There are specials rules that apply to UK property sales by non-residents. Since 6 April 2020 non-residents have needed to report and pay any non-resident Capital Gains Tax (CGT) due if they have sold or disposed of:

• residential UK property or land (land for these purposes also includes any buildings on the land);
• non-residential UK property or land;
• mixed use UK property or land; or
• rights to assets that derive at least 75% of their value from UK land (indirect disposals).

A CGT charge on the sale of UK residential property by non-UK residents was introduced in April 2015. Only the amount of the overall gain relating to the period after 5 April 2015 is chargeable to tax.

A UK non-resident that sells UK residential property needs to deliver a non-resident CGT (NRCGT) return and pay any CGT within 60 days of selling a relevant property. The return must be made whether or not there is any NRCGT to be paid. Even if there is a loss on the disposal and where the taxpayer is due to report the disposal on their self-assessment tax return.

There are penalties for failing to file the NRCGT return within the deadline as well as for failing to pay any tax due on time.

All children in the UK have their own personal allowance, currently £12,570. There are special rules if a parent gifts significant amounts of money to their children which results in them receiving bank interest of more than £100 (before tax) annually. If this is the case, the parent is liable to pay tax on all the interest if it is above their own Personal Savings Allowance (PSA). These anti-avoidance laws are designed to prevent a child’s personal allowance being used by parents of children aged under 18, with some minimal exceptions.

The PSA allows basic-rate taxpayers to receive interest of up to £1,000 on savings income tax-free. For higher-rate taxpayers the tax-free PSA is £500. Taxpayers paying the additional rate of tax do not benefit from the PSA.

The £100 limit does not apply to money given by grandparents, relatives or friends. In addition, any income from Junior ISA’s or CTF’s is exempt from Income Tax and CGT on the child or the parent even when the invested funds came from the child’s parents. The 2024-25 subscription limit for both CTFs and Junior ISAs is £9,000.

If older children are employed by a parent they can receive income paid as wages subject to the usual employment rules.

Where an error on a past VAT return is uncovered businesses have a duty to correct the error as soon as possible. As a general rule, any necessary adjustment can be made on a current VAT return. To do this, the errors must be below the reporting threshold.

Under the reporting threshold rule, businesses can make an adjustment on their next VAT return if the net value of the errors is £10,000 or less. The threshold is further increased if the net value of errors found on previous returns is between £10,000 and £50,000 but does not exceed 1% of the total declare sales value for the return period in which the errors are discovered.

HMRC must be separately notified of errors that exceed either of the limits set out above or if the error was deliberate. VAT errors of a net value that exceed the limits for correction on a current return or that were deliberate should be notified to HMRC by making the correction online or submitting form VAT 652 (or providing the same information in letter format) to HMRC's VAT Error Correction team.

HMRC can also charge penalties of up to 100% of any tax under-stated or over-claimed if you file an inaccurate return.

HMRC can enquire into any statutory return (or amendment of that return) or statutory claim to check if the return / claim has been prepared correctly or if further information is required.

HMRC’s internal manuals state that there is no statutory definition of an enquiry, so it carries its normal dictionary meaning of `seeking information, asking, questioning’. In practice the nature and extent of enquiries will vary considerably.

HMRC has historically referred to ‘full enquiries’ covering a tax return as a whole, and ‘aspect enquiries’ dealing with one or more matter(s). However, the legislation does not distinguish between different types of enquiries. Therefore, all enquiries into tax returns are legally enquiries into the full return, even if in practice HMRC only need to check part of the return.

If HMRC make no enquiries within the period allowed, or if they have completed an enquiry, the return becomes final unless

• the taxpayer is still within time to amend their return;
• the taxpayer has carelessly or deliberately caused a loss of tax; or
• HMRC discover that the return was incorrect, and the taxpayer had not disclosed enough information to show this. This is known as a discovery assessment. If a discovery is made in such circumstances HMRC can make a discovery assessment up to 6 years (20 years if the taxpayer has failed to notify chargeability) after the end of the relevant accounting period.

The following notes are reproduced from a Treasury statement issued 21 May 2024.

Lower inflation supports people by maintaining the purchasing power of their money.

If prices only rise slowly, people can plan their budgets more effectively – encouraging spending and investment, which fuels the economy.

Lower inflation also helps businesses grow by providing a stable, predictable environment for them to operate in – allowing for more job opportunities or the ability to research new products and services. 

Finally, low inflation enhances the UK’s competitiveness in a global market. When the economy is stable and predictable, other countries are more interested in investing in the UK.

This can bring in more money from foreign investors, give us better trade deals, and make the overall economy stronger. 

How will lower inflation help my business?

If inflation is lower, it means the price of materials businesses use to produce their goods and services aren’t rising as quickly, so there is less pressure on them to pass price increases onto their customers. 

For example, a coffee shop won’t face large increases in the cost of their coffee beans, paper cups, or the energy to turn on the lights in the coffee shop.

Because none of those things are getting drastically more expensive, they don’t have to pass those costs on to coffee for their customers.

Lower inflation provides a sense of stability for businesses, which is important to empower them to make decisions about their future. 

If inflation is high and volatile, businesses aren’t able to plan for their future spending decisions.

For example, if you want to invest in a factory that will take a year to build, it’s important to know how much things will cost in a year’s time.

What does inflation going down mean for my mortgage?

Inflation influences mortgage rates indirectly, through financial market’s expectations for the Bank of England’s base interest rate.

The base interest rate, which is also known as the Bank Rate, is the tool used by the Bank of England to bring inflation down. 

Mortgages are generally priced to reflect what the financial markets expect future interest rates to be. 

This means that if markets start to expect higher inflation, they will raise their expectations for the Bank Rate, in order to cool the economy and bring inflation back to target. This is in turn reflected in mortgage interest rates.

If inflation falls more quickly than expected, it may lead to reductions in market expectations for the base interest rate and therefore reductions in mortgage rates offered.

As time passes during the present election campaign, its seems more likely that we may have a change of government from the 5 July.

Labour have disclosed a number of tax changes they would introduce. To summarise they are:

• Private school fees will attract VAT at 20% which private schools will no doubt pass on to parents. The Labour Party has also said it will also end business rates relief for private schools. The £1.7bn raised by this move will be used to improve local authority schools.
• There may be changes to the taxation of Non-Doms to close loopholes that the Labour Party considers are unfair.
• To introduce a windfall tax on the profits of the energy supply companies.

They have also been vocal in confirming that they will not raise Income Tax, National Insurance or VAT (apart from the changes highlighted above).

In contrast, the Conservative Party has pledged to:

• Introduce a triple-lock pension allowance that would raise the tax-free pension allowance by at least 2.5% a year.
• They would raise the threshold for the claw back of child benefits (the High Income Child Benefit Charge) to £120,000 and base the income on household income rather than the income of the highest wage earner.
• Longer term, the Chancellor has disclosed his intention to reduce employees NIC and consider scrapping Inheritance Tax.

Of course, we will have to wait for the outcome of the election and then the formal disclosure of any future tax changes. Which ever party assumes control, let us hope we can look forward to a period of economic growth. If the pundits are correct, expanding economic activity and productivity are the necessary ingredients to increase prosperity. Fingers crossed that the new brooms are up for this task.

1 July 2024 – Due date for corporation tax due for the year ended 30 September 2023.

6 July 2024 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.

19 July 2024 – Pay Class 1A NICs (by the 22 July 2024 if paid electronically).

19 July 2024 – PAYE and NIC deductions due for month ended 5 July 2024. (If you pay your tax electronically the due date is 22 July 2024).

19 July 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2024. 

19 July 2024 – CIS tax deducted for the month ended 5 July 2024 is payable by today.

1 August 2024 – Due date for corporation tax due for the year ended 31 October 2023.

19 August 2024 – PAYE and NIC deductions due for month ended 5 August 2024. (If you pay your tax electronically the due date is 22 August 2024)

19 August 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2024. 

19 August 2024 – CIS tax deducted for the month ended 5 August 2024 is payable by today.

The Inheritance Tax residence nil rate band (RNRB) is a transferable allowance for married couples and civil partners (per person) when their main residence is passed down to a direct descendent such as children or grandchildren after their death. 

The allowance increased to the present maximum level of £175,000 from 6 April 2020. The allowance is available to the deceased person’s children or grandchildren. Any unused portion of the RNRB can be transferred to a surviving spouse or partner. The RNRB is on top of the existing £325,000 Inheritance Tax nil-rate band.

The allowance is available to the deceased person's children or grandchildren. Taken together with the current Inheritance Tax limit of £325,000 this means that married couples and civil partners can pass on property worth up to £1 million free of Inheritance Tax to their direct descendants. 

The transfer does not happen automatically and must be claimed from HMRC when the second spouse or civil partner dies. This is usually done by the executor making a claim to transfer the unused RNRB from the estate of the spouse or civil partner that died first. This transfer can also be made even if the first spouse or civil partner died before the RNRB was introduced on 6 April 2017.

There is a tapering of the RNRB for estates worth more than £2 million even where the family home is left to direct descendants. The additional threshold will be reduced by £1 for every £2 that the estate is worth more than the £2 million taper threshold. This can result in the full amount of the RNRB being tapered away. The RNRB maximum rate and the taper threshold are currently frozen until at least April 2028.

Directors are classed as employees and pay National Insurance on annual income from salary and bonuses that exceed the Primary Threshold. The annual threshold is £12,570 in the current 2024-25 tax year.

Many director shareholders take a minimum salary and any balance of remuneration as dividends. This tends to reduce National Insurance Contributions (NICs), and in some case income tax. The planning strategy is to pay a salary at a level that qualifies the director for state benefits, including the State Pension, but does not involve payment of any NICs.
 
A director’s liability to NI is worked out based on their annual (or pro-rata annual) earnings. This differs from regular employees whose liability is calculated based on their actual pay period usually weekly or monthly. Payments on account of a director’s NICs can be made in a similar way as employees. However, an annual adjustment must be made at the end of the tax year.

Directors, who are first appointed during a tax year are only entitled to a pro rata annual earnings band which depends on the actual date appointed and the amount of time remaining in the tax year. Care needs to be taken in these circumstances not to incur an unexpected liability to pay NIC.

There are a number of considerations to consider when setting the most tax/NIC efficient salary.

An employer can usually reclaim 92% of employees’ Statutory Maternity, Statutory Paternity, Statutory Adoption, Statutory Parental Bereavement and Statutory Shared Parental Pay. If the business qualifies for Small Employers’ relief, this figure can increase to 103%. 

Small Employers’ relief is available if the business paid £45,000 or less in Class 1 National Insurance (ignoring any reductions like Employment Allowance) in the last complete tax year before:

• the ‘qualifying week’ – the 15th week (Sunday to Saturday) before the week of the due date;
• the ‘matching week’ – the week (Sunday to Saturday) your employee was told they’d been matched with a child by the adoption agency;
• the date on the official notification if your employee is adopting a child from another country; or
• the ‘qualifying week’ – the week (Sunday to Saturday) before the death of the child or stillbirth, for Statutory Parental Bereavement Pay.

A claim for statutory payment assistance is usually made by including the claim on the Employer Payment Summary (EPS) that you submit to HMRC. You can also write to the PAYE Employer Office to ask for a repayment if you cannot set off the payments against the current year’s liabilities. You cannot do this until the start of the next tax year.

You can also apply to HMRC to pay you in advance if you cannot afford to make statutory payments.

There is an online tool, developed by HMRC, that allows taxpayers to check if they need to notify HMRC about additional income. The online tool can be found at www.gov.uk/check-additional-income-tax.

You are required to submit a self-assessment return if any of the following apply:

• you were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on);
• you were a partner in a business partnership;
• you had a total taxable income of more than £150,000 in 2023-24 (£100,000 in 2022-23);
• you had to pay Capital Gains Tax when you sold or ‘disposed of’ something that increased in value; or
• you had to pay the High Income Child Benefit Charge.

You may also need to send a tax return if you have any untaxed income, such as:

• money from renting out a property;
• tips and commission;
• income from savings, investments and dividends; or
• foreign income.

There could be other reasons why you may be required to register for self-assessment and therefore using HMRC’s online tool can help you check if you are required to submit a return.

Setting up in business as a sole trader is arguably the simplest way of starting and running a business. The advantages of being a sole trader include independence, ease of set up and running your business, and the fact that all the profits go to you.

The disadvantages include a lack of support, unlimited liability, the prospect of paying more tax on high profits and that you are personally responsible for any debts run up by your business.

HMRC publishes some simple guidance for those looking to set up as a sole trader. The list can be found at https://www.gov.uk/set-up-as-sole-trader

The main steps listed are as follows:

• Step 1: Check if being a sole trader is right for you
• Step 2: Choose your business name
• Step 3: Check what records you need to keep
• Step 4: Register as a sole trader
• Step 5: Check if you need to register for VAT
• Step 6: Plan for your tax bill
• Step 7: Get help and support

If you are looking at setting up as a sole trader we can also advise you of the many pitfalls you should avoid and if a sole trader status is the best structure for your proposed business.