Category Archives: Articles

Best of both worlds?

Owners of investment properties might sometimes like to gift an interest in a property (e.g., to adult children) but retain all the rental income. Their intention is generally to reduce the value of their estates for inheritance tax (IHT) purposes without affecting their standard of living. Do you have a reservation? The ’gifts with reservation’… Read More »

Be prepared!

Everyone suffers illness (or injury) from time to time. Covid-19 has been a stark reminder of how fragile life can be. For tax purposes, illness can result in tax compliance failures. However, penalties for late tax returns and payments do not apply if there is a reasonable excuse for the compliance failure, provided the failure… Read More »

Residence nil rate band: Is it ‘inherited’?

The family home is the most valuable asset in the death estates of many individuals and could trap some homeowners in the inheritance tax (IHT) net. Thankfully, a claim for the residence nil rate band (RNRB) is potentially available where the family home is ‘closely inherited’ (IHTA 1984, ss 8D-8M). The RNRB (£175,000 for 2022/23)… Read More »

A little extra could spell trouble!

Business property relief (BPR) offers inheritance tax (IHT) relief of 100% or 50% on a transfer of value attributable to ‘relevant business property’. For example, unquoted company shares potentially qualify for 100% BPR, subject to certain general restrictions where the company’s activities consist wholly or mainly of dealing in stocks or shares, land or buildings,… Read More »

Cash is king: Or is it?

Tax relief is available to individuals for contributions paid to a registered pension scheme, where certain conditions are satisfied. HM Revenue and Customs (HMRC) considers ‘paid’ generally means the contributions must be of a monetary amount, such as cash or bank transfer (NB a possible exception applies for ‘eligible shares’ relating to SAYE schemes or… Read More »

Out of proportion!

HM Revenue and Customs (HMRC) promises in its ‘Charter’ to “treat you fairly”. However, in practice HMRC can sometimes seem heavy-handed when applying its powers. Many appeals by taxpayers to the tax tribunal concern the imposition of penalties by HMRC. The rates and amounts of penalties can be eye-watering. For example, the standard maximum penalty… Read More »

Second helpings!

Business property relief (BPR) is an important inheritance tax (IHT) relief. It shelters the value of eligible business property from IHT, at current rates of 100% or 50%. The most common categories are a business (or interest in a business) and unquoted company shares, which potentially attract BPR at 100%. Various conditions must be satisfied… Read More »

What’s the purpose?

A higher rate of stamp duty land tax (SDLT) applies (in England and Northern Ireland) to acquisitions involving a ‘higher threshold interest’ by a company (among others). This is broadly an interest in a single dwelling costing more than £500,000. The SDLT rate in such circumstances is 15% (FA 2003, Sch 4A, para 3). Possible… Read More »

Gifting shares: The interest relief trap

Many individual shareholders of owner-managed businesses have bought their shares in the company using a bank loan. Alternatively, they may have used the borrowings to inject funds into the company’s trade; or to refinance a loan for either purpose. Jumping the hurdles Tax relief can generally be claimed for interest paid at a commercial rate… Read More »