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Tax Alert – 17th April 2019

Tax Alert – 17th April 2019

Corporation Tax – ATED and Corporation Tax Instalment Payments

TAX ALERT

Annual Tax on Enveloped Dwellings (ATED)

If your company owns a residential property that is valued at £500,000 or more, you may need to file an annual ATED return.

There are exceptions to the ATED charge; but it is still necessary to file ‘NIL’ ATED returns.

The latest return period covers the year from 1st April 2019.

The deadline for submitting the ATED return is 30th April 2019.

Contact us if you believe your company may need to make a return.

CORPORATION TAX INSTALMENT PAYMENTS

Changes for ‘very large’ companies

This is a reminder of changes to instalment payments for very large companies.

The changes to the corporation tax instalment payments were introduced in 2017.

They apply to very large companies for accounting periods beginning on or after 1 April 2019.

Companies with taxable profits exceeding £20 million will be required to make payments four months earlier.

For a 12-month accounting period, payments will be due in months 3, 6, 9 and 12 of the current accounting period.

The £20 million threshold is reduced where the company is a member of a group and is pro-rata’d for accounting periods shorter than 12 months.

Payments relating to bank levy and CT and supplementary charge on ring fence profits of oil and gas companies will not move to the new payment regime.

However, if a company is very large, all other liabilities including bank surcharge will move to the new regime.

Affected businesses should ensure that they are ready for the changes.

The first instalment payment under the new rules will be due before the final payment under the current regime and will impact on cash flow in the first year.

For further information on the above matters or any other tax query, contact Paul Southward.

Paul Southward

Tax Alert – proposed changes to Capital Gains Tax and Personal Residences

Tax Alert – proposed changes to Capital Gains Tax and Personal Residences

Capital Gains Tax

TAX ALERT

Proposed changes to Capital Gains Tax and Personal Residences

Private residence relief consultation

HMRC is consulting until 1 June 2019 on changes announced at Budget 2018 and due to take effect from April 2020, which reduce the final-period exemption from 18 months to 9 months and limit lettings relief to circumstances where owners are in shared occupancy with their tenants. The consultation also considers changes to other ‘ancillary’ aspects of the private residence relief rules.

The changes are to ensure the reliefs are properly targeted at owner-occupiers.

The final-period exemption currently means that where a property has been occupied as the owner’s only or main residence, the final 18 months of ownership always qualifies for relief regardless of the property’s use. The 36-month final exemption for disabled persons and those resident in a care home will not be affected by the changes.

Lettings relief, which applies where part or all of a main residence is let as residential accommodation, will not be available after April 2020 for periods where owners move out of the property and no longer share occupation with tenants, unless covered by one of the ancillary reliefs, such as job-related absences.

The other changes being considered include:

  • extending job-related accommodation relief to service personnel in accommodation not technically provided by the MOD, but rented in the private sector as part of the MOD’s future accommodation model pilot due to take place in 2019;
  • legislating for the concession, which allows an extension of the period for individuals to nominate one property as a main residence, where they have an interest in more than one property having only a negligible capital value, and they were unaware that such a nomination could be made;
  • legislating for concession, which allows for short delays in taking up residence, such as where an individual acquires land on which they have a house built, or have alterations or redecorations carried out before moving into a property purchased as an only or main residence; and
  • reforming the rules on spouse/civil partner transfers, which currently allow the receiving spouse to count any period where the residence was occupied as a main residence by their spouse as their own, and instead treat the receiving spouse as having inherited the ownership period and the use to which the property had been put in the past, regardless of whether it is a main residence at the time of transfer.

Following this consultation, the government expects to publish its response and draft legislation in the summer.

To keep up to date with all the latest tax issues, contact Paul Southward.

Paul Southward