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Self-catering and holiday let business rates

21st March 2018 By bespoketax

One important aspect of a self-catering or holiday let business that should not be overlooked, is whether or not the owner of a holiday let is liable to pay business rates. Business rates are charged on non-domestic properties and help councils and local authorities to fund local services. The business rates are charged in place of council tax and may be less than the council tax bill. Qualifying owners may also be eligible for additional reliefs such as the small business rates relief.

If your property is in England or Scotland and available to let for 140 days or more per year, it will be rated as a self-catering property and valued for business rates. In Wales, business rate apply where the property is both available to let for 140 days or more per year and actually let for 70 days or more. There are different rules for properties in Northern Ireland.

Owners of furnished holiday lets can benefit from other tax reliefs that are not available to traditional buy-to-let owners. These include the availability of capital gains tax reliefs such as Business Asset Rollover Relief, Entrepreneurs’ Relief, relief for gifts of business assets and relief for loans. It is also possible to claim for allowable expenses and capital allowances for items such as furniture, equipment and fixtures. Profits from an FHL business also count as earnings for pension purposes.

Planning note

Trading losses from a furnished holiday lettings business can only be set off against future, qualifying FHL profits.

Ken Dodd has the last laugh

21st March 2018 By bespoketax

The recent death of the comedian, Sir Ken Dodd, aged 90, would not usually be the topic of one of our weekly articles. However, the comedian managed to have one last laugh by marrying his partner of 40 years just days before his death. By doing this it is estimated his estate has avoided a tax bill of almost £2 million.

This last-minute marriage serves as a useful reminder that marital status continues to play a very important role in the inheritance tax liabilities of those affected. The inheritance tax rules allow for the transfer of assets to a surviving spouse or civil partner free of inheritance tax (subject to some limited exceptions).

In addition, the surviving spouse or civil partner receive the benefit of the nil rate band (currently £325,000) unused on the death of their partner. When the second person dies, their estate is allowed to utilise their own nil rate band plus the remaining proportion of the unused nil rate band from the death of the first partner. This in effect allows for the doubling of the nil rate band for married couples and civil partners.

Although Sir Ken and his partner did not have any children, there is also the new IHT main residence nil-rate band (RNRB) that came into effect on 6 April 2017. The RNRB will eventually allow for a £175,000 per person transferable allowance for married couples and civil partners when their main residence is passed down to children after their death.

This was not the first time that Sir Ken Dodd had made news with his tax exploits. In a Liverpool Crown Court case back in 1989, Sir Ken Dodd was charged with tax evasion. The trial, that lasted for three weeks, eventually saw Dodd acquitted of fraud charges, although he did pay taxes due. In the case, Dodd was represented by George Carman QC, who famously commented that ‘some accountants are comedians, but comedians are never accountants’.

Childcare voucher scheme deadline extended

18th March 2018 By bespoketax

The government has announced that the employer-operated childcare voucher scheme will remain open to new entrants for a further six months, i.e. until October 2018. The childcare voucher scheme, also called employer-supported childcare (ESC), was due to close from 6 April 2018 and be replaced by the government-backed childcare payments scheme, also called tax-free childcare (TFC). The government announced the extension during a debate in the House of Commons in response to concerns expressed by MPs about problems with the operation of TFC.

TFC was initially launched on a phased basis in April 2017. It has different eligibility criteria to ESC, plus employers have no involvement at all in the running of TFC. Employees who are already on ESC are not obliged to switch over to TFC, as ESC will continue to run as normal providing employers continue to offer the scheme. However, ESC was due to close to new applications from 6 April 2018. It is now due to close to new entrants in October 2018 and, as a result, employers can continue to admit new members to their schemes for a further six months.

Information Commissioner’s Office publishes introduction to the Data Protection Bill

14th March 2018 By bespoketax

The Information Commissioner’s Office (ICO) has published a 77-page introduction to the Data Protection Bill, to help businesses navigate their way around the Bill and focus on the areas that are most relevant to them. Assuming it receives Royal Assent and becomes the Data Protection Act 2018, the Bill is expected to come into force on 25 May 2018, i.e. on the same date as the EU General Data Protection Regulation (GDPR). The two pieces of legislation will then work alongside each other in place of the current Data Protection Act 1998, which is to be repealed. The GDPR gives EU member states limited opportunities to make provisions for how it applies in their country. One element of the Bill is the details of these. The Bill is currently progressing through Parliament and is currently at Committee Stage in the House of Commons. The ICO intends to produce further detailed guidance on the Bill once it has been enacted.

In addition, the government has announced a new charging structure for data controllers to ensure the continued funding of the ICO. The draft Data Protection (Charges and Information) Regulations 2018 have been laid before Parliament and are also expected to come into force on 25 May 2018 in line with the GDPR. Until then, businesses are legally required to pay the current notification fee, unless they are exempt. When the GDPR comes into effect, it will remove the requirement for data controllers to pay the ICO a fee, but the new charging structure has been proposed by the government to ensure that the ICO remains adequately funded. The draft regulations, which will replace the Data Protection (Notification and Notification Fees) Regulations 2000:

set out when data controllers will be required to provide information to the ICO and pay a charge associated with the processing of personal data
require the payment of an annual charge to the ICO unless all processing undertaken by the data controller is exempt
confirm that there will be three tiers of charge, i.e. £40, £60 and £2,900, depending on the data controller’s turnover, number of staff and organisation type.

For very small organisations, the fee won’t be any higher than the £35 they currently pay, if they take advantage of a £5 reduction for paying by direct debit. Larger organisations will be required to pay £2,900. The fee is higher because these organisations are likely to hold and process the largest volumes of personal data, and therefore represent a greater level of risk. There will continue to be financial penalties for not paying fees, but these will be in the form of civil monetary penalties rather than a criminal sanction.

To help data controllers understand why there is to be a new funding model and what they will be required to pay from 25 May 2018, the ICO has produced a new guide to the data protection fee. The guide also outlines the ICO’s intention to publish an online exemption assessment tool before 25 May 2018.

Claiming legal and financial costs

14th March 2018 By bespoketax

The self-employed are often concerned as to whether an expense is allowable for tax purposes. As a general rule, the self-employed can deduct running costs of the business when working out their taxable profit as long as the expenses are classed as ‘allowable expenses’. In this article, we briefly look at the rules for claiming expenses relating to claiming legal and financial costs.

HMRC provides the following guidance on the matter.

Accountancy, legal and other professional fees can count as allowable business expenses.

You can claim costs for:

hiring of accountants, solicitors, surveyors and architects for business reasons
professional indemnity insurance premiums

You can’t claim for:

legal costs of buying property and machinery – if you use traditional accounting, claim for these costs as capital allowances
fines for breaking the law.

Planning note

If you are unsure if a cost of this type can be claimed please call us for clarification.

Self-catering and holiday let business rates

Ken Dodd has the last laugh

Childcare voucher scheme deadline extended

Information Commissioner’s Office publishes introduction to the Data Protection Bill

Claiming legal and financial costs

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