Hello,
There is something of an international theme to this week’s SME Tax Update, as our case summaries include issues such as the ‘place of effective management' of a trust, Business Investment Relief (BIR), and the UK Income Tax chargeability of a non-UK resident partner in UK-based Limited Liability Partnerships (LLPs).
As is well known, the tax system for non-domiciled individuals was abolished on 6 April 2025 and replaced with a new residence-based regime. This is an area on which we have been focusing our attention in recent weeks, and a selection of our guides on the subject are featured below.
This week, the Senedd passed the Visitor Accommodation (Register and Levy) Etc. (Wales) Bill. This paves the way for Welsh councils to introduce a levy on overnight stays, often referred to as a ‘tourism tax’. Royal Assent is expected to take place in August 2025, with local authorities being able to introduce the levy from 2027.
Since last week’s update, it has been announced that Legislation Day (L-Day) will be on Monday, 21 July 2025, when we can expect the publication of draft clauses for the next Finance Bill, covering pre-announced policy changes, as well as supporting documents and responses to consultations. Of course, we will review and summarise everything published, so look out for our coverage that week.
More news, cases, and updates below, including HMRC’s latest one-to-many letters, which focus on the loan relationships unallowable purpose rule, in light of recent case law.
The Ross Martin Tax Team
Online PRACTICAL tax resources for accountants and tax advisers BY accountants and tax advisers.
Quick News
Legislation Day set for 21 July 2025
In a written statement to Parliament, James Murray, Exchequer Secretary to the Treasury, has announced that 'Legislation Day' (L-Day) will be on Monday, 21 July 2025.
Tourism tax approved for Wales
The Senedd, the Welsh Parliament, has voted to introduce the Visitor Accommodation (Register and Levy) Etc (Wales) Bill. This could see a family of four paying an extra £36.40 for a week's hotel or B&B stay.
One-to-many letters: Tracker
HMRC's latest one-to-many letter focuses on companies with open enquiries relating to the loan relationships unallowable purpose rule. Recipients are asked to consider the impact of recent court decisions.
Tax Cases
Non-UK resident partner's profits taxable in UK
In Mark Wallace v HMRC [2025] TC09563, the First Tier Tribunal (FTT) found that a non-UK resident partner in UK-based Limited Liability Partnerships (LLPs) was liable to Income Tax on their share of profits derived from UK trading activities with non-UK counterparties.
Director's loan prevented Business Investment Relief
In Benoit d’Angelin v HMRC [2025] UKUT 00212, the Upper Tribunal (UT) found that the provision of a Director's Loan Account (DLA) was an extraction of value, such that Business Investment Relief (BIR) was not available.
Remuneration trust contributions not deductible for CT purposes
In Marlborough DP Ltd v HMRC [2025] EWCA Civ 796, the Court of Appeal (CoA) agreed with an earlier ruling made by the Upper Tribunal (UT), in which contributions made by a dentist to a Paul Baxendale-Walker remuneration trust were found to be 'in connection with' his employment.
CoA rules 'place of effective management' not jurisdiction where trustees appointed
In Geoffrey Hawarth, Ian Lenagan and SG Kleinwort Hambros Trust Company Ltd v HMRC [2025] EWCA Civ 822, the Court of Appeal (CoA) found that a trust's 'place of effective management' was located in the UK where general management of the trust was undertaken, and not in the overseas jurisdiction where the trustees had been appointed.
Editor's Choice
Business Investment Relief (BIR)
Business Investment Relief (BIR) is a relief for formerly non-UK domiciled individuals, designed to encourage them to remit funds to invest in UK businesses. The abolition of the non-domicile regime has brought changes to BIR for both existing and future investments. Ultimately, the relief will cease from 5 April 2028.
Loan relationships: Connected Companies
How do the loan relationship rules apply to connected companies? What are the special rules? When do they apply? What are the exceptions to the special rules? What are deemed releases?
Guides & Updates
Self-employed
Making Tax Digital: Planner & Timeline
When does Making Tax Digital (MTD) apply? What does MTD really mean? How will it affect you?
Averaging claims
When can profits be averaged? What trades do averaging apply to? How are averaging adjustments calculated and made?
Partnerships
Partnerships: Capital Gains Tax
How does Capital Gains Tax (CGT) work for partners and partnerships? What is HMRC’s Statement of Practice D12? How are transactions between partners treated? What if the partners are connected persons for CGT?
Directors & Companies
Stamp Duty: Share-for-share exchanges
How do you calculate Stamp Duty on a share-for-share exchange? What relief is available from Stamp Duty on a share-for-share exchange?
Transactions in Securities
What are the Transactions in Securities rules? When do they apply?
Settlement anti-avoidance rules
What are the settlement anti-avoidance rules? How do these rules catch some common family tax planning? What are the rules for spouses and other family members?
Employers
P11Ds: Employers' checklist & top tips
UPDATE: Top Tips for employers on preparing form P11D together with a checklist.
CIS: Contractors and Subcontractors
What is the Construction Industry Scheme? Who does it apply to? How does it work?
Private Client & Estate Planning
Disguised Remuneration Zone
What is disguised remuneration? What is the loan charge? When does the loan charge apply? Will the loan charge affect me?
IHT: Long-term non-resident spouses (previously non-domiciled spouses)
What are the Inheritance Tax (IHT) rules for transfers to spouses who are long-term non-UK resident (previously non-UK domiciled)?
Overseas & Residence
Non-Domicile: Rules from 6 April 2025
UPDATE: What are the changes to the 'non-domicile' regime? What does this mean for non-domiciled individuals who previously used the remittance basis? How are Income Tax, Capital Gains Tax and Inheritance Tax affected by the changes?
Foreign income and residency pages: FAQs
How do you complete the foreign and residency pages of the Self Assessment return?
Land & Property
Land: future consideration (overage)
A guide to the tax treatment of future consideration payable on the disposal of land.
Penalties & Compliance
Cryptoasset Reporting Framework (CARF)
UPDATE: What is the Cryptoasset Reporting Framework (CARF)? When does reporting apply? What information will be collected and reported?
VAT
Reclaims and unjust enrichment
When can VAT reclaims be made? What are the time limits? What is unjust enrichment? Why might unjust enrichment prevent HMRC making VAT repayments?
Reconcile your output VAT to your turnover
Why should you reconcile your output VAT to your VAT returns? How can you perform such a reconciliation?
Tax Tools & Calculators
Tax tools & calculators
We have a suite of useful tax tools that help agents, business owners and sole traders calculate their taxes.
Calendar of tax deadlines and new tax measures
This is a freeview 'At a glance' rolling calendar of common recurring tax deadlines, new tax measures and other tax-significant events.
CPD
Recent webinars include:
- Practice Insight - July 2025 (free)
- Monthly Tax Update - June 2025
- Practice Insight - June 2025 (free)
- Monthly Tax Update - May 2025
- Making Tax Digital for Income Tax - Roadmap to April 2026
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Missed the Last Tax Update?
Ross Martin Tax: SME Tax News 3 July 2025
- Updates to List 3, approved organisations and societies
- Upper Tribunal reverses TiS block on EIS disposal
- Entrepreneurs' Relief denied due to substantial non-trading
- HMRC right to exercise 'the 7A power' in disguised remuneration case
- CoA rules vandalised property 'residential' for SDLT purposes
- Student Loans UPDATE
- Overseas Workday Relief (OWR) UPDATE
- Non-resident Tax Toolkit UPDATE
- Demergers: What are your options?
- Electric Vehicles: Update 2025 ...More
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