The case of Sambhi v HMRC (2020) provides a useful reminder of the "temporary workplace" rules for the purposes of income tax relief on travel and subsistence costs. In this case, the First Tier Tribunal ("FTT") dismissed the taxpayer's appeal and held that a change in the average travel time of 30 minutes or in travelling expenses of £14 were not "substantial" enough to qualify for relief. Temporary Workplace: An Introduction The cost of commuting from home to your workplace is not deductible as an expense against your employment income. This is because it is not a cost wholly, exclusively, and necessarily incurred in the performance of your employment; rather it is a cost incurred to put you in the position of being able to perform...

In the Spring Budget it was announced that new legislation would be introduced to clarify the computation of Top Slicing Relief (TSR) for gains made on or after 11 March 2020. HMRC have since announced that these new rules will apply by concession for all gains arising in the 2019/20 tax year. What is Top Slicing Relief? In the absence of TSR, a taxpayer who has historically paid income tax at a lower rate could be catapulted into the higher and/or additional income tax rates on insurance policy gains. This is because whilst the gains accrue over a number of years, they are only subject to income tax in the year of a chargeable event (such as the death of the life assured, or surrender of the bond). TSR therefore mitigates this hig...

Parents and caregivers can claim for Child Benefit, which is a tax-free payment calculated by reference to the number of eligible children in the household. Since the introduction of the High Income Child Benefit Charge (HICBC) in 2012, many taxpayers have been caught out by the charge, resulting in the issue of penalties by HMRC. Indeed, the failure to notify HMRC of the liability was so widespread that last year HMRC reviewed the penalties and confirmed that they would be cancelled if they met a number of conditions. Ramsdale v HMRC (2020) In the recent case of Ramsdale v HMRC (2020), the First Tier Tribunal considered whether being unaware that your partner was claiming Child Benefit was a reasonable excuse for failing to notify...

HMRC have issued detailed guidance regarding how the coronavirus job retention scheme will work in practice. How Much is the Grant? Employers can claim: the lower of; 80% of furloughed workers regular wage, or £2,500 per month associated employer NICs on that subsidised wage, and minimum automatic enrolment employer pension contributions on that subsidised wage This gives a maximum grant per employee of £2,804 per month (£2,500 salary + £245 Employer NIC + £59 automatic enrolment pension contribution). For salaried employees; the employee’s actual salary as at 19 March 2020 (excl. commission and bonuses) should be used to calculate the 80%. However, originally the amount needed to be calculated using the emp...

On 26 March 2020, the Government announced a much awaited support package for self-employed individuals and partnership businesses that have suffered a loss of earnings due to COVID-19. Eligible individuals will receive a grant of up to 80% of their average monthly trading profits, up to a cap of £2,500 per month. Initially the scheme was set to run for a 3 month period (March to May). However, as this scheme is designed to match the support given to furloughed individuals, it is thought that it will be extended to end of October to match the extension of the Job Retention Scheme announced by Rishi Sunak on 12 May 2020. So far, only those who work in the construction or manufacturing industry have been encouraged to go back to wor...

In this ‘pause from normality’ it is important to keep your tax compliance guard up. The period we are going through is not a ‘tax holiday.’ If the quality of your tax compliance drops, then the existence of Covid-19 will be no excuse for inaccuracies or negligence later down the line when faced with an HMRC enquiry, nor is it likely to be an excuse for late returns unless you become seriously ill. The reality of this is exemplified by the fact that people are still receiving loan charge settlement letters (which require a response in 30 days) during this time. Our advice: Understand the specific tax payment holidays and reliefs that exist through Covid-19 and apply them to the best of your ability. Prepare cash-...

The Upper Tribunal has found that Mr Davies, Mr McAteer and Mr Evans-Jones (the taxpayers) could not benefit from the Motive Exemption or Treaty Relief in relation to overseas property income subject to UK tax under the Transfer of Assets Abroad rules. Transfer of Assets Abroad Rules  The transfer of assets abroad (TOAA) rules were brought in in their original form for income tax in 1935, and extended to capital gains tax (CGT) in 1965. The rules are complex and far reaching, but in short they may apply where non-UK resident companies or trusts are created which can benefit UK-resident individuals. An income tax charge will apply to the individuals where the following conditions are met: There must be a transfer of assets by ...

Individuals who submit a self assessment tax return are required (subject to certain exceptions) to make payments on account to HMRC by 31 January and 31 July. The payments are based on the previous years income tax liability, and represent an advance payment for the following year's tax liability. The government has announced that the July 2020 payment on account may be deferred to January 2021, for individuals in self assessment. Initially the measure was only expected to apply the self-employed, however HMRC have since confirmed that it applies to all taxpayers with payment on account liabilities. Deferral of July 2020 Payment  Due to the effect of COVID-19, the government has brought in several measures aimed at supporting ...

Measures implemented in countries around the world to combat coronavirus will impact the UK residence status of many taxpayers. Many of the tests set out in the Statutory Residence Test (SRT) are based on day counting, with a day in the UK generally being a day on which you are in the UK at midnight. For some of the tests it is possible to ignore days attributable to exceptional circumstances – up to a cap of 60 days per tax year. HMRC typically views exceptional circumstances as being an event outside of the taxpayer's control that prevents them from leaving the UK (although rarely HMRC may accept that a taxpayer outside the UK may return for exceptional circumstances – such as the death/serious illness of a spouse or child). ...

Betting and gambling does not constitute a trading activity, and as such, any winnings are not taxable profits for income tax purposes. Nevertheless, if you make substantial sums of money in betting then care should be taken to ensure that you are able to prove the source of these funds. If betting activities cannot be evidenced, then you run the risk of having these winnings treated as trading profits by HMRC. This is what happened to a successful gambler in the case of Simon McMillan v HMRC (2019). In this case, the cards were stacked in McMillan's favour as he had several credible witnesses who could attest to his gambling activities.  The First-Tier Tribunal accepted his explanations, holding that based on the evidence his substa...