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The government introduced new rules to encourage charitable giving on death in 2012. The rule which has remained unchanged ever since means that a reduced rate of Inheritance Tax (IHT) of 36% (reduced from 40%) applies where 10% or more of a deceased’s net estate is left to charity. The lower rate applies where 10% or more of the ‘net value’ of the estate is left to charity. The current IHT nil rate band is £325,000 per person, below which no Inheritance Tax is payable. Any unused nil rate band can usually be transferred to a surviving spouse...

If you are an employee working from home, you may be able to claim tax relief for some of the bills you pay that are related to your work. Employers can reimburse employees for the additional household expenses incurred through regularly working at home. The relief covers expenses such as business telephone calls or heating and lighting costs for the room you are working in. Expenses that are for private and business use (such as broadband) cannot be claimed. Employees may also be able to claim tax relief on equipment they have bought, such...

The replacement of domestic items relief has been in place since April 2016. The relief allows landlords to claim tax relief when they replace movable furniture, furnishings, household appliances and kitchenware in a rental property. The allowance is available for the cost of domestic items such as free-standing wardrobes, curtains, carpets, televisions, fridges and crockery. The amount of the deduction is based on: the cost of the new replacement item, limited to the cost of an equivalent item if it represents an improvement on the old...

A new consultation has been published by the UK government seeking views for how a worldwide 15% minimum Corporation Tax should be enforced domestically. This follows more than 130 countries signing up to a new global minimum tax framework in October 2021, after the G7 agreed in principle to this measure during UK’s presidency. We have also seen publication of the Global Anti-Base Erosion Model Rules (Pillar Two) by the OECD/ G20 on 20 December 2021. This paper states that implementation of these new rules is envisaged by 2023. This new...

HMRC has issued an interesting press release stating that ‘Fact: HMRC does not do ‘sweetheart deals’. HMRC makes sure every taxpayer, no matter what their size, pays everything they owe.’ This denial could be in response to many claims that have been made over the years in Parliament and the press suggesting that HMRC offers better settlement terms when dealing with certain taxpayers (usually the largest UK businesses and multinationals). HMRC refutes these claims saying they seek to collect the right amount of tax due under UK law and that...

The rules for the Corporation Tax treatment of carried forward losses changed from 1 April 2017. The changes increased flexibility to set off carried forward losses against total profits of the same company or another company in a group whilst at the same time introducing new restrictions as to the amount of profits against which carried forward losses can be set. However, there is a specific restriction in respect of company reconstructions that disallows carried forward losses to a successor company. Broadly speaking, the losses disallowed...

HMRC has announced that late filing penalties will be waived for taxpayers that file their 2020-21 Self-Assessment returns by 28 February 2022. The due date of 31 January 2022 remains and HMRC is still encouraging taxpayers to try and meet this deadline. Taxpayers should try and pay their tax bill by 31 January 2022 as interest will accrue from 1 February 2022 on any outstanding liabilities. There had been concerns from Self-Assessment taxpayers and their agents for the government to soften its stance on late filing penalties in view of the...

In tandem with the announcement that no late filing penalties will be issued for 2020-21 Self-Assessment returns submitted by 28 February 2022, HMRC has also confirmed a delay in implementing late payment penalties. This means that taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by midnight on 1 April 2022. Under the normal rules a 5% late payment penalty would have been charged if tax remained outstanding or a payment plan has not been set up before 3 March 2022. This extension gives...

Making Tax Digital (MTD) for VAT is to be extended to cover businesses with a turnover below the VAT threshold from April 2022. The MTD for VAT regime started in April 2019 when businesses with a turnover above the VAT threshold of £85,000 became mandated to keep their records digitally and provide their VAT return information to HMRC using MTD compatible software. The extension of MTD from April 2022 will apply to all VAT registered businesses with turnover below the VAT threshold of £85,000. This change was first announced in July 2020 and...

HMRC’s Fraud Investigation Service (FIS) was launched in April 2016. The FIS is responsible for HMRC’s civil and criminal investigations into the most serious fraud and wrongdoing. It has been estimated that tax evasion and fraud cost the exchequer up to £10bn per annum. The formation of the FIS brought together HMRC’s criminal and civil investigators. This partnership allows HMRC’s investigators to unlock the most complex financial crimes. Since the service was established more than £1 billion has been recovered from the proceeds of crime and...