Income Tax 2024-25

New for this edition:

• New measures to combat exploitation of taxpayers by repayment agencies
• Update on what constitutes a “reasonable excuse” reflecting the recent high income child benefit charge cases Harwood and Newell
• Case of Walker highlighting importance of checking if penalty notices have been properly served by HMRC
• More re HMRC’s single customer account and the planned development of HMRC’s digital services
• Greatly expanded section on Making Tax Digital and how this impacts on the new penalty regime
• HMRC proposals re planned online tool to enable employees to claim tax relief in respect of reimbursed expenses and the intention for all benefits in kind to be payrolled
• Additional detail re claiming income tax relief on qualifying gifts to charity of shares, land or other investments
• More re implications of claiming remittance basis on various allowances, including details of the new foreign income and gains (FIG) regime
• Expanded section on gift aid, now including the Webster carry-back case, and negative tax impact of gift aid donations made by an individual who is no longer UK resident
• Marriage allowance qualifying conditions for non-residents
• Relief when a taxpayer makes a gift of pre-eminent property to the nation
• A new chapter has been added, specifically dedicated to venture capital schemes, significantly expanding the commentary on this subject
• Recent report, consultation and consultation response in respect of further devolution in Northern Ireland
• Brief discussion of probable impact that the proposed reforms to the taxation of non-domiciled individuals from 2025-26 will have on the employment-related securities regime
• Change to the notification to HMRC deadline for companies granting EMI options
• Different tax effects of a sale transaction being treated as either a capital gain/loss or a trading profit/loss
• More re ongoing tax year basis rules and the impact of transition profits on assessable profits
• Full details re switch of the cash basis from being an optional treatment to the default option for sole traders and most partnerships
• Voluntary Class 2 NIC for self-employed individuals with profits below small profits threshold
• New partnership example re apportionment of profit between partners for accounting periods, followed the apportionment of those profits to a tax year and the impact of transition profits
• Removal of distinction between untaxed and taxed income when assessing partnership non-trading income
• Targeted anti-avoidance rule that disregards arrangements put in place to try to circumvent the salaried member rules for a limited liability partnership
• Class 2 NIC to be abolished going forward
• Loss restrictions that previously applied to a business using the cash basis no longer apply to non-property businesses but continue to apply to property businesses
• Consideration of how proposed abolition of FHLs regime may affect losses brought forward from such properties
• Updates to the construction industry scheme, re landlord-to-tenant payments, digital applications, compliance with VAT filing, withdrawal of gross payment status and correction of errors using HMRC’s online service or commercial software
• Consideration of the meaning of “on the provision of” in respect of capital allowances on plant and machinery as discussed in the recent cases of Urenco Chemplants Ltd and Gunfleet Sands Ltd
• Reference to recent Acorn Venture Ltd case, with indicators of where tax tribunals may draw the line between what is and is not a building or a fixed structure for capital allowances purposes
• More detail on what constitutes a chargeable period for capital allowances, and interaction with basis period reform
• Chapter 22 has been expanded so that, as well as including some additional detail on structures and buildings allowances, it now includes commentary on the following: mineral extraction allowances - research and development allowances - know-how allowances - patent allowances - dredging allowances
• For convenience, as well as being considered in the dedicated part International aspects, relevant overseas matters are also now summarised in the chapters on the taxation of interest, dividends and rental profits
• Changes to ISA regime and additional detail concerning non-resident investors
• Tax treatment of rewards and cashbacks payable by banks and credit card providers to their customers
• Additional detail on close company distributions, including impact of temporary non-residence rules, distributions from non-resident companies and other clarifications
• Expanded commentary on stock dividends to clarify that the rules do not apply to dividend reinvestment plans
• A warning that double-taxation treaties may restrict the offset of withholding tax deducted and the practical steps required to claim back the shortfall Information regarding how policies provided by overseas companies may be qualifying life policies
• More detail re “the insurance year” and how it interacts with the tax year
• Information on how to disclose non-qualifying gains from both UK and foreign life policies to HMRC
• Liability of non-residents to tax on non-qualifying life policy gains, including temporary non-residence and split years
• Interaction of remittance basis and the partial surrender of life policy rules
• Additional information on taxation of personal portfolio bonds, including rules for non-residents
• Note that changes to the cash basis affecting self-employed taxpayers do not apply to property businesses
• Expanded commentary on the property allowance noting that double tax relief needs to be considered when claiming the allowance on an overseas property business and the time limits for making an election
• Additional illustration of how interest relief on rental profits may be restricted where taxpayer has low levels of income
• HMRC example showing how relief is available for interest paid on loans secured on assets used in a property business, even when the loan is used for personal purposes
• Revisions to FHLs chapter to reflect the proposed abolition of the regime from 6 April 2025
• Discussion of likely impact of the Pensions (Extension of Automatic Enrolment) Act 2023
• Interaction of ongoing adjustments for transition profits for the self-employed with the rules for contributions to registered pension schemes
• Some extra pitfalls and planning points in respect of making contributions into a registered pension scheme
• Carer’s support payment, available in Scotland
• Details of how The Bereavement Benefits (Remedial) Order 2023 has extended bereavement support payments to cohabitees
• Additional detail on when the remittance basis automatically applies
• Detailed overview of changes for non-domiciled individuals arising from the abolition of the remittance basis from 6 April 2025
• An expansion of the section on the anti-avoidance transfer of assets abroad rules to include use of a close company
• Exemption for certain sportspeople who attended the World Athletics Indoor Championships held in Glasgow during March 2024
• The pension overseas transfer allowance (OTA) and overseas transfer charge (OTC) for non-residents following the abolition of the lifetime allowance
• An overview of how the reforms to the taxation of non-domiciled individuals arising from 6 April 2025 will affect overseas workday relief and foreign employees with dual contracts
• The trusts chapter has been updated to reflect the new low-income exemption rules and the abolition of the standard-rate band for discretionary trusts
• The section on the anti-avoidance settlement rules for trusts has been expanded
• Expanded commentary re trust registration
• Updated procedure for notifying HMRC of an individual’s death
• Estates chapter updated to reflect new low-income exemption rules
• Additional examples added to demonstrate impact of receiving income from an estate in administration