Tax Insider Newsletter Bundle 

Tax implications of awarding shares to family members

The employment-related securities legislation deals with arrangements involving shares and securities provided by reason of employment where the full value of the employment reward provided to the employee is not included in the salary package and is charged to tax.  

Jennifer Adams considers the tax implications of shares in a family company being awarded or gifted to family members of employees. 

A sole trader looking to expand their business might be weighing up the ‘pros’ and ‘cons’ of a partnership or a limited company. They are very different, with not only very different tax consequences, but functions as well. 

Chris Thorpe looks at partnerships and companies and considers which business model might be best.  

Time to P45 the P45?

Employers complete PAYE form P45 for the leaving employee. In HMRC’s ideal world, a new employee presents their P45; the tax code, previous pay and tax and pay are then brought forward from the previous employment. P45 purpose fulfilled! 

Ian Holloway outlines limitations of the form P45 and suggests that HMRC should consign it to the legacy form dustbin.  

Don’t write off your chances of tax relief!

Under the loan relationships rules for companies, debits on loan arrangements are not deductible for corporation tax purposes in some circumstances.

Kevin Read highlights a recent case concerning the loan relationship rules for companies. 

VAT: The EU’s Import One-Stop Shop system

Business-to-customer (‘B2C’) sales of goods to the EU can be dealt with in one of two ways, which are at the choice of the supplier.  

Andrew Needham looks at the Import One-Stop Shop system introduced by the EU from July 2021. 

Who has tipped HMRC off?

When HM Revenue and Customs (HMRC) opens a tax return enquiry, the natural reaction of most taxpayers is to speculate about the reason why their tax return has been selected. In fact, HMRC does not need an excuse to open a tax return enquiry; a small proportion of tax returns are simply selected at random. . 

Mark McLaughlin looks at whether a taxpayer can find out if an HMRC enquiry has been opened as the result of an accusation made by a third party. 

Change in the basis of income tax assessment for self-employed individuals

Change in the basis of income tax assessment for self-employed individuals

Q&As with Arthur Weller

Extracting profits from your personal or family company

A company is a separate legal entity, distinct from the shareholders that own it. Consequently, if the directors and shareholders want to use the profits made by the company for their personal use, they will need to extract those profits first. There are various ways in which this can be done; some are more tax-efficient than others.  

Sarah Bradford considers options for extracting profits from a company in a tax-efficient manner in the 2024/25 tax year. 

Shielding investment assets away from trading risks

Many family and owner-managed companies grow to a stage where surplus funds retained from healthy trading profits are invested in significant income-producing investments. Typically, these range from residential or commercial properties to listed share portfolios. 

Peter Rayney explores how to shield investment assets away from trading risks. 

Practical aspects of the forced alignment of basis periods to tax years

HMRC requires the homogenisation of taxable profit reporting schedules for all taxpayers subject to income tax so that its IT systems can cope with the new quarterly update cycle under ‘making tax digital’. 

Lee Sharpe considers some practical aspects of the forced alignment of basis periods to tax years. 

BADR - Don’t just sit there!

Business asset disposal relief (BADR) usefully offers a capital gains tax (CGT) rate of 10% on lifetime gains of up to £1m, where certain conditions are satisfied. 

Mark McLaughlin warns that a business’s activities need to be sufficient to amount to a ‘trade’ for business asset disposal relief purposes. 

Q&As with Arthur Weller

Converting a property into a HMO - Tax dos and don'ts

A popular startegy for property investors is the converting an ordinary dwelling into an house in multiple occupation (HMO). Adapting such a strategy typically generates a significant uplift in rental income and profits.

Using a practical case study Lee Sharpe looks at tax aspects of modernising property and the risk of disallowance as improvements that constitute capital expenditure, losing income tax relief in the property business. 

Sub-dividing land: Tax Implications

Subdividing land will generally be for one of the following three purposes; where the owner intends to: 1. develop the land to retain it for a specific purpose (e.g., building a separate 'granny annexe'); 2. develop the land for selling at a profit or for renting out; or  3. sell the land to a third party for development and sale.

Jennifer Adams considers the reasons a landowner may wish to separate land from their main residence and the possible tax implications in doing so.  

Valuing property jointly owned by spouses or civil partners.  

It is common for married couples (or civil partners) to own assets jointly (e.g., the family home). On the first spouse to die, the question arises whether the market value of their property interest can be discounted for inheritance tax (IHT) purposes to reflect the fact that they did not own the whole property (such that the consent of the surviving spouse would have been needed before the property could be sold).
 
Mark McLaughlin looks at the ‘related property’ rules for inheritance tax purposes and their potential effect when valuing property jointly owned by spouses or civil partners.  

Main residence relief and multiple residences

Most people do not expect to have to pay capital gains tax (CGT) when they sell their home. Private residence relief (also known as main residence relief or principal private residence relief) normally applies in full when the property has been the taxpayer’s only or main residence throughout the whole period for which they have owned it.  

Sarah Bradford outlines the concept of a ‘main’ residence for capital gains tax purposes. 

Q&As with Arthur Weller