Beware of the IHT Trap – Gifts With Reservation of Benefits Planning to give away an asset but still plan on benefitting from it? The Gifts with Reservation of Benefits rules (“GWROB”) are an anti-avoidance provision introduced to prevent avoidance of UK Inheritance Tax (“IHT”). This article discusses the GWROB rules and certain exceptions where the GWROB rules will not apply. Please note that this article does not discuss the Pre-Owned Asset Charge rules. What are the GWROB rules? Traditionally, where a person makes a gift of a property (and is not a chargeable transfer or an exempt transfer), this will cease to be part of their estate if the donor survives 7 years from the gift. This is also known as a Potentially Ex...

Domicile has historical routes for being known as one’s ‘home’. It is very important to understand your domicile status as this can have a number of tax consequences, especially in relation to UK Inheritance Tax (“IHT”). This article sets out where an individual can be deemed to be domiciled in the UK for IHT purposes and what this means for taxpayers. Please note that this article specifically relates to IHT and does not discuss Income Tax or Capital Gains Tax. What is Domicile? Domicile is a common law concept and can broadly be described as an individual’s permanent home and where they plan to live permanently or indefinitely. For further information on what domicile is and the different types of domicile, please tak...

UK tax legislation is often complex and not always easy to interpret, and taxpayers typically want to know the tax considerations of a transaction in advance. To assist with this uncertainty, taxpayers can apply for clearance from HMRC on the tax treatment of certain transactions before the relevant transaction or event takes place. What is a Clearance?  Clearances are broadly defined as written confirmation of HMRC's view of the application of tax law to a specific transaction or event, where the taxpayer can rely on this verification in most circumstances. Our previous blog discusses where HMRC will not give clearance. Clearance applications to HMRC can come under: ‘Statutory clearances’ – the tax treatment of certain...

HMRC have seemed to send out a warning to anyone that is opting to use crypto assets to avoid their tax obligations. This article seeks to discuss the concept of Non-Fungible Tokens, its influence of digital ownership and HMRC’s recent seizure. What are Non-Fungible Tokens? A Non-Fungible Token, commonly referred to as an NFT, are digital tokens stored on the blockchain that can be bought and sold using cryptocurrency and represent certificates of ownership for both digital and potentially physical assets. NFTs differ from cryptocurrencies, where they are digital ‘uniques’ which cannot be exchanged like coins and other cryptocurrencies. NFTs first emerged in 2014 and each token is evidence of ownership of a unique and non-int...

Non-UK tax residents are generally not liable to capital gains tax (CGT) in the UK, on the disposal of assets. However, there are exceptions to this, in particular capital gains on UK based land/property and the rules applying to temporary non residents. This is especially relevant for taxpayers who leave the UK and become non-UK tax resident, as they may not be aware of their UK tax and compliance obligations. Non-UK Residents and Capital Gains on UK Property As noted above, individuals are generally not liable to CGT on capital gains when they are non-UK tax resident. However, where the gain arises on land/property based in the UK, then the gain is subject to UK tax. The rules also extend to assets that derive at least 75% of ...

The word ‘Crypto’ by its definition has the meaning ‘hidden’ or ‘secret’. In a new ‘nudge’ campaign, HMRC appears to be alerting taxpayers that there could be undeclared tax on the disposal of their cryptoassets. At the end of October 2021, HMRC’s Wealth External Forum issued a briefing that they will be sending ‘nudge’ letters from November 2021, to taxpayers who they believe have held cryptoassets, and to highlight the potential tax implications. Examples of the letters sent can be found here. Over the last couple of years, HMRC have conducted a number of ‘nudge’ letter campaigns including targeting taxpayers to review their non-domicile tax position and income from rental properties. Why have HMRC sent ...

The autumn budget was presented by the Chancellor of the Exchequer on Wednesday 27 October 2021, where for the most part few changes to the tax rules in the UK were announced. However, it was acknowledged in the budget that changes would be made to the Capital Gains Tax (CGT) Payment for Property Disposals (PPD) service rules. For further details on what the CGT PPD service rules are and whether they may apply to you, please consult our previous blog which provides details of this service. PPD Service Deadlines Previously, the government introduced new reporting requirements for UK residents disposing of residential property on or after 6 April 2020, where it was established that the deadline for taxpayers to report the disposa...

When it comes to the UK tax system, HMRC impose various penalties to ensure compliance and to encourage taxpayers to file their tax return by the 31 January deadline following the end of the tax year (or 31 October for paper returns). The penalties for missing the tax return filing deadline can be punitive, with HMRC also issuing the following penalties in relation to tax returns: For the late payment of tax; Failure to notify penalty, where a new source of taxable income or capital gains are received; Errors or inaccuracies on the return; Failing to keep sufficient records. Penalties for Late Filing of Tax Returns HMRC issue standard penalties for failing to submit your tax return on time, whereby these penalties ap...

From April 2022, in order for individuals to renew certain licences they will be required to prove to HMRC that they have completed a "tax check". These new rules, which apply in England and Wales, will apply to the following licences: Taxi Driver Licences; Private Hire Vehicle (PHV) Driver Licences; PHV Operator Licences; Mobile Collector Licences for Scrap Metal Dealers; and Site Licences for Scrap Metal Dealers. Individuals looking to renew their licences will be need to complete an online check to confirm that they are registered for self-assessment. The aim of the measure is to ensure that applicants have complied with their tax obligations. The introduction of this tax check is one of the latest tools that HM...

Multiple Dwellings Relief & Annexes: The State of Play   Multiple Dwellings Relief (“MDR”) was introduced by the Government in July 2011 such that a buyer can claim relief from Stamp Duty Land Tax (“SDLT”) where they purchase two or more dwellings in one chargeable transaction. This article is focused on taxpayers making the claim for MDR where they acquire a property with an annexe, rather than a number of distinct properties. The relief works through averaging the cumulative SDLT cost of a transaction across the number of dwellings acquired, where this should bring the SDLT rate closer to the rate applicable if the dwellings were acquired separately. However, the MDR can’t lessen the SDLT payable to below 1% of the...