Tax Insider Monthly Newsletter

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.

Company purchases of own shares can often be helpful. For example, a shareholder in a family trading company may wish to retire and exit the company to make way for the next generation. 

Mark McLaughlin looks at potential tax implications for shareholders if a company purchase of own shares does not satisfy legal requirements.

One of the old chestnuts which accountants are often asked is whether a sole trader/partnership should incorporate into a limited company. There’s no one deciding factor; profit levels, nature of the business, risks inherent are amongst the factors to consider, but another is profit extraction. 

Chris Thorpe looks at some less commonly used methods of extracting profits from a limited company.

The construction of new residential property is zero-rated, and builders and developers take for granted that the supply of building services in connection with the construction of new residential property is automatically zero-rated.

Andrew Needham looks at the importance of obtaining planning permission before starting work on a residential development and a potential VAT trap.

By law, employers in the UK need to deduct income tax from their employees before paying them their wages and salaries through PAYE (pay as you earn). Every individual is different; some will be basic rate taxpayers, others higher or additional rate taxpayers; some will have benefits-in-kind to consider, and others will not. 

Meg Saksida explains the basics of the PAYE tax code.

Some jobs come with somewhere to live, either as a ‘perk’ or because the employer wants the employee to live in a particular property. If this situation applies, a benefit-in-kind tax charge is levied on the employee, and employers are charged National Insurance contributions (NICs) (unless specific exemptions apply). 

Jennifer Adams considers the tax charge of an employer providing living accommodation.

The capital allowances ‘super-deduction’ is available for expenditure between 1 April 2021 and 31 March 2023 on new (i.e. not second-hand) qualifying plant and machinery (P&M) that would normally go within the main capital allowances pool. 

Kevin Read discusses some of the things about the capital allowances ‘super-deduction’ that the Chancellor did not mention in his Budget speech.

Many trading activities are owned by couples. What would be the impact if the couple were to permanently split up? What are the capital gains tax (CGT) impacts on being required to transfer business assets? Can gift relief (under TCGA 1992, s 165) eliminate potential CGT?

Reshma Johar highlights an HMRC interpretation of the tax law that is causing some difficulties for couples on divorce (or on the dissolution of a civil partnership). 

It is very common for employees to receive non-cash remuneration in addition to their salary. In a more competitive market, many employers will add ‘perks’ to an employee’s package (e.g., a company car, health insurance, gym membership, etc.). A pension is now a compulsory addition to most jobs, but none of these are taxed in quite the same way as the cash salary. 

Chris Thorpe looks at where we are with benefits-in-kind, particularly in relation to the salary sacrifice rules.

In most cases, businesses dealing in second-hand goods buy the goods or take them as trade-ins from private individuals and then sell them on, using the second-hand margin scheme. Only VAT on the profit margin can be accounted for if the second-hand margin scheme is used. If they use global accounting, even greater VAT savings can be achieved.

Andrew Needham looks at the VAT advantages of selling second-hand goods as an agent.

According to employment law, there are three kinds of workforce. The first is employed, the second is self-employed, and the third is ‘hybrid self-employed’ (i.e. self-employed but working as a part of a business carried on by someone else). 

Meg Saksida examines the outcome of the Uber taxi case and what has happened because of it.

Retirement for a family company member can be an emotive event. Someone who has spent much of their working life building up that business now has to hand over the reins to another.

Jennifer Adams considers the main reasons why some shareholders of a family-owned company may consider a purchase of its shares and the tax implications of doing so.

Capital gains tax (CGT) and business asset disposal relief (BADR) may apply to a disposal of company shares provided that...

Ken Moody analyses what may be regarded as ‘substantial’ non-trading activity affecting a company’s status for various capital gains tax relief purposes in the light of recent case law and its effect of non-statutory clearance applications. 

On incorporation, a taxpayer will have a choice between the use of either gift relief (TCGA 1992, s 165), incorporation relief (TCGA 1992, s 162), or simply paying the capital gains tax (CGT) at the time of disposal.

Reshma Johar considers what options a sole trader or partner of a partnership have when their unincorporated business is transferred into a company.

Bank or building society accounts are often held in the joint names of two or more family members. As a general rule, the person liable for tax on the interest credited is the person receiving or entitled to the interest.

Mark McLaughlin outlines the income tax treatment of joint accounts between family members.