This time we have the first of several updates and new briefings covering the changes to the taxation of partnerships starting with the proposed LLP rules for "Salaried Members". We have added a Director's Service Contract template onto the website.
Although it is a requirement for every company to have such a contract, research in recent months has indicated that this matter is regularly overlooked. Lack of documentation for any agreement for the payment of a director's services can create major problems when the company later has a PAYE and NICs visit from HMRC.
Other important changes coming up in 2014 affect Capital Gain Tax main private residence elections.
Follow the links below for summaries and briefings.
Best wishes
Nichola
Nichola Ross Martin FCA
Tax Director
www.rossmartin.co.uk
Your online Virtual Tax Partner: practical support for accountants, tax advisers and their clients
Quick news & Top Tips
CGT private residence relief
The exemption for the last 36 months of ownership reduces to a 18 month period from 6 April 2014: time to review elections.
Partnerships: new rules for salaried members and profit allocations
Two big changes to flag up from April 2014:
- Some junior members of LLPs may find themselves treated as "salaried members" for tax which means that they will be subject to PAYE, and tax on benefits.
- Where a partnership has mixed membership profit allocations made to corporate members may be treated as being taxable on individual partners.
HMRC top 10 bizarre excuses for late tax returns
Sadly no claims of being abducted by aliens on this list.
Autumn Statement: at a glance
A summary of key proposals for 2014 and beyond
Our Subscriber Toolbox
Partnership and Salaried Members: new rules
Briefing and planning points: so when will a partner be taxed as an employee?
Director's Service Contract template
- All directors are required under the Companies Act to have a service contract which must be available for general inspection at the Company's registered office.
- A concern for many directors during a PAYE visit to their company is whether a service contract will be treated as an employment contract for tax.
- HMRC are very likely, in the absence of any written contract, to treat all payments made to directors as remuneration, and as a consequence assess the company for NICs (if not for PAYE).
- It may be best practice to have separate contract for employment, director's service and consultancy (if the director is also acting as a self employed consultant for the company).
Surplus cash: CGT & IHT relief
UPDATE: when and how too much cash is too much to obtain business reliefs
IHT Agricultural Property Relief & Land
NEW: agricultural land values are shooting up again which raises some particular problems in estate planning.
2013-14 Tax Planning Toolkit for directors
UPDATE: essential planning tips and pitfalls.
Shares and employees
Employee Shareholder Status - tax & planning
UPDATE: a new type of employee and a new type of employee share scheme.
Employment Related Securities
This explains what happens when you give an employee or director shares outside of an approved share scheme or EMI option scheme.
ABC or alphabet shares: directors & employees
This links you to guides for directors, family companies and employers.
Editor's choice
Property profits and losses
Covering all key angles of property taxation
Research & Development Relief
UPDATE: SME guide to R & D reports. Is your client developing an API?
Special relief
A special relief applies under s3A TMA 1970 in cases where it would be unconscionable for HMRC to seek to recover an amount of tax or refuse repayment (if already paid). This is the statutory version of the old equitable liability concession.
Directors' service contracts - top tips
Company law requires that a director has a service contract with his company.
Property & letting: CGT and IHT issues
Three contrasting cases involving business asset CGT relief and residential properties.
Tax planning for income at marginal tax rates
Strategies for avoiding higher rates of tax, in general, for the self employed and for employees and directors.
Directors: tax planning toolkit 2013/14
Our a rolling ESSENTIAL tax planner, so we continue to update this all year as tax law evolves. The 2013 Finance Act made some significant changes to the tax rules affecting directors, our toolkit provides you and your adviser with a heads up on "what's hot and what's not" in 2013/14.
Directors' loan accounts: toolkit (freeview)
A checklist that details the main tax issues surrounding directors' loans.
Close company loans toolkit
Essential reading with a focus on new rules for "bed and breakfasting" loans to participators and measures affecting loans to LLPs. Review of latest consultation for reforming the loans to participator rules.
NEW
Overseas
NEW: a whole new area on the site covering the Statutory Residence Test and your FAQs
Close Company guides and updates for advisers
Will I pay less tax if I trade via an LLP?
An overview and comparison of key points
Running an LLP in tandem with a company
Tax planning suggestions for alternative structures
Do I pay a salary or dividend?
The tax-planning points and pitfalls of using dividends to create a tax-efficient pay package.
Capital reduction: index
Capital reduction is the process by which share capital or other capital reserves, including the share premium account of a company are repaid to shareholders. We now have a full range of guides on this topic for shareholders and directors.
Still coming to terms with the 2013 Finance Act and other recent changes?
Limit (cap) on income tax reliefs
UPDATE: yet more examples of situations which are affected by this cap (from our Virtual Tax Partner helpline), surely this measure needs to be amended?
Disincorporation Relief
The new relief applies from 1 April 2013. It may be useful for small companies which decide that it is administratively easier to scale down and become sole trades or partnerships.
IR35: changes from 2013
From April 2013 under measures introduced in the 2013 Finance Act office holders will become within the scope of IR35.
When an inspector calls
Health & Wellbeing professionals NEW disclosure opportunity. Notify HMRC by 31 December 2013.
Let Property Campaign Aimed at property landlords who have failed to disclose rental income. Unlike other fixed term opportunities this one has apparently no deadlines for registration: it will be open for at least 18 months.
Disclosure Opportunities: Top Tips NEW: advisers make sure that you understand how the different rules all interact.
IHT
IHT: non-domiciled spouses
From 6 April 2013 a non-dom spouse may elect to be treated as UK domiciled, this might be a dangerous election to make without some careful consideration.
IHT: restrictions on liabilities against the estate
Provisions were introduced by the Finance Act 2013 that restrict to what extent certain liabilities may be deducted against an estate on death. HMRC has now updated its manuals to reflect the changes which may catch out advisers and taxpayers alike.
'Simpler' Accounting for tax
Accounting: Simpler Income tax (cash basis) / fixed expenses Start here (self-employed taxpayers) to decide which of (or both) the new measures to adopt.
Board and lodging adjustments All change from 5 April 2013.
Cash or accruals accounting toolkit At a glance summaries with planning points and examples for all advisers in this new guide.
Flat rate expenses or actual cost toolkit Essential briefing for advisers and clients.
Land and Property
Furnished Holiday Letting
UPDATE: our detailed guide contains a summary of all the recent changes which is useful for talking over with clients.
Wear and tear allowance and the renewals basis
The rules changed on 6 April 2011 and then again on 6 April 2013: this updated guide explains the different tax treatments year by year.
Annual Tax on Enveloped Dwellings (ATED)
The first self-assessment return for ARPT will be due in 2013/14 and made by 1 October 2013.
Joint property: legal v beneficial ownership This guide provides you with a concise summary of the differences between legal title and beneficial ownership and explains what elections or actions are necessary to ensure that tax treatment matches your intentions.
Free-view guides
Travel and tax UPDATE: this is our sign-post to our guides in this area. If you are ever short of something to say to a client start here - the new rules for simplification of accounts make this whole topic quite fun.
Tax-free benefits and perks UPDATE: can you spot the changes? (scroll to the bottom to find the answers).
Staff parties and annual functions UPDATE for 2013.
Directors' loan accounts: toolkit An essential guide for directors and companies on the income tax and NICs treatment of overdrawn loan accounts.
Top Tips for directors
Schedule 36 information notices
Mini guide to HMRC's power's with topical tips and case law
Purchase (repurchase) of own shares Step by step guide to ensure Companies Act and tax compliance is met to allow a repayment to be treated as capital in the hands of the outgoing shareholder.
Converting part of a home into an office
How to create a tax-efficient home office.
Can I charge my company rent for use of my home?
- Recharging the company, on the same basis as a conventional home working employee for a proportion of your bills and running costs. This is explained in Working from home (directors) or
- Formalising a licence agreement with your company in order to allow it to occupy part of your property. It then pays you rent and service charges and you then claim all your expenses under self-assessment...More
Working from home (directors)
UPDATE: the same rules apply to home working directors as other employees. However, a director is more likely to be able to charge rent and there may be some additional issues and complications by virtue of their office.
Tax masterclass: running an LLP & Co structure
A guide is for trading companies and professional practices: we see many different structures and so we are constantly updating this guidance.
Annual Investment Allowance
Update: a handy summary with planning points.
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