A parent with sufficient means may sometimes wish to transfer an income producing asset. For example, mother may wish to transfer investment property in London into a discretionary trust for her daughter (e.g. to help cover university costs or supplement income when buying her own home and/or starting a family). However, there are various tax… Read More »
The Coronavirus pandemic has had a devastating effect on businesses; many struggled to survive severe financial difficulties. Some family and owner-managed company owners may have waived their salaries (or bonuses) to ease cashflow problems. However, there is a potential trap. If the waiver is not done correctly, an income tax and National Insurance contributions (NICs)… Read More »
A family investment company (FIC) is a possible means of passing family wealth down to adult children and remoter generations. Furthermore, a FIC can be a tax-efficient ‘wrapper’ for individuals to manage their wealth. A FIC is simply a company; its shareholders are family members. For example, parents could apply their wealth for the benefit… Read More »
A look at some exceptions to the inheritance tax ‘gifts with reservation’ anti-avoidance rules. The inheritance tax (IHT) ‘gifts with reservation’ (GWR) provisions are anti-avoidance rules. They are basically designed to prevent ‘cake and eat it’ situations (i.e. giving away an asset in the hope of surviving at least seven years in order for the… Read More »
For individual shareholders of family or owner-managed trading companies, a company purchase of own shares (CPOS) can be a useful ‘exit’ strategy in the right circumstances, subject to certain company law requirements being satisfied. Income or capital? When the company buys back its own shares from the shareholder, any ‘premium’ (i.e. payment exceeding the capital… Read More »
When an individual sells shares in (for example) a family company, and the buyer is another company, instead of receiving all the proceeds in cash up front (and/or shares in the buying company) the vendor will sometimes receive ‘loan notes’ instead. Many loan notes are ‘qualifying corporate bonds’ (QCBs). A QCB is broadly a normal… Read More »
It is common these days for individuals to work from home. For tax purposes, their attention is often focused on claiming tax relief for business expenses incurred while homeworking, or on whether capital gains tax ‘principal private residence’ relief will be restricted when the house is sold. However, what is the stamp duty land tax… Read More »
Many individual business owners are aware that a capital gains tax (CGT) rate of only 10% can apply if business asset disposal relief (BADR) (previously known as entrepreneurs’ relief (ER)) is available on qualifying business disposals, up to a lifetime limit. A major ‘headline grabber’ was the Chancellor’s announcement in the March 2020 Budget that… Read More »
Tax compliance is difficult and complex. Making a mistake in a tax return is a distinct possibility for many taxpayers. Was it a penalty? The penalty regime for errors in tax returns, etc. states that no penalty is charged in respect of a tax return error if ‘reasonable care’ has been taken. However, penalties can… Read More »
It might be considered straightforward enough to identify a ‘business’. However, that is not necessarily the case. HMRC will not give advance clearance on whether activities constitute a business. However, this question can be important for various tax purposes. An important issue For example, whether a business exists is a potential issue for many buy-to-let… Read More »