August Questions and Answers

Newsletter issue - August 2022

Q. I have prepared my 2022 tax return for submission but on reviewing previous returns I found that I made an error when completing the 2018/19 tax return, resulting in an overpayment of tax. Can I get my money back?

A: The self-assessment rules limit the time you have to claim tax relief. As an individual or company the time limit for submitting an amended return is usually one year from the deadline for submitting the return you want to amend. So to amend the 2020/2021 return, for example, you have until 31 January 2023. It is too late for the 2018/19 return to be amended but a claim can be made for 'overpayment relief'.

Except where legislation specifies to the contrary, the general rule is that relief must be claimed within four years from the end of the tax year to which the claim relates for personal taxes, and four years from the end of the accounting period for corporation tax. Therefore so long as this claim for the year 2018/19 reaches HMRC by 5 April 2023 you can claim. The claim must be in writing.

Q. I am the director of my company and one of my employees is getting married next month. I want to pay for the cost of the honeymoon night and taxi that they will use to travel to the airport. The company has an account with a local taxi business. Are there any tax implications for the employee and can the company claim tax relief?

A: Generally, any gifts made by a business to an employee are taxable as benefits in kind unless covered by a specific exemption (or are a 'trivial benefit'). This is the case even though the reason for the gift is not business related (as in this instance). The reason being that where there is an employer-employee connection, the gift is employment-related even if the reason for the gift is a private one.

Where a benefit in kind is charged then the company will be able to claim tax relief on the cost to the business.

Q. A couple of years ago I self-built a bungalow in my back garden intending to sell on the open market but since then my son and daughter in law have split up so I am now looking to sell the property to him but at a lower than market value. The bungalow cost overall £280,000 and is now valued at £520,000. My son can only afford to pay me £375,000. What are the capital gains tax (CGT) implications?

A: When you gift an asset to anyone, or when you transfer an asset to a connected person (e.g., a son - as in this case), for CGT purposes the asset is deemed to go across at present market value. The amount actually paid is ignored. Therefore, since the property is currently worth £520,000, and it cost £280,000, there is a capital gain of £240,000. However, there may be a value to allocate for the actual land underneath the property being transferred which may be included in the calculation.

What our clients say about us...

  • "Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."

    ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT

  • "I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."

    Neil Price - Managing Director at Work Relief Charity Recruitment

  • "Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"

    Lee Westrap MBCS - Director - Bulldog IT Services

Request a Callback
Please complete our form
to request a callback
Get a Fixed Quote

Competitive fixed quotes
for agreed services

Find out how to Make more, Keep more and Work less

Increase your profit and
reduce tax liabilities

Your Business Size?

Expert advice for your
business size

 

Marker

Booth & Co  |   The Hermitage  |   15a Shenfield Road  |   Brentwood  |   Essex  |   CM15 8AG        Telephone: 01277 224666    |   Email: info@boothandco.co.uk