Uplift of value of chargeable assets on death

by Leah McGarvey | 27 Jul, 2017 | Tax

Uplift of value of chargeable assets on death

Capital Gains Tax transfers between spouses or civil partners continue to be treated as nil gain, nil loss transactions. This means no Capital Gains Tax (CGT) liability arises when transferring assets between a husband and wife or civil partners. This remains an effective way to manage tax liabilities while ensuring financial flexibility within a relationship.

How Does Nil Gain Nil Loss Work?

Transfers of assets between spouses or civil partners are treated as if they take place at no profit or loss for CGT purposes. This allows couples to redistribute assets for tax efficiency without triggering a taxable event. It is a key tax planning strategy for married couples and civil partners, providing flexibility in managing assets.

HMRC’s Stance Under GAAR

The General Anti-Abuse Rule (GAAR) protects against aggressive tax avoidance. However, HMRC has clarified that CGT planning involving transfers between spouses or civil partners will not be challenged if done under genuine circumstances. This includes situations where one partner has a terminal illness but retains full mental capacity. This clarification provides reassurance for couples looking to plan effectively during difficult times.

Why Is This Important?

Making use of CGT exemptions and planning opportunities can significantly reduce tax liabilities. For couples facing complex personal circumstances, such as a terminal illness, this rule allows assets to be structured efficiently without creating additional tax burdens. It also ensures that families can make financial decisions with clarity and confidence.

How We Can Help

At Lewis Brownlee, we specialise in capital gains tax planning and understand the intricacies of HMRC’s rules. Whether you need advice on transfers between spouses or managing assets during challenging times, our expert team is here to help.

Contact us today to discuss your specific needs. Visit our contact us page to connect with a tax expert and plan your finances effectively.

Make Tax-Efficient Decisions with Confidence

Capital Gains Tax transfers between spouses can provide valuable tax planning opportunities. Let Lewis Brownlee help you maximise these benefits while ensuring compliance.

Plans to Digitalise tax have been put back

by Leah McGarvey | 14 Jul, 2017 | Tax, VAT

Plans to Digitalise tax have been put back

The Government have announced significant changes to the (making Tax Digital) MTD timetable, effectively deferring MTD until at least 2020, although digital records will need to be kept in support of VAT returns from April 2019.

There is also a suggestion MTD will not be compulsory for smaller businesses, at least to begin with anyway.

Under the new timetable:

Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes
They will only need to do so from 2019
Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020
Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes.

This means that businesses and landlords with a turnover below the VAT threshold will be able to choose when to move to the new digital system.

As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now.

All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.

Tax calculations for 2016-17

by Leah McGarvey | 28 Jun, 2017 | Tax

Tax calculations for 2016-17

The latest changes to the way income is taxed has even beaten HMRC’s computer programmers. You are allowed to allocate your personal tax allowance in the way that gives the least tax liability. However, HMRC will reject tax returns which seek to offset the personal allowance against dividend income in preference to other sources. This can cost you up to an extra £625 in tax if not done in the manner best for you. HMRC’s solution is to ask for a paper tax return to be submitted. Areas to be wary of are where the salary is around the basic rate band with dividends or savings income and also where there is low non-savings income or trade losses.

This does confirm that tax-simplification is required if even HMRC cannot get the sums right!

When is your home not a home?

by Leah McGarvey | 15 Jun, 2017 | Property, Tax

When is your home not a home?

In a recent case HMRC tried to deny capital gains tax private residence relief where an individual bought a property “off-plan” arguing that the ownership period started from when the contract was signed, not when there was a property that could be occupied. Fortunately common sense prevailed. Ownership here refers to the dwelling!

If there is a delay moving into a property while it is being renovated, there is a concession which treats it as occupied for capital gains tax private residence relief for up to 12 months or in special circumstances 24 months.

Tax information exchange agreements

by Leah McGarvey | 16 May, 2017 | Tax

Tax information exchange agreements

There has been an increasing focus on the automatic exchange of information in recent years.

New regulations will take effect from 17 May 2017 to improve international tax compliance.

The International Tax Compliance (Amendment) Regulations 2017 amend the International Tax Compliance Regulations 2015. The new 2017 regulations extend the application of automatic tax information exchange agreements between participating jurisdictions. The agreements allow the exchange of information between tax authorities of 90 different jurisdictions about financial accounts and investments to help stop tax evasion.

The new regulations clarify reporting requirements for financial institutions and the penalty regime for non-compliance. The regulations are intended to ensure that the UK meets its obligations under other international reporting standards such as US Foreign Account Tax Compliance Act (FATCA) and the OECD’s Common Reporting Standard (CRS).

HMRC will receive more information regarding offshore accounts held by UK taxpayers, and will share information with overseas tax authorities on accounts held in the UK.

Changes to Finance Bill 2017: Impact for ‘non-doms’

by Leah McGarvey | 12 May, 2017 | News, Tax

Changes to Finance Bill 2017: Impact for ‘non-doms’

In July 2015 significant tax reforms were announced for non-UK domiciled individuals who have been long-term UK resident. It was proposed that, from April 2017, those non-domiciled individuals who have been UK resident for at least 15 of the last 20 tax years will no longer be able to claim the remittance basis of taxation in respect of their non-UK income and gains.

Non-UK domiciled individuals who claim the remittance basis are only subject to UK tax on their non-UK income and gains to the extent that they remit their non-UK income and gains to the UK. When an individual has been UK resident for at least 7 out of the previous 9 tax years an annual remittance basis charge is payable which ranges from £30,000-£90,000 depending on the number of tax years the individual has resided in the UK.

Under the new proposals, from 6 April 2017 long-term UK residents would be deemed to be UK domiciled for the purposes of all UK taxes meaning that their worldwide income and gains would be taxed in the UK on an arising basis. Their worldwide estate would also be in the scope of UK inheritance tax.

On 25 April 2017 the government dropped the majority of Finance Bill 2017 including the ‘deemed domicile’ rules mentioned above. For many long-term UK resident, non-UK domiciled individuals who have historically claimed the remittance basis this creates a period of uncertainty. We expect that the deemed domiciled provisions will appear in the next Finance Bill, regardless of who wins the election.

This should mean that for 2017/18 at least, long-term UK residents should still be able to claim the remittance basis of taxation and pay the remittance basis charge in line with the number of tax years they have resided in the UK.