Tax Bite - The Budget The Budget of 15 March was relatively benign in terms of major tax announcements for business but did have a few welcome highlights. There were no changes made to the headline tax rates – so corporation tax will still increase to 25% from 1 April for companies with annual profits in excess of £250k – and BADR was left untouched. Full expensing The main announcement for...
Read moreThe basic rule, albeit subject to numerous exceptions, is that a sale or lease of a property is exempt from VAT. The most commonly encountered exception to that rule for non-residential property is where the person making the supply has opted to tax the relevant property for VAT purposes, resulting in the supply being subject to VAT at the standard rate of 20%. Whether or not a seller or landlord...
Read moreIn October, HMRC published its long-awaited (at least by advisers) guidance on the use of discretions in EMI options. There has been a long period of uncertainty, during which it was not clear in what circumstances HMRC would regard the exercise of a discretionary power in an EMI option contract as: Not affecting the tax-advantaged EMI status of the option; or A change to a fundamental term of...
Read moreTax Bite – EMI share valuations – HMRC’s latest approach In addition to the various tax advantages of EMI options, the ability to agree the market value of the option shares with HMRC is a very useful further benefit of EMI. If shares are simply issued/transferred outside of an EMI option, there is no ability to agree the share value with HMRC and shares in a private limited company are...
Read moreProperty Tax Bite – SDLT – Mixed use and MDR update – and “mini-Budget” 2022 In our last Tax Bite, we noted that a consultation had been launched on whether to update the SDLT rules around mixed use purchases (i.e. involving both residential and non-residential land) and multiple dwellings relief (MDR), where two or more dwellings are purchased in a single transaction. The consultation has...
Read moreTax Bite - The "Mini-Budget" The "mini-Budget" of 23 September, or Growth Plan as it was badged, was less mini than most had been anticipating in terms of tax announcements. The reversal of the 1.25% increase in national insurance contributions was very much expected, and will take effect from 6 November this year. This will be joined in April 2023 by a 1% reduction in the basic rate of income...
Read moreTax Bite – Share buybacks – Update A company purchase of own shares, or buyback, is a popular way of implementing corporate succession, but is not without tax challenges and risks. Corporate lawyers will be familiar with the company law rule that a buyback cannot include deferred consideration. Most will also be aware of the basic tax rule that the proceeds of a buyback from an individual (above...
Read moreIn this Tax Bite, we look very briefly the often-overlooked loans to participators rules. These rules are something to be aware of whenever you are dealing with a close company, which in broad terms is a company that is controlled by five or fewer “participators” (i.e. shareholders and their associates). If a close company makes a loan to a participator, and the loan remains outstanding 9 months...
Read moreTax Bite - Employee Ownership Trusts The Employee Ownership Trust (“EOT”) legislation was introduced in 2014. Since the news of a possible rise in CGT rates at some point in the relatively near future, more business owners have been looking to achieve an exit and as a result EOTs are currently on a lot of people’s radars. As a headline, the CGT relief afforded to shareholders is hard to ignore –...
Read moreTax Bite – Section 431 Elections In this Tax Bite, we give you a refresher on section 431 elections, with a focus on practical points and tips for transactions. Background – what are s431 elections and what do they do? Almost all shares acquired by a director (including a non-executive director) or employee of a company will be employment-related securities for tax purposes, bringing them within...
Read moreTax Bite – Temporary extension to trading loss carry-back rules – implications for deals We noted in a previous Tax Bite that the Spring Budget on 3 March 2021 included proposals for a temporary increase in the carry-back period for trading losses in response to the impact upon businesses of the COVID-19 pandemic. In certain circumstances the carry back period has been extended to the three...
Read moreProperty Tax Bite – Simplifying VAT on Land and Property? There is no doubt that the VAT treatment of land and property is complex. Starting from the most basic statement, set out in the legislation, that interests in land are exempt from VAT, the exceptions to that rule come thick and fast, and that is before considering zero-rating and reduced rating of certain supplies, and exceptions to the...
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