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Tax Insider

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  • FREE 3 Issues - The current April #160 and the previous two issues of March #159 and February issue #158.
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Here are just some of the strategies our tax experts are sharing with you this month:  
  • Entrepreneurs’ relief – tightening of conditions
    Mark McLaughlin highlights a case which underlines the importance of forward planning for tax purposes and ensuring that decisions are properly documented. A tightening of conditions for capital gains tax (CGT) entrepreneurs’ relief (ER) in Finance Act 2019 may have resulted in some taxpayers no longer qualifying for the relief. 
  • Mileage allowances for employees – how much can be claimed?
    It is not uncommon for employers and employees to be confused about the rules for claiming mileage and fuel costs for business travel, and the amount of tax relief which may be claimed. Sarah Laing outlines the tax advantages of approved mileage allowance payment rates for employee business travel in their own vehicles.
  • What VAT is due on the sale of goods over the internet 
    Many small and medium-sized businesses sell their goods through internet marketing platforms such as Amazon and eBay. Once their turnover exceeds the VAT registration threshold, they have to account for VAT on their sales; but how much VAT do they have to account for? Andrew Needham looks at the VAT implications of selling goods over the internet.
  • That’s a relief! Substantial shareholdings exemption
    Where the substantial shareholdings exemption (SSE) applies on a sale by a company of its investment in another company, the SSE provides exemption from corporation tax – not just on the sale itself but also from any ‘degrouping charge’, except where the subject of the ‘degrouping’ charge is an intangible asset. Until FA 2019, that is. Ken Moody points out a recent helpful relaxation in the substantial shareholdings exemption rules for companies.
  • Building and measuring shareholder value: business valuation
    Measuring business value is important when considering a business for sale, or to evaluate the impact of advisers and consultants on the business. Tony Granger describes a formula that might be considered for the purpose of measuring business value. 
  • The 2018 ER update (Part 3)
    This month, we turn to the welcome assistance for shareholders whose holdings are adversely diluted as a result of a commercial share issue. In the third of his four-part article, Peter Rayney outlines further Finance Act 2019 changes to the entrepreneurs’ relief rules.
  • Inheritance tax: when is a ‘residence’ inherited and what constitutes ‘closely inherited’?
    Inheritance tax (IHT) is levied on death at the penal rate of 40%. Any reliefs and exemptions available to reduce the amount on which this 40% charge is levied should be utilised to the full. Malcolm Finney takes a look at some important features of the inheritance tax residence nil rate band.
  • Information notices: ‘Fishing’ allowed? 
    Taxpayers understandably do not generally relish contact with HM Revenue and Customs (HMRC), such as receiving requests for information and/or documents in respect of an individual’s tax affairs. The natural instinct of some taxpayers is to resist such requests, or alternatively to provide only the details that the taxpayer considers HMRC should be entitled to see. Mark McLaughlin highlights a case in which HM Revenue and Customs was not given its own way when requesting information to check a taxpayer’s tax position.   
  • Help charities - and save tax! 
    As many charities continue to struggle to raise funds, highlighting the prospects of tax reliefs on donations is one way to encourage gifts. This article looks at how the gift aid scheme can be used to save tax. Sarah Laing highlights potential tax savings from charitable giving under gift aid. 
  • VAT: Belated notification of the option to tax 
    When a business ‘opts to tax’ it decides to charge VAT on the rental or sale of commercial property in order to recover the VAT on its purchase, construction or refurbishment. Andrew Needham looks at what happens when a business fails to notify HMRC of its option to tax at the correct time.           
  • The new structures and buildings allowance – some practical issues 
    In Tax Insider for January 2019, I wrote about the changes to capital allowances announced in Budget 2018, including the new structures and buildings allowance (SBA). This article provides more detail on the SBA, which gives a writing down allowance of 2% per annum (straight-line basis) of qualifying costs incurred on or after 29 October 2018. Kevin Read provides further detail on the structures and buildings allowance, including who can claim on leased properties. 
  • Calculating ‘key person’ life assurance to cover the business against loss 
    Whilst most businesses are aware of ‘key person’ assurance, 93% of businesses have no cover in place to protect the business against financial loss on the death or serious illness of a key person (source: Swiss Re survey). This is possibly because businesses are unaware of the extent of financial loss caused to the business if the key person dies or becomes seriously ill or disabled and cannot work. Tony Granger outlines different ways to provide a value to insure for when a key person dies or becomes disabled.             
  • The 2018 ER update (part 2) 
    Last month, we looked at the new 5% economic ownership tests that must now generally be satisfied by shareholders to secure entrepreneurs’ relief (ER) on the sale of their shares. In the second of his four-part article, Peter Rayney covers the latest Finance (No. 3) Bill 2018-19 changes to the entrepreneurs’ relief rules.   
  • The sorry tale of the personal representative and Barbados beneficiary  
    On death, as in life, one cannot escape taxation. On death, an individual’s estate (broadly, assets less liabilities) is subject to inheritance tax (IHT) at the rate of 40% on the amount of the estate over the current nil rate band of £325,000. Malcolm Finney highlights a potential trap for the personal representatives of deceased individuals.      
  • 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.  
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