In the wake of the Covid-19 pandemic, and with the ongoing energy price crisis, it is natural that some companies will look to build up cash reserves to help protect against further shocks. However, doing so can give rise to an inheritance tax (IHT) problem for smaller companies. BPR RECAP Inheritance tax relief for business assets, informally known as business property relief (BPR) or simply business relief, works by reducing the value of qualifying assets (which can include company shares) in a death estate. The relief is not capped. BPR is given at either 100% or 50%, depending on what the...

In his ‘plan for growth’ he carried through on Liz Truss’s leadership pledge to reverse the National Insurance and dividend tax increases that were implemented to help fund social care reforms. And in a surprise move, he will remove the additional rate of income tax from April 2023 and bring forward the 1% cut to basic rate tax. Read our summary of the key points from today’s fiscal event. Income tax Earnings and savings – The additional rate of tax of 45% (39.35% for dividends) on income in excess of £150,000 is to be abolished from 6 April 2023. This means that all taxable income...

Those who rented out properties during the Games as a short-term let may need to tell HMRC about any income they have received, by filing a self assessment tax return. To help ensure homeowners correctly report their income and do not make mistakes on their tax returns, HMRC has been working closely with three leading online booking platforms to share information and advice direct to customers about their tax responsibilities. The first £1,000 of income from a property let is tax-free and deductible expenses can be made such as energy costs, advertising and maintenance charges. Homeowners letting...

Calls for cohabitation law reform are being led by a group of cross-party MPs who say that cohabiting couples have “inferior” protections to those who are married or within a civil partnership. The Women and Equalities Committee has published a new report titled “The Rights of Cohabiting Partners”, highlighting the lack of protection against the risks faced by cohabiting couples, with cohabitation being the fastest growing family type in England and Wales. In 2021, there were around 3.6 million cohabiting couples in the UK compared with 1.5 million in 1996. A summary of the report reads, “Notwithstanding...

Inheritance tax take was up £729m to a record £6.1bn in the largest rise since 2015 when the figure shot up by 22%. An additional 900 estates had to pay the tax in 2021-22, with a record 23,000 paying IHT. However, this tax still only affects 3.7% of UK estates. The combined value of agricultural property relief (APR) and business property relief (BPR) set against assets was £2.8bn in the tax year 2019-20. This was a fall of £700m (20%) compared to the tax year 2018-19. Most of this decline was concentrated in the value of BPR claimed, which fell by £670m. The value of APR was down by only £27m. The...

The main focus will be on accessing more data about the self employed, partnerships and those earning dividends, as well as the number of hours worked by employees, their job titles and the locations of businesses. This would inevitably raise administrative costs for businesses and individuals who have to comply with the rules, and there would be a penalty system for non-compliance. The proposal is to add a compulsory field to real time information (RTI), the reporting mechanism for PAYE, requesting the occupation of each employee. This would have to be completed by employers, but it is hard...

Pledged policies, primarily surrounding tax and spending, became the key takeaways in the hard-fought contest. The former chancellor and foreign secretary exchanged views over future policies, discussing planned increases in corporation tax, temporarily scrapping green levies on energy bills, and raising tax thresholds; and rapid cuts to reverse Johnson’s high tax, high spending policies. Truss said she would scrap the rise in national insurance and would not go ahead with the planned increase in corporation tax from 19% to 25% in April 2023. Additionally, she would suspend green levies on energy...

Ours is largely a practical business and the service we provide is skewed towards practical solutions aimed at making your life easier or better, or your business easier to manage. Or hopefully all of that and more! However, there is space for us to go off occasionally on a philosophical tangent and help with some thought-provoking material, and ideas. That leads us to mention the London Olympics and the rather sobering reflection that ten years have now passed since those wonderful experiences that seemed to draw the whole country into a month-long celebration of all things Britain. The ten...

Recessions are defined as two consecutive quarters of negative growth. This rather untidy description harks back to President Nixon’s time in office in the US. It’s not as if there weren’t recessions before then, this just happens to be when the modern definition locked in. There are so many practical problems with this, especially in context of an individual planning their finances, or a business trying to survive and grow. In both cases, one might imagine that official definitions of a recession are largely irrelevant. The simple point must be that we all operate within a complex global economic...