Business Tax Insider Monthly Newsletter

Christmas brings the exciting prospect of gifts and parties. Many employers wish to ‘treat’ staff at this time of year, and if they can do it in a tax-efficient way, so much the better!

Mark McLaughlin highlights some potentially tax-efficient goodies for employees this Christmas. 

From 6 April 2023, a new Health and Social Care Levy is being introduced to provide ring-fenced funding for health and adult social care. The Government are also ensuring those who take dividends rather than a salary will contribute towards the costs of health and social care by increasing the rates of dividend tax.

Sarah Bradford outlines changes to the rate of dividend tax applying from April 2022, and suggests how the rises might be beaten by planning ahead.

The rules for ‘IR35’, encompassing so-called ‘false self-employment’, the ‘intermediaries legislation’ and ‘off-payroll working’ are long and convoluted; the principles are relatively straightforward, but their application can be very challenging. Many one-man companies that have been ‘caught’ by the rules will consider them quite unfair. 

Lee Sharpe looks at how several government departments have mishandled the ‘IR35’ regime, (arguably including HMRC itself) and what it means for contractor companies.

Stamp duty often tends to be overlooked with a simple shrug of the shoulders – ‘It’s only ½% on share purchases, isn’t it?’.  

In the first of a two-part article, Peter Rayney looks at some of the recent changes to stamp duty affecting owner-managed companies.

The basic idea behind this particular type of income tax planning is simple. Income tax being ‘a progressive’ tax, the rate at which you pay it leaps up when your total income for a year goes above a (comparatively) low threshold. To be specific, an individual with income of about £50,000 in a tax year will pay 20% income tax on the income above the personal allowance but below this threshold and will pay 40% income tax above that. 

Alan Pink considers whether it is better to take family or household members in as partners or pay them a wage.

Many companies have suffered losses because of the impact of the Covid-19 pandemic. Where a company has suffered a loss, if it has made a profit previously or will do so again in the future, it is possible to obtain relief for that loss. 

Sarah Bradford looks at how companies can take advantage of the limited-time extension to the carry back period for certain losses.

Plant, fixtures and integral features often form a valuable part of most commercial buildings. Consequently, there are likely to be significant capital allowances at stake when a building changes hands.

Peter Rayney reviews the capital allowances treatment of fixtures and integral features when a building changes hands.

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 researching the tax implications to the best of their ability.

Mark McLaughlin warns that structuring transactions in the ‘wrong’ way from a tax perspective proves to be an expensive mistake.

National insurance contributions (NICs) are often overlooked in tax planning, but are a major source of income for the Government. Many regard NICs as being no more, effectively, than another tax. This point of view has a lot going for it.

Alan Pink looks at ways that businesses can avoid overpaying National Insurance contributions to HMRC.

Smaller unincorporated businesses can elect to compute their taxable profits using thecash basis rather than the traditional accruals basis. The cash basis is a much simpler method as it only takes account of cash in and cash out. However, it will not be for everyone.

Sarah Bradford explains how the cash basis works and when, despite its simplicity, the accruals basis mighty be preferable.

Many company sales involve part of the consideration being satisfied in the form of loan notes issued by the purchaser. The sale of owner-managed companies often involves part of the sale consideration being satisfied in the form of loan notes issued by the purchaser. In effect, the owner manager is agreeing to finance the deferral of part of their sale proceeds.

Peter Rayney looks at some of the practical tax issues concerning loan notes.

Business property relief (BPR) offers inheritance tax (IHT) relief of 100% or 50% on a transfer of value attributable to ‘relevant business property’. For example, unquoted company shares potentially qualify for 100% BPR, subject to certain general restrictions where the company’s activities consist wholly or mainly of dealing in stocks or shares, land or buildings, or making or holding  investments.

Mark McLaughlin looks at an inheritance tax business property relief anti-avoidance rule that can result in a relief restriction.