Small businesses / 217 posts found
Rent a room scheme
Although Budget 2017 announced that the Government intends to review the rent-a-room scheme, it currently remains a tax-efficient way of letting out a spare room. Broadly, HMRC's rent-a-room scheme is an optional exemption scheme, which allows individuals to receive up to £7,500 of tax-free gross income (income before expenses) from renting out spare rooms in their only or main home. The exemption is halved where the income is shared with a partner or someone else. Broadly, as long as income is below the annual threshold, it does not need to be reported to HMRC. If income exceeds the threshold, it needs to [...]
New state pension and contracted-out NICs
Most people will be aware that the state retirement pension system has changed for people who reach state pension age on or after 6 April 2016 - that is men born after 5 April 1951 and women born after 5 April 1953. The full new state pension is currently £159.55 per week, but the amount that employees who have previously paid National Insurance contributions (NIC) at the contracted-out rate may be affected under the new system. The introduction of the new state pension from 6 April 2016 brought an end to the contracting-out rules. In very broad terms, to qualify [...]
Working from home
Over recent years, it has become increasingly popular for employers to allow their employees to work from home, and in doing so, pay an amount to cover any additional household costs incurred. What are the tax implications of such expenses for the employee? Broadly, no tax liability will arise where an employer makes a payment to an employee for reasonable additional household expenses, which the employee incurs in carrying out duties of the employment at home under 'homeworking arrangements'. 'Homeworking arrangements' are arrangements between the employee and the employer under which the employee regularly performs some or all of the duties [...]
July 2017 Q&A
Q. Can I give my house to my children and continue to live in it and avoid inheritance tax? A. It may be possible if you pay a full market rent for your home, but if you do this, then your children will have to pay income tax on the rent they receive. Capital gains tax may also be payable at some time in the future if they sell the house. The new inheritance tax residence nil rate band (RNRB), which is being phased in from April 2017 over a 4-year period, is designed to help people in your position to pass [...]
IHT: main residence nil-rate band
From April 2017, each individual spouse or civil partner will be offered a residence nil rate band (RNRB), which is designed to help pass on a home to 'direct descendants', including children or grandchildren, tax-free after their death. The rules governing the inheritance tax (IHT) nil rate band are complex and it is always recommended that prior professional advice is considered. Phasing in of RNRB The RNRB is being phased in over a four-year period as follows: £100,000 in 2017-2018 £125,000 in 2018-2019 £150,000 in 2019-2020 £175,000 in 2020-2021 Broadly, the new RNRB will be added to the existing £325,000 [...]
Reform of landlords’ taxation?
The government's plans to allow landlords to use the cash basis for tax purposes were confirmed in the 2017 Spring Budget, but although the proposed legislation was included in Finance Bill 2017, it did not appear in the much reduced Finance Act 2017, which received Royal Assent on 27 April 2017. It is likely that the proposals have been temporarily shelved, pending the outcome of the General Election, and are expected to reappear in a second Finance Bill later this year. If the provisions are subsequently enacted, they are expected to apply retrospectively from 6 April 2017, i.e. for the [...]
CGT annual exemption: use it or lose it!
Capital gains tax (CGT) is normally paid when an item is either sold or given away. It is usually paid on profits made by selling various types of assets including properties (but generally not a main residence), stocks and shares, paintings, and other works of art, but it may also be payable in certain circumstances when a gift is made. The most common method for minimising a liability to capital gains tax is to ensure that the annual exemption is fully utilised wherever possible. Whilst this is relatively straight-forward where only capital gains are in question, the computation can be [...]
HMRC launch consultation on employee expenses
As confirmed the Spring Budget 2017, HMRC have launched a consultation on the use of the income tax relief for employees' business expenses, including those that are not reimbursed by their employer. The main objectives of the consultation, which will run until 12 June 2017, are to understand: if the current rules or their administration can be clearer and simpler; whether the tax rules for expenses are fit for purpose in the modern economy; and why the cost to the exchequer of the tax relief for expenses which are not reimbursed has increased. Expenses form an integral part of the [...]
VAT Flat rate scheme: changes take effect
The VAT flat rate scheme (FRS) is used by many small businesses to help simplify their VAT reporting obligations. Businesses could often gain a cash advantage from using the scheme, but this advantage has been significantly curtailed from 1 April 2017, particularly in relation to service-related businesses. Whilst the FRS continues to operate, many businesses will no longer find it economical to use. Broadly, the FRS is a simplified VAT accounting scheme for small businesses, which allows users to calculate VAT using a flat rate percentage by reference to their particular trade sector. When using the FRS, the business ignores [...]
Tax-free savings update
Although interest rates for savings generally remain low, there are still a few tax-efficient savings opportunities on offer, with increased savings thresholds taking effect from 6 April 2018. Individual Savings Accounts Broadly, cash ISAs are available to investors aged 16 and over, who are resident in the UK, and stocks and shares ISAs are available to UK-resident individuals aged 18 and over. The maximum annual investment limit has been raised to £20,000 from April 2017, which means that a couple can now invest up to a sizeable £40,000 for 2017/18. Interest paid on the investment will be tax-free for both [...]