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December Questions and Answers
Newsletter issue – December 2025
Q: If I sell my rental property to my tenants at a discount, will Capital Gains Tax (CGT) be calculated on that price or the market value?
A: The answer primarily depends upon your relationship with your tenants. If they are not deemed to be "connected persons" (i.e. not relatives, business partners or part of a disguised gift arrangement), HMRC should base CGT on the actual sale price of the property.
However, if the discount is unusually steep or looks like an attempt at tax avoidance, HMRC could use the market value instead to calculate CGT. Either way, reporting and paying CGT on residential property sales must be done within 60 days of completion.
Q: Can I gift £50,000 worth of Premium Bonds to my young grandchildren, to reduce what will have to be paid in Inheritance Tax (IHT)?
A: You can buy Premium Bonds for grandchildren under 16, but they must be held in the child's name through a parent/legal guardian. Once they turn 16, they can manage the account themselves.
Whilst the prizes from Premium Bonds are tax-free, the initial gifting of the £50,000 does not remove the money from your estate immediately. Unless the gift qualifies for exemptions (e.g. £3,000 annual allowance or gifts from surplus income), it remains a Potentially Exempt Transfer (PET). PETs only become IHT-free if you survive seven years after making the gift.
Q: I've recently moved to being self-employed and am working from home. Are there any tax reliefs I can get?
A: Self-employed individuals working from home can claim part of their heating and household bills as business expenses. It is worth noting that employees required to work from home may also qualify for tax relief, but not if they simply choose to do so.
Only work-related costs (e.g. business phone calls, gas/electricity for your work area) are allowable. Items with mixed personal and business use (e.g. rent, broadband) are excluded.
You can claim through Self-Assessment tax returns (deadline: 31 January) and can do so for the current tax year and the previous four years. There are two approaches:
- Flat rate: £6 per week, or simplified expenses (£10-£26 per month depending on hours worked - minimum of 25 hours).
- Actual costs: Proportion of bills based on business use (e.g., 1/5 of a £1,000 electricity bill if one of five rooms is used as an office = £200 claim).
- If you would like help calculating your tax relief, please get in touch with us to discuss your personal circumstances in more detail.
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
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