At present, it is possible to make an election, in certain circumstances, allowing owners of more than one residential property to choose which property is their main residence. In this way a measure of Private Residence Relief (PRR) can be achieved for the elected property. This process of swapping properties for tax purposes achieved notoriety during the MPs’ expenses scandal when certain MPs were found to have “flipped” between properties in London and their constituency to achieve capital gains tax advantages when they sold.

HMRC have recently published a consultation document entitled “Implementing a capital gains tax charge on non-residents”. Surprisingly, section 3 of the document proposes that the present PRR election is to be scrapped for UK home owners and replaced by less advantageous rules. Here’s what the report says:

“The government is considering two possible approaches, both of which involve changes to the process by which a person can benefit from PRR. The government may:

1. Remove the ability for a person to elect which residence is their main residence for PRR. This would mean that PRR would be limited to that property that is demonstrably the person’s main residence. The government envisages that this would build on the existing process that applies where an individual with two or more residences has not made an election. In these cases, the person’s main residence is determined by the balance of all the evidence including factors such as the address where the taxpayer’s spouse or family lives, mail is sent, and that is on the electoral roll.
2. Replace the ability to elect with a fixed rule that identifies a person’s main residence e.g. that in which the person has been present the most for any given tax year. Depending on the test that is devised this may mean that taxpayers have to keep different or additional records.”

It is likely that any changes to legislation will be effective from April 2015. This does give owners of more than one property a chance to consider their options in the interim period. Please contact us if you would like an update on the present capital gains tax opportunities. 

It would seem that economic indicators confuse economists as well as the rest of us. The first two paragraphs of the recently published Executive Summary of the OBR makes for interesting reading.

 Here’s a bullet point summary:

• The UK economy has continued to recover.
• In the final quarter of 2013, GDP growth matched our December forecast, inflation fell back to target and unemployment dropped more quickly than expected.
• But productivity and wage growth remained disappointing.
• Revised data published since our last forecast suggest the economy grew slightly faster over 2013 as a whole than we expected in December, with GDP up 1.8 per cent on the previous year.
• Consumer spending, supported by a falling saving ratio, has been the biggest driver of recent growth.
• The latest data suggests that business investment is recovering.
• Housing market indicators have picked up sharply.
• But export performance remains disappointing.
• Given the momentum the economy carried into 2014, we have revised our GDP growth forecast up slightly to 2.7 per cent in 2014 and 2.3 per cent in 2015.
• We expect quarterly growth rates to ease through 2014 as consumer spending growth slows to rates more aligned with household income growth.
• The outlook for productivity growth, which underpins income growth and the sustainability of the recovery, remains the key uncertainty.

Whilst this is positive news let us hope that we are not led into another “boom and bust” scenario fuelled by unsustainable property prices and consumer expenditure funded by lower savings and increased household debt.

Hopefully, Government will see the sense in stimulating business investment, encouraging productivity growth, and supporting our exporters.

We recently shared that in 2014 Slaters have chosen to sponsor local and successful bike rider, Jamie Harrison, and we shall be sharing with you all the latest updates from Jamie’s race meets.

Here is our first instalment from his first meet on Saturday 5th April at Oulton Park which was an NG Road Racing meet.

Race one
Jamie started out 32nd on the grid, but this was due not having raced with the club before. The race conditions were bad with heavy rain and lots of spray, but despite this he managed to work his way up to finish in 14th place.

The Open Race Qualifier
Next up was qualifying for the open race where he was fastest for nearly all of the session, however in the final few seconds of the session he was pushed back to second place.

Race two
Jamie started from 14th on the grid. The race was going well and he was able to work his way up to 3rd position, however the race had to be cut short due to a red flag which meant that his final position was taken from the previous lap, so he officially finished in 5th position.

The Open Race
The grid for the Open Race at the end of the day was from qualifying so starting 2nd got a good start and he settled into 2nd place but was soon over taken and pushed back to 3rd. This is where he stayed finishing just two tenths of a second behind second place.

Overall it was a really good day, a very positive first meeting of the season. Jamie was happy with his results and lap time and is looking forward to the next meeting at Oulton Park on Saturday 26th April.

You can see the official results from the NG Road Racing Website – Click here

Employers are reminded to claim the £2,000 Employment Allowance which commenced 6 April 2014. Basically, employers can reduce their National Insurance contributions by a maximum £2,000 in the current tax year.

 Here’s the instructions on claiming the allowance as posted on GOV.UK’s website:

 “You can use your own 2014 to 2015 payroll software (see your software provider’s instructions), or HM Revenue and Customs’ (HMRC’s) Basic PAYE Tools for 2014 to 2015 to claim the Employment Allowance.

 When you make your claim (using the software of your choice), you must reduce your employer Class 1 NICs payment by an amount of Employment Allowance equal to your employer Class 1 NICs due, but not more than £2,000 per year.

 For example, if your employer Class 1 NICs are £1,200 each month, in April your Employment Allowance used will be £1,200 and in May £800, as the maximum is capped at £2,000.”

 Naturally, if we look after your payroll we will take care of these formalities for you.

 The following employers cannot claim the allowance, for instance if you:

• employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker
• already claim the allowance through a connected company or charity
• are a public authority, this includes; local, district, town and parish councils

• carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:
  • NHS services
  • General Practitioner services
  • the managing of housing stock owned by or for a local council
  • providing a meals on wheels service for a local council
  • refuse collection for a local council
  • prison services
  • collecting debt for a government department

If you are unsure if you are entitled to claim we would be happy to discuss your options.

Employers are reminded to claim the £2,000 Employment Allowance which commenced 6 April 2014. Basically, employers can reduce their National Insurance contributions by a maximum £2,000 in the current tax year.

Here’s the instructions on claiming the allowance as posted on GOV.UK’s website:

“You can use your own 2014 to 2015 payroll software (see your software provider’s instructions), or HM Revenue and Customs’ (HMRC’s) Basic PAYE Tools for 2014 to 2015 to claim the Employment Allowance.

When you make your claim (using the software of your choice), you must reduce your employer Class 1 NICs payment by an amount of Employment Allowance equal to your employer Class 1 NICs due, but not more than £2,000 per year.

For example, if your employer Class 1 NICs are £1,200 each month, in April your Employment Allowance used will be £1,200 and in May £800, as the maximum is capped at £2,000.”

Naturally, if we look after your payroll we will take care of these formalities for you.

The following employers cannot claim the allowance, for instance if you:

• employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker
• already claim the allowance through a connected company or charity
• are a public authority, this includes; local, district, town and parish councils

• carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:
  • NHS services
  • General Practitioner services
  • the managing of housing stock owned by or for a local council
  • providing a meals on wheels service for a local council
  • refuse collection for a local council
  • prison services
  • collecting debt for a government department

If you are unsure if you are entitled to claim we would be happy to discuss your options.

Glen Whittle must be feeling pleased with the outcome of his recent appeal against assessments issued by HMRC.

An enquiry instigated by HMRC resulted in the issue of assessments on the basis that the income of Mr & Mrs Whittle was insufficient to meet their outgoings. HMRCs argument centred on the level of household and holiday costs.

Fortunately, Mr & Mrs Whittle were able to prove that their actual expenditures, rather than those estimated by HMRC, were much lower. For example they were able to demonstrate that:

• Only one of two daughters was at school, the other worked and had made a contribution to the household budget.
• Mrs Whittle was employed by a travel agent and had secured unusual terms and conditions. She was absent from home for lengthy periods and received an allowance and discounted flights.
• The family home was eco-friendly with consequent savings in running costs.
• HMRC had also failed to adjust their figures to account for Mrs Whittle’s significant absences.

 The tribunal accepted the accounts of personal income and expenditure presented by the Whittle family and their appeal was allowed.

 Readers who are thrifty, or whose personal circumstances mean that their outgoing are below the norm, should keep records to justify their position. In Glen Whittle’s case this has paid dividends.

This new scheme, which starts in Autumn 2015, was originally announced in 2013 as being worth up to £1,200 per child. It has now been announced that the Government support will be even more generous with the limit being increased to £2,000 per child per year. The parents will be required to open a special childcare account. If for example they pay in £8,000, the Government will top this up to £10,000 (like pension contributions and Gift Aid) which can then be used to pay their childcare provider. It is not just parents who will be able to pay into the childcare account but grandparents and other family members will also be able to contribute to the childcare costs.  To qualify, both parents will have to be in work, earning just over an average of £50 a week and not more than £150,000 per year.
Unlike the existing employer-provided childcare voucher scheme which is only available to employees and directors, this new scheme will also be available to the self-employed. Those in existing employer provided schemes have the option of staying in their employer scheme (up to £55 a week free of tax and NIC) or switching to the new scheme. To support newly self-employed parents, the government is introducing a ‘start-up’ period. During this, self-employed parents won’t have to earn the £50 a week minimum income.

It was originally proposed that the new scheme would be phased in, initially only applying to children under 5 and gradually extended to those under 12. It is now proposed that children under 12 will be eligible from the outset.  If your circumstances change or you no longer want to pay into the account, you’ll be able to withdraw the money you have built up. If you do, the Government will withdraw its corresponding contribution.