Top 10 Tax Elections to Minimise Tax

24th January 2012

Examples of the most helpful and generous tax elections and claims include:

s222(5a) TCGA 1992 (Nomination of main residence)

This capital gains tax election, often referred to as ‘flipping’, enables taxpayers, who own and reside in more than one home, to inform HMRC which of these homes is their principal private residence. For those who own a holiday home, making such an election and then immediately reversing it, can result in sheltering gains on the eventual sale of the holiday home.

SA303 (Claim to reduce income tax payments on account)

Those individuals and trusts that self assess more than £1,000 per annum income tax and class 4 NIC are required to make estimated payments on account just before and after the 5th April fiscal year end. Where these taxpayers believe that their tax liability will be lower than the previous year, they can make a claim to reduce their 1st and 2nd payments on account.

s62(7) TCGA 1992 (Deed of variation)

This procedures allows a Will to me amended within two years of the date of death. There are many reasons why the beneficiaries of the original Will may wish to change their entitlement, including reducing the inheritance tax that the estate of the deceased is liable to pay.

s24(2) TCGA 1992 (Negligible value claim)

Under this legislation a taxpayer, who holds an asset which has become of negligible value, may make a claim to be treated as though the asset had been sold and then immediately reacquired for an amount equal to its value. The effect of crystallising such a ‘paper’ loss, without actually selling the asset, can often be useful for reducing income tax, corporation tax or capital gains tax.

s167(2) TIOPA 2010 (Disapply SME transfer pricing exemption)

Small and medium enterprises are exempted in legislation from transfer pricing principles on transactions between connected companies. An election to disapply this exemption can, however, be made, so that these transactions are taxed as if revalued on an arms length basis. Such an election can prove beneficial where a partnership owns a trading company subsidiary, which it receives under-valued charges from.

 

Form 17 (Declaration of beneficial interests in joint property & income)

Income and gains from jointly owned assets are usually taxed equally on spouses (or civil partners). Completion and submission of this claim specifies a different apportionment for tax purposes, which can be useful where owners are subject to different rates of income tax.

s131 ITA 2007 (Convert capital loss into an income loss)

Losses suffered on shares in qualifying unquoted companies are usually capital losses, eligible to be offset against current or future year capital gains. Under this section, a claim can be made to convert these capital losses into income losses, which are eligible to be offset against current year and previous year total income, which will usually yield a better and quicker tax result.

ss1134-1136 CTA 2009 (R&D connected sub-contractor)

Companies claiming R&D corporation tax relief on qualifying costs from an unconnected sub-contractor usually have to restrict this claim to 65% of the costs incurred. By making this joint election with the sub-contractor, the relationship is treated as if both parties are connected, entitling the claimant company to relief on 100% of the costs.

s12 FA 2011 (Short-life asset election)

Businesses obtain tax relief on purchased plant & machinery capital items via the capital allowances rules. These rules generally operate by grouping all capital assets within a ‘pool’, before capital allowances are calculated on the net carried forward total. For assets that are expected to be used within the business for a period of 8 years or less, and which will then have a nil or low disposal value, de-pooling these items into a separate short-life asset pool will accelerate the tax relief.

s1AB TMA 1970/Para 51 Sch 18 FA 1998 (Overpayment relief)

Since 1 April 2010 there is a single procedure to recover overpayment of all the main personal and business taxes. The taxpayer must make this claim within 4 years of the end of the relevant tax year or accounting period. The claim must be in the correct form and must state the amount that the person believes they have overpaid.



 
Other items in Blogs
 
Bethan Hassey
18th January 2018 Guide to filing confirmation statements

  A confirmation statement (CS01) must be filed by a company every year to confirm the information held about them at Companies House. Even if the details on the CS01 haven’t changed since last year’s statement, you must still submit one. This is usually within 14 days of the anniversary of incorporation of the company…

Read More »

Lisa Searle
8th January 2018 National Minimum Wage Rates

  Effective from April 2018 the National Minimum Wage rates will be increasing again, as per the below figures: Workers aged 25 years or more: £7.83 per hour Workers aged 21 to 24 years: £7.38 per hour Workers aged 18 to 20 years: £5.90 per hour Workers aged under 18 (but above compulsory school age):…

Read More »

Julie Quayle
8th January 2018 HMRC – Appeals

  HMRC has updated the postal address for where to send grounds for appeal if you have not paid your PAYE and National Insurance contributions on time. The address that should now be used is: DM PAYE Late Payment Penalties HM Revenue  and Customs BX9 1EW HMRC will charge penalties if more than one of…

Read More »

Jaimie Lane
4th January 2018 Charity annual returns due

  Charities with the financial year end of 31 March 2017 must submit their annual return by 31 January 2018, 10 months after the year end. What you need to submit varies based on whether it is an un-incorporated organisation or a charitable company. It also varies based on income of the charity – requiring…

Read More »

Richard Alecock
4th January 2018 Directors’ responsibilities

  Limited company directors and secretaries are collectively referred to as ‘officers’. Directors are appointed by members (shareholders and guarantors) to run and manage the day-to-day operations of the business. Secretaries are optional for private companies, but not public companies. They are usually appointed to assist directors with important administrative tasks. An Overview Company directors…

Read More »

Andrew Band
4th January 2018 EU competition infringements by European truck manufacturers

  The European Commission imposed fines of €3.4 billion in July 2016 and September 2017 following findings that a number of manufacturers were party to a cartel at senior management level from 1997-2001. Breakdowns of the fines for the companies involved were as follows: Daimler/Mercedes – €1 billion Scania – €880 million DAF – €752…

Read More »