Wages for the children – What’s the ‘purpose’?
Many business owners employ family members such as adult children. The business owner will normally seek to claim a deduction for wages paid to them. For example, a self-employed individual might employ his adult son. How much can father reasonably pay his son? There is no specific tax rule dealing with wages payments to family […]
Every little (tax break) helps!
The UK tax system is not known for its generosity when it comes to allowing tax-free benefits from an employment. Any such benefit should therefore be welcomed, however small it may seem. For example, there is an income tax exemption for ‘trivial’ benefits provided by employers (ITEPA 2003, ss 323A-323C), where certain conditions are met. […]
Investors and entrepreneurs – There’s a (tax) difference!
Individual business owners may be aware that a capital gains tax (CGT) rate of only 10% can apply if entrepreneurs’ relief (ER) is available on qualifying business disposals, up to a lifetime limit of £10 million. A relatively newer and less well-known relief, investors’ relief (IR), also provides for a reduced CGT rate of 10% […]
Investors and entrepreneurs – There’s a (tax) difference!
Individual business owners may be aware that a capital gains tax (CGT) rate of only 10% can apply if entrepreneurs’ relief (ER) is available on qualifying business disposals, up to a lifetime limit of £10 million. A relatively newer and less well-known relief, investors’ relief (IR), also provides for a reduced CGT rate of 10% […]
Trusts: Tax traps to avoid!
The use of trusts is a fairly popular way of passing wealth down generations. For example, an individual (who is resident and domiciled in the UK) may wish to set up a discretionary trust to hold an investment property, to provide income to family members, and ultimately a capital asset that will hopefully appreciate in […]
Trading income – An unfair assumption
Business owners whose tax returns are subject to enquiry by HM Revenue and Customs (HMRC) may be asked to provide evidence about the source of unidentified bank receipts into a ‘mixed’ account (i.e. an account used for business and private purposes) or sometimes even a personal account. Prove it! If the receipts cannot be identified […]
Tax relief for business travel: Prove it!
The tax system in the UK offers tax reliefs and exemptions to employees (including company directors) and the self-employed for various costs etc. relating to their work. However, these tax deductions generally come with strings attached in the form of conditions and record keeping requirements. A useful tax exemption is available for payments by employers […]
IHT: Don’t look back in anger!
Many taxpayers are aware of a ‘seven year rule’ for inheritance tax (IHT) purposes. They assume this rule to mean that if (for example) a parent gifts an investment property to their adult offspring, the gift will escape IHT if the parent survives at least seven years after making the gift. Seven years…or is it? […]