Tax Insider Monthly Newsletter

Another tax year end of 5 April comes and goes, and thoughts often turn to tax. Here is a selection of potential income tax savings ideas to consider, based on personal circumstances.

Meg Saksida highlights a selection of potential income tax savings to consider.

Anyone starting a new business needs to decide which legal structure is best suited to the particular type of business being created, taking into consideration all the issues involved for each type, including the potential liability for any future business debts and the tax implications of their chosen structure.

Jennifer Adams considers the advantages and disadvantages of incorporation.

Company cars are a nice perk to have with a job, but they are expensive. The income tax they attract for the availability of private use is calculated using a percentage based on the carbon dioxide (CO2) emissions and then applied to the car’s list price. Those percentages go up every year and diesel cars attract an extra special surcharge! Fuel is also taxed on the same percentages and applied to a fixed rate (i.e. £24,600 in 2021/22). Only cars with zero CO2 emissions and the most efficient hybrids attract zero tax. 

Chris Thorpe considers what might happen when giving employees a company van rather than a car.

The domestic reverse charge is a major change to the way VAT is collected in the building and construction industry.

Andrew Needham looks at the introduction of the new domestic reverse charge for the construction industry.

Introduced in April 2000, the intermediaries (or ‘IR35’) rules refer to two sets of tax legislation designed to combat a situation whereby services performed via a personal services company (PSC) would be classified as standard employment if the intermediary company was removed from the equation. If so, the contractor is liable to pay PAYE and National Insurance contributions (NICs) as if they were an employee.

Iain Rankin outlines the upcoming changes to the IR35 legislation and discusses what it means for those temporary workers in the private sector.

The chargeable gain arising from the gift (or transfer at undervalue) of an asset is reduced by the amount of held-over gain (which could wipe out either part or the entire gain). The recipient (or ‘donee’) will acquire the transferred asset with the held-over gain set against the base cost. 

Reshma Johar points out when emigration can cause a nasty surprise for business asset hold-over relief purposes, which could leave a person out of pocket when leaving the UK.

Business asset disposal relief (BADR) offers a capital gains tax (CGT) rate of 10% on net chargeable gains of up to £1 million. A claim for BADR is available on a material disposal of business assets, such as an individual’s company shares, where certain conditions are satisfied.

Mark McLaughlin looks at the ‘substantial’ test for capital gains tax business asset disposal relief purposes. 

Employing family members i.e. putting their wages through the books and claiming the tax deduction is a popular strategy for the vast majority of family businesses. This is  perfectly acceptable provided they are working as genuine employees, such that the expense is wholly and exclusively for business purposes.

Chris Thorpe looks at issues of involving members of the family in the business and the potential minefields.

For income tax purposes a partnership has no legal existence distinct from the partners themselves (this is not the case in Scotland where a partnership is a legal person) and as such each partner is taxed on their share of profit as an individual. The effect of this provision ensures that an individual is treated as commencing their business when they start to trade, even if that was before they became a member of the partnership. 

Jennifer Adams looks at some tax tips and traps that may arise when being a member of a business partnership. 

There are a large number of different loyalty schemes designed to increase turnover and maintain customer loyalty. They do this by linking purchases from a business to a reward, or reduction in price on subsequent purchases, by the issue of points. These schemes are commonly used not only by retail outlets, but also by manufacturers and other suppliers to encourage continued customer loyalty. 

Andrew Needham looks at the VAT consequences of customer loyalty schemes.

The government has several beneficial arrangements to help individuals avoid financial difficulty due to COVID-19. However, it is impossible to aid taxpayers who are not eligible for help. To be eligible for the SEISS grant, HMRC looks at whether the individual had taxable profits in the past, and then looks at the associated Income Tax and National Insurance Contributions (NICs) paid on it. They do this by looking at the taxpayer’s previous self-assessment tax returns, commencing with the 2018/19 tax year. 

Meg Saksida considers the traps to avoid.

Travel to and from temporary workplaces is allowable for tax purposes for an employee. In the last edition, I discussed the law in this area. Now let’s look at some recent cases on the subject.

Kevin Read reviews recent cases on temporary workplaces.

This article follows on from my previous one (‘Relief is at hand’), which reviewed the circumstances when a claim can be made to defer a capital gains tax (CGT) liability from arising (under TCGA 1992, s 165), including a handy checklist. 

Reshma Johar looks at how holdover relief and potential restrictions can apply.

Many individuals who are concerned about inheritance tax (IHT) being payable on their death estates will undertake IHT planning in their lifetimes. 

Mark McLaughlin looks at pre-owned assets tax and some possible let-outs from a charge. 

Running your own business can be exciting as well as challenging; as a business grows, there may be situations where an extra pair of hands is needed to help with the smooth running of that business. 

Jennifer Adams considers how employing a spouse/civil partner can reduce a business's tax bill.

Upon incorporating a business, probably the most important issue for the director/shareholder and their tax adviser is how to extract the subsequent profits. 

Chris Thorpe looks at tax-efficient ways of extracting profits from a limited company.

Valentine’s Day is an opportunity for people with a ‘significant other’ to show how much they care; and if it can be done tax-efficiently, so much the better! 

Mark McLaughlin offers some tax tips for romantic (or perhaps not-so-romantic!) couples. 

When a business discovers it has made a VAT mistake it needs to correct it in order to avoid paying additional interest and penalties, but it has to follow certain procedures or it could still find itself still liable to a penalty.

Andrew Needham looks at what methods are available to correct errors on a VAT return.

We all know employment income is taxable; but what if you earn money for babysitting the neighbour’s child? What about tips earned at work and winnings on the horses? 

Meg Saksida considers when you need to declare various types of additional income.

The tax rules (ITEPA 2003, s 338) deny a deduction from earnings for travel expenses incurred in ‘ordinary commuting’, which is travel between a) the employee’s home and a permanent workplace; or b)
a place that is not a workplace and a permanent workplace

Kevin Read looks at the rules on travel to temporary workplaces by employees.

Capital gains tax (CGT) arising from a transfer of a business asset (or agricultural property) which was either an outright gift or sale at undervalue, could be reduced either partly or entirely by a holdover relief claim.

Reshma Johar outlines the circumstances when a claim for business asset hold-over relief could alleviate an immediate charge to CGT on the transfer of a business asset.