reporting schedules for all taxpayers subject to income tax so that its IT systems can cope with the new quarterly update cycle under ‘making tax digital’. 

Lee Sharpe considers some practical aspects of the forced alignment of basis periods to tax years. 

Business asset disposal relief (BADR) usefully offers a capital gains tax (CGT) rate of 10% on lifetime gains of up to £1m, where certain conditions are satisfied. 

Mark McLaughlin warns that a business’s activities need to be sufficient to amount to a ‘trade’ for business asset disposal relief purposes. 

HMRC recently undertook a ‘One to Many’ letter campaign, wherein HMRC’s skilled data analysts undertake to mine nuggets from a huge range of sources to test for omissions or errors in tax returns. 

Lee Sharpe reports on HMRC getting all ‘Nancy Drew’ with its sleuthing over company reporting and shareholders’ dividend income returns. 

Some company shareholders may either be unaware or have forgotten about a relatively unknown capital gains tax (CGT) relief that offers a reduced CGT rate of only 10% on qualifying gains of up to £10m during their lifetime, if certain conditions are satisfied.  

Mark McLaughlin highlights a relatively unknown and infrequently used but generous capital gains tax relief.

Owner-managers can spend a significant amount of time and energy building a successful and profitable trading company.

Joe Brough looks at tax issues for business taxpayers and their tax advisers when a company is coming to an end. 

If you (‘you’ meaning an employer) provided your employees with taxable benefits in the tax year 2023/24, which you did not payroll, you need to report those benefits to HMRC no later than 6 July 2024 on form P11D. You will also need to file a P11D(b), which is your employer’s declaration and your Class 1A National Insurance return by the same date.

Sarah Bradford outlines the reporting obligations for employers in relation to benefits-in-kind. 

Enquiries by HM Revenue and Customs (HMRC) involving businesses often extend to the business owners themselves. Tax return adjustments can occur, even for honest business owners.  

Mark McLaughlin looks at ‘close’ company overdrawn directors’ loan accounts and tax liabilities under the ‘loans to participators’ rules, following HMRC enquiries.  

We have a special regime for the taxation of motor vehicles, the principles of which were set out many years ago. But there is still scope for disagreement with HMRC, and it often does not go HMRC’s way.  

Lee Sharpe highlights several problem areas for HMRC with the taxation of motor vehicles, where the taxpayer may stand to benefit.  

Vincent was at home recovering from a very nasty bout of pneumonia. He had been hospitalised for over three weeks and had to spend his 64th birthday in a hospital bed. However, it was the first time that he had time to really think about his life and the future of ‘his’ property construction consultancy business, which he ran through his 100% owned company, Starry Night Consultants Ltd (SNCL). He was pleased to learn that the company’s senior management team had really stepped up to the plate during his illness. And they had managed without him for over two months now.  

Peter Rayney shares some valuable pointers about succession planning based on a recent client experience. 

Historically, from a tax perspective it has been preferable to operate a business as a personal company and extract profit in the form of a small salary plus dividends than to run an unincorporated business.  

Sarah Bradford looks at the impact of recent tax and National Insurance contributions changes.