Tax Insider Newsletter Bundle

 Profit extraction: Traps to avoid

When a company has been incorporated, the first thought by the owner is often how one pays oneself. Proper remuneration planning can help mitigate the effects of perceived double taxation of corporation tax for the company and personal tax for the shareholders or directors. 

Chris Thorpe looks at company remuneration and highlights some potential pitfalls. 

It might be thought that the taxation of interest and dividends should be fairly straightforward, but changing rates and particular rules and exemptions have somewhat muddied the waters.  

Richard Curtis provides an overview of how interest and dividends are taxed on individuals. 

VAT: Calculating the profit margin when selling second-hand goods 

If a business buys and sells second-hand goods, it can use one of the second-hand margin schemes so that VAT is only due on the profit margin, not the full selling price.

Andrew Needham looks at what you can and cannot add to your purchase price or deduct from the sale proceeds when calculating the profit margin on second-hand goods. 

Meeting workplace nursery partnership provisions

To avoid a benefit-in-kind (BIK), the provision of childcare has two tax exemptions (inserted into ITEPA 2003, Ch 4): (1) Employer-supported childcare, possibly provided by way of a childcare voucher and often via salary sacrifice. ITEPA 2003, s 318A outlines the limited exemption of up to £55 per qualifying week. This exemption from tax and National Insurance contributions ceased to be available to new employees on and after 4 October 2018; and (2) Employer-provided childcare (as outlined in ITEPA 2003, s 318). Commonly referred to as the workplace nursery, this exemption has not ceased. An HMRC article in its July 2024 Agent Update referred to the criteria for this exemption.

Ian Holloway highlights a recent HMRC announcement about meeting workplace nursery partnership provisions.

A little knowledge is a dangerous thing! 

I am always amazed by the number of people who undertake high value transactions without getting proper advice about the tax consequences.  

Kevin Read looks at a recent case where the appellant had misunderstood all the tax issues involved. 

Connected employers: Employment allowance implications 

Several tax implications can arise due to the relationship between the companies, particularly affecting corporation tax, VAT, group relief, and transfer pricing, as well as having an impact on the PAYE employment allowance (EA).  

Jennifer Adams considers the tax implications should employers be 'connected'. 

Property options and the importance of tax planning

In property transactions, an option agreement will sometimes be made between an individual property seller and a prospective buyer.

Mark McLaughlin looks at property options and the importance of establishing the tax consequences of property agreements.

Q&As with Arthur Weller

Dividends or bonuses? We can work it out!

Consider the following scenario:

'On a wintry sunny morning, Alan was reviewing his company’s January 2024 management accounts. Alan was the sole director and 100% shareholder of Llandudno Hotels Ltd, which operated two large hotels in Llandudno. The business was on course to healthy pre-tax profit of around £650,000 for the year ended 31 March 2024. Alan had been planning to pay himself a substantial ‘bonus’ before the year-end'. 

What does Alan do?

Peter Rayney examines an owner-manager’s cash extraction following the numerous tax and National Insurance contributions changes.

Use them or lose them: 2023/24 tax allowances

As the tax year draws to a close, it is prudent to review one’s 2023/24 tax allowances and consider whether there is scope for utilising any unused allowances so they are not lost. 

Sarah Bradford explores options for using 2023/24 tax allowances so they are not wasted.

Record-keeping in a digital age

Lee Sharpe looks at taxpayers’ record-keeping obligations in light of HMRC’s inexorable march to digital everything (almost).

Historically, HMRC has been quite relaxed about whether original records must be maintained or digital facsimiles (scans, etc.). 

Trap for business owners seeking CGT incorporation relief

HM Revenue and Customs (HMRC) recently commenced a ‘One to Many’ campaign, targeting taxpayers who incorporated property businesses in the tax year 2017/18 but reported no capital gains tax (CGT) liability in their tax returns on the basis that ‘incorporation relief’ applied in full. 

Mark McLaughlin highlights a potential trap for business owners seeking capital gains tax incorporation relief.

Q&As with Arthur Weller