When looking at the capital gains tax (CGT) position following a disposal of an asset, it is important to understand that CGT follows the beneficial interest in the property (as opposed to the legal title). Establishing the owner(s) of the beneficial interest should be considered on a case-by-case basis. The case of Asif Bhikhi v HMRC (2020) demonstrates the importance of properly documenting transfers of property which can often be overlooked in transactions between family members. In this case, the First-Tier Tribunal (FTT) held that there was insufficient evidence to demonstrate that the appellant retained their beneficial ownership of a property on a transfer. In any case, even if there had been an implied trust in place, the transfe...

Private residence relief (PRR) provides relief from capital gains tax (CGT) on the disposal of a property that has been used as your main home during the period of  ownership. In the recent First Tier Tribunal (FTT) case of Hashmi v HMRC, the tribunal found that Mrs Hashmi (the taxpayer) had failed to satisfy the burden of proof required to show that the properties that she lived in were her private residences, and therefore eligible for private residence relief. The case provides insight into the level of proof that is required to support a claim for private residence relief for a property. Background Between 2013 and 2015, the taxpayer lived in the following properties, for the following periods:  132 Shaggy Calf Lane unt...

If you build yourself a new home or if you convert a non-residential building into a home for you or your relative to live in as a main residence, you may be able to claim a VAT refund on building materials and services. In order to be eligible for a refund, you must make a claim with HM Revenue & Customs (HMRC) no later than 3 months after the "completion" of the building. P Wedgbury & S Wedgbury v HMRC - The Definition of "Completion" The term "completion" is unfortunately not clearly defined in the legislation. However, in the recent case of P Wedgbury & S Wedgbury v HMRC (2020) the First-Tier Tribunal (FTT) considered the meaning of "completion" and therefore provides a useful guide for taxpayers who are looking to...

This article will cover the Stamp Duty Land Tax “SDLT” relief that may be available to you if you purchase a subsidiary dwelling alongside a principal dwelling. Normally if you purchase an additional residential property which will not be used as your main residence, an SDLT surcharge may be applicable. The surcharge increases the basic rates of SDLT by 3%, meaning that more SDLT will be payable. However, a purchase of more than one dwelling may be treated as the purchase of a single dwelling for SDLT purposes if one or more of the dwellings is subsidiary to the principal dwelling. This is applicable if: The subsidiary dwelling is within the same building as, or in the grounds of, another dwelling purchased in the same transa...

On the 8th July 2020, Rishi Sunak (the Chancellor of the Exchequer) set out the next round of financial provisions aimed at counteracting the contraction of the economy due to the impact of coronavirus. The headline policies from the fiscal event, dubbed a 'mini-budget,' are as follows: 1.Furlough Funding Eased - The furlough scheme will gradually wind down before concluding at the end of October. Currently, the Government pays 80% of wages up to £2,500 plus associated National Insurance contributions (NICs) and pension contributions leading to a maximum grant of £2,804 per employee. However, there are several changes proposed in the coming months to ease this finance: August - Employers will now need to pay employers NICs a...

Where an individual buys a property suitable for use as a dwelling (e.g. a residential property) and they already own another dwelling worth at least £40,000, then a 3% SDLT surcharge may become payable. This surcharge is known as the Higher Rates on Additional Dwellings (‘HRAD’). In some circumstances the individual may become eligible for a refund of the surcharge if: the new property is purchased as a replacement for the individual’s main home; and their former main home is sold within three years of the purchase of the new home. Earlier this month HMRC confirmed that the refund will also be available to individuals who sell their former main home outside of the three-year time limit, provided that they were unable to s...

In line with government guidelines, large swathes of UK workers are currently working from home.  Whilst there are a range of expenses you may be able to claim depending on your specific circumstances, this blog is aimed at those of you who own a limited company and are running the business from home. Rather than claiming the flat rate of £6 per week (£26 per month) under the simplified expenses rules, it may be more beneficial to instead rent out the personal work space in your home to your limited company. Under this arrangement, where the rent charged is equal to costs (see below), then no taxable rental profits will arise. Furthermore, provided that the rent is charged at no more than the market rate then the rental payments ma...

As of 6 April 2020, disposals of residential property and the Capital Gains Tax (“CGT”) charged must be reported and paid within 30 days of the completion date. This will be completed through the new CGT on UK property service, which will be accessible through www.gov.uk from today. The new rules apply to individuals, personal representatives and trustees (i.e. not companies). Prior to 6 April 2020, if a taxable gain arose when a UK resident disposed of an interest in UK residential property, this had to be reported through a Self-Assessment tax return. This meant that the disposal and Capital Gains Tax (“CGT”) had to be reported and paid by 31 January following the tax year in which the disposal took place. Under the new ru...

Discussions regarding the development of the HS2 train line have been plagued by controversy and uncertainty. However, with phase 1 of the HS2 line seemingly ploughing full steam ahead from London to Birmingham, one thing is certain: it’s going to be a bumpy ride for the HS2 developers. With homes, businesses, and nature reserves located along the entire proposed line, HS2 has already caused a large amount of disruption. Those who are affected should receive compensation from HS2 for their loss; indeed, some have already received payments of over £1million. The receipt of this HS2 compensation is taxable on the recipient (albeit reliefs may be available). This is something that many of those affected may not be aware of. The tax...

The rules regarding the administration of Capital Gains Tax ("CGT") have been overhauled, with significant changes to the reporting and payment requirements coming in from 6 April 2020. These changes represent a significant acceleration of the tax payment and reporting requirements that currently apply. Current Position Under the current rules, on the disposal of residential property UK residents are required to report the gain/loss and pay the tax due by 31 January following the end of the tax year in which the disposal took place. For example, where a property was sold in the 2019/20 tax year, the gain must be reported and tax paid by 31 January 2021. With this in mind, CGT can become due anywhere between 10 and 22 months f...