Hello,
Highlights this week include news on gaps in self-employed National Insurance records, two GAAR advisory panel opinions, and an update from HMRC on the cases it is reviewing under the Corporate Criminal Offences rules. We also cover two cases, one of which involves a Home Loan scheme that was effective for Inheritance Tax (IHT) purposes.
In the second of our case summaries, Wensley Stock & Ors v Neal & Anor, the High Court was asked to consider whether royalties paid to a trust established by the Reverend Wilbert Vere Awdry, author of the Thomas the Tank Engine books, were capital or income for trust law purposes.
It was common ground between the parties that the royalties were income for Income Tax purposes. In a useful reminder that trust law and tax law do not always run on the same track, the royalties were found to be capital for the purposes of trust law. This distinction matters in practice as the 45% trust-rate charge broadly applies to income which, as a matter of trust law, is accumulated or discretionary income. As a result, the Court’s finding is likely to reduce the trust's exposure to that 45% charge. Our summary below explores the Court’s reasoning.
In other news, draft legislation was recently published for a new Securities Transfer Tax (STT), which the government intends to introduce in 2027. This will replace both Stamp Duty and Stamp Duty Reserve Tax, while retaining the current reliefs and exemptions. To assist in navigating this, we have published a new ‘Stamp Taxes on shares’ subscriber guide this week. This examines both the current rules as well as the proposed changes, and will be kept up to date over the coming months as the draft legislation evolves, and guidance on its application is published by HMRC.
Finally, do note that HMRC are writing to up to 800,000 self-employed taxpayers who may have gaps in their National Insurance records. Letters offer the opportunity to make voluntary Class 2 contributions as far back as 2015-16, beyond the usual six-year time limit.
More news and updates below, including HMRC's latest one-to-many letter campaigns.
Online PRACTICAL tax resources for accountants and tax advisers BY accountants and tax advisers.
Quick News
HMRC writes to self-employed taxpayers about National Insurance gaps
Up to 800,000 self-employed taxpayers could be affected by gaps in their National Insurance record that may impact their State Pension entitlement. HMRC have started writing to those potentially affected, offering an opportunity to review and correct missing qualifying years.
One-to-many letters: Tracker
HMRC's latest one-to-many 'nudge' letters target individuals who may have underpaid Income Tax or Capital Gains Tax on cryptoasset transactions; individuals whose reported income from let property does not match information HMRC has received from third parties; and businesses that run prize draws, in respect of output VAT liabilities that may be due.
Live Corporate Criminal Offences six-monthly update
The number of live cases being reviewed under the Corporate Criminal Offences (CCO) legislation has decreased slightly in the last six months, while no further charging decisions have been secured.
GAAR Opinion: IHT planning gifting shares to an Employee Benefit Trust
HMRC have released two more opinions in their favour from the GAAR advisory panel (GAP), both of which relate to Inheritance Tax planning through the use of an Employee Benefit Trust (EBT). In both cases, the arrangements were found not to be reasonable courses of action.
Tax Cases (subscription content)
Thomas the Tank Engine royalties stay on the capital track
In Wensley Stock & Ors v Neal & Anor [2026] EWHC 1823 (Ch), the High Court (HC) found that royalty payments received by a family settlement established by the creator of Thomas the Tank Engine were capital rather than income for trust law purposes. The dispute centred on how royalties arising from an assigned right to receive publishing royalties should be treated within the trust, and whether trust law principles overrode the wording of the settlement.
Home Loan scheme effective for IHT
In Elborne & Ors v HMRC [2026] EWCA Civ 894, the Court of Appeal (CoA) agreed with previous tribunals 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 caught by the relevant anti-avoidance legislation.
Editor's Choice
This week's Editor's Choice was selected by Dan Hurst. You can meet our team of editors and writers here: Meet the team.
Trust Registration Service
What is the Trust Registration Service? What trusts does it apply to? What are the requirements and deadlines?
Business Asset Disposal Relief (Entrepreneurs' Relief): Disposal of a business
Entrepreneurs' Relief (ER) was renamed Business Asset Disposal Relief (BADR) by Finance Act 2020. When does BADR apply? What is the rate of BADR? How do you claim BADR? What BADR case law is there?
Appeals: Grounds for Appeal Toolkit
What grounds are there to appeal a tax penalty? How should you word a tax appeal? Can you appeal HMRC errors? What is a reasonable excuse?
Guides & Updates
New This Week
Stamp Taxes on shares
What is Stamp Duty? When does it apply? What reliefs and exemptions are available? What changes have been proposed for 2027?
Self-employed
MTD: Toolkit for accountants
What is the current timetable for Making Tax Digital (MTD)? When will MTD for Income Tax become mandatory? How will it work? Which clients will be excluded? What planning needs to be undertaken?
Clothing and work wear
Is tax relief available on clothing bought for work? When might clothing costs be disallowed? What needs to be considered?
Partnerships
When does a partnership exist?
When does a partnership exist? Why does it matter? What are the implications for different taxes?
Directors & Companies
Goodwill & incorporation: Tax issues
What are the tax issues concerning Intangible Property (IP) assets, such as goodwill, on incorporation? What tax reliefs apply if you buy and sell goodwill and IP? What are the valuation and clearance procedures?
Research & Development Tax Reliefs
What is R&D Relief? How does it work? Why does the size of the company matter? What is sub-contracted R&D? How do I write an R&D Report?
Employers
Tips, gratuities and troncs
How are tips, gratuities and troncs taxed? What are the rules for National Insurance Contributions (NICs)? What impact does the Employment (Allocation of Tips) Act 2023 have?
Termination, redundancy and leaving payments
How are redundancy and termination payments taxed? What amounts can be paid tax-free? What amounts are taxable as earnings?
Private Client & Estate Planning
PRR: Private Residence Relief
What is Private Residence Relief (PRR)? What are the qualifying conditions? Can you claim relief on two homes? How do you claim PRR? Can you claim PRR if you develop your garden?
National Insurance: What's the maximum payable?
How are National Insurance Contributions (NICs) limited? What is the maximum payable? What different rules apply to employment and self-employment income?
Overseas & Residence
Business Investment Relief (BIR)
Business Investment Relief (BIR) is a relief for formerly non-UK domiciled individuals, designed to encourage them to remit funds to invest in UK businesses. The abolition of the non-domicile regime has brought changes to BIR for both existing and future investments. Ultimately, the relief will cease from 5 April 2028.
Penalties & Compliance
Overpayment Relief
What is Overpayment Relief? When can you claim Overpayment Relief? What are the conditions for a claim for Overpayment Relief? What are the time limits for a claim for Overpayment Relief?
VAT
Flat rate scheme: Farmers
What is the agricultural Flat Rate Scheme? Who can use it? What are the conditions? What is the benefit? What about non-farming income?
Continuing Professional Development (CPD)
Recent and upcoming webinars include:
- Practice Insight - July 2026 (free)
- Monthly Tax Update - July 2026
- Capital Gains Tax Planning Strategies to Maximise Net Proceeds (free)
- Practice Insight - June 2026 (free)
- Monthly Tax Update - June 2026
- Mandatory HMRC Agent Registration Part 2 - Where We Are Now
- Mandatory HMRC Agent Registration Part 1 - Getting Started Before May 2026
- Ethics and PCRT for Tax Advisors
Need Tax Support?
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, reorganisations and much more.
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