Tax Insider 3 x Newsletter Bundle 

In most cases, businesses dealing in second-hand goods buy the goods or take them as trade-ins from private individuals and then sell them on, using the second-hand margin scheme. Only VAT on the profit margin can be accounted for if the second-hand margin scheme is used. If they use global accounting, even greater VAT savings can be achieved.

Andrew Needham looks at the VAT advantages of selling second-hand goods as an agent.

The Uber case: What was all the fuss about?

According to employment law, there are three kinds of workforce. The first is employed, the second is self-employed, and the third is ‘hybrid self-employed’ (i.e. self-employed but working as a part of a business carried on by someone else). 

Meg Saksida examines the outcome of the Uber taxi case and what has happened because of it.

So long, farewell! Company purchase of own shares

Retirement for a family company member can be an emotive event. Someone who has spent much of their working life building up that business now has to hand over the reins to another.

Jennifer Adams considers the main reasons why some shareholders of a family-owned company may consider a purchase of its shares and the tax implications of doing so.

Trading activities: A question of substance

Capital gains tax (CGT) and business asset disposal relief (BADR) may apply to a disposal of company shares provided that...

Ken Moody analyses what may be regarded as ‘substantial’ non-trading activity affecting a company’s status for various capital gains tax relief purposes in the light of recent case law and its effect of non-statutory clearance applications. 

It’s a showdown! Gift relief vs incorporation relief

On incorporation, a taxpayer will have a choice between the use of either gift relief (TCGA 1992, s 165), incorporation relief (TCGA 1992, s 162), or simply paying the capital gains tax (CGT) at the time of disposal.

Reshma Johar considers what options a sole trader or partner of a partnership have when their unincorporated business is transferred into a company.

Joint account: Whose interest?

Bank or building society accounts are often held in the joint names of two or more family members. As a general rule, the person liable for tax on the interest credited is the person receiving or entitled to the interest.

Mark McLaughlin outlines the income tax treatment of joint accounts between family members.

Q&As with Arthur Weller

Family company profit extraction: Optimal salary for 2021/22

Where a business is run as a family or personal company, the company is separate from the shareholders and those who run it. This means that where funds are required outside the company to meet personal bills and suchlike, they have to be extracted from the company.

Sarah Bradford explains how to determine the optimal salary level for 2021/22 for personal and family companies seeking to extract profits in a tax-efficient manner.

BADR - Potential 'traps' for the unwary

Business asset disposal relief (BADR) is an important and valuable capital gains tax (CGT) relief. However, the relief conditions are such that BADR can be easily lost. Here is a selection of potential ‘traps’ for the unwary.

Peter Rayney highlights six potential traps that can lead to claims for business asset disposal relief being rejected on company share sales.

Companies: Better together?

Where the same people are carrying on two or more different trades, for all kinds of reasons it’s often a good idea for those different trades to be carried on in different companies. 

Alan Pink considers whether different trades should be held in a group of companies or in stand-alone companies.

Gifting shares: The interest relief trap

Many individual shareholders of owner-managed businesses have bought their shares in the company using a bank loan. Alternatively, they may have used the borrowings to inject funds into the company’s trade; or to refinance a loan for either purpose.

Mark McLaughlin looks at a potential tax pitfall for company shareholders gifting their shares.

Q&As with Arthur Weller

Do you have a loss-making rental property?

According to resolutionfoundation.org, one in eight private sector tenants has failed to cover their housing costs during the Covid-19 crisis. This means that 13% of private landlords are facing the same expenses as every other year but without the income to cover them, meaning they are more than likely finding themselves in a loss-making position. 

Meg Saksida outlines ways for individual landlords to offset rental losses for tax purposes.

Property development (4); Void repair work and insurance claims

The previous case study focused on the kind of expenses incurred when a landlord or landlady takes on a new property and prepares it for letting out. 

In his fourth article in the series, Lee Sharpe looks at repair work undertaken in a void period and how to deal with insurance claims.

Passing on the family home and ‘frozen’ nil-rate bands

Inheritance tax (IHT) is only payable where the value of the chargeable estate exceeds the available nil-rate bands.

Sarah Bradford considers the impact that the Chancellor’s announcement that the IHT nil-rate band and residence nil-rate are to be frozen until April 2026 may have on those looking to pass on their family home.

Jointly owned property - any chance of a discount?

Land and buildings (e.g. the family home) are often held in joint names, such as by spouses (or civil partners), or parent and offspring. When it comes to valuing an interest in a jointly-owned property for inheritance tax (IHT) purposes (e.g. on death), it is necessary to consider the valuation methodology.

Mark McLaughlin looks at discounts from the market value of jointly-owned properties for inheritance tax purposes.

Q&As with Arthur Weller