One of the most often used and valuable of the Capital Gains Tax (CGT) exemptions covers the sale of the family home. In general, there is no CGT to pay on a property that has been used as the main family residence. An investment property that has never been used will not qualify. This relief from CGT is commonly known as private residence relief or PRR.
The rules are different if you live abroad. A CGT charge on the sale of UK residential property by non-UK residents was introduced in April 2015. Only the amount of the overall gain relating to the period after 5 April 2015 is chargeable to tax. In certain circumstances, PRR may apply where the property is the owner’s only or main residence.
A UK non-resident that sells UK residential property needs to deliver a non-resident CGT (NRCGT) return and pay any CGT within 60 days of selling a relevant property. The return must be made whether or not there is any NRCGT to be paid if there is a loss on the disposal, and when the taxpayer is due to report the disposal on their Self-Assessment tax return.
There are penalties for failing to file the NRCGT return within the deadline as well as for failing to pay any tax due on time.
Special VAT rules allow businesses to standard rate the supply of most non-residential and commercial land and buildings (known as the option to tax). This means that subsequent supplies by the person making the option to tax will be subject to VAT at the standard rate.
The ability to convert the treatment of VAT exempt land and buildings to taxable can have many benefits. The main advantage is that the person making the option to tax will recover VAT on costs (subject to the usual rules) associated with the property, including the purchase and refurbishment of the property.
However, any subsequent sale or rental of the property will attract VAT. The purchaser or tenant can recover the VAT charged, which is not usually an issue. However, where the purchaser/tenant is not VAT registered or not fully taxable (such as a bank), the VAT can become an additional (non-recoverable) cost.
Once a tax option has been made, it can only be revoked under limited circumstances, so proper consideration of the issue is essential. This includes:
– within a specified ‘cooling off’ period in the first six months, – an automatic revocation where no interest has been held for more than six years, and – after 20 years has elapsed.
The Chancellor, Rishi Sunak delivered a statement to the House of Commons on 3 February 2022 announcing a number of measures to help people cope with fast-rising energy costs.
Record increases will see a 54% jump in the energy price cap from 1 April 2022 affecting some 22 million customers across the UK. This will mean the average consumer paying by direct debit will face an annual increase of £693 from £1,277 to £1,971 per year with those paying by prepayment facing even higher costs. The price cap is updated twice a year and tracks wholesale energy and other costs that have been seen.
The emergency package of measures announced by the Chancellor will see the government offer support with energy bills worth £9.1 billion in 2022-23.
– A £200 discount on their energy bill this Autumn for domestic electricity customers in Great Britain. This will be paid back automatically over the next 5 years starting in 2023-4 when wholesale gas prices are expected to come down. – A £150 non-repayable Council Tax Rebate payment for all households that are liable for Council Tax in Bands A-D in England. – £144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax Rebate.
The devolved administrations will receive around £715 million funding through the Barnett formula where UK Government support doesn’t cover Scotland, Wales or Northern Ireland.
HMRC has confirmed that almost 1.8m couples across the UK have benefitted from the marriage allowance and are saving up to £252 a year. The marriage allowance is available to qualifying married couples and those in a civil partnership where a spouse or civil partner is a non-taxpayer i.e., has an income below their personal allowance (currently £12,570).
The marriage allowance allows the lower-earning partner to transfer up to £1,260 of their personal tax-free allowance to their spouse or civil partner. The allowance can only be used when the recipient of the transfer (the higher-earning partner) doesn’t pay more than the basic 20% rate of Income Tax. This would usually mean that their income is between £12,570 to £50,270 in 2021-22. The limits are slightly different if you live in Scotland.
If you are entitled to the marriage allowance and have not yet applied you could receive a payment of up to £1,220 from HMRC. HMRC is using the summer wedding season to remind couples to make a claim. It is estimated that whilst almost 1.8m couples have already claimed the Marriage Allowance, there are still in the region of 2 million eligible couples that have not made a claim.
If you meet the eligibility requirements and have not yet claimed the allowance you can backdate your claim to 6 April 2017. This could result in a total tax break of up to £1,220 for 2017-18, 2018-19, 2019-20, 2020-21 as well as the current 2021-22 tax year.
When deciding whether an expense is allowed or disallowed it is important to consider that the expenditure must be incurred wholly and exclusively for the purposes of your trade or employment.
Under the legislation any expenditure not incurred wholly and exclusively for the purposes of the trade, profession or vocation should be disallowed. HMRC takes a slightly more relaxed view that a strict reading of the legislation would suggest.
One of the main points HMRC examines when considering the application of the ‘wholly and exclusively’ test relates to apportionment and duality.
In this regard, HMRC’s internal manuals state that:
When you consider the application of the ‘wholly and exclusively’ test, it is important that you distinguish between cases where:
a) a definite part or proportion of an expense has been laid out or expended wholly and exclusively for the purposes of the trade, profession or vocation. That part or proportion should not be disallowed on the ground that the entire expense is not laid out or expended wholly and exclusively for the purposes of the trade, profession or vocation, b) an expense has been incurred for a dual purpose. Such expenditure should be disallowed. For example, when considering the running costs of a car used partly for the purposes of the trade and partly for other purposes, HMRC’s position is that the costs apportioned to the business use of the car would be deductible.
Following the end of the Brexit transition period, the process for exporting goods to the EU mirrors the process for all other international destinations.
Businesses, especially those that only trade with EU should by now be aware of the rules and be working accordingly. Businesses can make customs declarations themselves or hire a third party such as a courier, freight forwarder or customs agent to do the paperwork.
HMRC lists the following eight-steps that should be considered when exporting goods :
1. Check if you need to follow this process. The process listed below should be if you’re moving goods permanently from: England, Wales or Scotland (Great Britain) to a country outside the UK or from Northern Ireland to a country outside the UK and the EU. There are different rules for goods that move between Great Britain and Northern Ireland or between Northern Ireland and the EU. 2. Check the rules for exporting your goods. 3. Get your business ready to export. This includes ensuring you have an Economic Operator Registration and Identification (EORI) number. 4. Decide who will make export declarations and transport the goods 5. Classify your goods. 6. Prepare the invoice and other documentation for your goods. 7. Get your goods through customs. 8. Keep invoices and records.
Companies House has developed and launched a new temporary online service to upload and send completed forms during the Coronavirus outbreak. The online service was first launched at the beginning of June. The latest release of the upload a document service was issued on 6 July and now allows users to upload more form types, including Scottish limited and qualifying partnerships, articles and resolutions. This temporary service is designed for paper forms that could previously only be sent by post or delivered in person to Companies House.
The main categories of forms that the temporary online service relate to:
Scottish limited partnership forms ; Scottish qualifying partnership forms ; Registrar’s powers ; RP forms ; Change of constitution ; Resolutions in relation to change of constitution (CC) forms ; Articles in relation to change of constitution (CC) forms . Companies House is working on a new release to allow a large number of insolvency forms to be submitted via the upload service in the coming weeks.
The service is not available nor intended for the large number of Companies House documents that were already accepted online before the pandemic began. This includes documents relating to filing accounts, filing a confirmation statement, making changes to a company and closing a company.
The UK has confirmed that it will neither accept nor seek any extension to the Brexit transition period which expires on 31 December 2020. The EU has formally accepted this position. With just over six months to go before the end of the transition period there remains a lot of work to be done if agreement is to be reached. This move could result in the possibility of a no-deal Brexit.
From 1 January 2021, the UK will have autonomy to introduce its own approach to goods imported to GB from the EU. Recognising the impact of Coronavirus on businesses’ ability to prepare, and following the announcement in February that the UK would implement full border controls on imports coming into GB from the EU, the UK has taken the decision to introduce the new border controls in three stages ending 1 July 2021. This flexible and pragmatic approach will give industry extra time to make necessary arrangements.
The stages are:
From January 2021:
Traders importing standard goods, covering everything from clothes to electronics, will need to prepare for basic customs requirements, such as keeping sufficient records of imported goods, and will have up to six months to complete customs declarations. While tariffs will need to be paid on all imports, payments can be deferred until the customs declaration has been made. There will be checks on controlled goods like alcohol and tobacco. Businesses will need to consider how they account for VAT on imported goods. There will also be physical checks at the point of destination or other approved premises on all high risk live animals and plants.
From April 2021: All products of animal origin (POAO) – for example meat, pet food, honey, milk or egg products – and all regulated plants and plant products will also require pre-notification and the relevant health documentation.
From July 2021: Traders moving all goods will have to make declarations at the point of importation and pay relevant tariffs. Full Safety and Security declarations will be required, while for SPS commodities there will be an increase in physical checks and the taking of samples: checks for animals, plants and their products will now take place at GB Border Control Posts.
HMT Information about the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) and Future Fund Scheme.
Under the Coronavirus Business Interruption Loan Scheme (CBILS), 49.247 businesses have received funding so far, with lenders approving £10.11 billion.
The Coronavirus Large Business Interruption Loan Scheme (CLBILS) has approved £1.77 billion in loans to 279 larger businesses.
Under the Bounce Bank Loan Scheme (BBLS), for small and micro businesses, in the five weeks since the launch over 863,584 businesses have successfully applied for funding totalling £26.34 billion.
The Future Fund is a special investment fund for high-growth companies impacted by the crisis, made up of funding from government and the private sector. Funding applications for the Future Fund opened on 20 May 2020 and the first government loans totalling £146.0 million have now been approved for 155 companies.