Whoops! Some spreadsheet tweaking for Rebecca and the rest of us now.
Or not! They aren't restricting Class 4 as they should be.
When supplied with Class 1 income between thresholds, our software calculates and reports the restricted Class 4 NIC for clients who've had several new employments, self-employments and partnerships in the year and the Class 2 based on number of weeks. HMRC's response is consistently unrestricted Class 4 NICs and no Class 2. ( the latter explained by Rebecca's article). On phone, an officer in HMRC's NIC team denies they have the Class 1 income information. Both HMRC and software house have suggested refiling. Trust me, don't waste your time with that.
If the clients had tax liabilities, I'd have said don't pay. But of course they are having insufficient tax repayments. If we contest the calculations within 30 days, will the repayments be stopped? I'm afraid I don't have many years' experience but as self-assessment is not working as it should, is the only solution to write separately for NIC refund?
In my example, I understand that a bike shop voucher of no more than £50 would be deductible and not taxable.
Yep. This has been a happy sweetener when director clients have asked about the company paying for their gym membership or flights and entry to a cycle challenge event. As one who dislikes frequently pointing out tax cost consequences, it is good to be able to soften the message with 'but there is a way the company could contribute to all that lycra cost.'
And should anything be recorded in boxes 6 and 7, as well as boxes 1 and 4, relating to services purchased from abroad, on the flat rate return?
Many thanks for your input Paul. Always appreciated. The fact that tenant left last year is in my very first post above; but agree it gets lost in what follows. Pretty familiar with the leg and manuals, not so familiar with how it pans out in practice. So value the feedback. Thanks. Jim
If the couple, or one of them acquires another property this can revive the right to make the election.
The client has recently changed his combination of residences through tenant leaving the property he'd transfer, so is in good time to nominate.
Think I'd be happier if he lets the property again whilst in his sole ownership, then transfers whilst let. This puts beyond doubt it's use when transferred.
But he shouldn't need to! the nomination of the other (first) home, whilst there are 2 occupied residences and before transfer should suffice.
I'm not happy about leaving the status open to HMRC's view, but alarmed at 1) a tax lecturer's suggestion it is left and assumed a matter of fact and 2) multiple nominations either side of a transfer possibly raising a red flag.
If you have two properties (or more but just run with two) and both have genuinely been a residence at some time then you are entitled, in law, to decide which is your main residence without any question as to which is actually your main residence. ... If you have evidence that it was a residence election removes the element of doubt....
Yes, as I understand HMRC to instruct in their guidance.
So I'm intrigued why a tax lecturer suggested to 'let it be' (ie not nominate first home as the main residence) unless because it raises a red flag when nominations are changed on a new ownership. It concerns a spousal transfer of a 100% owned city flat by one spouse 100% to the other spouse, washing out all the gain accumulated to transfer.
From Nichola Ross Martin, I understand this only happens on a transfer between spouses/CPs of a property which wasn't a main residence at the time of transfer. The couple can then elect second home as PPR and keep using before eventual PPR relieved sale. Seems too good to be true which makes me consider the GAAR.
Does making an election make it more likely that there will an enquiry on ultimate sale?
As below, if 100% PPR eligible, there is nothing to declare and enquiries and the fuss had by Ian rarely happen.
Client has situation where it might be worth considering an election where the main home is clear to me, but to put it beyond doubt as not all the items on the shopping list of evidence are available. Client would prefer to run with the facts than have an increased risk of an unnecessary fuss on ultimate sale.
I would like thoughts on this too. I put a similar situation to a tax lecturer this week, who simply asked me back 'which is the main residence?' as a matter of fact.
However, I was contemplating a nomination to absolutely secure the stronger residence and ensure the secondary residence wasn't deemed a main residence at the time of a transfer to spouse. The success of the inter spousal transfer for washing out all gains depends on the gifted property not being a main residence.
I am grateful to qwer78 for raising this; should we risk a nomination flagging to HMRC what should, if tested, be a non issue with 2 homes?
Timely article on quality of residence. For a planning conundrum posted earlier for a married couple owning 2 residences where husband owns and lives regularly in the London pad.
I wondered about the quality of residence required of his wife, given he's never nominated a residence, and would be advised to do so. Law requires it to be a joint nomination because they are married. The planning opportunity is for him to first transfer ownership to her, then they make the nomination. But whilst his quality of regular residence, both before letting and since letting ended in the last year, has long been demonstrable, hers is much less so. Just how much does she need to be present and evidenced as such alongside hubby if she were to become sole (or joint) owner? It's that question of quality!