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. […]
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 […]
Are You Winding Me Up?
When HM Revenue and Customs (HMRC) encounters an arrangement that it regards as tax avoidance (or ‘unacceptable’ tax planning), the government will often seek to block it by introducing targeted anti-avoidance legislation. Rising from the ashes? For example, a targeted anti-avoidance rule (TAAR) was introduced (in Finance Act 2016) to prevent ‘phoenixism’. In very broad […]
Are You Winding Me Up?
When HM Revenue and Customs (HMRC) encounters an arrangement that it regards as tax avoidance (or ‘unacceptable’ tax planning), the government will often seek to block it by introducing targeted anti-avoidance legislation. Rising from the ashes? For example, a targeted anti-avoidance rule (TAAR) was introduced (in Finance Act 2016) to prevent ‘phoenixism’. In very broad […]
Property Rental Expenses: Your Guess Is As Good As Mine!
Keeping full and proper records of property rental business expenses is an important task for landlords. For example, HM Revenue and Customs (HMRC) could seek to disallow such expenses if there is insufficient evidence that the expenditure has been incurred, and may impose penalties for record keeping failures. Property rental business owners are subject to […]
Director’s Tax Returns: Don’t Believe Everything You Read!
The majority of owner-managed or family company directors receive a notice to file a tax return from HM Revenue and Customs (HMRC) each year. Most of those directors will regularly extract profits from the company (e.g. as salary and/or dividends). However, in some cases a director may not have received anything from the company, and […]
Director’s Loan Accounts: No Turning Back!
Many company owners have director’s loan accounts (DLAs), and generally understand how they operate. However, there are pitfalls for the unwary. These can sometimes result in tax and National Insurance contributions (NICs) liabilities for the company and/or themselves. For example, an overdrawn DLA can give rise to a tax charge for a closely-controlled company under […]