UK Tax Compliance Services

Inheritance Tax (IHT), UK Taxes, Capital Acquisitions Tax.

The 2024 Autumn Budget announced a series of changes to UK Inheritance Tax.  As you’re aware, in the UK, Inheritance Tax is a tax payable on the value of a deceased person’s estate.  This differs to Irish Capital Acquisitions Tax where the beneficiary pays CAT on gifts and/or inheritances.

Current Rules

Currently, UK IHT is charged at 40% on the value of an estate above the tax-free allowance i.e. the Nil Rate Band of £325,000. This tax-free allowance can be further increased by a Residential Nil Rate Band of £175,000 providing you leave your home to direct descendants i.e. children, step children, grandchildren, etc.  As a result, this brings up the total tax-free allowance to £500,000 per person.  In certain circumstances, this could potentially equate to £1 million for a couple.  These thresholds were fixed until April 2030 in the Autumn Budget.  If, however, your estate is worth less than £325,000 when you die, then any unused amount up to the threshold limit can be added to the surviving spouse’s/partner’s threshold amount.

New Rules

From 6^th April 2025, the rules for taxing non-UK domiciled individuals will be replaced by a tax residence-based system.  This will apply to long-term residents owning non-UK property who were previously outside the scope of UK Inheritance Tax.  UK assets will always remain within the scope of inheritance tax.  Therefore, from 6th April 2025 onwards, individuals who have held non-domicile status will no longer be exempt from Inheritance Tax on their foreign assets. Instead tax will be based on the individual’s residency status.

Non-UK assets will be within the scope of UK Inheritance tax if an individual qualifies as a long-term resident.  This means that anyone who has been resident in the UK for ten out of the last twenty years will be subject to Inheritance Tax on their worldwide assets.  This is assessed using the same statutory residence test currently applied for Income Tax and Capital Gains Tax purposes.  It’s important to keep in mind that where an individual ceases to be UK resident after 6th April 2025, there will be an “IHT tail.”  This effectively means that an individual can remain within the scope of UK Inheritance Tax, on their worldwide assets, for a period of up to ten years after ceasing their UK residence.

In summary, from 6th April 2025, the concept of domicile will no longer determine exposure to inheritance tax.  Instead, it will be replaced with the concept of a long-term resident.

For further information, please click:

https://www.gov.uk/inheritance-tax

https://www.gov.uk/government/publications/2024-non-uk-domiciled-individuals-policy-summary/changes-to-the-taxation-of-non-uk-domiciled-individuals

For all your Irish or cross-border gift or inheritance concerns, please contact us on queries@accountsadvicecentre.ie.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Inheritance Tax, UK IHT, UK Taxes, Agricultural Property Relief, Business Property Relief, Gift and Inheritance Tax

The UK Autumn Budget 2024 announced changes to the current Agricultural and Business Property Inheritance Tax regimes.  From 6^th April 2026, the combined Agricultural Property Relief and Business Property Relief will be restricted to the first £1 million on “qualifying assets.”  The Chancellor of the Exchequer delivered her Budget on 30th October 2024, announcing 100% relief for the first £1 million pounds of combined assets and 50% Relief thereafter.  Currently, Agricultural Relief offers two potential rates of Inheritance Tax Relief.  These depend on the circumstances of ownership. These rates will remain in place until 5^th April 2026.

Old Regime – Agricultural Property Relief

Agricultural Property Relief is an Inheritance tax relief for farmers and landowners.  It provides for either 50% or 100% relief on the agricultural value of land and certain buildings.

For the 100% Relief to apply:

1. the property must be in the owner’s vacant possession i.e. the owner or transferor has the immediate right to vacant possession of the property or the right to obtain it within the next twelve months.

2. the land must be let with the tenancy having commenced on/after 1st September 1995.

3. the land must be let and conditions regarding vacant possession must be complied with – This applies by concession.

4. the owner had been entitled to his interest in the property since before 10th March 1981 and has met the conditions for ‘Working Farmer Relief”.

The 50% Relief is available in circumstances where the above conditions aren’t met.

If the property is owner-occupied, it must have been owned and used for agricultural purposes for at least two years ending with the date of the transfer.  If, however, the property is let to a tenant, it must have been owned by the transferor for at least seven years, ending with the date of the transfer, and the land must have been actively farmed during that time.  The property must not be subject to a binding contract of sale on disposal.

Additional rules apply in relation to successive transfers.

Agricultural property includes agricultural land or pasture, grazing land, cottages, farmhouses, farm buildings, woodlands and buildings used in intensive animal rearing, etc.

Old Regime – Business Property Relief

Business Property Relief is a relief from IHT which applies to the transfer of relevant business property.  100% relief is available on the following assets (i) a business or interest in a business operating as a sole trade or partnership and (ii) shares in an unlisted trading company which the donor has owned for a minimum of two years

50% Relief is available on the transfer of shares in a quoted trading company where the donor has a controlling interest (i.e. 51%) in the company.  The 50% rate also applies to land and buildings, including plant and machinery, where those assets are used by the donor’s partnership or by a company they control.

With regard to lifetime gifts, Business Property Relief is only available on death provided the donee still owns the relevant business property at the time of death.

If the business owns investments, Business Property Relief is restricted to the business assets. In other words, BPR does not apply to any ‘excepted assets’ in the balance sheet. An ‘excepted asset’ is one which is not used wholly or mainly for the purposes of a trade.

New Regime

From 6^th April 2026, the combined Agricultural Property Relief and Business Property Relief will only be available on the first £1 million on qualifying assets. If the individual owns qualifying assets above this threshold amount of £1 million, the rate of the Relief will be reduced to 50% of the excess.  This means, from 6^th April 2026, an effective IHT tax rate of 20% will apply to the value of qualifying assets above £1 million.

Assets automatically qualifying for the 50% relief rate will not use up the £1 million allowance.

It’s important to keep in mind that any unused part of the £1 million allowance cannot be transferred between spouses in the way that the NIL Rate Band can.

This allowance will not apply to AIM-listed shares and other similar shares not listed on a recognised stock exchange.  Instead, they will be entitled to the 50% rate of Relief.

The new rules will apply for lifetime transfers on/after 30th October 2024 in situations where the donor dies on/after 6^th April 2026.

The Inheritance Tax liability arising on assets which qualify for Agricultural Property Relief and Business Property Relief can be paid by way of equal annual instalments, over a ten-year period, in certain circumstances.

Full exemptions for transfers between spouses and civil partners will continue to apply i.e.  any agricultural and business assets left to a surviving spouse or civil partner will be tax free.

For further information, please click:

https://www.gov.uk/government/publications/agricultural-property-relief-and-environmental-land-management

https://www.gov.uk/government/news/what-are-the-changes-to-agricultural-property-relief

Following the Inheritance Tax changes in the Autumn Budget 2024, it’s time to consider the practical consequences and what you can do to protect your family wealth.  For expert advice and assistance, please contact us on queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Business Tax. Corporation Tax. UK Taxes. Reliefs and Changes. UK Autumn Budget

Today, 30^th October 2024, the Chancellor of the Exchequer, Rachel Reeves, delivered the UK Autumn Budget.  She announced the publication of the Corporation Tax Roadmap.  In it, she confirmed that there would be no change to the current corporation tax rate, which is capped at 25%, until 31^st March 2027.  The Small Profits Rate and marginal relief will remain at their current rates and thresholds.  No changes will be made to other business tax areas including:

1. The current Patent Box and Intangible Assets Regime which will be maintained.

2. The Audio-Visual Expenditure Credit will be maintained.  The Video Game Expenditure Credit will also be retained.

3. With regard to Capital Allowances, full expensing for plant and machinery expenditure will be retained.  The £1 million Annual Investment Allowance will also be maintained.

4. 100% first year allowances for qualifying expenditure on zero-emission cars and electric vehicle charge points will be extended to 31^st March 2026.

5. In relation to R&D Reliefs, the current rates for the merged R&D Expenditure Credit Scheme as well as the Enhanced Support for R&D Intensive SMEs will be kept.

6. Support to the global taxation agreements under Pillar 1 and Pillar 2 will continue.

Business Tax Changes

• The Pillar Two Undertaxed Profits Rule will be introduced into law and will take effect from 31st December 2024.

• The Government have introduced changes to the taxation of Employee Ownership Trusts and Employee Benefit Trusts which will take effect from 30^th October 2024.

• For 2025/26, Retail, Hospitality and Leisure businesses will be given 40% relief on their business rates. The maximum amount available in relief each billing year is £110,000 per business.

• From 6^th April 2025, the special tax rules for Furnished Holiday Lets will be abolished. Individuals, corporates, and trusts who operate or sell furnished holiday lettings accommodation will be affected.

• Employer National Insurance contributions will increase to 15.0% from 6^th April 2025. The secondary threshold will be reduced to £5,000 per year, the Employment Allowance will be increased to £10,500 per annum while the £100,000 threshold will be removed.

• There will be further consultation on Transfer Pricing.

• Changes to the treatment of carried interest. From April 2025, the CGT rate applicable to carried interest will increase to 32%.

Anti-Avoidance Legislation

The Government have introduced new Anti-Avoidance legislation in respect to loans to participators.  From 30^th October 2024, these reforms will prevent shareholders from extracting untaxed funds from Close Companies. This new legislation is being introduced to prevent loans which are repaid and then reborrowed from associated companies from avoiding the s455 charge.

Also, from 30^th October 2024, the way in which capital gains are taxed when a Limited Liability Partnership is liquidated has been amended. It relates to situations where assets are disposed of to (i) a contributing member, (ii) a connected company or (iii) any other connected person.  The chargeable gain accruing to the contributing member will be computed as if the gain had arisen at the time they initially contributed the asset to the Limited Liability Partnership.

For further information, please click:

https://www.gov.uk/government/collections/autumn-budget-2024-tax-related-documents

For all your Irish, UK or cross-border business tax concerns, please contact us on queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

UK Principal Private Residence Relief, Capital Gains Tax, Cross Border Tax, Expat Tax, UK Tax Advice

If you have recently moved to the UK and intend selling your home in Ireland, please be aware that even if you qualify for Principal Private Residence Relief (from Capital Gains Tax) under Section 604 TCA 1997 in Ireland you may not qualify for UK Private Residence Relief.  This article is aimed at individuals who have become UK resident and who are in the process of selling their Irish principal private residence.  In general, you do not pay Capital Gains Tax when you sell or ‘dispose of’ your home if all the following conditions apply:

• you have only one home and you’ve lived in this property as your main home for the entire time you’ve owned it
• you have not let part of it out (Please be aware that this does not include having a single lodger)
• you have not used part of the property for business purposes only
• the grounds, including all buildings, are less than 5,000 square metres in total
• you did not buy the property with the sole or main intention to make a gain

If all the above conditions apply you will automatically get a tax relief called Private Residence Relief.

Your period of ownership begins on the date you first acquired the dwelling house or on 31st March 1982 if that is the later date. It ends when you dispose of or sell the property.

The final 18 months of your period of ownership will always qualify for Private Residence Relief regardless of how you use the property during that time but providing the property has been your only or main residence at some point.

The following periods of absence are treated as periods of occupation for the purposes of calculating Private Residence Relief:

• Any periods of absence, for whatever reason, not exceeding three years in total
• Any period of absence when carrying out the duties of your employment outside the United Kingdom
• Any periods not exceeding four years in total which are due specifically to employment requirements.

In order for these periods of absence to qualify as “deemed occupation” there must be a time both before and after the absence when the dwelling house is the individual’s sole or main residence. It is important to keep in mind that absences due to the conditions of an employment will qualify for the Relief even if the individual does not return to the dwelling house afterwards provided the reason for not their returning is due to their contract of employment requiring them to live somewhere else.

Any period of absence which requires the individual to live in job/work related accommodation will qualify for Private Residence Relief if there is an intention to occupy the dwelling as a main residence at some point.

HMRC will, by concession, allow a period of up to one year before the individual begins to occupy the property as his/her principal private residence to be treated as a period of occupation provided the property is then occupied as his/her only or main residence. In exceptional cases, HMRC may extend this period to two years.

From April 2015, the PRR rules were amended so that a property may only be treated as an individual’s main or sole residence for a tax year where that person or his/her spouse/legally registered partner has either:

(a) been tax resident in the same country as the property for the tax year in question (For further information on residence rules please follows this link:  https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1) or

(b)  has stayed overnight in the property at least 90 times in that UK tax year.  Time spent in another property owned in the same jurisdiction/country can also be included in the ninety day count so that the total number of days in all properties in the territory in question are added together.

The new rules apply equally to a UK resident individual disposing of an overseas home as well as to a non-UK resident disposing of a home in the United Kingdom.

Finally, Lettings Relief may be available in circumstances where Principal Residence Relief is restricted because all or part of a property has been rented out.

This Relief is particularly important for individuals who, due to the current economic climate, experience difficulty selling their former home and, as a result, find they need to rent it out while they’re trying to sell it.

A maximum gain of £40,000 per owner is exempt from Capital Gains Tax provided that property has at some time been the main or only residence of the owner.

From 6th April 2020 there will be a change to this Relief whereby Lettings Relief will only be available in situations where the owner shares occupancy with the tenant.

For complete a complete UK Tax Advisory and Compliance Service, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

UK Taxes. Income Tax, Corporation and Business Taxes, Capital Gains Tax, Stamp Duty, Land Tax, Inheritance Tax.

In today’s Budget, there were a number of UK tax changes and tax policy announcements aimed at supporting businesses and enhancing living standards under Income Tax, Capital Gains Tax, Inheritance Tax, Savings & Investments, National Insurance, Pensions, Trust Tax, Property Tax, Corporation and Business Tax.  However, this brief article will only focus on Stamp Duty and Land Tax.

The Chancellor announced today that the government will extend first-time buyers relief to all first-time buyers of shared ownership properties in England and Northern Ireland.

The relief will not apply to purchases of properties valued over £500,000.

This amendment will apply to relevant transactions with an effective date of on or after 29^th October 2018.  The measure will also apply retrospectively to transactions with effective dates on or after 22^nd November 2017, which was the date first-time buyer’s relief was originally introduced.

The relief must be claimed in an SDLT Return or by amending an SDLT return which has already been filed.

For those who completed their transaction before 29^th October 2018, the opportunity to amend their SDLT Return will be extended by a further 12 months until 28^th October 2019.

A technical correction was included to extend the time frame in which the 3% SDLT on additional dwellings can be reclaimed.  This applies to situations where an individual sells his or her home within three years of making a replacement purchase.  The amendment, which comes into effect from 29^th October 2018, extends the reclaim period from three to twelve months following the sale of the old home.

For further information, please click: https://www.gov.uk/government/publications/budget-2018-overview-of-tax-legislation-and-rates-ootlar/budget-2018-overview-of-tax-legislation-and-rates-ootlar

For a full and comprehensive UK tax advisory and filing service, please contact us today at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

UK Capital Gains Tax. UK Tax Reliefs for Businesses and Individuals. UK Tax Advice for Shareholders and Company Directors. Entrepreneurs Relief

This UK Budget was overshadowed by Brexit, however, tax raising measures were limited and there was an anticipated range of anti-avoidance and anti-evasion tax measures. The Chancellor announced two key changes to Entrepreneurs’ Relief in today’s budget which will impact shareholders and business owners.  The application of this Capital Gains Tax (CGT) relief was restricted and the qualifying period for shareholdings to qualify for entrepreneurs’ relief has been extended from twelve months to two years.

What is Entrepreneurs’ relief?

Entrepreneurs’ Relief reduces the rate of Capital Gains Tax on disposals of certain business assets from 20% to 10%.

What changes were introduced today?

 Today’s Budget introduced two new additional tests to be met:

1. The First one which extends the qualifying holding period from one year to two years for disposals on or after 6^th April 2019.  In other words, it increases the holding period for shares held by individual shareholders. Individuals will now be required to hold the shares for at least 24 months rather than the current 12 months before they can claim Entrepreneurs’ Relief on the disposal of their shares. This change will apply to disposals made on or after 6 April 2019.
2. The second change immediately introduces two further tests that must be satisfied before Entrepreneurs’ Relief is available. These tests will require the claimant to have at least a 5% interest in both (a) the distributable profits and (b) the net assets on a winding up of the company. The measure will have effect for disposals on or after 29 October 2018.

What does the 5% Rule mean?

 The changes introduced in today’s Budget mean that along with existing conditions that an individual must hold at least 5% of the ordinary share capital and voting rights of a trading company, the individual must also be entitled to:

a)       5% of distributable profits and

b)       5% of assets available on a winding up of that company.

How is Entrepreneurs’ Relief affected by Dilution?

 As previously announced, the Government confirmed that legislation will be implemented from 6^th April 2019 in relation to individuals’ shareholdings diluted below 5% as a result of a commercial cash investment.

These individuals will be able to elect to preserve their Entrepreneurs’ Relief on gains to the date of dilution by treating their shareholding as having been disposed of and simultaneously reacquired at market value at the time of dilution. Another way of looking at this is, under the new rules, a shareholder can elect to claim Entrepreneurs’ Relief on the capital gains accrued before dilution below 5%.  This is provided the dilution resulted from an issue of new shares for cash. The Entrepreneurs’ Relief will be claimed on the eventual disposal of those qualifying shares.  There is, of course, the prerequisite that the share issue has not occurred for the purposes of tax avoidance.

There will also be an election allowing the individual to defer any tax due until a future liquidity event.

It is important to keep in mind that this provision will also not be available if the percentage entitlement falls below 5% due to a part-disposal of shares.

What about Entrepreneurs’ Relief in situations where there has been a transfer of a business to a limited company?

 The changes to Entrepreneurs’ Relief introduced in today’s Budget will affect the availability of the relief on the sale of shares originally issued after the incorporation of a trade.

A transfer of a trade in exchange for shares in a trading company should benefit from Entrepreneurs’ Relief if the trade existed for at least two years prior to the date of incorporation.

Under the current regime the claimant was required to hold the resultant shares for at least two years prior to the date of disposal.

Therefore, this amendment to the Entrepreneurs’ Relief is deemed to benefit sole traders who incorporate the trade shortly before selling their business.

For further information, please click:

https://commonslibrary.parliament.uk/research-briefings/cbp-8428/

https://www.gov.uk/government/collections/budget-2018

For further information on the full and comprehensive range of UK taxation services provided, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

UK Taxes. UK Capital Gains Tax (CGT). Full Cross Border and Expat Tax Services. UK CGT Reliefs

Current UK Legislation

Principal Private Residence Relief (PPR) is a capital gains tax relief on the disposal of an individual’s only or main residence.  Under current U.K. legislation, an individual can claim relief for any period where the relevant property is deemed to be the individual’s “Principal Private Residence” (PPR).  The individual can claim Principal Private Residence relief for the final eighteen months of ownership providing the property had been that individual’s principal or main residence at any point during his or her ownership.  In other words, the final eighteen months always qualify for Principal Private Residence Relief even if the dwelling was no longer the individual’s only or main residence.  Lettings relief currently provides relief of up to £40,000 to individuals who let out a property which is or has been their main or principal residence.

Budget 2018 Amendments

The government proposes to make the following two changes with effect from April 2020:

1)      The Lettings Relief will be reformed so that it only applies where the owner of the property is in “shared-occupancy” with a tenant.  The relief can reduce the capital gain, per person, by up to £40,000, giving a potential tax saving of up to £11,200 (£40,000 x 28%) and

2)      The final period of exemption, which applies if a property has been an individual’s PPR at any point during their period of ownership, will be reduced from eighteen months to nine months.   There are no proposed amendments to the thirty six months that are available to disabled persons or those residing in a care home.

The government will consult on the proposed changes before legislating.

For further information, please click:  https://www.gov.uk/government/publications/private-residence-relief-budget-2018-brief

As Cross Border Tax Advisors, we provide a full and comprehensive UK tax advisory and compliance service including liaising with HMRC on your behalf.  For further information, please contact us through queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.