The valuation of assets can be important for tax purposes. For example, a valuation may determine the amount of inheritance tax (IHT) payable on a lifetime transfer (e.g. the transfer of an investment property to a discretionary trust), or on an individual’s death estate. In addition, an asset valuation may be needed to determine the… Read More »
Mistakes by taxpayers in tax returns are common but might go undetected until it is too late for HM Revenue and Customs (HMRC) to open an enquiry into the return within normal time limits. However, HMRC may make a discovery assessment outside the normal enquiry ‘window’ broadly if HMRC can demonstrate that the taxpayer’s mistake… Read More »
The principal private residence (PPR) relief rules for capital gains tax purposes require a dwelling to have been a ‘residence’ of the individual to whom the gain accrues (TCGA 1992, s 222(1)). What is a ‘residence’? The term ‘residence’ is not defined in the PPR relief legislation. However, case law indicates that the requirement for… Read More »
Many parents wish to support family members by gifting them assets, with the aim of providing a source of income, and/or something that will appreciate in value over time. For example, a parent (e.g. mother) may gift a 50% interest in an investment property in London to her adult son. The possible tax implications will… Read More »
The capital gains tax (CGT) annual exemption is a welcome and useful tax break for many taxpayers. It is generally available to individuals (i.e. £12,300 for 2021/22), personal representatives (for the tax year of death and the two following years) and trustees (albeit the maximum entitlement is generally one-half of the exemption for individuals; see… Read More »
The valuation of assets for tax purposes is a tricky business. It has been called a ‘dark art’; a specialist area for experts, not to be dabbled in by other professional advisers. Get help! Even HM Revenue and Customs (HMRC) officers don’t normally engage in tax valuations of assets; they enlist the help of specialists… Read More »
A business generally comprises various assets, one of which is often goodwill. However, a new business will not normally have goodwill; the goodwill of a business is broadly the advantage of the reputation and connection with customers that the business possesses. A new business will not normally have a ‘name’ or reputation as such. Goodwill… Read More »
Back in the ‘good old days’ it was possible to pick up the phone and speak to a tax inspector to resolve tax issues; the figures in tax assessments were often handwritten; and Inland Revenue (as it was then) staff did a lot of administration by hand, rather than using a computer. The basic structure… Read More »
Two (or possibly more) individuals might together buy (say) a house. If one of those individuals disposes of their interest in the house to a third party or dies, how should that property interest be valued for inheritance tax (IHT) purposes? Why it matters The jointly-owned house could be held either as ‘joint tenants’ or… Read More »
Individual shareholders selling their shares back to the company normally prefer the proceeds from the share disposal to be treated as a capital receipt, where possible. This is because the capital gains tax (CGT) rate is 10% if business asset disposal relief is available, or 20% in most other cases. Income or capital gain? However,… Read More »