Tax Insider Monthly Newsletter

Directors and employees who drive fully electric company cars will continue to benefit from a 2% benefit-in-kind rate in 2022/23 and 2024/25. When we consider that such vehicles were taxed at 16% of the list price in 2019/20, we can see the tax benefits of electric cars as fuel prices continue to soar, despite the Chancellor’s recent fuel duty cut.

Iain Rankin suggests that now may be the time to make the switch to an electric company car.

Many small and medium-sized companies struggled through the pandemic, with some directors or shareholders finding that they have overdrawn loan accounts which they are unable to repay, even after taking salary and dividends into account. 

Jennifer Adams considers the tax implications should a director be unable to repay the balance on their overdrawn directors loan account and the loan has to be written off.

There are nearly five million family businesses in the UK paying nearly £150bn in tax, so they are the backbone of our economy. 

Chris Thorpe looks at how best to structure a husband and wife (or civil partner) business.

Beneficiaries or legatees from either a trust or a death estate may be paid income during the tax year by the trustees or the personal representatives (PRs). Unless directly mandated to the taxpayer, these amounts will generally have already been taxed on the trustees or PRs, such that the beneficiary will receive the income net of tax into their bank account. 

Meg Saksida explains when Form R185 might be received, and how it is used.

Businesses must overcome a number of hurdles in order to claim back input tax; it’s not just as simple as having a purchase invoice.

Andrew Needham looks at recovering input tax in practice and the evidence that may be needed other than the purchase invoice.

Most unincorporated businesses that do not have a 31 March or 5 April year end should be encouraged to change their accounting date before 2024/25, when the new ‘tax year’ basis for assessing profits will be in place. 

Kevin Read takes solace in classic soul music as he considers a change in accounting date prior to the introduction of the tax year basis of assessment.

Most people prefer to avoid thinking about their own demise. This is understandable but it can result in poorly drafted wills (or even worse, no wills at all), causing potential disputes about what has been inherited and by whom.

Mark McLaughlin warns that imprecise wording in wills can result in disputes and unexpected results, including for inheritance tax purposes.

A method by which cash can be extracted from a family company is to borrow from that company. The benefit for the borrower is a short-term loan, interest-free, with no completion of application forms and no refusal by a bank. 

Jennifer Adams looks at the anti-avoidance rules applicable to ‘participators’ borrowing from a family company.

I sometimes find myself scratching my head over the capital gains tax (CGT) relief for exchanges of interests in jointly held properties, which is not for the faint-hearted; patience and a careful analysis of the legislation are key. 

Ken Moody looks at the capital gains tax relief for exchanges of interests in jointly-held properties.

Although called the marriage allowance (MA), the benefit of the MA is available both for those couples that are married, and those in a civil partnership.

Meg Saksida points out the income tax benefit from being married (or in a civil partnership). 

If a business has a dispute with HMRC and it cannot be resolved through the internal review process or the alternative dispute resolution process, it has the right to appeal to the independent tribunal. In the first instance, the appeal is made to the First-tier Tribunal of the Tax Chamber

Andrew Needham looks at the time limits a taxpayer has to comply with when making a VAT appeal to the tax tribunal.

It is common for owner-managed business director shareholders to draw a low salary and high dividends when extracting funds from their company. However, what happens when most of those funds are paid into a ‘remuneration trust’ rather than being declared as a dividend? 

Kevin Read discusses a recent case on payments to a remuneration trust.

One of the more common benefits-in-kind is the provision of a company car. An income tax and Class 1A National Insurance contributions (NICs) charge arises when the employer provides a car which is available to the employee for their private use. The actual use of the car is irrelevant if the car is at the employee’s disposal; this is enough to trigger the liability. 

Chris Thorpe looks at some company car changes since 2020, and their tax effect.  

Death and taxes are said to be two certainties in life. However, in some (albeit unfortunate!) circumstances, an individual’s estate can escape inheritance tax (IHT) on death.  

Mark McLaughlin looks at circumstances where an individual’s estate can escape inheritance tax completely on death.

One of my previous Tax Insider articles (March 2021) considered the matter of employing family members, but with specific regard to the settlements legislation (i.e., anti-avoidance provisions addressing the artificial transfer of income to other family members). 

Chris Thorpe looks at potential issues from employing a family member within a business.

Loss relief for a guarantor is only available when a payment to a third party needs to be made by the guarantor of a qualifying loan to a trader. 

Reshma Johar looks at the capital loss relief available on loans to a trader, focussing in this article on guarantors as opposed to lenders.

It has been a tough couple of years for most taxpayers. When January comes around, it can be overwhelming to find, hot on the heels of Christmas and in addition to all the normal monthly expenses, self-assessment tax becoming due.

Meg Saksida outlines the help available to taxpayers with difficulties meeting their self-assessment liabilities on time.

The reduced rate of 5% applies to the installation of specific energy-saving materials. Unfortunately, wind and water turbines were removed from the list of qualifying items following the revised legislation, which took effect from 1 October 2019. However, insulation materials, solar panels, ground and air source heat pumps, and micro heat and power units remain qualifying if the conditions outlined below are met.

Andrew Needham looks at what energy-saving materials are subject to the 5% lower rate of VAT.

Picture the following: Mr C is sole director and shareholder of two companies (‘A’ and ‘B’). Company A has made good profits and has surplus cash on deposit. Company B has not done well and has been financially supported by Mr C. 

Ken Moody warns that the waiver or release of intercompany debt between connected companies, while tax neutral under loan relationships rules, may not be advisable for completely different reasons.

To address the impact of Covid-19 and provide additional funding, a new Health and Social Care Levy has been announced, adding 1.25% to the percentage rates of National Insurance contributions from 6 April 2022. 

Jennifer Adams considers whether the impending increase in dividend rates could be a 'one off' tax-saving opportunity.

It is not uncommon for HM Revenue and Customs (HMRC) to make ‘discovery’ assessments outside the normal ‘window’ for opening enquiries into the self-assessment returns of individual taxpayers, if certain conditions are satisfied (TMA 1970, s 29; similar rules apply to companies). 

Mark McLaughlin points out that taxpayers should consider challenging HMRC discovery assessments in appropriate circumstances.