Latest News

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. 

HMRC Loses IR35 Case

In the February newsletter, we reported the Tax Tribunal decision involving Christa Ackroyd Media Ltd, a company set up by a TV presenter to supply her services to the BBC, where it was held that the IR35 personal service company rules applied to the arrangements. In a recent case involving a night manager on a building site, another tribunal decided that the IR35 rules did not apply. 

Form P11Ds to Include Benefits Provided by Salary Sacrifice

Employers need to report all Benefits in Kind (BiKs), including those under the Optional Remuneration Arrangements (OpRAs) or “salary sacrifice” arrangements, to HMRC on form P11D from 6 April 2018, unless they are registered to voluntarily payroll benefits.

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.

Changes to Termination Payments

Care is always required when employees are made redundant or payments are made on the termination of employment. Not only are there employment law considerations, there are also important tax implications and this is an area where professional advice is strongly recommended to avoid unnecessary pitfalls. The tax treatment of these payments changed from 6 April 2018 and further changes come into effect in 2019.

Pay In Lieu of Notice

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. 

Charities Gift Aid Small Donations Scheme

Whilst on the subject of the reduction in cash transactions, we take the opportunity remind you of the Gift Aid Small Donations Scheme (GASDC). Under this scheme, a charity or community amateur sports club (CASC) can claim top-up payments on small donations up to £20. 

From 6 April 2017 charities have also been able to claim tax back on donations made using contactless technology, such as a contactless credit or debit card.

Cash and Digital Payments in the New Economy

One of the announcements in the Spring Statement was the possible demise of the 1p and 2p coins and the £50 note, but for different reasons. It seems that more and more of us are paying for small transactions such as our morning coffee by using contactless payments. 

Those who do pay in cash and where the cost is say £2.99 we put the penny change in the charity pot and many are thrown away! The £50 note has been linked to money laundering and other illegal cash-based payments.

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.

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