HMRC take action on ‘hybrid’ Buy-To-Let schemes

HMRC take action on ‘hybrid’ Buy-To-Let schemes

by | Thu, 05, October, 2023 | hmrc, specialist tax advice

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There has been some interesting developments on 4th October 2023 regarding tax efficient savings for Buy-To-Let property investors from HMRC perspective after some highly reputable tax saving firms using schemes that we have known, and explained to our clients for quite sometime, to not be as tax efficient as they have been marketing.

“HMRC’s view is that this scheme does not work. People who use these arrangements may have to pay more than the tax they tried to avoid as well as paying interest, penalties and high fees for using such schemes.”

Please click this link to read the full HMRC views on ‘hybrid schemes’ and if you have been affected by this then please contact us immediately to start rectifying any mistakes with HMRC before they contact you.

https://www.gov.uk/guidance/property-business-arrangements-involving-hybrid-partnerships-spotlight-63?fbclid=IwAR2JjK3m0oeryvGRpAHTmZKOaOvVTeIMbeWjZ5AD46kxhsfbbMIudO3vQEw

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Capital Gains Tax £2bn rise to £16.7bn

Capital Gains Tax £2bn rise to £16.7bn

by | Wed, 09, August, 2023 | hmrc, specialist tax advice

Capital Gains Tax (CGT) in the UK has risen by over £2bn to a record £16.7bn for 2021-2022 with 394,000 taxpayers contributing to this with the total amount of taxpayers rising by 20%. This liability was claimed on £92.4 billion of gains

In 2020-2021 the CGT liability was £14.3bn, a 15% increase from 2021-22, and the record rise is thought to be due to an increase in the number of taxpayers, gains, and tax in residential property disposals. 49% of gains and 51% of tax liability were accounted for in London and the South East during the 2021-2022 period.

There are significant increases over the last 2 years as the 2019-2020 tax year shows CGT taxpayers disposed of 2 million assets totaling £198.4bn and gains of £80.7 bn calculating CGT at £10bn. From 2019 to 2022 there is a massive 60% surge in CGT.

Business Asset Disposal Relief (BADR) accounted for 7% of CGT from CGT disposals from taxpayers that qualify for BADR. 47,000 taxpayers claimed BADR on £12.6bn of gains resulting in a tax charge of £1.2bn over the 2021-2022 tax year according to HMRC. When the Finance Act 2020 was updated, Entrepreneurs’ Relief (ER) was renamed BADR which reduces the rate of capital gains tax (CGT) on disposals of certain business assets from 20% to 10%.

Most CGT comes from the small number of taxpayers who make the largest gains. In the 2021 to 2022 tax year, 45% of CGT came from those who made gains of £5 million or more. This group represents less than 1% of CGT taxpayers each year.

If you have any CGT Issues or any other specialist tax issues and need to speak with a Chartered Tax Advisor then please contact Tax Advisory UK where we can assist you.

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Football agents scrutinsed by the Tax Policy Associates

Football agents scrutinsed by the Tax Policy Associates

by | Mon, 10, April, 2023 | specialist tax advice, tax advice

Premier League football clubs are being scrutinised for structuring their payments to football agents with an estimate of around £470 million in lost revenue since 2015, Tax Policy Associates (TPA) have reported.

The player contracts are said to be structured so the agent acts on behalf of the club and the player so employment taxes and VAT in commissions paid to the agents can be avoided.  The club pays half of the fees and the player pays the other half out of their after-tax income this means there are no taxable benefits from the player’s perspective, no employer NICs on the half paid by the club and the club can also claim VAT back.

The TPA argues the case that the agent is always acting on behalf of the player and not the club as the contract structure suggests. 

These claims have been dismissed by the Sports Tax Association who say ‘based on a fundamental misunderstanding of the relationship between agents and clubs’ and the agent would always work for both player and club.

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HMRC claim £6.4 billion in Inheritance Tax

HMRC claim £6.4 billion in Inheritance Tax

by | Wed, 05, April, 2023 | inheritance tax, specialist tax advice

HMRC inheritance tax receipts have risen nearly £1 billion from the year before taking this to a record £6.4 billion in the financial year 2022 to 2023.

The previous year’s inheritance tax receipts prove that IHT planning is crucial for the keepsake of your family and to protect your estate.  In 2019 to 2020 HMRC IHT receipts were £5.1 billion, 2020 to 2021 were £5.3 billion and 2021 to 2022 were £6.1 billion.  The Treasury’s forecast is estimated to soar by £3 billion over the original forecast between 2022/23 to 2027/28.

The reason for the continued IHT rise is the nil-rate band threshold of £325,000 per person has not changed since April 2009 and remains frozen till at least April 2028.  Generally, a family’s property is the biggest asset a family will own and with inflation rates growing the market value of your family home could rise above the £325,000 threshold leaving you subject to IHT.

If inheritance tax could be a problem for you and your family then please contact Tax Advisory UK to speak with a Chartered Tax Advisor who can advise on what strategy to use to ensure the 40% IHT is saved.

For more information on Inheritance Tax please click here and please contact Tax Advisory UK to discuss your IHT planning immediately.

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HMRC claim £6.4 billion in Inheritance Tax

Inheritance tax freeze could push 10,000 families over the IHT threshold

by | Wed, 09, November, 2022 | hmrc, inheritance tax

The Chancellor of the Exchequer, Jeremy Hunt, could extend the inheritance tax Nil Rate Band freeze from 2025-26 to 2027-28 in the Autumn statement on November 17th.  

Hunt is planning to raise £54 billion through tax rises and feels that the extended IHT threshold freeze could contribute to around £500 million for the treasury from grieving families.

Along with the recent inflation increase, by keeping the tax-free thresholds at the same levels, the tax being paid on possible inheritance tax, income tax, capital gains tax and pensions could generate billions of pounds. 

Rishi Sunak originally froze the £325,000 IHT threshold when he was Chancellor until 2026.  An estimated 10,000 families could be pushed over the IHT threshold essentially contributing to the UK’s most hated tax.

As it stands, if your combined estate of properties, investments and shares total £1 million, you can subtract the £325,000 IHT threshold leaving £675,000 which can be taxed at 40%.  The tax needing to be paid would be £270,000, leaving your family with £405,000 and the £325,000 exemption rate.  The total of your estate that your family would inherit upon your passing would be £730,000. 

For more information on Inheritance Tax please click here and please contact Tax Advisory UK to discuss your IHT planning immediately.

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