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Tax Insider

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  • FREE 3 Issues - The current January #157 and the previous two issues of December issue #156 and November issue #155.
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Here are just some of the strategies our tax experts are sharing with you this month:                       
  • IHT Exemption: No Waiting Required! 
    When it comes to tax reliefs and exemptions, one of the most generous is the inheritance tax (IHT) exemption for ‘normal expenditure out of income’. This is because the exemption is only limited broadly by an individual’s personal circumstances and the amount of surplus income available to give away. Mark McLaughlin outlines an inheritance tax exemption for gifts, which might be particularly attractive to individuals wishing to make gifts without waiting for the normal seven-year period before gifts become exempt.  
  • Planning For School Fees: Some Options 
    Paying for education is likely to affect most parents and their student offspring at some point. Many people are already paying college and university fees, and this trend of rising fees and falling local authority grants is set to continue. Sarah Laing examines possible options for those saving for a child’s education.        
  • VAT: What Is Self-Billing And How Can It Help? 
    Usually, it's the supplier who issues a VAT invoice; but in some circumstances, the customer prepares the invoice instead and gives the supplier a copy. This system is called 'self-billing'. Any business can use this procedure, so long as certain conditions are met. Andrew Needham looks at the workings of the self-billing system and how it can be helpful for businesses.             
  • EIS And SEIS Applications: Not Quite ‘Catch 22’ 
    The ‘risk to capital condition’ introduced by FA 2018 in relation to enterprise investment scheme (EIS) and seed EIS (SEIS) investments and the updated HMRC guidance concerning applications for advance assurance and compliance statements, create obstacles which require careful management. Ken Moody explains the implications of recent changes affecting applications for advance assurance in respect of enterprise investment scheme and seed enterprise investment scheme potential investments.       
  • Taxation Of Pension Funds And Contributions: Watch The Limits 
    For some, it may become expensive to make pension contributions, as over-contributing can have taxation consequences. For many, the restrictions are confusing, and those who opted for ‘fixed protection’ will find their continued pension funding restricted. Tony Granger outlines the pension contribution and fund taxation regime for business owners.  
  • The 2018 ER update (Part 1) 
    The basic entrepreneurs’ relief (ER) legislation has been fairly stable since it was first introduced in 2008, but it seems the Chancellor thought it was due a 10th anniversary revamp! In the first of his four-part article, Peter Rayney covers the latest Finance (No. 3) Bill 2018-19 changes to the entrepreneurs’ relief rules. "e 2018 ER update (Part 1).
  • Married To A Non-UK Domiciled Spouse: IHT Implications 
    The archaic concept of ‘domicile’ (broadly, the country which a person regards as home and typically, but not always, lives there on a day-to-day basis) continues to take centre stage when ascertaining liability to tax, whether that is income tax, capital gains tax or inheritance tax. Malcolm Finney identifies an inheritance tax trap for certain mixed domiciled marriages.  
  • Private Residence Relief: Good News – If It Lasts!
    Private residence relief (PRR) for capital gains tax (CGT) purposes is a simple tax relief conceptually – if an individual sells a dwelling house which has been their only or main residence throughout their period of ownership (or throughout that period except for all or any part of the last 18 months), any gain is generally exempt from CGT. However, the tax system is not necessarily known for its fairness. Mark McLaughlin looks at a recent successful appeal by taxpayers in a private residence relief case, but questions whether the tribunal’s decision should be allowed to stand.              
  • Cash In On Tax-Free Savings!
    Whilst interest rates remain relatively low, bank and building societies are often unable to provide investors with a ‘wow’ factor, so any measures which incentivise savings will generally be welcomed. Sarah Laing provides an update on current opportunities to boost savings.                                
  • Reclaiming VAT After De-Registration  
    You might think that once a business has de-registered from VAT it would no longer be able to reclaim any VAT; but this is not the case. Andrew Needham looks at how businesses can reclaim VAT even after they have de-registered for VAT.                               
  • Capital Allowance Changes And Their Practical Impact
    There were several unexpected changes to the tax rules for capital expenditure announced by Philip Hammond on 29 October 2018. Kevin Read looks at changes announced in Budget 2018 to the tax rules for plant and buildings, as the government seeks to encourage investment during these uncertain economic times.                                
  • Estate Planning: Leaving The Business To Your Heirs
    This article outlines some options open to a business owner to successfully leave the business to others. Inheritance tax (IHT) is an important consideration on death; chargeable assets above the ‘nil rate band’ of £325,000 (for 2018/19) could be subject to IHT at 40%. Tony Granger looks at ways to pass on an owner-managed business.                               
  • The 2018 ER Update (Part 1)
    The basic entrepreneurs’ relief (ER) legislation has been fairly stable since it was first introduced in 2008, but it seems the Chancellor thought it was due a 10th anniversary revamp! In the first of his four-part article, Peter Rayney covers the latest Finance (No. 3) Bill 2018-19 changes to the entrepreneurs’ relief rules.        
  • Discretionary Trust Versus Direct Equity Ownership
    It is quite common for trustees of discretionary trusts to hold equities as part of a trust’s portfolio of investments. However, does this make sense? Malcolm Finney illustrates the impact of changes to dividend taxation pre and post-April 2016.                          
  • Tax Relief For Employment Expenses: But Don’t Get Too Excited!  
    Many employees need to use and maintain special clothing for work purposes. They may incur costs of (for example) having their protective work clothing cleaned regularly. It would, therefore, seem fair and reasonable that such costs should be deductible from their employment income. However, the tax system is not necessarily known for its fairness. Mark McLaughlin points out that tax relief for certain employment expenses is potentially miserly but can be higher in some cases.
  • Making The Most Of Your Spare Time 
    HMRC introduced two new allowances with effect from 2017-18 onwards; the trading allowance and the property allowance. The allowances are currently worth £1,000 each, for each tax year, and in broad terms mean that those with income from these sources below the annual threshold may not need to report it to HMRC. Sarah Laing looks at how the trading tax allowance can be used to give ‘hobby-style’ traders some tax-free income.                                    
  • VAT And Making Tax Digital 
    As part of the introduction of making tax digital (MTD), businesses registered for VAT with a taxable turnover above the VAT registration threshold of £85,000 will need to keep VAT records digitally and file their VAT returns using MTD compatible software. This will start from their first VAT period commencing on or after 1 April 2019.  Andrew Needham looks at the introduction of making tax digital from a VAT perspective.                                     
  • A New Penalty Regime For Businesses
    The government is proposing to introduce a new penalty regime for businesses, covering VAT, income tax and corporation tax: a reform of the way in which penalties are charged for late filing of returns. This is based on a points system similar to that which applies for driving offences; and a reform of the way penalties are charged for late payment. The system will be geared towards encouraging taxpayers to pay early rather than late. Satwaki Chanda discusses the proposed new penalty regime for businesses following July’s draft Finance Bill.                                      
  • Directors’ Loan Accounts And Partner Capital Accounts – Are They Inheritance Taxable? 
    Both directors’ loan accounts and partners’ capital accounts represent money put into the business by the director or partner. Yet their tax treatment for inheritance tax (IHT) purposes is completely different. Tony Granger examines what happens on death if an individual has a director’s loan account or a partner/LLP member’s capital account where inheritance tax is concerned.  
  • Not Very Assuring! New Advance Assurance Procedures For Venture Capital Investments 
    Changes to the procedures for applying for advance assurance (AA) for proposed enterprise investment scheme (EIS) and seed EIS (SEIS) investors are intended to deter ‘speculative’ applications but, along with the ‘risk to capital’ condition introduced by FA 2018, may also create a ‘Catch 22’ situation for some start-ups. Ken Moody points out some recent unhelpful changes affecting certain investors.                         
  • Residence Nil Rate Band: When Is A ‘Residence’ Inherited And What Constitutes ‘Closely Inherited’? 
    For deaths occurring on or after 6 April 2017, an extra nil rate band is available to reduce the inheritance tax (IHT) charge on the deceased’s estate. This extra nil rate band is referred to as the residence nil rate band (RNRB). The RNRB is in addition to the ordinary nil rate band (NRB). Malcolm Finney takes a look at two important terms in the inheritance tax residence nil rate band rules.  
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