Furnished holiday letting business is not a business for inheritance tax (IHT) relief

holiday let

A furnished holiday letting business is treated as a trade for most tax purposes. For example, capital allowances are available on furniture, and CGT entrepreneurs’ relief is available on disposal of the business.

However, a recent tax case has determined that a holiday letting business in Cornwall did not qualify for inheritance tax business property relief.

Despite the provision of a range of services to customers, the judge agreed with HMRC that the business was wholly or mainly that of making or holding of investments and as such ineligible for any relief from inheritance tax.

Note that the restricted deduction for interest that started to apply to buy-to-let businesses from 6 April 2017 does not apply to furnished holiday lets.

There are special rules for a rental business to qualify as furnished holiday lettings, in particular the property must be available for letting for 210 days a year, and actually let for 105 days.

Contact us if you need help with the tax implications of your furnished holiday letting business.

Increased contributions for workplace pension schemes in 2018

Auto-enrolment of staff in workplace pension schemes now applies to even the smallest of employers, although there are exclusions. The current minimum contributions are 1% from the employer and 1% from the employee but these limits are scheduled to increase to 2% and 3% respectively from 6 April 2018.

The contributions will then increase to 3% from the employer and 5% from the employee from 6 April 2019. Employees will have a further opportunity to opt out of auto-enrolment.

Contact us if you would like further help or advice about auto-enrolment or work place pensions.

Ross is the latest member to join the Ambleside Office team

Ross Huck
Trainee Accountant’s Clerk Ross Huck

Ross Huck joined Saint and Co’s Ambleside Office at the beginning of July 2017. Ross has lived in the area all his life.  He attended Ambleside Primary School and the Lakes School before joining Saint & Co.

Following his successful application to join Saint & Co Ross started attending Kendal College in mid-September and is currently studying towards his AAT level 2 course. He looks forward to progressing on his course. Ross is currently training as an accountants clerk and is looking forward to improving his knowledge and experience alongside his studies.

 

Ambleside Office’s David Dunlop qualifies as a chartered certified accountant

 

David Dunlop, pictured right, with Partner, Darren Little
David Dunlop, pictured right, with Partner, Darren Little

David Dunlop joined Saint and Co’s Ambleside Office in November 2011, after seeking a role within accounting to accompany the AAT qualification being undertaken at Kendal College.  David passed his AAT levels 2, 3 and 4 in his first 3 years.

Having found he enjoyed the challenge of technical exams David wanted a harder challenge so began taking the ACCA exams with the hope of qualifying as a chartered certified accountant. The course consisted of 2 or 3 day courses at Kaplan’s offices in Manchester alongside home study and weekend revision days.

In all David passed all 11 exams with first time passes at Fundamental and Professional levels within 3 ½ years to achieve his aim of becoming a chartered certified accountant!

After passing all the exams, David now plans to complete a dissertation to achieve a 1st Class Honours Degree in Applied Accounting.

David is grateful for Saint & Co not only paying for his studies but also for giving him the paid leave to facilitate his rapid exam success.

Professionally David is looking forward to using his new found qualifications and knowledge to undertake more challenging and advanced work within the Ambleside Office.

Outside the office David enjoys playing bowls for Bowness and Ulverston teams.  He also follows Manchester United and hopes their current return to form and success is long lived.

Partner Ian Thompson said “I am very pleased that David has achieved the success his hard-work and effort deserves.  We are constantly striving to ensure we can give our clients the best advice possible and to do so involves having a number of well qualified staff who can all keep up to date and bounce ideas off one another.  As one of the largest accountancy offices in the South Lakes David is now part of that client facing team.”

 

Arlagården Plus – is it worth the time?

With Arla now looking to roll out Arlagården Pus to all its UK milk suppliers, it may also only be a matter of time before other processors look to introduce their own versions.

cowScoring all the cows for cleanliness, condition, lameness etc could be a lengthy process for some, however, the suggestion of a 1 €/cent bonus can make it appealing – a farmer supplying 1,000,000 kg of milk could receive an extra £8,850 (on current €/£ exchange rates) annually, should they submit and qualify each quarter. For larger producers, this could equate to tens of thousands of pounds annually. For a several hours work on assessing and inputting the data on a quarterly basis, this could be a worthwhile task for the average farmer in its current form.

As such, this is likely to be an extension of the current Arla audit regime, with the assessor checking the scoring results when the normal audit happens. It isn’t yet clear what the implications will be if the assessor deems the results to be inaccurate.

Farmers must be sure they have the time to assess and submit the data within the application windows. Only time will tell if this will spiral into further data input? Perhaps online records of antibiotic and medicine records in the future?

The incentive is certainly worth considering, particularly with the volatility seen in recent years – every pound helps, and with many dairy farmers already assessing the cows in a similar way, perhaps there isn’t much extra work. It may be that an App or software currently used on the farm is able to tabulate and submit to Arla, rather than re-keying data – this would save a reasonable amount of time, and hopefully streamline the process.

Reclaiming foreign VAT on expenses

VAT

If your business has suffered VAT on expenses incurred in another EU country, for example overseas hotel and restaurant bills, then it is possible to reclaim the foreign VAT.

The foreign VAT must not however be reclaimed on the UK VAT return but by using HMRC ‘s VAT online services system.

The foreign VAT refund claims can be made either quarterly or annually but there is a de-minimis amount that may be reclaimed quarterly.

The conditions for being able to reclaim the foreign VAT are that the business must:

  • be VAT registered in the UK
  • not be registered for VAT in the EU country nor have a place of business there
  • not make supplies of goods or services in that EU country, except for transport services

Contact us if you need assistance with your refund claims if this applies to your business.

Saint & Co’s Whitehaven Office participate in a school’s careers day

Whitehaven & Millom Office's Accounts Senior, Sarah Shaw at Millom School's Careers Day
Whitehaven & Millom Office’s Accounts Senior, Sarah Shaw at Millom School’s Careers Day

Our Whitehaven Office attended and participated in a careers day for the students at Millom School.  Accounts Senior, Sarah Shaw represented Saint & Co and reports on her day at the school: “The morning session consisted of mock interviews for the Year 11 students. As this was mostly likely their first ever interview, the students were understandably nervous but all came dressed to impress. All the students I ‘interviewed’ were well prepared and had a good idea of what they wanted to do after finishing school. I was impressed by their confidence, by what they had to say and the exciting things they had done both inside and outside of school.

The afternoon involved a careers fayre which was well attended by businesses from the local area. There were stands from BAE Systems, Sellafield, Kimberly Clark, Furness College and the Army, to name a few. Pupils from Year 8 all the way up to Year 13 attended the event and parents were invited after the school had closed. There was a good response from pupils, a lot wanting to know what we did and what opportunities were available in accountancy. I spoke to the students about the AAT and ACCA qualifications and the different routes to getting started in the accountancy profession. By the end of the day there wasn’t a lot left on the Saint & Co stand which definitely reflected the level of interest we had.  I left with a croaky voice from all the talking but feeling encouraged by the students’ response and enthusiasm!”

 

The History of Saint & Co. – Part Five

From industrial Haltwhistle to prosperous Carlisle: John Jackson Saint’s early years.

John Jackson Saint was an ambitious and enterprising 23-year-old when he established a pioneering new business in Carlisle in the late 19th century.

His qualification as a chartered accountant in 1884 coincided with a series of wholesale changes to the bankruptcy laws, which inevitably led to a high demand for his expertise.

Within a few short years J.Jackson Saint & Co became one of the first chartered accountancy firms in Carlisle and it quickly established a formidable reputation.

Entrepreneurial SpiritThe History of Saint & Co. - Part Five

Mr Saint’s entrepreneurial spirit would have come as no surprise to his family back in Haltwhistle, a small industrial town some 25 miles east of the Border City. It was in his blood. His ancestors were credited with establishing a woollen industry in the town in 1749, a trade they were involved in until the turn of the 20th century.

And in the boom years that followed the arrival of the railway line in Haltwhistle, John Jackson’s father, Joseph Saint, was among those who led the town’s industrial revolution. A well-known businessman, Joseph ran a local woollen mill with two of his elder sons, William Oliver Saint and Joseph Saint junior.

By 1861 – the year his youngest son was born – he employed 13 men, four girls and four boys at the mill and dye-house at Town Foot. It is likely to have been strenuous, tiring and dirty work, made worse by the conditions of the decaying mill.

In a letter to his landlord in 1837, Joseph Saint, who was then 43, appealed for help in restoring the structure. He wrote:

“…the building would not have been tenable this forty years or more had we not repaired it ourselves, the roof of the dyehouse has fallen in this spring and the Mill and Mill house is in a bad state almost dangerous for men to work in…”

Arsenic & Gossip

A leading member of the local Methodist church, Joseph was apparently a kind-hearted, God-fearing man but, in 1849, he became embroiled in a scandal which culminated in a notorious murder trial.The History of Saint & Co. - Part Five

When a local woman, Christina Hornsby, 26, was accused of poisoning her husband, William, with arsenic, the jury at her trial was told of rumours of her affair with the churchman. Neighbours told how they spotted the 55-year-old devout Methodist leaving the married woman’s home late in the evening, while her husband worked away.

Their sightings sparked idle gossip, despite the fact that the Hornsbys lived with Joseph’s widowed sister-in-law, to whom he was a frequent visitor. Under oath, each of them swore they did nothing more risqué than pray together.

According to The Newcastle Guardian on August 4 1849, the defence solicitor said:

“…Those who got up this prosecution had searched in vain for a motive and because they couldn’t find one had endeavoured to cast suspicion on Joseph Saint…They sought to pull down a man who is an honour to the neighbourhood in which he lives, a member of a people which have done as much good, if not more than any other religionists – he meant the bold, intrepid, faithful, zealous body called the Wesleyan Methodists…”

Mrs Hornsby was found not guilty of murder.

Leaving Haltwhistle

John Jackson Saint was barely 10-years-old when his father died, aged 77, in 1871. In an early sign that wool trade profits were falling, he left just £20 to his widow, Ann.

Over the decade that followed, his elder brothers continued to produce wool in Haltwhistle but by the 1880s, there are further signals that the business was in trouble.

It must have become clear to John Jackson that there was no future in the family business for an ambitious young man like himself. Although he started his working life as a draughtsman in his hometown, he was part of an exodus from Haltwhistle in the late 19th century.

In the same year that he established his accountancy firm in Carlisle, his brothers formally dissolved their working partnership at the woollen mill.

While his siblings Joseph and James moved away from the area and apparently led comfortable lives, it appears that the only brother who stuck with the woollen mill died penniless.

William Saint and his son Joseph were still living and working at the mill in 1891, though it was advertised for sale in The Southern Reporter in the same year.

Within three years William was dead; his wife Isabella followed shortly afterwards, yet there is no record that either of them left a will. By 1901 their son was living many miles away in Blyth, Northumberland, where he boarded with another family. He died in 1906.

It may never be known whether it was luck or good judgement which took John Jackson Saint from the declining woollen mill industry in Haltwhistle to the relatively unchartered territory of accountancy. Either way, his background in this Northumberland market town stood him in good stead for the next chapter.

Must own 5% of ordinary shares for capital gains tax entrepreneurs relief

In order for a shareholder to qualify for capital gains tax (CGT) entrepreneurs relief on the disposal of their shares, they must be an officer or employee of the company (or group) and hold 5% or more of the company’s ordinary share capital and voting rights for 12 months prior to the disposal. The company must also be a trading company or the holding company of a trading group throughout the same 12 month period.

In a recent tax case, the judge agreed with HM Revenue and Customs that in determining whether or not the shareholders held the required 5% of the ordinary share capital, all of the company’s shares should be considered except those with a fixed rate of dividend (preference shares). A lower court had previously decided that shares with no entitlement to dividends and voting rights could be disregarded.

When is a company van not a van?

van

The P11d benefits on company vans are generally much lower than company cars and where private use of the van is merely incidental to its business use by the employee, then there is no taxable benefit at all. But when is a van not a van?

In a recent tax tribunal case, the judge agreed that a VW Kombi van that had been converted so that it had two rows of seats for passengers was a company car not a van.

Under the employee benefit rules, a van is a vehicle where its primary construction is for the conveyance of goods or burden.  Kombi vans and those similar have not previously been thought to fall into this category due to them being designed to carry both goods and people. Historically, HM Revenue and Customs has offered a concession from 2002/2003 onwards for vehicles of a very similar construction, double cab pickups (including both uncovered and covered models), if the payload capacity of the pickup exceeds a metric tonne. HM Revenue and Customs accepts that these vehicles can be treated as a van for benefit in kind purposes.  The judge decided that the primary construction of the Kombi van was not for the conveyance of goods alone but rather that its purpose was for the conveyance of both goods and people equally. This means that the Kombi did not meet the requirement to be considered to be a van and therefore for benefit in kind purposes it was a car. The same judge however decided that Vauxhall Vivaro vans converted so that they had two rows of seats were vans!

Similar rules apply for VAT purposes so contact us first if you want to check the correct tax treatment of the vehicle you are planning to buy.