Tax for You

Capital Gains Tax is charged when an individual or trust sells or gifts a capital asset, such as a second property, shares or art.

There are, of course, a number of reliefs’ – Entrepreneurs, Principal Private Residence, Incorporation, Gift, Deferral, Roll and Holdover Relief. However, eligibility to claim these reliefs often needs to be established in good time before the disposal takes place. It is therefore essential to engage a proactive advisor to ensure you are not landed with an unattractive tax bill on an attractive disposal.

“If in doubt, tax it”

This often appears to be the opinion of HM Revenue & Customs – and an unrepresented taxpayer may be under the wrong impression that whatever HMRC says, goes. But that’s not always the case!

Our team of qualified Chartered Tax Advisors will ensure you pay the right amount of tax, you make use of all available exemptions and reliefs and you do not fall foul of various pitfalls.

Benjamin Franklin famously wrote: “…in this world nothing can be said to be certain, except death and taxes.”

It stands to reason, then, that most people will eventually need Inheritance Tax planning, care planning or both.

The elderly are far more likely to need these services although Inheritance Tax (IHT) and care planning is usually far more beneficial to children than to parents. After all, the main aim of Inheritance Tax planning is to ensure that children inherit much more of the wealth their parents spent a lifetime accumulating, rather than see it swallowed up by IHT and care home fees.

Inheritance Tax Health Check

Each person has a tax-free allowance or ‘nil rate band’ on their estate. This means that their estate won’t incur Inheritance Tax if it’s under a certain amount. The threshold for the 2022/23 tax year is £325,000.

Since 2019, each person receives an additional tax-free allowance to use against the value of their home (subject to circumstances). The rate of this additional tax free allowance for 2022/23 is £325,000.

If taxable estates exceed this amount, the balance will be taxable at 40 per cent. In these cases it would be worthwhile to implement planning to mitigate the exposure to Inheritance Tax.

Trust Funds

Trust funds can be an effective way to take assets out of estates, to hold standalone and/or to pass assets down the generations when beneficiaries come of age. They may also be an effective way to avoid future family feuds and to ensure assets reach their intended destination.

Smailes Goldie’s team of tax specialists can implement tax planning and asset protection through the medium of trusts. We are also able to deal with all areas of routine accounting and tax compliance, as well as the day-to-day administration.

Is tax getting you down? It might be time to call in the accountants.

Our specialist tax team can save you not only time and money, but also the stress and strain, by preparing your tax return for you.

Working with you, we prepare all the necessary paperwork and guide you through the self-assessment regime in a seamless and timely manner. We also highlight any opportunities that could potentially reduce your exposure to Income, Capital Gains and Inheritance Tax.

Acting as your agent with HM Revenue & Customs, we deal directly with them on your behalf to ensure you keep on the right side of the tax man.

Pay As You Earn (PAYE) is just that. It is the regime HM Revenue & Customs adopt to collect tax from earnings and pension as you are paid.

However, the method does rely on the correct PAYE tax code being used. If the code is incorrect, the correct allowances or deductions won’t be made and you can quickly find yourself in a position of overpayment or underpayment.

If you need any help or advice, please get in touch. We can deal directly with HMRC on your behalf.

For unincorporated businesses such as sole traders and partnerships (where all of the partners are individuals) there exists an optional measure to claim a flat-rate deduction in respect of certain expenses when calculating taxable profits.

These “simplified expenses” are available for business motor expenses and any business use of an individual’s home. Taxpayers have the option to claim the actual expenditure incurred, in which case adequate records must be kept in order to identify the business element of all relevant costs, or to claim the simplified expenses, which reduces the record-keeping burden.

Motor expenses

The flat rate deduction in respect of motor expenses is intended to cover the cost of buying, running and maintaining a vehicle including fuel, servicing, repairs, insurance as well as depreciation of the vehicle.

It does not cover incidental expenses associated with a particular journey such as tolls or parking fees which can be claimed as an additional deduction where incurred for business purposes.

The flat-rate deduction which can be claimed depends on the type of vehicle and the level of business mileage.

The above rates may seem familiar and that is because they are the same as the approved mileage rates which apply to the business use of an employee’s car.

The business proportion of any finance element of a hire purchase or finance lease may also be claimed in addition to the simplified expenses.

When a new vehicle is acquired, a choice must be made between either claiming:

• capital allowances along with the business proportion of the running costs, or
• the simplified expenses as noted above.

Once the choice has been made in respect of that particular vehicle, it is not possible to change to the other method.

Business use of home

Where a sole trader or partner use their home for business purposes, a monthly flat rate deduction can be claimed instead of deducting the business proportion of household running costs for light, heat, power, telephone, broadband etc.

The amount which can be claimed depends on the number of hours worked from home per month.

Claiming this simplified expense does not prevent a separate deduction being available for fixed costs such as council tax, insurance and mortgage interest where an identifiable proportion can be attributed to business use.

Unlike the simplified expenses for motor vehicles, a trader can decide whether to claim the flat-rate deduction or the actual expenditure incurred in each accounting period.

Business premises used partly as a home

In certain situations, a business premises may also be used as a home, such as in the case of a pub or a bed and breakfast business, for example. In these cases, a trader can only claim tax relief for the business element of their premises costs and must therefore exclude the private element.

Alternatively, where the premises are used mainly for business purposes, and there is some non-business use, the trader can elect to claim tax relief on the actual costs incurred less a flat-rate reduction to cover private use. The flat-rate deduction for private use is based on the number of non-business occupants per month.

The flat-rate amount is intended to reflect the non-business proportion of expenditure on household goods and services, rent, utilities, food and non-alcoholic drinks.

Mortgage interest, business rates and council tax are not covered by the flat-rate reduction and so the trade proportion of these fixed premises costs can be deducted when calculating taxable profits for a period.

A trader can choose between claiming the total expenditure less the flat-rate reduction or claiming for actual business expenses in each accounting period.

The UK has the highest – and some of the most confusing – property taxes in the world.

That’s why landlords come to Smailes Goldie Group for expert help and advice. We are able to assist at every stage of the journey, from Stamp Duty to Capital Gains Tax (CGT).

Tax issues can have a significant financial impact on UK landlords. We make sure there are no surprises from purchase to sale

We can advise on:

• Private or corporate ownership
• Year-round advice on tax-deductible allowances and repairs
• Rent-a-room relief
• Lettings exemptions
• Treatment of overseas property holdings
• Holiday lettings
• Structuring of finance to obtain maximum tax relief for interest paid
• Property development
• Taxation of rental transactions
• Personal tax returns
• Capital Gains Tax
• Stamp Duty Land Tax (SDLT)