Business Tax Insider Monthly Newsletter

Various changes to the company car tax rules came into effect from 6 April 2020, including a new way of measuring carbon dioxide (CO2) emissions and changes to the taxation of low emission cars. One year on, there are further tweaks affecting the 2021/22 tax year.

Sarah Bradford looks at some changes to the company car tax rules taking effect from 6 April 2021.

A time honoured and straightforward way of reducing your tax bill on a business’s profits each year is to move a slice of the profits, by one means or another, to a member of the household who is paying tax at a lower rate. Very often this is a spouse – and throughout this article, where I use the word ‘spouse’ you can freely substitute the words ‘civil partner’ because the rules are the same. 

Alan Pink highlights the merits and dangers of involving spouses and ‘significant others’ in a business to save income tax.

Companies frequently provide assets for the private use of their directors and employees, ranging from mobile phones, computers, cars, bicycles, living accommodation to more exotic assets such as yachts, planes and helicopters.

Peter Rayney explores how benefits are calculated on company assets provided to directors and employees.

Taxpayers must play by the rules. HM Revenue and Customs (HMRC) enforces its vast powers to ensure this is so. Fortunately, those powers invariably also give taxpayers some degree of protection. 

Mark McLaughlin points out that HMRC must stick to the rules in exercising their powers when seeking information from taxpayers. 

Business owners want their enterprise to be successful and financially rewarding. Unfortunately, this is not always the case. 

Mark McLaughlin looks at new HMRC powers to make company directors (and others) jointly and severally liable for unpaid tax liabilities.

We have seen a fair number of owner-managers seeking to exit their businesses as a result of the challenges created by Covid-19. Under normal circumstances they may have stayed on a little longer, but since they were approaching retirement anyway, the uncertainties and possibly difficult trading conditions have accelerated these plans. This is especially so when the owner-manager is confident in their adult children or senior management to take the business forward. 

Peter Rayney provides some tips for owner-managers using a ‘multiple completion’ purchase of own shares mechanism to facilitate their exit route.

After a one-year delay, the reforms to the off-payroll working rules will come into effect from 6 April 2021. The reforms extend the rules that currently apply where services are provided through an intermediary to a public sector body, such that from 6 April 2021 they will also apply where the end client is a medium or large private sector organisation. 

Sarah Bradford considers what the extension of the off-payroll working rules means for contractors.

The Partnership Act 1890 defines a partnership as ‘the relation which subsists between persons carrying on a business in common with a view of profit’. There are exceptions to this, but there is no need for a formal arrangement, to give notice or to ask permission.

Lee Sharpe looks at some taxpitfalls of carrying on a business in partnership.

Many more people have been working (more) from home, as shops and other businesses have been forced to shut their normal premises. In some cases, this might involve no more than a laptop and a ban on Radio 2 or Netflix during working hours. In other cases, a bedroom or similar will find itself being given over to predominantly business use.

Lee Sharpe explores some potential tax risks in relation to working from home.

Many business owners are in a similar predicament to Monty…

“On a dark December morning, Monty Marshtitch was staring depressingly at ‘his’ company’s management accounts for November 2020.  Monty was the 100% shareholder of Barnsdale Garden Centres Ltd, which operated two garden centres. The business had been ravaged by Covid-19 and whilst almost all the staff has been furloughed for several months, it was still likely to make a trading loss of around £80,000 for the year ended 31 December 2020.

He rang up his accountant, Carol Greenwood; “Hi Carol, the figures this year are pretty dismal due to Covid...”

Peter Rayney uses a case study to look at an owner-manager’s cash extraction plans during Covid-19.

The question of whether, and if so when, a business has stopped can be crucially important for all kinds of tax reasons. 

Alan Pink looks at the sometimes thorny question of when a business ceases to trade, and why it’s important.

A company purchase of own shares (CPOS) is often a tax-efficient way for an individual shareholder to dispose of their shares (e.g. on retirement). 

Mark McLaughlin highlights a case in which the tax treatment of a company purchase of own shares was not as the taxpayer had hoped.