Employing your children?

by Leah McGarvey | 15 Jul, 2016 | Business, Tax

Employing your children?

Employing your children can provide tax benefits while giving them valuable work experience. If structured correctly, it is a legitimate and tax-efficient business expense.

To qualify, the child must perform actual work for the business and receive a fair, commercial rate of pay.

Tax Benefits of Employing Your Children

Paying your child a reasonable wage is a tax-deductible expense for your business. This reduces taxable profits and lowers the business’s tax liability.

For the child, earnings are tax-free if their total income stays below the personal allowance (£11,000 at present). This means they can receive tax-free income while the business benefits from a deductible expense.

However, payments must reflect the work performed. HMRC will not accept excessive wages for minimal duties.

Regulations to Consider

When employing your children, it is essential to follow employment laws and local authority regulations, particularly if they are still in school.

School-age children – May need a work permit from the local council.
Minimum working age – Children can work part-time from 13, with some restrictions.
Hours and conditions – Rules exist around working hours and school term commitments.

Failing to comply with these regulations could lead to penalties.

How We Can Help

Employing your children can be a smart tax strategy, but compliance is essential. At Lewis Brownlee, we ensure businesses follow the correct procedures while maximising tax efficiency. With leaders in the field, we are always poised to talk you through the complexities, bringing clarity and illumination as we go. So, if you have any questions or would like to find out more, do reach out. We are always happy to talk you through and see how we can help. Plus, we offer a free introductory meeting so that you can see firsthand the difference we can make before you commit!

If you need guidance on payroll, tax, or employment rules, contact us today. Our experts are here to help.

Buy to let – personal or company ownership

by Leah McGarvey | 14 Jul, 2016 | Property, Tax

Buy to let – personal or company ownership

There is no simple answer to which is the best option, following the significant changes made to how the income is taxed when property is not held through a company.

Three major changes are:-

Restriction of higher rate tax relief on loans and finance costs being phased in from 6 April 2017 (affects just individuals)
3% stamp duty land tax surcharge for second or subsequent residential properties (affects both individuals and companies)
Exclusion from the general reduction in capital gains tax rates (affects individuals but not companies which are taxed at corporation tax rates – 20% at present)

Factors that affect which option is best include:-

Rate of property value increases
Inflation (allowance is given for inflation in working out gains realised by companies)
Rate of interest on borrowed money and whether this is affected by whether the borrower is an individual or a company or whether the individual is a higher rate taxpayer

Depending on your other sources of taxable income, you might be able to extract some of the companies’ profits at a tax rate of 0% due to the new dividend and savings allowances.

Stamp duty and second homes – relief extended

by Leah McGarvey | 1 Jul, 2016 | Property, Tax

Stamp duty and second homes – relief extended

Understanding Stamp Duty on Second Homes

Since 1 April 2016, buyers of second homes must pay an extra 3% Stamp Duty Land Tax (SDLT) surcharge. This applies even if the second home is only temporary.

Many homeowners faced difficulties reclaiming the surcharge due to strict time limits. Fortunately, the government extended the refund period, giving buyers more flexibility.

Extended Relief: What’s Changed?

Initially, buyers had 18 months to sell their original home and claim a refund of the stamp duty on second homes. However, this has now been extended to 36 months, making it easier to reclaim the surcharge.

To qualify for a refund:

The first property must be sold within 36 months of buying the second home.
The SDLT refund claim must be submitted to HMRC within 12 months of selling the first home or within 12 months of the SDLT filing deadline (whichever is later).

This extension gives homeowners more time to manage property transitions without losing out financially.

Who Benefits from the Extended Relief?

The extended relief particularly helps homeowners who face delays selling their first property. This includes:

Those experiencing slow market conditions.
Homeowners dealing with unexpected sale complications.
Buyers relocating for work but struggling to sell their previous home quickly.

If the first home sells within the timeframe, the stamp duty on second homes can be refunded, reducing overall costs.

How We Can Help

Understanding stamp duty on second homes and reclaiming the surcharge can be complex. At Lewis Brownlee, we ensure you receive the relief you’re entitled to.

If you need help navigating SDLT rules, contact us today. Our team is here to assist you.

Changing lanes to get the answer they want

by Leah McGarvey | 14 Jun, 2016 | Business, Tax

Changing lanes to get the answer they want

The Court of Appeal decided that cars leased by an employer to its employees on arm’s length terms did not constitute a taxable benefit in kind.

HMRC had argued that the employees should be charged to income tax on the cash equivalent of the cars which to our mind seemed unfair, although we were aware of HMRCs view in this area.

Being bad losers the Finance Bill 2016 includes a clause ‘in determining [the benefit of] a car or van made available to an individual it is immaterial whether or not the terms on which the car or van is made available constitute a fair bargain.’ In other words if there is a specific statutory provision for calculating the tax charge on a benefit-in-kind, this must be used.

Stamp duty land tax on annexes

by Leah McGarvey | 8 Jun, 2016 | Property, Tax

Stamp duty land tax on annexes

When purchasing an additional property, buyers must pay a 3% Stamp Duty Land Tax (SDLT) surcharge. This applies to second homes and buy-to-let properties. However, concerns arose about how this surcharge affects properties with annexes.

The good news is that Stamp Duty Land Tax on annexes is not always subject to the extra charge. Specific conditions determine whether the second home supplement applies.

When Is the Extra SDLT Not Charged on Annexes?

The 3% surcharge does not apply if the annexe meets the following criteria:

It cannot be sold separately from the main property.
Its value is less than one-third of the total property value.

This means homeowners buying a main residence with a self-contained granny annexe may avoid the surcharge if these conditions are met.

Why This Matters for Homebuyers

Many buyers feared that having an annexe would trigger the second home surcharge. This exemption provides reassurance that properties with granny annexes are not unfairly penalised.

If an annexe is worth more than one-third of the total property price or can be sold separately, the surcharge may still apply. Buyers should assess their situation carefully before purchasing.

How We Can Help

Navigating Stamp Duty Land Tax on annexes can be complex. At Lewis Brownlee, we help buyers understand their tax liabilities and ensure they do not overpay SDLT. So, whether this is a matter of immediate concern, or something you are curious to learn more about, we can help. As leaders in the field, we have tax experts on site to help demystify Stamp Duty. We also offer a free introductory meeting for you to find out exactly how we can help. So, when you’re ready, we’re ready. Book your free meeting today and let’s see how we can partner in your success!

If you need guidance on stamp duty or property tax planning, contact us today. Our experts are here to help.

Inheritance tax – nil band

by Leah McGarvey | 2 Jun, 2016 | Tax

Inheritance tax – nil band

The inheritance tax nil band is the threshold up to which an estate pays no inheritance tax (IHT). Currently, this stands at £325,000 per individual, regardless of domicile or residence.

Anything above this threshold is usually taxed at 40%, unless exemptions or reliefs apply. Planning around the inheritance tax nil band can significantly reduce an estate’s tax liability.

How Unused Nil Band Can Transfer to a Spouse

A lesser-known aspect of the inheritance tax nil band is that it can be transferred between spouses. If one spouse dies domiciled abroad with no UK assets and leaves their estate to their children, their nil band remains unused.

If the surviving spouse later dies in the UK, they can inherit the unused nil band from their late spouse’s estate. This can increase their IHT-free allowance, reducing the tax burden for beneficiaries.

Maximising Your Inheritance Tax Allowance

To make the most of the inheritance tax nil band, consider:

Spousal exemptions – Assets left to a UK-domiciled spouse are tax-free and can pass on unused allowances.
Residence nil band – If passing a main home to direct descendants, an extra £175,000 allowance may apply.
Gifting strategies – Lifetime gifts may reduce the taxable estate if given at least seven years before death.

Proper estate planning ensures you take full advantage of these reliefs and exemptions.

How We Can Help

Understanding and making the most of available allowances can be complex. At Lewis Brownlee, we help families plan efficiently to reduce inheritance tax liabilities.

If you need expert estate planning advice, contact us today. Our team is here to assist you.