The confusion over the chancellor's proposed changes to dividend taxation has now been cleared up.

The Treasury have provided the ICAEW with some workings. There will not be a new extra £5,000 basic rate band for dividends as the ICAEW had thought, instead the £5,000 dividend allowance will be within the basic rate tax band. 

There have been a lot of changes, as you are aware, to the corporation tax of goodwill and intangibles. We have updated our guide on this topic and broken down the changes and their effects into a useful summary. This is my pick of the week's reading.

In terms of other news, a couple of First Tier Tribunal decisions attracted my attention this week. In one a director and his wife's ignorance of the car benefit rules led to the assessment of car benefits for five cars on one individual. Reading between the lines it may have been that he was providing vehicles for his family.The other case concerned a tax penalty and a taxpayer's refusal to tick HMRC's box to confirm that he had read all HMRC's terms and conditions (T & Cs). He did not read the T & Cs and so did not wish to tick the box and the result was that he was therefore unable to use any of HMRC's online services as he could not obtain a Government Gateway account. I bet no one else had thought of that one.

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Nichola Ross Martin FCA Tax Director


Your online Virtual Tax Partner®: practical support for accountants, tax advisers and their clients. 

Quick News

How dividends are to be taxed in 2016/17
The Treasury clears up the confusion.

Topical tax cases

Director assessed on the benefit of FIVE company cars 
In Mark Holmes & Trudie Holmes v HMRC (2015) TC04467 the failure to prohibit the private use of company vehicles led to a director being assessed for employee benefits for five company cars.

Sch 36 information notices and private bank statements
In James Smith v HMRC (2015) TC04592, the First Tier Tribunal (FTT) agreed that personal bank statements could be included in a Schedule 36 information notice because they contained transactions pertaining to a property business.

Penalty unlawful 
In Neil Garrod v HMRC (2015) TC04237, the first tier tribunal (FTT) cancelled a penalty imposed for failing to submit a VAT return electronically. The taxpayer refused to tick a box to say that he agreed with HMRC's T & Cs, which meant that he could not file online, so he submitted his return on paper.

Delaware LLCs: Supreme Court overrules HMRC's practice
These LLCs are now fiscally transparent (just like a regular UK partnerships)

Accelerated Payments: judical review dismissed
In Rowe, Worrall and others v HMRC [2015] EWHC 2293, members of a large film partnership failed to convince the High Court that HMRC was unreasonable and that their Human Rights and legitimate expectations and claims for nature justice had been breached. Their claim for judicial review failed.

Subscription content

Editor's Choice:

Goodwill and Intangibles
UPDATE: all the new rules and changes "at a glance"  and explained for you. Bookmark this page.

Tax on interest
From 2015/16 there is a 0% starting rate for savings income of £5,000 per year. Provided that an individual has non-savings income (earned income, rental income, pension) of less than £15,600, they will be able to claim a refund of tax on any savings that falls into the band of £15,600 less non-savings income. There are further changes planned for 2016/17.

Small and personal service company tax briefing
UPDATE: The OTS review small company tax AND the merger of tax and NICs. An HMRC discussion on IR35 and a consultation on travel and subsistence. We add commentary on the new proposals for dividend tax (that may not be necessary if the other measures are also introduced).

Family investment companies
Directors and their families may find that running their own investment company provides far greater flexibility and planning opportunities than a trust, with the added advantage that unlike a trust, even the beneficiaries might understand how their income is taxed. Non-domiciled families may also find that the use of corporate structure, despite recent changes is to their advantage. 

Property profits

Buy-to-let ownership: personal v company
We are nation of buy-to-let nuts. What is the most efficient way to hold your property following the latest budget changes?

Restrictions on loan interest relief and the increased Rent a Room relief
Loan interest relief: a staggered introduction from 2017/18

Furnished holiday letting
Recent IHT cases show that obtaining IHT business property relief on your average holiday let is unlikely, however if you are looking at medium term investments the CGT benefits should not be overlooked.

Property profits and losses: an Adviser's guide
Thinking of letting? Start here.

Starting in business: building your own workplace 

If you are converting part of your home into an office or workspace, or building an office or workshop in the garden you may be able to claim tax relief on some of all of your expenditure, and if you work via a company and it finances the building costs you may find that you have taxable employment benefits, and then there are the VAT issues. Each of these guides considers cross-tax the different issues.

Missed last time's update?

Nichola's SME Tax Update 31 July 2015

Updates on:

  • small company taxation
  • family investment companies
  • consultation on termination payments

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