Author Archives: corlettcolin

Private residence relief changes

When houses became harder to sell the government brought in a relief for owners who basically had to buy a new house without selling their old one.

They allowed you 3 years to sell the old house without any reduction in the private residence relief for the capital gain on sale.

From April 2014 this period will be reduced to 18 months.

So if you own 2 or more houses and they are both potentially your residence then you might need to reassess which is your main one and let the tax man know.

Tax advice and bookkeeping in Cumbria? – Give me a call on 075 1391 7997

£2,000 NIC relief

The £2000 employers NIC relief will kick in from April

Basically it is

  • Available to all sizes of business, with certain exceptions.
  • Claimed via the payroll software.
  • From 6 April 2014 onwards.
  • This measure was announced in the 2013 Budget

So for instance

  • a single employee a salary of £22,448, or
  • two part-timers on salaries of £15,202, or
  • three part-timers on £12,786, or
  • four part-timers on £11,579 per annum and
  • pay no ER’s NICs at all.

From 2015/16  there will also be exemption for any employee under 21 and earning less than £813 a week.

Do you live and work around Carlisle? Why not give me a call for free a consultation.

Capital gains tax on a granny flat

The recent first tier tribunal decision in the Wagstaff case brings welcome news for anyone who has come to a financial arrangement with an parent or in law in regard to their house.

The old lady sold her house to her daughter and son in law on the condition that she could continue to live there. When the house came to be sold it was accepted that an implied trust had been created and therefore private residence relief was available.

More details here

If you live in Cumbria and have a tax question then please give me a call on 075 1391 7997

FHLs and BPR

Holiday cottages ( or furnished holiday lets ) are a funny creature. For NIC purposes they are not a business but for some really important reliefs they have always been regarded as a business.

One of these reliefs, business property relief, means that traditionally there would be no inheritance tax to pay on a holiday cottage. With IHT rates as high as 40% this was a valuable concession.

However the recent Pawson case looks as if all this has been overturned.

Basically the executors of the estate will need to show that the business activities have been much more than maintenance and taking bookings. You have to look to what a hotel or B&B would provide as an idea. So these might include

1. Cooking and provision of meals ( think a courtyard of cottages and maybe a tea room attached)

2. Activities on site such as organised trips.

3.On site services such as massages or baby sitting.

To me it looks like this level of service would be tricky for single cottages and ones which are remote or isolated.

If you have a number of houses close to many attractions and you or a manager live on site or nearby then there is a chance for you but otherwise?

 

What is entrepreneurs relief?

When you come to sell your business there will hopefully be a capital gain to pay. In most cases this will be charged to tax at 28%. However Entrepreneurs relief can offer you the opportunity to only pay 10% capital gains tax. The relief applies to partnership disposals as well as certain land and building sales where they were used in a qualifying business. There is a lot of small print but essentially this is a good relief for business owners.