Tax Insider Newsletter Bundle

Joint Accounts and IHT: The 50:50 Assumption That Can Cost You

When it comes to working out the potential inheritance tax (IHT) liability on an individual's estate, it might be assumed that funds in a joint account belong equally to the joint account holders (e.g., mother and adult son).

This might actually be the case – but not automatically so. As with many other questions in tax, the answer is: it depends.

This article considers the IHT treatment of joint accounts in England, Wales and Northern Ireland. In Scotland, the position may differ (see the HM Revenue and Customs (HMRC) Inheritance Tax Manual at IHTM15051 and IHTM15054).

Mark McLaughlin warns that it is not necessarily straightforward to ascertain how much money in a joint account belongs to each account holder for inheritance tax purposes.

When the actor and comedian Rik Mayall died in June 2014, many were astonished to learn that he did so intestate (i.e., he had no will outlining what was to happen to his estate); there was clearly no tax planning either, resulting in a £60,000 inheritance tax bill. 

Whilst this was a fairly high-profile intestacy case, over 51,000 letters of administration were issued in the UK in 2024 (i.e. where estates were intestate), so Rik Mayall was not the only one.

Chris Thorpe looks at what happens to an individual’s estate on death if there is no valid will.

Reclaiming VAT: Do You Have More Than Just an Invoice?

Businesses have to overcome a number of hurdles to claim back input tax, so it is not just as simple as having a purchase invoice.

Any input tax claimed by a business must relate to a supply that has actually taken place. For example, where a payment has been made and an invoice received but the goods or services were never physically supplied, input tax should not be claimed as no supply has actually taken place.

Andrew Needham looks at recovering input tax and warns that a business may need more evidence than the purchase invoice.

£1m IHT Free: The Routes Most People Overlook

Lottery winnings of £1m are not exempt from inheritance tax (IHT) once they become part of a person's estate. Winnings paid out to members of any formal National Lottery or syndicate are exempt from IHT provided a written agreement was drawn up before the win; this ensures each person receives what legally belongs to them within the agreement rather than a taxable ‘gift’ from the first named lottery participant. 

Jon Golding looks at ways of securing a £1m IHT-free exemption for gifts and legacies.

Hit Your Pension Allowance? Could You Pay Into Someone Else’s?

Putting money away for retirement is generally sensible, and pensions are highly tax-efficient ways of saving for the future. 

However, those with income between £260,000 and £360,000 have a tapered annual allowance (possibly as low as £10,000); high pension contributors may hit their annual allowance maximum (£60,000) and those who have already started accessing their pension have a separate limit (i.e., £10,000 with no carry forward). 
What if someone wants to pay more into pensions, or to help out others with their retirement savings?

Tristan Noyes looks at the implications and opportunities of funding other people’s pensions.

Rent a Room Relief: Easy on Income Tax, Tricky on CGT

Most property owners who let out a room will be aware of rent-a-room relief, the income tax exemption for up to £7,500 a year of gross receipts (£3,750 if income is shared with another) from furnished accommodation in their only or main property. They will also expect any gain on disposal to be covered by capital gains tax (CGT) principal private residence (PPR) relief. 

Jennifer Adams considers the capital gains tax position when someone takes one or more lodgers into their home. 

Capital Allowances: Are You Using the Right One for Each Asset?

Companies cannot deduct capital expenditure when calculating their taxable profits; relief is instead given through the capital allowances system. 

There are a number of allowances available for expenditure on plant and machinery, and these should be used wisely to maximise relief.

Sarah Bradford explores the capital allowance claims available to companies, and how best to use them.

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