View the related Tax Guidance about Property tax
Introduction to stamp taxes
Introduction to stamp taxesThere are a five UK stamp taxes which apply to transactions involving UK land and buildings, stocks and marketable securities and partnership interests. The five stamp taxes are:•stamp duty land tax (SDLT), applying to transactions in land and buildings in England and Northern Ireland •land and buildings transactions tax (LBTT), applying to transactions in land and buildings situated in Scotland•land transaction tax (LTT), applying to transactions in land and buildings situated in Wales•stamp duty applying to instruments (for example, a stock transfer form) that transfer UK shares and certain other types of stocks and securities•stamp duty reserve tax (SDRT) applying to electronic (or paperless) transfers of UK shares and certain other securitiesIn addition, there is separate property tax known as the annual tax on enveloped dwellings (ATED) which should be considered along with the SDLT (or LBTT/ LTT) consequences of the acquisition of residential property. Broadly, ATED applies to the acquisition of certain UK dwellings worth more than £500,000 by companies and other types of ‘non-natural persons’. For more information, see the Overview of the ATED regime guidance note. Each stamp tax is briefly described below, with links to separate guidance notes containing further details.SDLT, LBTT and LTTSDLT was introduced on 1 December 2003 to replace stamp duty on transactions in land and buildings. Its scope is much wider than stamp duty in that it
Weekly tax highlights ― 15 April 2024
Weekly tax highlights ― 15 April 2024Direct taxesPAYE and NICs guides updatedHMRC has updated the 2024–25 version of its CWG2 employer guide to PAYE and NICs to note the following:•tax-free lump sums over £30,000 paid to employees who cannot work due to disability, injury or ill health no longer need to be reported to HMRC (also reflected in the 2023–24 edition)•the new rules around delayed reporting of salary advances•NICs rates from 6 April 2024HMRC has also published the 2024–25 edition of its guide CA44: National Insurance for company directors.New guidance on pension lump-sum allowancesHMRC has published the following new guidance which explains in straightforward terms how the individual lump sum allowance and lump sum death benefit allowance work from 6 April 2024, following abolition of the lifetime allowance:•find out the rules around Individual lump sum allowances•how to tell HMRC about a lump sum death benefit chargeHMRC has also updated its guidance ‘Protect your pension lifetime allowance’ to reflect the deadlines for applying for fixed protection 2016
Qualifying interest in possession trusts ― IHT treatment
Qualifying interest in possession trusts ― IHT treatmentTrust property, which is the subject of a qualifying interest in possession (QIIP), may become chargeable to inheritance tax on the following occasions:•on the death of the beneficiary with the interest in possession•on the death of the beneficiary within seven years after a transfer or lifetime termination of his interest•on the transfer or conversion of the interest to a non-qualifying or discretionary interestProperty in which a QIIP subsists is not relevant property so it is not subject to principal and exit charges during the life of the trust. See the Relevant property guidance note, and other notes in the 'relevant property' sub-topic for details of the relevant property tax regime.Death of the beneficiary with the qualifying interest in possessionWhen the beneficiary with the QIIP dies, the trust property will be valued and counted as part of the deceased estate, and the inheritance tax estate charge will be levied on that property (in addition to any other property that is in his estate). In valuing the trust property, the related property rules will apply. Once the inheritance tax estate charge has been calculated, the trustees of the interest in possession trust will be responsible for paying that part of the tax that relates to the settled property (with the personal representatives being primarily responsible for paying the balance).By contrast, a reversionary interest in settled property subject to a qualifying interest in possession is not included in the estate of the
Overview of the ATED regime
Overview of the ATED regimeATED ― backgroundThe annual tax on enveloped dwellings (ATED) regime was introduced by FA 2013, Part 3 and was one element of a series of anti-avoidance measures that were designed to make it less attractive to hold high-value UK residential property through a corporate structure (or ‘envelope’). The key aspects of ATED are:•the annual charge•entities ‘in charge’ but relievable and the nil return requirement to avoid penalties•ATED-related SDLT•ATED-related CGT for disposals prior to 6 April 2019The ATED regime applies to high-value UK residential property owned on, or acquired after, 1 April 2013, by:•companies•partnerships with at least one company member, or•collective investment schemes (including unit trusts)Together these are referred to in the remainder of this guidance note as ‘non-natural persons’ or ‘NNPs’. The ATED charge applies regardless of where the NNP is established or resident and therefore applies to both UK and non-UK NNPs.Those within the ATED rules are subject to an annual property tax based on the value of the property held, although certain reliefs and exemptions are available. ATED also brings with it additional filing requirements for those within the scope of the provisions, even in cases where no tax charge is actually payable.The ATED rules are complex and this guidance note outlines the main aspects of the regime only.For further detail on the ATED regime, see Simon’s Taxes B6.7 and also HMRC’s annual tax on enveloped dwellings technical guidance.When does ATED apply?Broadly, the ATED regime will
Weekly case highlights ― 25 March 2024
Weekly case highlights ― 25 March 2024These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.SDLTNewsand Ltd v HMRCRegular readers of these notes will be aware that HMRC has had a high level of success in appeals involving multiple dwelling and mixed-use SDLT reliefs. Here HMRC sought to build on those successes by applying to the tribunal for this appeal to be struck out, on the basis that it had no reasonable prospect of success. It cited the previous decision in the LadstonPreston case to support its application. The tribunal did not agree. Although it said that there were clear similarities between that case and the current one, there were some differences and it could not be said that the taxpayer’s chances of success in an appeal were merely fanciful. As a result, the appeal will now proceed to a full hearing.All involved in tax litigation will find much of interest in this decision and it does show that ultimately every case has to be decided on its own merits. Investment and Securities Trust Ltd v HMRCThis is quite a complex case concerning both ATED and SDLT. Essentially, the question was whether the acquisition of a property by a company from a director was wholly for
Tolley tax case tracker
Tolley tax case trackerThis tax tracker tool displays the current status and most recent developments of direct tax cases being heard by the Upper Tribunal (UT), the Court of Appeal, the Court of Session, the Supreme Court and the EU Court of Justice as at 14 May 2024. It is updated on a rolling monthly basis.The tracker is split into three parts:•Cases subject to an appeal•Cases potentially subject to an appeal, and•Finalised tax casesRecent updates are shown below in bold.Cases subject to an appealThis section of the tracker shows those cases that are currently subject to an appeal.Name of parties and citationCurrent statusAltrad Services LFtd (formerly Cape Industrial Services Ltd) and another v HMRCCA/2022/001869; [2023] EWCA Civ 474; [2022] UKUT 185 (TCC); [2020] UKFTT 162 (TC)Corporate tax: Ramsay principle The FTT found that the scheme failed on Ramsay grounds because the taxpayers had not really disposed of (and then reacquired) the assets on which allowances were claimed. However, FTT found that, but for Ramsay, the scheme would have worked. The UT decided that the taxpayers were entitled to capital allowances even though these had been created by an artificial series of transactions with no business purpose, reversing the FTT’s decision that the arrangements were defeated by a Ramsay analysis. The Court of Appeal granted HMRC permission to appeal the UT’s decision on its first ground of appeal, namely that the UT erred in law in concluding that the taxpayers
A–Z of international tax terminology
A–Z of international tax terminologyList of commonly used phrases in international taxThe table below lists some of the terminology commonly used in the context of corporate international tax and transfer pricing, together with links to additional sources of information including other guidance notes, Simon’s Taxes and HMRC’s manuals.Navigation tip: press ‘Ctrl + F’ to search for a particular term within the table.TerminologyDefinitionFurther detailsAAnti-conduitCertain double tax treaty provisions contain anti-conduit conditions, which deny treaty benefits where the amounts received are paid on to another company. This ensures that treaty benefits are only obtained by the contracting states, rather than residents of third countries who have deliberately arranged their transactions to obtain treaty benefits to which they would not otherwise be entitledDT19850PPArm’s length arrangementAn arm’s length arrangement reflects the price that would be payable and the terms which would be agreed for a transaction between unconnected parties. This is important for the purposes of the transfer pricing legislation (see ‘Transfer pricing’ below)Transfer pricing rules ― overview guidance note Simon’s Taxes B4.147INTM412040ATAD (anti-tax avoidance directive)ATAD is an EU directive which provides for a series of anti-abuse rules relating to interest expense deductions, controlled foreign companies and hybrid mismatches, and requires the introduction of a corporate GAAR and an exit tax (these two measures not being part of the BEPS project). ATAD II introduced further measures to combat hybrid mismatches, whilst ATAD 3 aims to limit the use of ‘shell’ holding
Overseas property businesses for companies
Overseas property businesses for companiesOverviewReal estate income is generally taxed where the property is located; the UK’s network of tax treaties generally allow the jurisdiction where the land is located to tax income from the land.Therefore, a UK company with overseas property may be subject to tax in the foreign jurisdiction as well as in the UK, as UK tax rules subject a UK company to UK corporation tax on its worldwide profits including from foreign land and property. Relief for overseas tax on property income may be available by treaty relief, unilateral relief or deduction relief, depending on the circumstances. There is unfortunately no substitute for checking the tax treaty to see if one country has unilateral taxing rights, or otherwise how its provisions may affect double tax relief. The relevant provisions to check will depend on the nature of the income, such as rental or trading. Basis of taxation of foreign property incomeWhere the business of the UK company is such that the income from property is taxed as trading income, rather than gains (eg where the company is a property developer or trades in property such as flipping), then the UK tax treaties, where applicable, may provide relief from overseas taxes under the business profits article. Where the UK company does not have a permanent establishment in the treaty country, the UK will generally have taxing rights over business profits over the UK company, including the profits of a property business.Where the UK company is a
Spring Budget 2024
Spring Budget 2024Chancellor Jeremy Hunt delivered his Spring Budget on 6 March 2024, setting out further proposals to stimulate growth in the economy in advance of a General Election.The key changes / announcements made are summarised below. Detailed analysis will follow in all of our usual sources.Personal taxesAbolition of the remittance basis of taxationUK resident individuals who are not domiciled or deemed domiciled in the UK currently have the choice to pay tax on the remittance basis (meaning UK tax is only paid on foreign income and gains to the extent that these are brought to the UK in the tax year) or the arising basis (meaning UK tax is payable on worldwide income and gains arising in the tax year).From 6 April 2025, the remittance basis of taxation is expected to be abolished. This is to be replaced by a new regime linked to the number of years of UK residency.Individuals will not be taxed in the UK on their foreign income and gains for the first four tax years of UK residency, under a new system called the ‘foreign income and gains’ regime (also known as FIG). They will be free to bring the foreign income and gains arising in those tax years to the UK without suffering a UK tax liability, in a departure from the existing remittance basis rules. They will also not pay tax on non-resident trust distributions. They will not however be entitled to a UK personal allowance or annual exempt amount. From
Weekly tax highlights ― 2 April 2024
Weekly tax highlights ― 2 April 2024Direct taxesFinance Act 2021 (Income Tax and Capital Gains Tax) (Penalties) (Appointed Day: Eligible Volunteers) Regulations, SI 2024/440These Regulations appoint 6 April 2024 as the day on which FA 2021 Schs 24–27 come into force for income tax and capital gains tax for the purposes of failures by eligible volunteers in relation to returns required to be made and tax payable by persons other than trustees or partnerships.Those Schedules of Finance Act 2021 established a new points-based system of penalties for late returns, including where the taxpayer has deliberately withheld information from HMRC, and penalties for failure to pay the relevant amount of tax on time. This is a new harmonised system of penalties across multiple taxes, and was brought into effect for VAT purposes only from 1 January 2023.Income Tax (Indexation of Qualifying Care Relief Amounts) Order, SI 2024/423This Order sets out the following amounts of qualifying care relief from the 2024–25 tax year onwards:•fixed amount: £19,360 (up from £18,140)•weekly amount for an adult: £485 (up from £450)•weekly amount for child under 11: £405 (up from £375)•weekly amount for older child: £485 (up from £450)Indirect taxesList of museums and galleries eligible for VAT refunds to be updatedHMRC is
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