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Taxation of Buy-to-Let Properties

In 2015 the UK Government set out its Five Point Plan for housing which was designed to stimulate housing supply and encourage first-time ownership. Support such as this was welcomed by many as the impact of the global financial crisis, and the critical effects this had on the property development sector, continued to be felt by first-time buyers as they battle astronomical rents and house prices worsened by low salaries. Alongside the introduction of affordable homes, and enhancements to the Help to Buy scheme, the Government has over recent Finance Acts introduced a number of tax changes imposed on buy-to-let investors presumably with the intention of deterring investors from investing further, which the Government believes will free up property for owner-occupiers. Read more

Disguised Remuneration Settlement Opportunity – The clock is ticking

On 1st June 2018, HMRC offered a final settlement opportunity to those that have used schemes involving disguised remuneration (“DR”) loans (such as those taken from Employee Benefit Trusts) by extending the deadline for taxpayers to register their interest in exploring a settlement with HMRC by a further four months.

The current guidance explains that settling now could allow taxpayers to sidestep the impending April 2019 charge on outstanding DR loans, the potential costs of legal action, and also eradicates the possibility of further penalties or interest being incurred. In addition, you may be able to arrange a payment plan to pay the liability in instalments depending on your circumstances.

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Spring Statement 2018 – Key Announcements

The Chancellor reserved the deliverance of any new major tax measures for the Autumn Statement later this year. Instead, he utilised his Spring Statement last week to focus on the status of our economy at present, and to flesh out some previous announcements. Summarising a couple of the key updates below:

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Entrepreneurs Relief (“ER”)

The Chancellor announced that this Government were “the champions of small business and the entrepreneur,” and with that a Consultation has been opened to determine the mechanics of plans to allow shareholders who would otherwise lose ER to retain it when their shareholding in a qualifying trading company falls below 5% as a result of dilution, for example where the company has a funding round and issues shares in return for capital. Read more

Employee Benefit Trusts – Follower Notices

HMRC have recently started the process of issuing Follower Notices to companies that have used Employee Benefit Trusts in the past.  A sample copy of a notice can be found here. This appears to be the general approach now taken by HMRC with planning of this kind.

As might be expected, HMRC have used the Supreme Court’s decision in the Rangers Football Club EBT case as the judicial ruling which gives them the authority to issue FNs. HMRC believes that the tax advantage claimed by companies would be denied if the principles from the Rangers case are applied to companies’ use of the planning. Read more

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