This month you may have taken advantage of Free Wills Month, to have a Will drafted for free by a participating firm of solicitors. If they have got a new Will, or even if they have an old one, it is worth reviewing it to check whether IHT will be due at 40% or 36% on death.

The reduced rate of IHT applies when at least 10% of the net estate is left to charities. This is the value of the estate after deduction of the nil rate band, and is also referred to as the “baseline amount” (IHTA 1984, Sch 1A). You can work out whether the 10% gift threshold will be met by using the IHT reduced rate calculator.

[Read more…] about 29/03/2018 – IHT and Wills

On 15 March 2018 a new VAT law came into effect whose purpose is to ensure that sellers which sell through online marketplaces pay the right amount of VAT on the goods they sell in the UK (FA 2018, s 38).

This new law will primarily affect the big players such as: Ebay, Amazon and Facebook, but it also applies to companies which sell their own goods online and invite other companies to sell parts or products alongside. For example, a manufacturer of coffee making machines may allow coffee suppliers to advertise on their site and sell coffee pods to use in the machines.

[Read more…] about 29/03/2018 – VAT and online marketplaces

Many construction workers operate through their own personal service companies (PSC), as their particular skills are needed for short periods on different construction projects. The PSC normally contracts with an agency, which in turn contracts with the company running the construction project.

This was the situation for Mr Daniels, whose company MDMC Ltd contracted with an agency, which provided his services to the construction firm STL. IR35 would apply if, had Daniels provided his services directly to STL, the hypothetical contract for that arrangement would be an employment contract rather than a contract for services.

HMRC had to prove that the indications of employment existed in the hypothetical contract and they out-weighed the indications of self-employment. The judge helpfully summarised the various factors which pointed to employment or self-employment.

For employment:

• No substitution permitted
• Daniels took no financial risk
• Safety equipment was provided by STL

Against employment:

• Daniels was not controlled by STL any more than any other contractor
• Daniels could refuse to work on another site
• He was paid a fixed rate per day
• No notice period
• No sick pay or holiday pay
• No employment benefits
• No expenses paid for travel or accommodation
• He was not integrated into STL

Although the judge found that Daniels could not provide a substitute to work for STL, and he took no financial risk with the contract, in evaluating the situation overall Daniels was not treated as an employee and IR35 did not apply.

This case demonstrates that one factor (such as substitution) should not outweigh all other factors, and the entire relationship must be considered.

Written by the Tax Advice Network

In the week when we were all shocked that our personal data was harvested to be used in political campaigns, its good to remind clients that HMRC is also a digital player, which hoovers up useful data on taxpayers where it can.

The revised leaflet on tax investigations conducted under Code of Practice 8 has a new section which says: “HMRC may observe, monitor, record and retain Internet data which is available to anyone. This is known as ‘open source’ material and includes news report Internet sites, Companies House and Land Registry records, blogs and social networking sites where no privacy settings have been applied.”

This, states the obvious that if you make online posts on with a “public” setting, anyone, including HMRC, can read them. This applies to all posts on twitter which are not direct messages, as well as public posts on Facebook and Linkedin.

Although the information gleaned from online sources may not be complete or accurate, HMRC will use it to paint a picture of the taxpayer’s lifestyle, which in turn informs them of the taxpayer’s likely income and wealth.

From 31 January 2018 HMRC has been able to ask the High Court to issue an unexplained wealth order (UWO) where it suspects the individual of being involved in serious crime, including tax evasion, and has an interest in a particular property. An UWO can also be applied to any politically exposed persons who come from a country outside the EEA. The individual who receives the UWO must provide information about the property, such as its legal ownership and the means by which is was obtained.

Written by the Tax Advice Network

The Government is sending out mixed messages about electric vehicles. It encourages employers to provide charging points for electric vehicles but penalises employees who drive company-provided electric cars or vans. Here are the facts that employers need to know.

An employee provided with an electric company car will see their taxable benefit leap from 9% of list price to 13% of list price on 6 April 2018, and it will increase again to 16% of list price on 6 April 2019. Bizarrely on 6 April 2020 the taxable benefit for an electric company car will reduce to 2% of the vehicle’s list price.

The taxable benefit for using an electric van for private journeys more than doubles on 6 April 2018 from £646 to £1,340 per year, which is still a bargain compared to the benefit for an electric company car.

Currently charging a company owned electric car or van at work for free is not a taxable benefit, as electricity is not a “fuel” for the car benefit regulations. However, where employees are permitted to charge their own electric vehicles at work for free, the cost of the electricity used is a taxable benefit.

In the Autumn Budget on 22 November 2017 Philip Hammond announced that the law would be clarified, such that employees would not be taxed on a benefit in kind when the charge their own electric vehicles at their workplace. This change was to apply from “next year”, which presumably was supposed to be from 6 April 2018.

The law has not been clarified, there is in nothing in FA 2018 (passed on 15 March), and there are no new regulations. The CIOT has been assured that the law will be changed in FA 2019 and backdated to 6 April 2018.

Where the business installs electric charging points for vehicles in the period from 23 November 2016 to 31 March 2019, it can claim a 100% capital allowance for those costs.

Written by the Tax Advice Network

In our newsletter on 8 March 2018 we told you about the imminent demise of childcare voucher schemes. These employer-supported schemes were due to close to new entrants on 5 April 2018, but the Government (under pressure from the DUP), has decided to allow these schemes to accept new applicants for another six months to October 2018.

[Read more…] about 22/03/2018 – Childcare