Tax News

Simplification of Inheritance Tax

The Office of Tax Simplification (OTS) have been tasked with carrying out a review of Inheritance Tax (IHT) with a view to simplifying how the tax operates. IHT is perceived to be complicated and currently yields a relatively small amount of tax compared to income tax and national insurance.

Making Tax Digital Delayed Further, Apart from VAT Reporting

HMRC have confirmed that no further MTD for business changes will be brought in before 2020 at the earliest.

The Treasury set out its revised priorities for current digital transformation projects, to make room for the additional demands on its resources of work to upgrade customs systems in preparation for Brexit. 

Marriage Relief

Since 6 April 2015, it has been possible for you to transfer £1,190 of your annual personal allowance to your husband, wife or civil partner if they earn more than you do. This is a relief which is not being made the most of by a number of people but is worth a tax reduction of up to £238 per year.

Taking a Lodger? Don't Forget to Claim "Rent a Room" Relief

HMRC are carrying out a review of rent a room relief to discover whether the scheme, introduced back in 1992 provides the right incentives for the rental market. The current scheme exempts from tax, gross rents up to £7,500 where rooms within the taxpayer’s main residence are rented out.

Most accountants that responded to the call for evidence were keen for the relief to continue as it encourages taxpayers to let out spare rooms and provides them with additional income. 

Tax Advantage of EMI Share Option Schemes Lapses

HMRC have advised companies to consider delaying the grant of Enterprise Management Incentive (“EMI”) share options until fresh State Aid approval has been granted by the EU.

As the UK Government were late in applying for an extension (12 months’ notice is required) the existing approval expired on 6 April 2018 and EMI share options granted after that date before new approval is received may be treated as non-tax advantaged employment-related securities options.

Tax Efficient Extraction of Profit from Companies for 2018/19

The new tax year means that many directors of family companies will be considering the most tax efficient method of paying themselves. 

For many years accountants and tax advisors have suggested that director/shareholders should extract profit by paying themselves a low salary with the remainder of their income being extracted in the form of dividends. 

Scottish Income Tax Rates due to Rise from 6 April 2018

The Scotland Act 2016 provides the Scottish Parliament with the power to set all income tax rates and bands that will apply to Scottish taxpayers’ non-savings, non-dividend (NSND) income for tax year 2018/19. 

No Major Tax Changes in Chancellor's Spring Statement

As announced last year, the Chancellor’s Budget will in future take place in the Autumn each year as opposed to the Spring. There was, however, a Statement by the Chancellor on 13 March, but he made little mention of tax changes, instead choosing to focus on the state of the economy and stating that there is “light at the end of the tunnel”. This contrasts with other recent Chancellors such as Gordon Brown and George Osborne who used both the Spring Budget and Autumn Statement to make announcements of tax changes.

Pension Funds can be Very Effective in Estate Planning

We have featured the tax efficiency of pension fund investment in a number of recent newsletters. As well as the increased flexibility in terms of drawdown arrangements that were introduced in April 2015 there were some important changes to what happens to the undrawn funds on death. These changes mean that your pension fund can be passed to survivors tax efficiently.

BBC Presenter Loses Landmark IR35 Case

The IR35 personal service company legislation has been on the statute book since 2000 and has never really worked as intended.

The main reason for this is that the interpretation of the legislation is based on the same employment status tests referred to above, which lack clarity and are open to interpretation by the courts.

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