Business Tax Insider Monthly Newsletter

Many businesses are sitting on a kind of ticking time bomb in relation to tax. This is in the situation where profit and loss reserves build up because they are not being regularly cleared out by way of dividends paid to the shareholders. 

Alan Pink looks at the potential impact of allowing reserves to build up in limited companies.

In the current Covid-19 environment, we are seeing a lot more owner-managers liquidating ‘their’ companies. In many cases, business owners were already approaching or contemplating their intended retirement, and the impact of Covid-19 has simply accelerated these plans. 

Peter Rayney explains how to deal with overdrawn shareholder/director’s loan accounts in a winding-up scenario.

Many businesses have, unfortunately, incurred losses because of the Covid-19 pandemic. Tax relief is already available for losses, and there are various ways in which losses can be relieved. 

Sarah Bradford explains how the new rules that extend the period for which losses can be carried back might be used to generate a useful tax repayment.

Business property relief (BPR) is an important inheritance tax (IHT) relief. It shelters the value of eligible business property from IHT at current rates of 100% or 50%. The most common categories are a business (or interest in a business) and unquoted company shares, which potentially attract BPR at 100%. 

Mark McLaughlin looks at how inheritance tax business property relief may be ‘recycled’ in a family.

In a family or personal company scenario, director’s loans can be very beneficial. Where there is a close relationship between the director and the company, it is easy for the boundaries to become blurred; the director may meet company debts personally and the company may pick up the tab for some of the director’s personal liabilities. A director’s loan account is the mechanism for keeping track of these transactions.

Sarah Bradford looks at the tax and National Insurance contributions implications of writing off a director’s loan account.

The importance of the question in the article title relates, of course, to the ability to claim travelling costs from home to where you work. 

Alan Pink looks at the tax law when claiming expenses of travel from home, where most of a person’s work is done there.

Corporate sales taking place in the midst of the Covid-19 pandemic frequently include some form of ‘earn-out’ mechanism. 

Peter Rayney highlights some pitfalls to avoid when selling a company, where the deal involves an earn-out.

Companies holding residential property in the UK need to be wary of the annual tax on enveloped dwellings (ATED) (FA 2013, Pt 3, Schs 33-35).

Mark McLaughlin looks at relief from the annual tax on enveloped dwellings for property development trades.

Where a business is run as a family or personal company, the company is separate from the shareholders and those who run it. This means that where funds are required outside the company to meet personal bills and suchlike, they have to be extracted from the company.

Sarah Bradford explains how to determine the optimal salary level for 2021/22 for personal and family companies seeking to extract profits in a tax-efficient manner.

Business asset disposal relief (BADR) is an important and valuable capital gains tax (CGT) relief. However, the relief conditions are such that BADR can be easily lost. Here is a selection of potential ‘traps’ for the unwary.

Peter Rayney highlights six potential traps that can lead to claims for business asset disposal relief being rejected on company share sales.

Where the same people are carrying on two or more different trades, for all kinds of reasons it’s often a good idea for those different trades to be carried on in different companies. 

Alan Pink considers whether different trades should be held in a group of companies or in stand-alone companies.

Many individual shareholders of owner-managed businesses have bought their shares in the company using a bank loan. Alternatively, they may have used the borrowings to inject funds into the company’s trade; or to refinance a loan for either purpose.

Mark McLaughlin looks at a potential tax pitfall for company shareholders gifting their shares.