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Directors’ loan accounts (DLAs) in owner-managed and family companies often become overdrawn. Possible tax consequences include: a tax charge under the ‘loans to participators’ provisions; if the shareholder is a director or employee, a benefit-in-kind charge under the beneficial loan rules; and if the loan account is released or written off, an income tax charge on the shareholder (and a repayment of any tax charge for the company on the loan). 

Mark McLaughlin looks at when a directors’ loan account is treated as being discharged. 

Owner-managers generally expect liquidation distributions to fall within the capital gains tax (CGT) regime. The statutory rule (in CTA 2010, s 1030) stipulates that distributions received during the course of a winding-up do not count as income distributions. 

Consequently, liquidation distributions are generally expected to be taxed as capital distributions under TCGA 1992, s 122 – which are treated as a disposal of an interest in the relevant shares.  

Peter Rayney throws some light on the application of the ‘anti-phoenix’ targeted anti-avoidance rule. 

Like adults, children have their own suite of personal allowances, including the personal savings allowance and the dividend allowance, which can shelter any income that they receive. A minor child may have income in their own right (e.g., from a paper round or a Saturday job). They may also have savings on which they earn interest, and shares from which they receive dividends. 

Sarah Bradford explains when the ‘settlements’ rules might apply to tax a parent on income received by their minor child. 

In his 2010 emergency Budget, the then-chancellor announced a plan to progressively reduce the standard or ‘main’ rate of corporation tax to create “the most competitive corporate tax regime in the G20” countries. 

Meanwhile, the standard rates of tax relief for capital allowances were also quietly whittled away to balance the exchequer’s books. 

Lee Sharpe looks at full expensing, replacing the temporary ‘super-deduction’ capital allowances. 

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 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.