Rent-a-Room Relief and Possible Changes

Written by Arnold Hill on August 17, 2017

Landlords who rent out rooms in their homes should be aware of possible changes in tax legislation. In the Spring Budget of 2016, the Chancellor announced a new annual tax allowance of £1,000 for property income to apply from 2017/18. Its objective was to help ‘micro entrepreneurs’ in the ‘digital age’ and aimed especially at…

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Making Tax Digital (MTD)

Written by Arnold Hill on August 14, 2017

What is MTD? The core principles behind the concept of a digital tax system by 2020 were set out in December 2015 in HMRC’s MTD road map. HMRC referred to the four foundations of MTD: Tax Simplified The idea that if HMRC already hold tax information, such as P60s and annual interest statements, why should…

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Sole Trader vs Limited Company

Written by Arnold Hill on August 7, 2017

When starting up in business, it is often the first decision to make as to whether you trade as a sole trader or incorporate a limited company. Making the decision as to which structure your business operates will generate thoughts around potential tax savings, perception to the outside world or considering future plans you may…

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Is Helping Your Debtors Unexpectedly Burdensome?

Written by Arnold Hill on August 4, 2017

At a time when credit and cashflows may be tightening, it can be felt appropriate to offer clients ‘time-to-pay’ or ‘instalment’ arrangements to discharge historic debts. Generally, the FCA may be the last item on a client’s mind as they conclude those discussions with their customer, but you’d perhaps be surprised how broad the Consumer…

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Country-by-Country Reporting

Written by Arnold Hill on August 3, 2017

Country-by-country reporting is a relatively new statutory requirement introduced for multinational enterprises with a combined revenue of greater than €750 million. Country-by-country reporting is part of the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan 13. The basic requirements include providing an annual country-by-country report and return to include a breakdown of the key…

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Loans to Director Shareholders

Written by Arnold Hill on August 2, 2017

What are the implications of taking a loan from your company? This area has been the topic of discussion by clients and their advisors for many years. Shareholders who regularly withdraw sums without applying PAYE or voting a dividend are generally treated as receiving a loan from their company. The basic tax rules regarding this…

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Ensuring You’re not Taxed on Reimbursed Expenses

Written by Arnold Hill on August 1, 2017

It has often been the case that employers have reported expenses reimbursed to employees on the annual form P11D. Commonly reimbursed expenses include: mileage allowance up to the Approved Mileage Allowance Payment (AMAP) rates where an employee uses their own car for business travel; business travel and associated expenses; professional fees and subscriptions to professional…

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IR35 Legislation – Off-Payroll Working through an Intermediary

Written by Arnold Hill on July 31, 2017

IR35 is the short name used for the ‘intermediaries legislation’, which is a set of tax rules that apply to individuals that work for a client through an intermediary. The IR35 legislation specifically challenges those people who supply their services to clients via their own company, often known as a ‘personal service company’ who in…

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UK Salaried Members Rules

Written by Arnold Hill on July 28, 2017

One of the many benefits of being a member in a Limited Liability Partnership (“LLP”) is the prospect of not being subjected to at source income tax deductions (PAYE) on your salary and bonus payments, which is the case for employees in a limited company. In comparison, a member in an LLP must meet their…

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Accounting and Tax Recognition of Website Costs Under FRS 102

Written by Arnold Hill on July 27, 2017

Pre-FRS 102 accounting requirements Companies incurring expenditure on website development costs have historically accounted for them depending on the perceived long term net benefit to the business. For accounting purposes, entities that have been within the scope of FRS 10 (the financial reporting standard for goodwill and intangible assets) have been required to capitalise website…

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Recharges or Disbursements Charged onto Customers

Written by Arnold Hill on July 26, 2017

There is a distinct difference and more importantly an implication for VAT purposes between recharges and disbursements charged on to customers;  Disbursements Disbursements are where payments are made to a supplier on behalf of a customer and subsequently these costs are passed on to the customer when invoicing them. Disbursements should not include VAT when…

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Joint Property

Written by Arnold Hill on July 25, 2017

Where land and buildings, known as real property, is owned by two or more people, it can be owned either as “joint tenants” or as “tenants in common”. The type of ownership affects what owners can do with the property if they wish to dispose of it or if they die.  Joint tenants have equal…

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Lifetime ISA

Written by Arnold Hill on July 24, 2017

The Lifetime ISA is a tax-free savings account that can help you with buying your first home or building a financial safety net for life after 60. Each year (up to the age of 50), you can deposit up to £4,000 into your Lifetime ISA and the government will add 25% of the amount you’ve…

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Tax On Gifts Of Assets

Written by Arnold Hill on July 21, 2017

Many individuals make gifts and there is a common misconception that there will be no tax arising. However, this may not be the case since a gift to another individual is treated as a disposal at market value for tax purposes and, if the value is not already known, a donor will need to obtain…

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Distributions in a Winding up of a Company

Written by Arnold Hill on July 20, 2017

Distributions made by a company to its shareholders are generally taxed as dividends at the following rates in excess of the £5,000 dividend allowance: Basic rate taxpayers £0 – £33,500 7.5% Higher rate taxpayers £33,501 – £150,000 32.5% Additional rate taxpayers > £150,000 38.1% Where a company has ceased to trade and the shareholders wish…

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Apprenticeship Levy – Watch Out!

Written by Arnold Hill on July 19, 2017

The Apprenticeship Levy (“the Levy”) was introduced with effect from 6 April 2017 and effects employers with an annual wage bill of £3 million or more. The £3m threshold is calculated according to the tax year as opposed to the employers’ accounting year and essentially includes most regular payroll costs except benefits in kind. The…

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Informal Winding Up of a Company

Written by Arnold Hill on July 18, 2017

Shareholders of companies that have ceased business can appoint a liquidator to carry out a formal winding up of that business to pay out the accumulated profits that have built up over the life of that business. The appointment of a liquidator under a formal winding up can mean that the shareholders are treated for…

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Automatic Exchange of Information and The Common Reporting Standard

Written by Arnold Hill on July 17, 2017

Automatic Exchange of information (AEOI) agreements have been made between the UK and many other countries. They allow the exchange of information between tax authorities of different countries about financial accounts and investments to help combat tax evasion.  The OECD developed a “common reporting standard” for the exchange of information in 2014. Until then information…

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Changes to PSC and Confirmation Statement Filing

Written by Arnold Hill on July 14, 2017

As from 26th June 2017, the information required to be submitted to Companies House in relation to confirmation statements and the register of people with significant control (PSC register) has been amended. There is no longer a requirement to disclose PSC information with the confirmation statement. The new rules apply to all confirmation statements produced…

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Scottish Limited Partnership – People with Significant Control

Written by Arnold Hill on July 13, 2017

On 6 April 2016, the PSC requirement was introduced which required a company or limited liability partnership (LLP) to disclose a register of people who have ‘significant control’ over the entity. The scope has now been extended to capture Scottish Limited Partnerships (SLPs) and Scottish Qualifying Partnerships (SQPs). A SQP is a partnership with solely…

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Online Registration for Trusts and Estates

Written by Arnold Hill on July 12, 2017

New trusts and estates must now register with HMRC using the online registration service, which replaces the old form 41(G) Trusts.  All trusts with a UK tax liability should be registered with the online service on or before 5 October following the tax year in which the trust or estate is set up.  You need…

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Setting up of a Private Limited Company

Written by Arnold Hill on July 11, 2017

Incorporating a private limited company has many benefits including the company being legally and financially separate from the individuals running it. In order to incorporate a company you will need the following; Suitable and available company name The name of the company cannot be the same or too similar to another registered company. In addition,…

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Form 17 – Recording Interests in Let Properties

Written by Arnold Hill on July 10, 2017

Most people will accept as sensible the starting point of HMRC in assuming that income arising from property held jointly by a husband and wife will be split equally between them. Income Tax Of course an equal split is not always the most beneficial split in terms of the allocation of profits and so HMRC…

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Annual Tax on Enveloped Dwellings (ATED)

Written by Arnold Hill on July 7, 2017

Although not a new tax, there have been changes with ATED since its introduction in 2013 which makes a refresher in respect of the current regime worthwhile. From 1 April 2016 ATED applies to dwellings valued at £500,000 or more. If the dwellings were owned on 1 April 2012, it is the 2012 open market…

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Audit Exemptions for UK Subsidiaries

Written by Arnold Hill on July 4, 2017

Small groups Subsidiary companies registered in England and Wales can claim exemption from the statutory requirement for an audit if the group they are in meets the definition of a ‘small’ group. This requires that the group they are a part of is smaller than at least two of the limits below: Gross Net Turnover…

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Extended Deadline for 2016/17 Share Scheme Returns

Written by Arnold Hill on July 3, 2017

Companies who operate employee share incentive schemes, for example the tax advantaged EMI scheme, are required to submit information to HMRC in the form of an Employment Related Securities (ERS) annual return. From 2014/15 onwards, companies have been required to submit their ERS annual returns online. The statutory deadline for submitting the return is 6…

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Tax Implications of Staff Entertaining

Written by Arnold Hill on June 30, 2017

 HMRC only allows tax relief and the claiming of VAT on the cost of entertaining your business’s employees. The first question that needs to be resolved is to determine who are your employees? Former and previous employees don’t qualify, nor do subcontractors or shareholders who do not work in the business. If you’re a sole…

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Key Tax Deadlines

Written by Arnold Hill on June 29, 2017

Income Tax 6th April 2017 First day of new tax year 31st July 2017 Deadline for second self-assessment payment on account for tax year ended 5th April 2017 5th October 2017 Deadline to notify HMRC for necessary Income Tax / Capital Gains Tax if not registered already for self-assessment 31st October 2017 Deadline for paper…

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Considerations before applying for EIS

Written by Arnold Hill on June 28, 2017

EIS qualifying conditions need to be met by both company and investor for duration of the holding period of three years; Company Company must not be controlled by or control another company Company must be unquoted at the time shares are issued Company has fewer than 250 employees Company has gross assets that do not…

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Charity VAT – Basics Covered

Written by Arnold Hill on June 27, 2017

Grants & Donations Grants and donations are not generally consideration for a supply and therefore treated as outside the scope of VAT. This is on the basis that income is freely given with no strings attached and hence treated by the charity as a gift. However, it is very important that this income has to…

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UK Film Tax Relief

Written by Arnold Hill on June 26, 2017

For all British qualifying films of any budget level, the film production company can now claim a payable cash rebate of up to 25% of UK qualifying expenditure. The tax relief is capped at 80% of core expenditure i.e. even if you spend 100% qualifying expenditure in the UK, tax relief is payable on up…

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Offshore Funds – Tax Treatment on Disposal

Written by Arnold Hill on April 3, 2017

Offshore funds are non-UK resident investment vehicles, such as companies and the overseas equivalent of unit trusts. When disposals of such funds are made, care needs to be taken as certain types of offshore funds attract income tax, rather than capital gains tax (CGT), on the arising gain. Broadly speaking, funds which accumulate income are…

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Extension of Probate work to accountants

Written by Arnold Hill on March 31, 2017

When a person dies, their executors (if they have left a Will) need to apply to the Courts for a grant of probate in order that their estate can be administered. Whilst some individuals are prepared to make a personal application to the Court, it is very common for the task to be left to…

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SSE Note

Written by Arnold Hill on March 29, 2017

Where the relevant conditions are met, the Substantial Shareholding Exemption (“SSE”) exempts gains arising on a qualifying disposal of shares from a charge to corporation tax. The SSE was originally introduced in Finance Act 2002, but HMRC are now broadening its scope by loosening some of the conditions for qualification in Finance Bill 2017. The…

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Business Investment Relief

Written by Arnold Hill on March 23, 2017

Business Investment Relief (BIR) is available to non-UK domiciled individuals who are assessed to UK tax on the remittance basis. This valuable relief exempts from UK income tax or capital gains tax any foreign income or capital gains remitted to the UK which are used to make a qualifying business investment within 45 days. A…

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Rebasing Updated

Written by Arnold Hill on March 21, 2017

As a follow-up to our article in respect of becoming deemed domiciled in the UK [insert link], with effect from 6 April 2017 it is important to consider the impact of that change. Although being taxed on worldwide income and gains is undoubtedly the headline change, it is important to consider some of the finer…

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Deemed UK Domicile – Changes from April 2017

Written by Irina Dumitru on March 13, 2017

From 6th April 2017, new rules regarding non-domiciled individuals will take effect. Those resident in the UK for at least 15 of the past 20 tax years will become “deemed” UK domiciled for income, capital gains and inheritance tax purposes. Such individuals will no longer have the option to claim the remittance basis and therefore,…

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Budget 2017 – Personal Tax Highlights

Written by Kate Kalina on March 9, 2017

Income tax The personal allowance will increase to £11,500 and the basic rate band to £33,500 from 6 April 2017. From April 2018 the annual dividend allowance will be reduced from £5,000 to £2,000. The capital gains tax annual exemption will increase to £11,300 in 2017/18. The Government plans to consult on the redesigning of…

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Change of Accounting Date

Written by Arnold Hill on December 12, 2016

For various reasons, an unincorporated business, whether a sole trader or a partnership, may wish to change its accounting date. A change of accounting date might offer the opportunity for profits to be taxed at a lower rate of tax. This would be particularly relevant when the top rate of income tax changes from one…

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Tax Free Remittances

Written by Arnold Hill on December 1, 2016

Tax Free Remittances This article is aimed at non-UK domiciled taxpayers who elect to be assessed on the remittance basis. Such individuals are likely to be aware of remittances of foreign income and gains to the UK. Here we will look at what does not constitute a remittance for UK tax purposes. Clean Capital Taxpayers…

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Stamp Duty Land Tax on Additional Residential Properties

Written by Arnold Hill on November 17, 2016

New rules introducing higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties came into force on 1st April 2016. The higher rates are part of the Government’s plan to support home ownership and first time buyers. The higher rates will only apply to purchases where the individual owns two or…

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Enterprise Investment Schemes (“EIS”) and Seed Enterprise Investment Schemes (“SEIS”)

Written by Arnold Hill on November 16, 2016

EIS Introduction The Enterprise Incentive Scheme (EIS) is a government initiative designed to encourage investors to undertake investments in small, higher risk, trading companies by providing income tax and capital gains tax reliefs. Since the EIS was launched in 1993-94, almost 22,900 individual companies have received investment through the scheme and over £12.2 billion funds…

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EMI Note for Publication

Written by Arnold Hill on November 14, 2016

Enterprise Management Incentive Introduction An Enterprise Management Incentive (EMI) scheme is an employee share option scheme. It is designed to help small, higher risk companies recruit and retain employees who have the skills to help them grow and succeed. The options are very tax advantageous and can also be a method for rewarding employees for…

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Correcting Mistakes in Financial Statements

Written by Arnold Hill on November 11, 2016

Despite the best efforts of all those responsible for the preparation and approval of financial statements, from time to time Prior Period Errors occur. International Accounting Standard 8 and FRS 102 adopt a similar approach for dealing with those errors. IAS 8 defines Prior Period Errors:- Prior Period Errors are omissions from, or misstatements in,…

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Minority Interest Discounts in Unfair Prejudice Claims

Written by Arnold Hill on November 10, 2016

A colourful case in its own right, the judgement in Murrell v Swallow and Sanders is an interesting reminder of how the courts can look at minority interest discounts in unfair prejudice actions. In this particular case the petitioner was a 3% shareholder and became a shareholder when he acquired 1.5% of the company from…

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VAT Flat Rate Scheme… Are You Eligible?

Written by Arnold Hill on October 12, 2016

The standard rate of Value Added Tax (VAT) in the UK currently stands at 20 percent. The amount of VAT which an organisation pays (or reclaims) from HM Revenue and Customs (HMRC) is, in most cases, the difference in value between the VAT charged by the business on their taxable supplies and the VAT the…

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Client notification letter

Written by Arnold Hill on October 10, 2016

The International Exchange of Information Manual issued by HMRC imposes certain obligations on ‘Specified Relevant Persons’ which would include Arnold Hill & Co LLP.  If you have any queries, please do not hesitate to contact your relevant Partner.  Tel: 0207 306 9100


Ready…Steady…Auto Enrol!

Written by Arnold Hill on September 26, 2016

There is no doubt that you have already seen the adverts, the billboards, and heard the “we’re all in” catchphrase countless times by now. However, despite all this, are you ready for auto enrolment? This article aims to explain what auto enrolment is, how it may affect you and the processes involved. Auto enrolment is…

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