Tax Insider: The Monthly UK Tax Newsletter

When it comes to working out the potential inheritance tax (IHT) liability on an individual's estate, it might be assumed that funds in a joint account belong equally to the joint account holders (e.g., mother and adult son).

This might actually be the case – but not automatically so. As with many other questions in tax, the answer is: it depends.

This article considers the IHT treatment of joint accounts in England, Wales and Northern Ireland. In Scotland, the position may differ (see the HM Revenue and Customs (HMRC) Inheritance Tax Manual at IHTM15051 and IHTM15054).

Mark McLaughlin warns that it is not necessarily straightforward to ascertain how much money in a joint account belongs to each account holder for inheritance tax purposes.

When the actor and comedian Rik Mayall died in June 2014, many were astonished to learn that he did so intestate (i.e., he had no will outlining what was to happen to his estate); there was clearly no tax planning either, resulting in a £60,000 inheritance tax bill. 

Whilst this was a fairly high-profile intestacy case, over 51,000 letters of administration were issued in the UK in 2024 (i.e. where estates were intestate), so Rik Mayall was not the only one.

Chris Thorpe looks at what happens to an individual’s estate on death if there is no valid will.

Businesses have to overcome a number of hurdles to claim back input tax, so it is not just as simple as having a purchase invoice.
Any input tax claimed by a business must relate to a supply that has actually taken place. For example, where a payment has been made and an invoice received but the goods or services were never physically supplied, input tax should not be claimed as no supply has actually taken place.

Andrew Needham looks at recovering input tax and warns that a business may need more evidence than the purchase invoice.

Most property owners who let out a room will be aware of rent-a-room relief, the income tax exemption for up to £7,500 a year of gross receipts (£3,750 if income is shared with another) from furnished accommodation in their only or main property. They will also expect any gain on disposal to be covered by capital gains tax (CGT) principal private residence (PPR) relief. 

Jennifer Adams considers the capital gains tax position when someone takes one or more lodgers into their home. 

Companies cannot deduct capital expenditure when calculating their taxable profits; relief is instead given through the capital allowances system. 

There are a number of allowances available for expenditure on plant and machinery, and these should be used wisely to maximise relief.

Sarah Bradford explores the capital allowance claims available to companies, and how best to use them.

A sole trader looking to expand their business might be weighing up the ‘pros’ and ‘cons’ of a partnership or a limited company. They are very different, with not only very different tax consequences, but functions as well. 

Chris Thorpe looks at partnerships and companies and considers which business model might be best.  

Under the loan relationships rules for companies, debits on loan arrangements are not deductible for corporation tax purposes in some circumstances.

Kevin Read highlights a recent case concerning the loan relationship rules for companies. 

Despite the reduction in National Insurance contributions (NICs) in Spring Budget 2024, more employees are paying tax at higher rates on their earnings due to the freezing of tax thresholds. Some may find that any pay rise or bonus attracts additional tax and NICs such that the net pay increase is minimal.  

Jennifer Adams looks at some alternatives to rewarding an employee with a pay rise or a bonus.