Call 01527 521717 for a free consultation
Was inherited land a business asset?
A recent case before the First-tier Tribunal examined the applicability of Business Asset Taper Relief (BATR). In this case a taxpayer appealed against a Closure Notice from HMRC that the sale of land was not a business asset. HMRC amended the taxpayers self-assessment return to disallow BATR of over £150k.
The land in question was inherited by two brothers in 1998. The appellant argued that the land was farmed under conacre arrangements until the asset was sold in 2007. 'Conacre' is a method of farming land that has been used across the island of Ireland since the 1800’s. One form of conacre referred to in this decision is known as 'agistment'.
HMRC argued that this was not the case although they seemed to accept that the appellant may have carried out some work on the land in question. HMRC's position was clear that the appellant was not carrying out sufficient acts of husbandry to be classed as farming within the meaning of the relevant legislation.
The First-tier Tribunal looked in detail at many similar cases and ultimately were 'strongly influenced by the traditional understanding, articulated by a succession of distinguished judges and commentators over the course of more than a century, that the grantor of an agistment licence himself remains in occupation, with the agistor having only some lesser interest'.
This strongly supported the appellant’s position and the First-tier Tribunal found the appellant's occupation was therefore wholly or mainly for the purposes of husbandry. The taxpayer’s appeal was allowed and BATR was due for the whole period of ownership from 1998 to 2007.
The Help to Save scheme
A consultation on the launch of the new Help to Save scheme recently closed. The new scheme will allow anyone in work and in receipt of Universal Credit or Working Tax Credits to save up to £50 a month and receive a 50% bonus after 2 years that can be worth up to £600. The scheme is expected to be in place by April 2018.
As things currently stand, account holders will then be able to continue saving under the scheme for a further 2 years and receive another £600 bonus. This could see those on low incomes receive a bonus of up to £1,200 over 4 years. The new scheme will be open to all adults in receipt of Universal Credit with minimum household earnings equivalent to 16 hours at the National Living Wage or those in receipt of Working Tax Credits.
The Low Income Tax Reform Group (LITRG) has recently published a press release urging the government to ensure that the Help to Save accounts be free from income tax. This was in response to the fact that the tax status of the scheme was not covered in the consultation document.
Anthony Thomas, Chairman of LITRG, said:
'We strongly recommend that there is a specific exemption written into tax law to exclude both the government bonus and any interest on the accounts from income tax to make the Help to Save accounts simple, accessible and cost-effective for accountholders and HMRC.'
The LITRG was also concerned that the £2,000 cap on prior savings in order to be able to access Help to Save was too low and urged the government to increase the cap to £6,000 or more.
It is thought that as currently drafted the Help to Save scheme could benefit an estimated 3.5 million people across the UK. It will be interesting to see what shape the scheme takes when it is finally launched.
The Apprenticeship levy
The new apprenticeship levy will commence in England from 6 April 2017 at a rate of 0.5% of the employer's 'pay bill'. To exclude smaller employers a £15,000 allowance can be claimed. This will mean that only employers with a pay bill in excess of £3 million will contribute to the levy. To keep the process as simple as possible the 'pay bill' will be based on total employee earnings subject to Class 1 secondary NICs , including all earnings below the Secondary Threshold. Further guidance for employers relating to calculating and paying the levy will be published by HMRC later in the year.
The introduction of the levy will mark a major step change in the way that apprenticeships are funded and is part of the governments’ ambitious plans to introduce 3 million apprenticeship starts in England by 2020. Scotland, Wales, and Northern Ireland have their own separate arrangements for supporting employers to access apprenticeships.
The Government will collect the levy via Pay As You Earn (PAYE) and it will be payable alongside income tax and National Insurance. Levy paying employers in England will receive funds in a new digital apprenticeship service account, which can then be used to pay for apprenticeships. The governmental responsibility for apprenticeships has recently changed and the levy is now the responsibility of the Skills Funding Agency (SFA) and the Department for Education (DfE). All employers, including those who are not subject to the levy will still get a government contribution to the training and assessment of their apprentices.