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...

Private residence relief (“PRR”) was first introduced over 50 years ago and is one of the more widely known tax reliefs, providing relief from capital gains tax ("CGT") on the sale of your home. That said, there has been contention over the definition of the terms “period of ownership” and “periods of occupation”, both of which are crucial for determining if PRR can be applied. Last year we wrote a blog on the case of Higgins v HMRC where the Upper Tribunal held that the period of ownership for PRR purposes starts from the date the contract for purchase was signed, even though the property in question had not yet been built. Mr Higgins has appealed his case to the Court of Appeal who has now reversed the Upper Tribunal�...

Stamp Duty Land Tax ("SDLT") is payable by the buyer on the purchase of land and property in England and Northern Ireland. The rate at which SDLT is charged is determined by whether or not the property is "residential" property, which is defined in the legislation as a building that is: Used or suitable for use as a dwelling; or In the process of being constructed or adapted for such use. The rates of SDLT for residential property are higher than those for non-residential property, plus an additional 3% surcharge may also apply where the purchaser already owns residential property. Therefore, it is important that the nature of the property is correctly identified. In P N Bewley Ltd v HMRC (2019), the First-Tier Tribunal con...

Certain taxpayer expenditure can qualify for tax relief, and these amounts are known as deductible payments. The payments are deducted from income when calculating taxable income, effectively saving tax at a taxpayer’s marginal rate. For example, if a taxpayer pays tax at a marginal rate of 40%, they will  have saved 40p for every £1 of the payment they pay in the tax year. Interest paid on qualifying loans is a deductible payment, however there is a cap on the amount that may be relieved each tax year.  The total amount which can be deducted is the greater of £50,000 or 25% of adjusted total income (being total income less payroll giving and gross pension contributions paid). Qualifying Interest Where a loan is a qualify...

Whether a property is residential or non-residential for Stamp Duty Land Tax ("SDLT") purposes is not always clear cut, and this will affect the tax payable and also the reliefs/exemptions that might apply. Residential rates can be as high as 15% (where the 3% surcharge applies), whilst non-residential rates top out at 5%. Mixed use properties (used for both residential and non-residential purposes) are subject to non-residential rates. In light of the different rates and reliefs that can apply, it is crucial that the nature of the property is correctly identified at the time of purchase. HMRC has recently clarified their views and guidance on what constitutes residential property for SDLT purposes - some of the points discussed ar...

Here are some of the highlights from the Chancellor of the Exchequer's 2018 Budget (published on 29 October 2018): Personal Tax The Personal Allowance will be raised to £12,500 and the Higher Rate Threshold (i.e. the amount that an individual can earn before paying higher rate tax) to £50,000 in April 2019 – a year earlier than planned. These levels will remain the same in 2020/21, and then increase by CPI going forward. The final exemption period for Principal Private Residence Relief (PPR) which provides Capital Gains Tax relief on the sale of your home will be reduced from 18 to 9 months. Under the current PPR rules, where you have let a property which at one point was your home Lettings Relief may be available to reduc...