Tax Insider Newsletter Bundle

IHT and Trusts: A Costly Trap for the Unwary

Many individuals set up trusts for family members as part of their lifetime inheritance tax (IHT) planning. The intention is that assets gifted into trust fall outside their estate and the individual (the ‘settlor’) escapes IHT completely if they survive at least seven years following the gift.  

Mark McLaughlin highlights a potential beartrap when setting up a trust for family members as part of their lifetime inheritance tax planning.

Charitable giving is seen as a ‘good thing’ and is supported by the UK tax system with various tax reliefs designed to encourage donations. As well as financially incentivising the donors, these reliefs also benefit the charities by increasing the value of donations. 

This article looks at the various tax reliefs available to individuals.

Richard Curtis outlines various tax reliefs on charitable giving by individuals.

Recovering VAT on Business Gifts and Commercial Vehicles

Andrew Needham looks at the provision of gifts to customers and business contacts and when recovery of input tax on their purchase is permitted.

Andrew Needham looks at what counts as a commercial vehicle and the VAT recovery position.

Are Undrawn Pension Funds the Next Tax Target?

It is standard inheritance tax (IHT) planning to write death benefits payable from money purchase (defined contribution) pension schemes into trust for one or more nominated beneficiaries (usually family members). Under current rules, this puts them outside the IHT net if the policyholder dies.

Kevin Read warns that we may be heading for very high tax charges on undrawn pension funds.

When Gifting Assets Triggers Capital Gains Tax

People are sometimes surprised that they can trigger capital gains tax (CGT) if they gift an asset or sell it at undervalue. Unfortunately, that is what the tax law requires.

Tristan Noyes points out that gifting assets can trigger capital gains tax for the donor and explores ways to gift the tax along with the asset.  

How to Keep Staff Parties and Gifts Tax-Free

Spending £150 per head (inclusive of VAT) on an annual staff function is quite common these days. However, by combining this exemption with the ‘trivial benefits’ exemption, it is possible to exceed the £150 per head limit without triggering any tax implications. 

Jennifer Adams considers the potential for Christmas or other annual functions plus staff gifts to be tax-free.

Taking On Staff – The Tax Considerations

With the growth of a business will come the need for more people to service the growing number of clients and customers. 

When it comes to employees, a plethora of employment laws needs to be considered (especially once the Employment Rights Bill becomes law later in 2025), but the tax consequences also need to be considered.

Chris Thorpe outlines some tax issues for consideration by employers when taking on staff.

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