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.
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.
From 6th 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.
https://www.gov.uk/inheritance-tax
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 6th 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 5th April 2026.
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:
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.
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.
From 6th 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 6th 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 6th 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.
https://www.gov.uk/government/news/what-are-the-changes-to-agricultural-property-relief
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.
Today, 30th 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 31st 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:
The Government have introduced new Anti-Avoidance legislation in respect to loans to participators. From 30th 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 30th 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.
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.
In the United Kingdom, the tax year commences on 6th April and ends on the following 5th April. HMRC have published a set of criteria which outlines the taxpayer’s requirements in order to accurately and correctly complete a self-assessment tax return. For further information please click link: https://www.gov.uk/log-in-file-self-assessment-tax-return
You are required to file a self-assessment form if you are a self-employed individual or if you receive untaxed income, for example, from rental properties. In other words, the self-assessment system applies to any individual whose income is not automatically taxed at source. To check if you need to file a self-assessment tax return please click: https://www.gov.uk/check-if-you-need-tax-return
For the 2023/24 tax year, taxpayers in receipt of PAYE earnings of up to £150,000 are no longer required to file a self-assessment tax return, provided, of course, that they do not meet any of the other self-assessment criteria outlined by HMRC.
The self-assessment deadline is 31st January 2025 for online submissions, however, if you submitted a paper tax return, the deadline was 31st October 2024. Please keep in mind that the tax is still due by 31st January 2025.
Online Tax Returns must be filed and all outstanding tax paid on or before 31st January following the end of the tax year.
In other words:
Failing to file your tax return or pay your taxes by the appropriate date can result in penalties. Missing the 31st January deadline comes can result in significant penalties even if no tax is owed. For full details, please click: https://www.gov.uk/self-assessment-tax-returns/penalties
In summary, missing any of the Self-Assessment deadlines can result in penalties and interest. A delay in filing your Tax Return by a single day can result in a £100 fine, even if you don’t actually owe any tax.
You can register for self-assessment through the HMRC website before the deadline of 5th October. For further information, please click: https://www.gov.uk/register-for-self-assessment
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.
The Chancellor of the Exchequer, Jeremy Hunt delivered his UK Spring Budget 2024 today. As you are aware, the Furnished Holiday Letting (FHL) regime provides UK Tax relief for property owners letting out furnished properties as short term holiday accommodations. From 6th April 2025, however, the Chancellor is removing this tax incentive in an attempt to increase the availability of long term rental properties.
According to HMRC’s guidance material, a furnished holiday let is deemed to be a furnished commercial property which is situated in the United Kingdom.
It must be available to let for a minimum of 210 days in the year.
It must be commercially let as holiday accommodation for a minimum of 105 days in the year.
Guests must not occupy the property for 31 days or more, unless, something unforeseen happens such as the holidaymaker has a fall or accident or the flight is delayed.
You may wish to consider your options before the rules are abolished in April 2025.
Options include:
For further information, please click: https://www.gov.uk/government/publications/furnished-holiday-lettings-tax-regime-abolition/abolition-of-the-furnished-holiday-lettings-tax-regime
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.
Today, HMRC announced an increase in its interest rates, due to another increase in the Bank of England base rate, from 4.25% to 4.5%. The new rates will take effect from Monday, 22nd May 2023, for quarterly tax instalment payments. The aim of the late payment rate is to encourage prompt tax payment by UK Taxpayers and to ensure the system is fair for those individuals who pay their liabilities within deadline.
The new rates will take effect from Wednesday, 31st May 2023, for non-quarterly instalments payments.
Today, HMRC has announced increases to interest charged on both the late payment of tax as well as on tax repayments/refunds.
The two new increased rates of interest are:
The interest rate on unpaid instalments of Corporation Tax liabilities will increase to 5.5% from 22nd May 2023.
The interest rate for the late payment of other taxes will increase to 7% from 31st May 2023.
The interest rate paid by HMRC on the overpayment of tax will increase to 3.5% on 31st May 2023.
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.
In 2016 the ‘New State Pension’ was introduced. As part of transitional arrangements to the new State Pension, taxpayers have been able to make voluntary contributions in relation to any incomplete years in their National Insurance record between April 2006 and April 2016.
Anyone who is retiring on or after 6th April 2016, under the ‘new State Pension’ rules, requires approximately thirty five qualifying years to claim the full state pension.
The U.K. government has extended the voluntary National Insurance contribution deadline from 5th April 2023 to 31st July 2023. This will allow taxpayers more time to fill gaps in their NI records to maximise the amount they will receive in State Pension.
Therefore, if you’re a man born after 5th April 1951 or a woman born after 5th April 1953 you have until 31st July 2023 to pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016, providing you’re eligible.
Where there are gaps in an individual’s National Insurance record, voluntary NICs can be paid to be eligible for a higher State Pension or entitlement to other state benefits. Therefore, anyone with gaps in their National Insurance record from April 2006 onwards still has time to fill the gaps and increase their State Pension.
After 31st July 2023 you’ll only be able to pay for voluntary contributions for the past six years which may not be sufficient to qualify for a new State Pension if you have less than four qualifying years on your National Insurance record. Normally, you would require at least ten qualifying years in total.
Please be aware that any payments made will be at the lower 2022 to 2023 tax year rates. In other words, where the rates of voluntary National Insurance contributions were due to go to up from 6th April 2023, payments made by 31st July 2023 will be paid at the lower rate.
To look at your personal tax account to view your National Insurance record and obtain a state pension forecast, without charge, please click link: https://www.gov.uk/check-state-pension
The Future Pension Centre can tell you if paying for extra national insurance years will increase your state pension entitlement. For full details, please click: https://www.gov.uk/future-pension-centre
Based on the information you receive from HMRC, if you have returned to Ireland and you decide to top up your pension contributions before the deadline date, please find link to Application Form: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1102905/CF83.pdf
Please click for full HMRC guidance material which may be relevant to you if you have returned from working in the UK: https://www.gov.uk/government/publications/social-security-abroad-ni38/guidance-on-social-security-abroad-ni38#deciding-whether-to-pay-voluntary-national-insurance-contributions
The ability to buy back years by looking back to 2006 is scheduled to end on 31st July 2023. After the cut-off date, it will only be possible to pay for gaps in your National Insurance record by looking at the past six years. This means that you could lose out on the opportunity to maximise your UK State Pension for gap years before 2017.
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.
HMRC issued it’s updated Digital Service Tax guidance material today in which it confirmed that cryptocurrencies are unlikely to meet the definition of financial instruments, commodities or foreign exchange and will therefore, not be exempt from the Digital Services Tax. For further information, please click: https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto48000
This means that exchanges dealing in crypto assets will be subject to the 2% digital services tax on their revenue.
HMRC has confirmed that it will issue ‘nudge letters’ to known UK resident crypto-asset investors who it believes may have underpaid tax on their cryptocurrency transactions.
Therefore, if you have used, bought or sold crypto-assets between 6th April 2020 and 5th April 2021, you should check whether or not you have a reporting obligation to HMRC.
Although the letters are not being sent out to non-UK domiciled individuals, this does not mean that HMRC’s view on the situs tests for crypto-assets has changed. For further information on the location of crypto assets please click: https://www.gov.uk/hmrc-internal-manuals/cryptoassets-manual/crypto22600
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:
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:
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.
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 29th October 2018. The measure will also apply retrospectively to transactions with effective dates on or after 22nd 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 29th October 2018, the opportunity to amend their SDLT Return will be extended by a further 12 months until 28th 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 29th 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
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.