Hello
Now that the 'Self Assessment season' is fully underway, this week we have a broad range of updates, new guides and checklists that will support you. We also continue our review of Budget Announcements and the new Finance Bill has been published.
The Government's IHT changes are wide and no more so than when it comes to taxing pensions. We have been taking a closer look at the proposals to tax unused pension funds and death benefits. A new consultation contains a range of different examples for which we are eternally grateful and are a must-read.
Recent statistics reveal that part of the tax gap in relation to the misreporting of offshore income and gains is accidental, some of which is down to sheer ignorance of the law. There is also a wider problem in trying to work through over-complexity in the anti-avoidance legislation. The Government has issued a call for evidence that looks at the Settlement Provisions, Transfer of Assets Abroad and Capital Gains Tax (CGT) for non-residents.
The outcome of the Government's call for evidence on the reform of HMRC’s enquiry and assessment powers, penalties and safeguards indicates an appetite for reviewing measures to improve taxpayer access to alternative dispute resolution and statutory review to cut tribunal time and costs. Potentially two out of the four cases we have reviewed this week might have been solved via alternative resolution of sorts.
An increasingly hot topic is profit extraction for 2025-26. To aid in assessing the options, we have updated our self-employed profits and different salary v dividend calculators, based on current knowledge of 2025-26 tax rates and allowances.
We have also published a range of different guides and checklists this week to aid you in the preparation of accounts and tax returns as it is that time of year again. If you would like a different checklist that is not on our list, let us know and we can make one for you.
More news, cases and updates below.
Nichola and the Team
Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
Quick News
Consultation: IHT on Pensions
Unused pension funds and death benefits will be subject to Inheritance Tax (IHT) from 6 April 2027. A new consultation considers the mechanics of IHT collection and includes some useful examples to illustrate how the new rules will be applied to different types of schemes.
Simplifying offshore avoidance legislation
In the Autumn Budget 2024, the Government issued a rather unusual Call for evidence on 'Tackling off-shore anti-avoidance'. The premise sounds simple: to understand the complexities of the Settlements legislation, the Transfer of Assets Abroad legislation and Capital Gains Tax in relation to offshore avoidance.
Help to Save Reform update
HM Treasury have published a response and delivery consultation following its 2023 consultation 'Help to Save Reform'. Several changes have been announced, including widening the scheme's eligibility criteria, paying bonuses more frequently and changing the bonus calculation method.
Report outcome on HMRC’s enquiry and assessment powers
HMRC have published the outcome of their call for evidence ‘The Tax Administration Framework Review: enquiry and assessment powers, penalties, safeguards’. This explored wide-ranging possibilities for reform, and further consultation will now follow.
Finance Bill 2024-25
Finance Bill 2024-25 was published on 7 November 2024. The bill includes legislation for both the reform of the Non-domiciles regime and Remittance Basis and the amendments to the Furnished Holiday Letting regime.
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Tax Cases
SME R&D claim success
In Collins Construction Limited (CCL) v HMRC [2024] TC09332, a company's claim for SME R&D tax relief was upheld by the FTT, who found, contrary to HMRC's allegations, that the relevant expenditure was not subsidised and it was not incurred in relation to activities which were contracted out to it either.
APN judicial review no excuse for late payment of penalties
In Stephen Ray v HMRC [2024] TC09340, the First Tier Tribunal (FTT) found that being party to a judicial review was not a reasonable excuse for not paying accelerated payment notices (APN) by the due date.
Late tax appeal was ten years too late
In Paul Needham vs HMRC [2024] TC09342, the First Tier Tribunal (FTT) found that failure to receive ‘notice to file’ letters and a lack of engagement from HMRC, were not reasons to permit an appeal.
Accountant's ‘Compensation’ claim liable to Income Tax
In Equity Advisory Ltd & Craig Allan Mellor v HMRC [2024] TC09334, the First Tier Tribunal (FTT) found that 'a capital sum' declared as compensation was a payment of earnings was not capital after all. It was liable to Income Tax and National Insurance Contributions (NICs).
Editor's Choice (subscribers)
Self Employed Tax Calc
Calculate Income Tax, Class 4 National Insurance (NICs) on profits from self-employment. Updated for 2025/26.
Salary v Dividend Calc
UPDATE: We have updated to include 2025/26 following the recent Budget announcements
Salary v Salary & Dividend combinations v Dividends
UPDATE: Updated for 2025/26, noting that NICs thresholds will change come 2025 to adjust for the RPI.
Overseas & Non-Residents: Autumn Budget Subscriber Guide
Proposals affecting UK tax for non-residents during the Autumn Budget 2024 include a reform of the non-UK domiciled rules, tackling offshore tax avoidance and changes to rules on overseas pensions.
Guides & Updates
Self-employed
Self Assessment Return 2023/24: What's new?
2024 Self Assessment toolkit: top tips for completing tax returns for the year ending 5 April 2024.
Side-Hustles & Tax: At a glance
When do I need to pay tax on my side-hustle income? Is a side hustle taxable? Is there a new side hustle tax? Do I need to register for tax when I sell on eBay, Vinted or Etsy etc?
Herd basis: Farming
UPDATE: The 'herd basis' recognises, for tax purposes, the economic nature of animals held for production as capital assets, rather than as trading stock. This can be of benefit to some farmers and result in tax savings.
Directors & Companies
Company checklists: Start here
These company tax compliance checklists and tax planning toolkits are designed for tax advisers and accountants. We have also created Toolkits for the self-employed.
Reorganisations and share-based planning: start here
You can reorganise or separate company activities and different subsidiaries using a variety of different methods.
The super-practical tax guides in this index provide an outline of the tax treatment together with step-by-step guides, case studies and tax clearance templates.
CGT: Share-for-share exchanges
UPDATE: HMRC confirm that for Condition 2 in s.135(2) TCGA 1992, control of the target may be attained via a subsidiary of company B.
Overseas & Residence
Statutory Resident Test (SRT) Toolkit
Our freeview interactive tool determines 'At a glance' whether you are a UK resident or not in a tax year. A tax year in the UK runs 6 April to 5 April.
Offshore Income Toolkit
This toolkit provides an outline of the tax issues for UK resident individuals with offshore income and investments.
Employers
Enterprise Management Incentives (EMI)
UPDATE: HMRC recently updated its manuals on the meaning of 'control' and the independence condition.
PAYE Starter Questionnaire with NICs
UPDATE: We have updated our version of HMRC's Starter Form for PAYE to include a questionnaire for NICs, which will be handy for payroll staff.
Making Work Pay: At a glance
UPDATE: What is the government's plan to 'Make Work Pay'? What measures have been taken? What measures are proposed?
Capital allowances
Enhanced Capital Allowances: Energy saving plant (inc. vehicles)
What are Enhanced Capital Allowances (ECAs)? What is energy-saving plant and machinery? What allowances are available?
Cars, Vans & Other 4 wheel vehicles: Allowances
What capital allowances are available for vehicles? How does HMRC classify what is a car or what is a van?
Private Client & Estate Planning
Adviser Briefing: Changes to APR (Autumn Budget 2024)
Significant changes to Agricultural Property Relief (APR) and Business Property Relief (BPR) were announced at the 2024 Autumn Budget. This guide considers the changes in relation to farming. What is changing and what might the impact be?
IHT: Transfers of value
What is a transfer of value for Inheritance Tax (IHT) purposes?
Trusts & Estates: Ten-year charge reporting requirements
What is the ten-year charge (or principal or periodic charge) and when does it apply?
Land & Property
Abolition of the FHL regime: Briefing
UPDATE: HMRC have published draft legislation and related notes detailing how the abolition of the Furnished Holiday Letting (FHL) rules in April 2025 will operate. We consider the practical impact of losing the FHL rules and provide some essential planning points.
Penalties & Compliance
Named tax avoidance schemes, promoters, enablers
UPDATE: HMRC publishes a list of named tax avoidance schemes, promoters, enablers and suppliers. It is not recommended that taxpayers use any of these schemes, as HMRC does not consider that they work and you may end up with a significant tax liability if you engage with the scheme suppliers.
Discovery Assessments
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? Can HMRC issue two alternative assessments for the same period? What are your rights of appeal and defences?
VAT News & Cases
Groups (VAT)
What are the conditions for forming a VAT group? What rules apply once a VAT group is in place?
Partial exemption & input VAT
How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?
Tax Tools & Calculators
Tax tools & calculators
UPDATE: 2024/25 versions available now. We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes.
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
CPD for lunch: Byte-sized chunks of lunchtime CPD (free for our Subscribers)
- CPD: Income Tax and Trusts
- Free Study Skills Session - Preparing for Your Tax Exams
- CPD: Change of basis periods: Transitional rules 2023-24 Returns
- How to run the most tax-efficient business 2024/25.
- Purchase of Own Shares: all the details.
- Anti-money Laundering Update and Firm-Wide Risk Assessment ...More...
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 wide range of expertise: covering direct and indirect tax, as well as accounting, R&D claims, reorganisations and much more.
Missed the Last Tax Update?
Ross Martin Tax: SME Tax News 7 November 2024
- Raising standards in the tax advice market: Consultation response
- Consultation: Expanding Tax Conditionality
- Double Cab Hic-Ups
- Tax Compliance: Autumn Budget 2024
- Autumn Budget 2024: At a glance
- 20:20 Innovation, RossMartin Practical Tax Database and Virtual Tax Partner Service
- HMRC right to refuse notice submitted ten years late
- Tax Agent deliberately misled HMRC
- Serviced offices not 'relevant business property' for IHT purposes
- RTI: Salary Advance Payments ...More
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