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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 applies to any acquisition of a

Weekly tax highlights ― 22 July 2024

Weekly tax highlights ― 22 July 2024Direct taxesHMRC form P1000 published onlineHMRC has published form P1000 online for the first time, it having previously only been available on request from HMRC. The form is used to advise HMRC of the personal representatives on a death and also to authorise someone to act for them, rather than completing a form 64-8. The form is not electronic and will need to be printed and completed in hardcopy.Property taxesLand transaction tax reliefs: consultation responses summarisedThe Welsh government’s report summarises the contributions received to its consultation on land transaction tax (LTT) reliefs. In response, the Welsh government intends to undertake further work, taking into account comments received, before making decisions on potential changes to LTT reliefs. The report sets out key issues considered, under the following main sections:•multiple dwellings relief ― abolition received a mixed response, with respondents on both sides raising various problems and challengessix dwellings rule ― most favoured retaining the rule, with concerns raised around potential negative impacts on larger investors, housing supply, and the Welsh economy if abolishedsocial housing ― respondents agreed with the extension of existing relief to Welsh local authorities for social housingInternationalHMRC brings together pillar 2 guidance HMRC has brought together its collection of guidance on the multinational top-up tax and domestic

Weekly tax highlights ― 16 September 2024

Weekly tax highlights ― 16 September 2024Direct taxesMultinational Top-up Tax and Domestic Top-up Tax ― further HMRC draft guidanceHMRC has published further draft guidance on Multinational Top-up Tax and Domestic Top-up Tax. This release of the draft HMRC guidance manual includes all previously released pages (including updates in some cases) in addition to newly drafted pages.HMRC invites comments from stakeholders and publication of the manual will begin following the review of consultation responses.A supplementary release of draft guidance will follow in due course. This will include remaining draft guidance on flow-through entities, joint ventures, the insurance sector, additional top-up amounts, and the undertaxed profits rule (UTPR).The consultation closes on 23 October 2024.This guidance collection has also been updated to include a link to the consultation and a new section ‘Report Pillar 2 top-up taxes’.See Simon’s Taxes D4.302, D4.320.The Research and Development Relief (Information Requirements etc) Regulations 2024, SI 2024/950These Regulations amend the Relief for Research and Development (Content of Claim Notifications, Additional Information Requirements and Miscellaneous Amendments) Regulations 2023 (SI 2023/813) in relation to the specified information to be provided by companies in support of their claims for Research and Development (R&D) tax reliefs following significant reforms to the R&D tax regime. A valid additional information form must be submitted alongside a claim for R&D relief.They also make a small technical amendment relating to R&D claim notifications, and require notifications under Regulation 2(3)(b) of the Research and Development (Chapter 2 Relief) Regulations 2024 (SI 2024/348) (which enable certain companies to

Qualifying interest in possession trusts ― IHT treatment

Qualifying interest in possession trusts ― IHT treatmentThis guidance note details the IHT treatment of qualifying interest in possession trusts on the death of the beneficiary or on a termination in their lifetime and explains the calculation in each case, including any exemptions that are available.When a QIIP is charged to inheritance taxTrust 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 interest during the beneficiary’s lifetime.Property in which a QIIP subsists is not relevant property so it is not subject to principal (10-year) 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’s estate, and inheritance tax will be charged on that property (in addition to any other property that is in their estate). In valuing the trust property, the related property rules will apply. See the Valuation of property guidance note. Once the inheritance tax charge has been calculated, the trustees 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

Tolley’s monthly tax case tracker 2024

Tolley’s monthly tax case tracker 2024This 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 9 December 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 cases that are currently subject to an appeal.Name of parties and citationCurrent statusA D Bly Groundworks and Civil Engineering Limited v HMRCCA/2024/001410; [2024] UKUT 104 (TCC); [2021] UKFTT 445 (TC)Corporation tax-provision for pensions liabilities The FTT found that the primary purpose of entering into an unfunded pension arrangement (which had been notified under DOTAS) was to reduce their corporation tax liability without incurring any expenditure; and that the liability to pay pensions under those arrangements did not generate deductible expenses (even though there were pensions being paid out). The FTT also found that the creation of such a scheme is not a payment or transfer from which benefits will be provided under the EBT regime. The UT dismissing the appeal upheld the FTT’s conclusion that the pension liabilities were not incurred wholly and exclusively for the purposes of a trade and accordingly the deductions claimed should not be

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 detailsAAmount A and Amount BPart of the OECD’s package of measures to be introduced under Pillar 1 ― see ‘Pillar 1’ belowAnti-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

Weekly tax highlights ― 25 November 2024

Weekly tax highlights ― 25 November 2024Direct taxesPensions (Abolition of Lifetime Allowance Charge etc) (No 3) Regulations, SI 2024/1167These Regulations make further consequential changes as a result of the abolition of the pensions lifetime allowance.These Regulations make further changes to the substantive pensions legislation (mainly FA 2004 Schedules 29 and 36) in consequence of the abolition of the lifetime allowance. The changes have effect for the 2024–25 tax year onwards.See Simon’s Taxes E7.215A.Indirect taxesPrivate school fees and VAT treatment of therapy servicesHMRC has updated its guidance on the VAT treatment of payments linked to private school fees to cover supplies of therapy services which are provided in addition to supplies of education.In an important addition to its guidance on the VAT treatment of payments linked to private school fees, HMRC has provided new notes and examples covering situations where pupils receive therapy services in addition to education. The new section ‘supplying special educational needs and disabilities (SEND) therapies and education’ notes that, where services performed by registered healthcare professionals (such as speech and language therapists or educational psychologists) are provided by a school it will be necessary to determine who is making the supply and whether the services form part of a single supply of education or are a separate supply of healthcare. The guidance confirms that ‘qualifying supplies of healthcare are exempt from VAT as long as the primary purpose of these services is the protection, maintenance, or restoration of the health of a person.’See De Voil Indirect

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