SDLT Surcharge, Capital Gains, Quarterly Recording and other items

Jan 21, 2016   //   by Ralph   //   Latest News

A happy new year to you all.  I hope you all had a good Christmas and are looking forward to 2016. I stated last month that I would give any highlights of the Chancellor’s Autumn Statement in this month’s edition of Accountant’s Corner due to dates of going to press. Well there is nothing much to report, we have predicted low interest rates to thank for that, although there may well be greater changes in the budget on the 16th March 2016.

SDLT surcharge for buy-to-let landlords.  There is to be a 3% SDLT surcharge on all residential property where the purchaser is not going to live in the property. This means that on a buy to let investment property of £150,000 there will be £5,000 SDLT payable rather than £500. This does not apply to commercial property and the government are consulting as to whether it will apply to landlords with more than 15 properties. For those landlords who have exchanged prior to the 25th November 2015 but completing after 1st April 2016 the new rules will not apply. Once the rules have been finalised I will let you know.

Capital gains tax earlier payment dates. Although this doesn’t come in until April 2019 from that date all capital gains tax on the sale of let property will be due by 30 days after the date of completion rather than by 31st January in the year following the tax year in which the property was sold as the system is now.

Reporting quarterly to HMRC.  Buried in the Autumn Statement is a proposal to force business and landlords to report income and expenditure quarterly to HMRC. Apparently this is to reduce compliance costs for the businesses. I have to admit to being at a loss as to see how this can be, surely multiplying the reporting requirement by four will not ease the burden on small business.

Other items.

Reasonable expectation of profit. Losses in a trade can be offset against (amongst other things) other income received in the same tax year. A recent tribunal case has shown that for these losses to be offset they must be suffered by genuine business with a reasonable expectation of profit. HMRC successfully argued that the expectation of profit was too far away for the business model to be viable therefore the losses were not allowable. The business was as a sheep farmer. To counteract any such challenge by HMRC a good business plan is advisable.

Self-employed travelling expenses. There has been another case which has resulted in a victory for HMRC in their efforts to restrict the amount of travelling expenses that the self-employed claim. The latest case concerned a consultant anaesthetist Dr. Jones, who worked at several hospitals in South Wales. He administered his business from home and the tax tribunal accepted this. The fact that he attended one hospital about 100 times and another about 50 was sufficient for the tribunal to deny tax relief for these expenses. This is concerning because often the self-employed will work at one place for several weeks at a time, or visit one customer regularly. Beware of HMRC trying to deny relief. Detailed records should be kept to show all different locations visited.

The author Ralph Robson FCCA is based at TA Gittins & Company’s Wrexham office and can be contacted on 01978 264846 or via email on ralph.robson@tagittins.co.uk

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