Child’s income: Or is it?

Parents sometimes wish to gift income-bearing assets (e.g. company shares) directly to their unmarried minor children, to take advantage of the child’s personal allowance (and dividend allowance) and possibly also their basic rate income tax band, to reduce the family’s overall tax burden on dividend payments. Unfortunately, this tax planning idea is generally blocked by […]

Partnership expenses: Panic over?

Individual partners in a partnership sometimes incur business expenses personally. It has been widely accepted that tax relief can be claimed for such expenses. This could be achieved by adjusting for the expenses in the tax computation in the partnership tax return, provided any adjustment was made before the net profit was allocated between the […]

Selling your company? How dare you!

A targeted anti-avoidance rule (TAAR) was introduced (from 6 April 2016) to prevent ‘phoenixism’. In broad terms, this practice involves company owners winding up their ‘old’ companies and extracting profit reserves as capital (instead of income) and repeating the exercise in one or more successive businesses. The effect of the TAAR applying is that an […]

Sale of goodwill: income or capital?

It is common in many occupations and professions (e.g. law, medicine) for individuals to be engaged as self-employed consultants. Some consultants will build up their own practices before eventually selling them. From a tax perspective, the question arises how the practice disposal proceeds should be treated. For example, is it an income or capital receipt? […]

Having a takeout

Earlier this year, a readers’ forum query ‘Company residential property transfer to daughters’ (Taxation, 28 February 2019, page 22) questioned the tax implications of the transfer of residential properties from a company to two daughters of the company’s sole director and shareholder. It is relatively common for assets to be transferred from a company on […]

Having a takeout

Earlier this year, a readers’ forum query ‘Company residential property transfer to daughters’ (Taxation, 28 February 2019, page 22) questioned the tax implications of the transfer of residential properties from a company to two daughters of the company’s sole director and shareholder. It is relatively common for assets to be transferred from a company on […]

Holiday villa accommodation: Is it ‘commercial’?

Property businesses that provide residential accommodation tend to be profitable in most cases. However, unfortunately losses sometimes arise. For example, an individual may incur losses in the early years of their UK rental property business. Such a loss can generally be carried forward for offset against future profits. Alternatively, in some cases the loss may […]

Holiday villa accommodation: Is it ‘commercial’?

Property businesses that provide residential accommodation tend to be profitable in most cases. However, unfortunately losses sometimes arise. For example, an individual may incur losses in the early years of their UK rental property business. Such a loss can generally be carried forward for offset against future profits. Alternatively, in some cases the loss may […]

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 […]