Hello,
This week we explore HMRC’s February Agent Update, new advisory fuel rates, HMRC’s latest compliance activity and much more besides.
In recent years we have witnessed HMRC’s increased use of one-to-many ‘nudge’ letters; an informal approach to encourage wider tax compliance. Using this method, HMRC have now started targeting individuals they believe have income to declare from online marketplace sales, up to 5 April 2023.
This has been something of a hot topic over the last year. Much misinformation has been shared online suggesting that a new ‘side-hustle tax’ had been introduced, following the commencement of reporting obligations for digital platform operators. The first reports by platform operators, for the 2024 calendar year, were due to be made to HMRC by 31 January 2025.
As a result, it seems likely that we will see increased tax compliance activity in this area over the coming months, as sellers' data continues to be analysed. From the perspective of any potentially affected taxpayers, it will be imperative to assess the precise facts and circumstances of selling activities, to determine whether they are trading or not.
In other news, we feature one tribunal decision this week. The Upper Tribunal (UT) considered an Inheritance Tax (IHT) ‘home loan scheme’ which was designed to remove the value of an individual's home from their IHT estate while allowing them to continue residing in it.
The First Tier Tribunal (FTT) had previously found that the arrangement was ineffective, but the UT disagreed. This decision makes for interesting reading in the context of tax planning and the related anti-avoidance provisions.
More news, updates and guides below.
Nichola and the team
Your Virtual Tax Partner®: online PRACTICAL support for accountants, tax advisers BY accountants and tax advisers.
Quick News
Agent Update: February 2025
HMRC have published their Agent Update for February 2025. We have summarised the key content with links to our detailed guidance on the topics covered, including 2025-26 ATED returns, the Official Rate of Interest from 6 April 2025, changes to Employer's National Insurance and the Employment Allowance.
Advisory fuel rates from 1 March 2025
HMRC have published new advisory fuel rates for company car drivers from 1 March 2025.
HMRC target online sellers
In their latest one-to-many letter campaign, HMRC are targeting individuals believed to be operating in the hidden economy by selling via online marketplaces, and not declaring their income.
Tax Cases
Home loan scheme was effective for IHT
In The Executors of Mrs Leslie Vivienne Elborne Deceased & Ors v HMRC [2025] UKUT 00059 (TCC), the Upper Tribunal (UT) found that an Inheritance Tax (IHT) home loan scheme was valid. The value of a settled property within a deceased's estate could be reduced for IHT purposes by an associated loan note as it was not a 'debt incurred by' the deceased under anti-avoidance legislation.
Editor's Choice
What is the 2025/26 PAYE tax code?
NEW: What is the 2025-26 PAYE tax code? What do the different types of tax code prefixes and suffixes mean?
Employers What's On: 2024/25
NEW: This employer update is for advisers and their clients for 2024-25 and covers measures from the 2024 Finance Acts and the October 2024 Budget. It also considers other topical issues for employers and employees.
Badges of Trade: Are you trading or not?
Are you trading, running a business, or just buying and selling investments? Is your 'side-hustle' taxable? The 'Badges of Trade' are a set of indicators, built up over time by the courts, to decide when an activity is a trading or investment activity.
We're hiring: you looking? Tax Adviser/Consultant
We are recruiting for a Tax Adviser to come and join our friendly team at 20:20 Innovation and work in the Virtual Tax Partner (VtaxP) advisory service and on rossmartin.co.uk.
Guides & Updates
Self-employed
Board and lodging adjustments
What private use adjustment should be made for board and lodging where a taxpayer lives at the business premises?
Carried interest
What is carried interest? When does carried interest arise? How is carried interest taxed?
Partnerships
Salaried members: When is a partner taxed as an employee?
UPDATE: In some circumstances, Limited Liability Partnership (LLP) members are taxed as employees under PAYE. What are the Salaried Member rules? When do they apply? What are the conditions?
Directors & Companies
Creative Industries: Audio-Visual Expenditure Credit (AVEC) & Video Games Expenditure Credit (VGEC)
UPDATE: From April 2025, the CT600P creative industries supplementary page must be submitted with the Company Tax Return.
Losses: Trading and other losses
When can a company offset its losses? What restrictions are there? How are loss claims made?
Land & Property
Furnished Holiday Letting (FHL): Abolition of the regime: Briefing
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.
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?
Overseas & Residence
Non-Domicile: Rules from 5 April 2025
UPDATE: What are the changes to the 'non-dom' regime? What does this mean for non-doms currently using the remittance basis? How will Income Tax, Capital Gains Tax and Inheritance Tax be affected by the changes?
Private Client & Estate Planning
Investment bonds & tax
How are investment bonds taxed? What is an investment bond? What is a chargeable event gain and how is it calculated? How do notional tax credits work? How is top-slicing relief calculated? What is deficiency relief?
CGT: Loans to traders relief
What is loans to traders relief? When can it be claimed? What are the conditions of the relief?
Estates: Income Tax and Capital Gains Tax
How do executors deal with income and capital gains arising on the deceased’s estate? What allowances and reliefs are available?
VAT News & Cases
Partial exemption & input VAT
UPDATE: How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?
Food, catering and takeaway
What is the VAT rate charged on food? How does this differ depending on hot or cold food and food consumed on or off the supplier's premises?
Land & Property: DIY Housebuilders scheme
It is possible to recover VAT on constructing a new residential dwelling, or dwellings, even where there is no planned sale of the property. This recovery can arise under the special refund scheme for DIY housebuilders.
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
- NEW: Family Investment Companies & succession planning
- 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
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Missed the Last Tax Update?
Ross Martin Tax: SME Tax News 20 February 2025
- Employer Bulletin: February 2025
- HMRC acknowledge 2023-24 was a difficult period for complaints
- GAAR opinion: Creation and sale of pension obligation
- GAAR Opinion: IHT planning gift of shares into employee trust
- E-invoicing consultation
- CoA reinstates FTT decision in 'exceptional circumstances' SRT case
- Bar humbug: no VAT exemption for students
- VAT phishing email warning
- Compare software for Making Tax Digital for Income Tax UPDATE
- Named tax avoidance schemes, promoters, enablers UPDATE ...More
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