Forward planning is essential if you want to ensure that you are on course to achieve your business and personal financial goals, and this is even more the case in times of ongoing economic uncertainty. Click on the image to read our 25 page guide.
Following the success of my Making Tax Digital Seminars and I am making 3 filmed webinars for MBL on Property Tax
Furnished Holiday Lets & Serviced Accommodation – Tax Matters
Using a Company Vehicle for Property Investment – A Guide for Accountants
Option to Tax on Commercial Property Conversions – A Guide for Accountants & Tax Advisors
These are a useful guide to current tax and accounting rules and include tips on how to avoid problems.
Recent tax changes such as Clause 24 Interest Restrictions, 3% extra SDLT and 8% extra Capital Gains Tax have hit landlords hard and these NLA videos explain the full impact
The NLA predict that the changes will mean that 20% of Landlords will sell their portfolios.
Since September lenders to Portfolio Landlords have been required to look at the whole portfolio before lending and this has lead to 70% of landlords with four or more properties saying that they have found it hard to obtain finance.
Overall Residential transactions have seen a slight decline in activity
Since 2015 more and more landlords have been using Limited Companies to purchase property investments even though mortgage interest rates are a around 1% higher there are many advantages:
It seems to me that there are basically two types of taxpayer and the split is pretty even.
The first type are ‘Organised Planners’, they prepare things as early as possible, work out what tax might be due and how they will pay it, look at ways to change things and file early. They will always pay less tax because they have had a chance to consider their options – Pensions, Gift Aid, SEIS, EIS and other things that reduce tax – they also tend to have a full set of records neatly posted on their accounting system.
The second type are ‘Just in Time’, whatever the deadline, they put things off. The problem with this is that often this means things get forgotten and paperwork gets lost, there is no time to prepare or plan and the tax will be payable immediately.
The added problem this year is that Credit Card Payments are no longer an option
In 2016, personal credit card payments for tax numbered 454,000 making of total of £741 million and resulting in £3.2 million in bank fees.
These payments were largely made by small businesses, looking to manage bulk payments by putting them on a credit card that could then be paid off over time.
Below are some statistics from HMRC from 2012, but I think that little has changed and the statistics will be similar this year.
I don’t think anyone would say they enjoy paying tax or filling in forms, so in some ways you can understand why some people put it off and do it ‘just in time’.
Last year HMRC reported
29 January was the busiest day with 513,271 returns completed – that’s more than 21,386 returns received per hour. The busiest time was between 14:00 and 15:00, with 50,358 customers – 14 per second – clicking submit.
If you haven’t done your return, do it now, don’t wait till 11.59 on 31st January.
On the 15th December 2017 you will no longer be able to pay tax at any Post Office Branch, fantastic timing! just in time for the January self assessment payment rush
The contract with Santander which allowed this method of payment expires on that date and Santander and HMRC have not reached agreement on a new contract.
To make things worse from the 13th January 2018 you won’t be able to pay by Credit Card either!
So your options will be
These changes are likely to come as shock to many taxpayers and any reduction in ways to pay can only be bad news for taxpayers!
In a company Capital Gains and Trading activity are both taxed at Corporation Tax Rates.
The downside to holding CryptoCurrency as an investment is that if you have a trading company it could put your trading status at risk for entrepreneurs relief if more that 20% of the business becomes investment related.
The best known Virtual Currency is Bitcoin and since 2014 there have been calls for tighter control of these currencies.
The European Banking Authority, the EBA, called on national supervisory authorities to discourage banks and credit institutions from buying, holding or selling virtual currencies. It called for regulation of market participants at the interface between conventional and virtual currencies. Over the longer-term, the EBA is calling for a ‘substantial body’ of regulation to be applied to virtual currency market participants, including the creation of ‘scheme governing authorities’ accountable for the integrity of a virtual currency scheme and the imposition of capital requirements. In the short term, the EBA is calling for national authorities to ‘shield regulated financial services from virtual currencies’.
Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part.
Any salary paid will be subject to Income Tax and National Insurance as well as having to comply with National Minimum Wage and Auto Enrolment.
But you can only use the cost as a business tax deduction if:
Mark McLaughlin explains more in this video and tells about a recent case involving a Heating Engineer and his wife. Mark is a brilliant tax writer and I have already order his next book ‘Tax Planning 2017/18’
The rules don’t only cover spouses, they also cover other family members.
There are many other pitfalls relating to other ways to share income such as dividends.
The s660 rules (or settlements legislation) have been around since the 1930s.
The rules stop you passing income to someone else in the family, or giving income or assets to someone else in an effort to reduce your overall tax bill. This is called a “settlement”, and the aim of the legislation is to stop people settling their income on another person who pays tax at a lower rate. (Contractor UK)
It makes a big difference whether a vehicle is treated as a Car or a Van for tax purposes, in summary:
HMRC have some guidance in EIM23150….
Under this measure, a double cab pick-up that has a payload of 1 tonne (1,000kg) or more is accepted as a van for benefits purposes. Payload means gross vehicle weight (or design weight) less unoccupied kerb weight (care is needed when looking at manufacturers’ brochures as they sometimes define payload differently).
Under a separate agreement between Customs and the Society of Motor Manufacturers and Traders (SMMT), a hard top consisting of metal, fibre glass or similar material, with or without windows, is accorded a generic weight of 45kg. Therefore the addition of a hard top to a double cab pick-up with an ex-works payload of 1,010 kg will convert the vehicle into a car (net payload reduced to 965 kg). Under this agreement, the weight of all other optional accessories is disregarded. HMRC has also adopted this treatment.
Kombi’s have been a grey area, but not any more, following the case of Noel Payne v HMRC as reported by Croner Taxwise…
Under ITEPA 2003 S.115, a van is a vehicle where its primary construction is for the conveyance of goods or burden. Kombi vans and those similar have not previously been thought to fall into this category due to them being designed to carry both goods and people. Historically, HMRC has offered a concession from 2002/2003 onwards for vehicles of a very similar construction, double cab pickups (including both uncovered and covered models), if the payload capacity of the pickup exceeds a metric tonne. HMRC accepts that these vehicles can be treated as a van for benefit in kind purposes.
With such similarities in the construction of the Kombi van, this has led to this concession being applied to the Kombi vans as well. However, in Noel Payne vs HMRC, a judgment was reached that the primary construction of the kombi van was not for the conveyance of goods alone but rather that its purpose was for the conveyance of both goods and people equally. This means that the Kombi did not meet the requirement to be considered to be a van and therefore for benefit in kind purposes it is a car.
The advice from Croner is that from now on Kombi’s and any van built to carry passengers should now be treated as a car for benefit in kind purposes, the case did involve a Vivaro as well but that was manufactured as a Van and later converted so that was allowed to be treated as a Van.
This also has implications for VAT and Capital Allowances.
Companies often borrow from their directors, especially property companies as 100% loan to value loans may not be available from lenders.
If the company pays interest on the loan it will have to register with HMRC and prepare CT61 returns
The CT61 requires the company to deduct 20% tax on the interest.
The Director may be entitled to the interest tax free
You may also get up to £1,000 of interest tax-free depending on which Income Tax band you’re in. This is your Personal Savings Allowance.
|Income Tax band||Tax-free savings income|
Your allowance applies to interest from:
So the Personal Savings Allowance should cover Directors Loans as explained in accountingweb
If you are lending to your company you should make sure that its at a market rate and you may want to consider your security for the loan.
You could opt for a charge at Companies House but at the very least you should have a loan agreement.