Tax Insider Monthly Newsletter

One of the first things that a sole trader looking to incorporate their business must get into their heads is that the money within the new company is not theirs. They can no longer casually extract vast wads of notes from the ATM each Friday evening once a company is in place, as that money belongs to the company. 

Chris Thorpe looks at the role played by directors’ loan accounts in owner-managed businesses.

Selling a business can be a complex matter. One point to consider is the VAT consequences of the sale. When a business is sold, it can be either by a share sale if it is a company, or it can be the sale of the trade and assets of all or part of the business. 

Andrew Needham looks at the different ways of selling a business and their VAT consequences.

During his Budget speech in March 2021, the Chancellor of the Exchequer, Rishi Sunak, announced that as a part of the various schemes he was introducing to promote economic growth in the UK, both the personal allowance (PA) and the income tax bands would be frozen for the next four years. 

Meg Saksida looks at the impact and practical tips for taxpayers in respect of personal allowances and the additional rate band.

Getting through the pandemic has been difficult for all, but it will mean closure of businesses for many. Closure may not be because there is no money in the bank account and no more clients on the horizon; some may have just decided to call it a day. Such companies may have accumulated monies or assets that need to be distributed to shareholders on cessation (after all creditors' liabilities have been settled). 

Jennifer Adams looks at the cost-effective withdrawal of monies from a company on closure.

The reduction in the lifetime limit for capital gains tax (CGT) business asset disposal relief (BADR) from £10 million to only £1 million was something of a shock, even if, arguably, justified. 

Ken Moody considers the use of preference shares on the incorporation of a business as a way of deferring capital gains tax and maximising the benefit of annual exemptions.

A PAYE settlement agreement (PSA) is there to alleviate certain benefits and expenses from having to be declared on either an employee’s form P11D or self-assessment tax return. 

Reshma Johar looks at the potential advantages of PAYE settlement agreements for employers providing staff with certain benefits and expenses.

Owners of investment properties would sometimes like to gift an interest in a property (e.g. to adult children) but retain all the rental income. Their intention is generally to reduce the value of their estates for inheritance tax (IHT) purposes without affecting their standard of living.

Mark McLaughlin highlights an important exception to the inheritance tax ‘gifts with reservation’ anti-avoidance rules on the gift of an interest in a rental property. 

Many one-man companies utilise their directors’ tax-free allowance by paying them a small salary. With proper planning, the director incurs no income tax or National Insurance contributions (NICs), while the company receives corporation tax relief.

Iain Rankin shows how spouses can benefit from splitting company shares, as well as the traps to avoid.

Now that the UK has largely caught up with mainland Europe on the provision of pensions, it’s worth considering how useful they can be, not only in provision for old age but also in tax planning.

Chris Thorpe looks at some of the advantages that pensions can bring when tax planning.

If a business makes an error and overpays or underpays VAT, it can result in a repayment of VAT or an assessment for underpaid VAT plus interest and penalties. In certain circumstances, this can affect the bottom line profits of a business and impact its direct tax liabilities.

Andrew Needham looks at how a VAT assessment can affect other taxes as well.

The Bank of England defines cryptoassets or cryptocurrencies as combining two things: ‘crypto’, being hidden or secret and ‘reflecting the secure technology used to record who owns what and for making payments between users’; and ‘currencies’, ‘a type of electronic cash’. 

Meg Saksida explains when you need to concern yourself with tax associated with cryptoassets.

Many of the self-employed already work from home, but the pandemic has brought such flexibility into potential reality for employees as well. 

Jennifer Adams considers the tax implications for a self-employed individual of building a purpose-built office at home.

This article focuses on residential single transaction purchases by individuals, which include a subsidiary dwelling (often referred to as a ‘granny flat’). How does this type of transaction interact with stamp duty land tax (SDLT)?

Reshma Johar looks at the stamp duty land tax position on acquisitions of residential properties and subsidiary dwellings. 

Everyone suffers illness (or injury) from time to time. Covid-19 is a stark reminder of how fragile life can be.

Mark McLaughlin warns that injury and illness may not be accepted as reasonable excuses for failing to meet tax obligations.

A directors loan account (DLA) records the transactions that occur between a company and its director, including any salary (if not directly attributed as a salary for an employee director), dividends, expenses, director's personal bills paid for by the company and reimbursements (e.g. company bills paid personally by the director and owed back by the company).

Jennifer Adams considers the tax implications of an overdrawn directors loan account.

A common scenario, particularly among smaller businesses, is where there’s a bright individual within the workforce: someone on whom the business has come to rely; someone whose presence really makes a difference. What’s stopping them from leaving? Hopefully, they have such a good boss the thought wouldn’t enter their head; but what if they’re so good there’s a strong chance that a competitor will want to poach them? How can you stop this from happening? 

Chris Thorpe looks at some under-utilised remuneration methods potentially available to companies, in particular the enterprise management incentives scheme.

It goes without saying that businesses should always show the correct amount of VAT on their sales invoices; but mistakes sometimes happen. The VAT amount can be wrongly calculated by a mathematical error, or the wrong VAT liability can be applied (e.g. a zero-rated supply is treated as standard-rated, or a standard-rated supply treated as subject to the lower rate).

Andrew Needham looks at the consequences of showing the wrong amount of VAT on an invoice.

The pandemic has affected all walks of life, both with the obvious physical manifestations of the disease but also with the more insidious impact on the UK economy. 

Meg Saksida explains why a valuable measure for business owners was introduced and how it may affect you.

The introduction of the 19% flat rate of corporation tax (CT) in 2017 put the topic of ‘associated companies’ on the backburner.  

Kevin Read explains why the ‘associated companies’ rules will soon be important again.

A very popular property investment strategy is to convert a large property into a house in multiple occupation (HMO). In fact it is fair to say that many landlords have this as their sole investment strategy given the potential financial rewards. 

Reshma Johar delves into the increasingly popular multiple dwellings relief for stamp duty land tax relief purposes.

The inheritance tax (IHT) allowance (or 'nil rate band') (£325,000 for 2021/22) is generally available to individuals. For married couples (and civil partnerships), the transferable nil rate band (TNRB) rules broadly allow claims for unused nil rate band of a deceased spouse (or civil partner) to be transferred to the survivor. 

Mark McLaughlin warns of a potential IHT problem when dealing with ‘nil rate band’ legacies in wills.