Hello,
Our main news this week of course centres on the Spring Budget. We also review HMRC's new views on tax relief for training costs. Our cases feature the first ever appeal against the withdrawal of COVID-19 'Eat Out to Help Out Scheme', whether property was a trade or investment for Business Asset Disposal Relief (BADR), and the tribunal had to sample Nakd and Organix bars. Hopefully not stale ones this time!
Spring Budget 2024 included a lot for tax advisers to get their teeth into and it was quite refreshing to have a 'light weight' budget. We await further detail on the changes to Furnished Holiday Letting (FHL) and non-domicile status.
Changes to Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax (SDLT) were a surprise to us, however there have been so many SDLT appeals on this topic of late that it does appear that it was time to 'shut that stable door'. More commentary on the budget in our At a Glance guide below.
One factor that has affected all the recent chancellors is the triple lock on the State Pension. Unlike pensions, the Personal Allowance does not increase for inflation, it would just be too expensive. This means that the Chancellor has only National Insurance Contributions (NICs) to play with. Future reform of NICs now seems likely whoever is next in power.
If you want something away from the budget, we have noticed that HMRC has updated its Business Income Manual in respect of tax relief on training costs. The old version of their guidance advised that 'Expenditure on a course which provides new expertise or knowledge is capital'. The new guidance removes that to confirm that expenditure will be allowable if it 'provides new expertise or knowledge in the individual's existing business area.' The change means that if you are a sole trader and you want to expand your skill-set and take a course in selling or bookkeeping for example, this will be allowable. I am now wondering whether that means that tax qualifications, say ATT or CIOT could also be allowable. Tax is an economic cost to all business after all!
We would very much like to welcome two new members to our team this week, Autumn Murphy and Diane Deller. You will no doubt 'meet' them if you post a query on our Virtual Tax Partner (VtaxP) support service. Also, a date for the diaries, we are all heading to the Accountex Show on 15-16 May 2024, it would be lovely to catch up there too.
Back soon
Nichola & the Team
Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
Quick News
Spring Budget 2024: At a glance
The Chancellor used the 2024 Spring Budget to announce some wide-ranging reforms including a 2% reduction in the rate of NICs, the abolition of both MDR and the Furnished Holiday Lettings regime and an increase in the VAT registration threshold.
Change of view on Training Costs
HMRC has updated its guidance on tax relief in respect of proprietor's training courses by now confirming that any course will be tax deductible if wholly and exclusively incurred for the purposes or 'ancillary purposes' of the trade or business.
Tax-free childcare statistics
HMRC have published the quarterly statistics for Tax-free Childcare for the period ending 31 December 2023. There is reduced usage for the scheme but a greater overall spend.
Taxation of environmental land management
HM Treasury has published a response to the 2023 consultation ‘Taxation of environmental land management and ecosystem service markets’. Agricultural Property Relief (APR) will be extended to cover environmental land management from 6 April 2025.
Tax Cases
Was company investing or dealing in land?
In Mark Stolkin, Margeaux Stolkin and Faye Clements v HMRC [2024] TC09086, the First Tier Tribunal found that distributions received during liquidation did not qualify for Entrepreneurs’ Relief (ER) (now known as Business Asset Disposal Relief, or BADR) because the company was not trading.
Eat Out to Help Out claim valid
HMRC's challenge to a restaurant's claim for support payments under the Eat Out to Help Out Scheme (EOHOS) failed at the First Tier Tribunal (FTT). This is the first FTT case considering the EOHOS.
Editor's Choice (subscribers)
Spring Budget 2024: At a glance
The Chancellor used the 2024 Spring Budget to announce some wide-ranging reforms including a 2% reduction in the rate of NICs, the abolition of both MDR and the Furnished Holiday Lettings regime and an increase in the VAT registration threshold.
Guides & Updates (subscription content)
Self-Employed
Basis Period reform
What is basis period reform? Who is affected? What is the new basis year for tax? What are the transitional rules?
Pre-trading expenses (self-employed)
What are pre-trading expenses? What tax relief is available for pre-trading expenses? What are the restrictions to relief? What expenses will not qualify?
Partnerships
Partnerships: Capital Gains Tax
How does Capital Gains Tax (CGT) work for partners and partnerships? What is HMRC’s Statement of Practice D12? How are transactions between partners treated? What if the partners are connected persons for CGT?
When does a partnership exist?
When does a partnership exist? Why does it matter? What are the implications for different taxes?
Directors & Companies
Interest relief: Making a loan to a close company
An individuals can claim tax relief for interest paid on a loan where the funds are used by a close company or used to buy an interest in a close company. Which loans qualify? What is a business purpose?
Stamp Duty: Share-for-share exchanges
How do you calculate Stamp Duty on a share-for-share exchange? What relief is available from Stamp Duty on a share-for-share exchange?
Employers
Employers' NICs allowance
The Employers' National Insurance Contributions (NICs) allowance is an allowance given to small and medium-sized employers (SMEs) to offset against their annual Employers' National Insurance liabilities.
PAYE Settlement Agreements
What are PAYE Settlement Agreements? How do they work? What can be included?
Private Client & Estate Planning
Gift Aid: How it works
UPDATE: HM Revenue & Customs (HMRC) pays around £1.3 billion a year to charities and other qualifying bodies through Gift Aid. This introductory guide is not intended to comprise exhaustive coverage of the subject. Reference should be made to the legislation for all technical and practical questions.
CGT: Rollover (Incorporation s.162) Relief
UPDATE: Incorporation Relief is available to individuals. Gains from the disposal of business assets on incorporation can be deferred. What assets are included? How does the relief work?
High-Income Child Benefit Tax Charge
UPDATE: Spring Budget 2024 introduced increased new allowances for the High-Income Child Benefit. What is it? Who pays it? Can you appeal against an assessment? Are there any useful cases from the tax tribunals?
Land & Property
Annual Tax on Enveloped Dwellings (ATED)
What is the Annual Tax on Enveloped Dwellings (ATED)? Who does ATED apply to? What relief is available and how is it claimed? What are the ATED return filing dates?
Land & Property: DIY Housebuilders scheme
UPDATE: It is possible to recover VAT on constructing a new residential dwelling, or dwellings, even where there is no planned sale of the property. Spring Budget 2024 announced increased investigatory powers for HMRC in assessing claims.
SDLT: First-time buyers
What Stamp Duty Land Tax (SDLT) relief is available to first-time buyers? What qualifying conditions must be met?
Capital Allowances
Annual Investment Allowance (AIA): Related companies
What restrictions to AIA apply to companies? What does common control mean? When are companies related?
Disposal values & rules
What is a disposal for capital allowance purposes? What is the tax consequence of a disposal? What value needs to be accounted for on a disposal?
Overseas & Residence
SRT: Statutory Residence Test
What is the Statutory Residence Test (SRT)? Why is it important and how does it determine a person's residency?
SRT: Split Year Treatment
What is Split Year Treatment? When does it apply?
VAT News & Cases
Nakd and Organix bars standard-rated for VAT
In the latest instalment of a long-running £1.1m VAT dispute, the First Tier Tribunal has found that Nakd and Organix bars were ‘confectionery’ for VAT purposes.
R & C Brief 1 (2024): Live web streaming of funeral services
HMRC have published Revenue and Customs Brief 1 (2024): ‘Live web streaming of funeral services’. This brief clarifies HMRC’s position on the VAT treatment of live web streaming of funeral, burial, or cremation services.
EU VAT e-commerce package: From 1 July 2021
UPDATE: On 1 July 2021 a number of European Union (EU) VAT changes took effect, including the introduction of two new One Stop Shops. What are the changes? Who is affected?
Penalties: Electronic Sales Suppression
UPDATE: What penalties apply for till tampering or Electronic Sales Suppression (ESS)?
Tax Tools
Tax calculators
UPDATED for NICs changes: FREE for subscribers: We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes.
Tax Tools
FREE add-on for subscribers, or available separately
Calendar of tax deadlines and new tax measures
UPDATE: This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines, new tax measures and other tax significant events.
CPD for Lunch
Byte-sized chunks of lunchtime CPD for subscribers
- CPD: VAT Penalties Update
- CPD: CGT Reporting and payment deadlines
- CPD: Corporation Tax Part 1: Rates and Challenges
More at CPD Index
CPD Workouts
Two hours of CPD: Unravelling the diverse tax rules over a range of topical subjects
- VtaxP Tax Workouts 2023: AML Essentials update & IHT and Family Investment Company case studies
- VtaxP Tax Workouts 2023: Tax Update for OMBs & Taxing the Digital Nomad
Tax Queries?
UK Agent for registration of Overseas Entities
Do you require assistance in the registration and verification of an overseas entity that owns UK land or property?
Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a very wide range of expertise: covering direct and indirect tax, as well as accounting, R&D claims, reorganisations and much more.
Missed Last Time's Web-update?
Nichola's SME Tax W-update 29 February 2024
- Advisory fuel rates from 1 March 2024
- Agent Update: February 2024
- Employer Bulletin: February 2024
- Tax administration framework: Consultation response
- Call for evidence: HMRC’s enquiry and assessment powers
- Finance Act 2024
- Construction sector dominates tax defaulters list
- Umbrella travel expenses disallowed
- SDLT sub-sale scheme steps ignored
- HMRC right to approach employee using potential tax avoidance arrangement
- Construction Industry Scheme (CIS) Contractors & Subcontractors UPDATE
- ISA guide UPDATE
- National Insurance: What's the maximum payable? UPDATE:
- Non-domicile status, deemed domicile & tax
- Gardens: selling or developing
- Disguised remuneration loan charge
- Cash or accruals accounting toolkit...More
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