Navigating the risks of Valentine’s Day
Navigating the risks of Valentine’s Day It’s Valentine’s Day later this week and love is in air (apparently). However, an unwanted Valentine’s gesture in the office could lead to awkwardness, discomfort or even legal issues. As an employer, how can you ensure Valentine’s Day passes smoothly? Get the help you need and get to know us better. Cards and gifts – whilst an employee sending a romantic card or gift to a colleague on Valentine’s Day may seem harmless, if it’s unsolicited and unwanted it may make the recipient feel uncomfortable, awkward or pressured, particularly if there is a power imbalance, e.g. it’s come from a manager or someone more senior. It might even amount to sexual harassment, depending on the particular circumstances of the case, i.e. if it constitutes unwanted conduct of a sexual nature which has the purpose or effect of violating the employee’s dignity or creating an intimidating, hostile, degrading, humiliating or offensive environment for them. Given your new positive duty to take reasonable steps to prevent sexual harassment, you may therefore wish to remind staff that workplace professionalism requirements continue to apply, so employees must respect boundaries and should not send unsolicited cards or gifts on Valentine’s Day to colleagues, regardless of whether those are intended romantically or as a joke, or whether they are sent anonymously or signed. Date invitations – Valentine’s Day can bring an increase in colleagues inviting each other out for a drink or dinner but, if the invitation is unwelcome, the same considerations apply as above. So, you might also wish to remind staff that, if there is any doubt about how an invitation to socialise outside the office will be received, they should not ask. Plus, “no means no” and, if a colleague declines an invitation, the issue should not be raised again. If you have any employees who are already in consensual personal romantic relationships with colleagues, you could remind staff that public displays of affection, grand gestures or intimate behaviour in the office between such individuals on Valentine’s Day can be disruptive and make others feel uncomfortable and so are prohibited. You can also refer staff to the provisions on your personal relationships at work policy (if you have one).
Self-employed set for penalty reprieve
Self-employed set for penalty reprieve Over 1m people missed the 31 January filing deadline last week and will shortly be receiving automatic £100 penalties as a result. However, HMRC has announced that the penalty won’t be enforced for the self-employed – but only in limited circumstances. Are you eligible? Get more help with our Accounting Services Penalties for late filing are applied in stages, with the first being a £100 penalty where the tax return is not filed by midnight on 31 January following the end of the relevant tax year, i.e. 31 January 2025 for the 2023/24 year. There are sometimes blanket extensions to the deadline, e.g. during the pandemic, but in other cases a penalty might be waived if the taxpayer has a “reasonable” excuse. There is good news for sole traders and partnerships for 2023/24 due to the disruption caused by basis period reform. In its latest Stakeholder Digest, HMRC has announced that where such taxpayers requested an overlap relief figure from HMRC before 31 January but did not receive a response by that date, an extension to 28 February will apply. It is not clear from the announcement whether this extension will apply automatically, or whether those affected will need to appeal using a reasonable excuse argument. The Digest also advises filing the return using estimated figures in the meantime and amending later on. This will allow an estimate of the tax to be paid. Don’t forget, interest will always be added to late-paid tax, even where a late filing penalty is waived.
Chancellor set to tone down non-dom reform?
Chancellor set to tone down non-dom reform? Domicile will no longer be a relevant factor in an individual’s tax status from April 2025. However, reports are suggesting that the Chancellor is going to soften the blow for those affected. What’s going on? Domicile is a general, not a tax, law principle. Nonetheless it has long been an important factor in determining the extent to which worldwide income, gains and assets are subject to various taxes. This will change from 2025/26 and later years with a move to a residence-based system, which can be determined year-by-year. If You need help with your Personal Tax see our Accounting Services pages. This move was first announced by the last government, but the incumbent government confirmed it would be continuing with the reform, tightening up what it said were loopholes in the pre-existing plans. The announcements were met with dismay by many in the financial sector, with warnings that the changes would disincentivise wealthy people from moving to, and investing in, the UK and perhaps lead to “capital flight”. Yesterday, it emerged that the Chancellor had apparently conceded that the reforms were having more of an impact than expected and was planning to table an amendment to the draft legislation in response. We don’t know the full details yet, but the amendment will be to the temporary repatriation facility. As currently drafted, this will allow individuals who were previously taxed on the remittance basis to designate amounts derived from pre-6 April 2025 foreign income and gains and to pay a reduced tax rate. This facility will be available for three tax years; 2025/26, 2026/27 and 2027/28. A tax rate of 12% will apply for 2025/26 and 2026/27, rising to 15% for 2027/28. The most likely scenario is that this period will be extended, and/or the applicable rates reduced. The Chancellor’s announcement comes on the heels of a report by global analytics firm New World Wealth and investment migration advisers Henley & Partners which found that 10,000 millionaires had left the country in 2024, an increase of 157% compared with the previous year.
Russian hedge fund manager loses £484k SDLT case.
Russian hedge fund manager loses £484k SDLT case. The First Tier Tribunal (FTT) has found that an ex-bacon factory was suitable for use as a dwelling and therefore did not qualify for SDLT relief. What’s the full story? InTretyakov v Revenue and Customs, Mr Tretyakov (T) purchased a luxurious £5.75m property in London and paid a reduced rate of SDLT on the basis that part of the property was “non-residential2. For SDLT purposes, a property will be considered non-residential if it is not suitable for use as a dwelling – measured at the point of acquisition. For more Help with your Business Needs see our Accounting Services The property was originally a bacon factory, which was converted into a three-storey residence and had several owners before being purchased by T who, on the advice of the estate agent, claimed that the ground floor was non-residential. The ground floor included a garage with two sunken parking spaces, storage space, a 40ft-fully-functioning bar, games room, wine cellar, gym and sauna. The vendors gave evidence at the tribunal, stating that they had been unable to obtain planning permission to turn the ground floor into a residential space, and that it is subject to non-domestic business rates. It was also noted that there was very little natural light and concrete flooring. The vendors confirmed that there had been some commercial use of part of the garage but that the majority of the ground floor was used for private entertaining. The judge found that while the planning designation of the floor was a factor, it was not determinative. Any commercial use at the time of sale was irrelevant, as were any planning restrictions because the tax treatment is based on whether the ground floor was suitable for use as a dwelling. The wine cellar, games room, bar and other entertainment facilities had been enjoyed by the vendors personally, not for any commercial purpose and so the FTT found that the entire property was suitable for use as a dwelling. The appeal was denied and T was hit with a further SDLT bill of £484,250.
Selling online – what’s HMRC’s latest guidance?
Selling online – what’s HMRC’s latest guidance? Recently published guidance which suggests that as an online seller you may have to report to HMRC even if you’re selling personal possessions you no longer want. Is this actually true? Déjà vu? HMRC seems slow to learn that ambiguous information has a habit of breeding unwelcome headlines and panic on social media. So after releasing “Check if you need to tell HMRC about your income from online platforms” , it quickly followed up with a press release confirming that there were no tax changes for online sellers. We’ve been here before, in early 2024, when there was a supposedly new tax for side hustles. To get more Help with your Personal Tax, take a look at our Tax Pages Vague guidance The trouble is HMRC uses phrases such as “you may” and “unlikely” which, when you’re deciding if you need to declare income is hardly clear or transparent. On the part dealing with personal possessions there is a focus on chattels worth less than £6,000 which are indeed exempt from capital gains tax (CGT). However, there is little mention of the important exemption for wasting assets. Wasting assets Wasting assets are all items with a predicted lifespan of less than 50 years from the date you acquired them. This includes all machinery unless you’ve claimed business tax deductions for it. The reason these assets are exempt from CGT is because their value generally erodes over time so HMRC doesn’t expect a gain to arise. Example. If Neo buys a case of good Bordeaux, it’s very unlikely to last 50 years even if kept well. So any profit he makes is exempt from CGT, even if it does in fact last more than 50 years. As Morpheus prefers to invest in vintage whisky with an expected life exceeding 50 years, any profit (gain) will be liable to CGT. Machinery includes watches, clocks, shotguns and most types of vehicle, including yachts but excluding racing cars, and musical instruments. If you frequently sell items – second-hand (other than your personal possessions) or new – you might be trading. In this situation any profit/gain you make can be liable to income tax, therefore the CGT wasting asset exemption can’t apply. Why it matters By 31 January 2025, online platforms such as eBay and Etsy must provide a report to HMRC and the individual where there were over 30 sales transactions in 2024 or their cumulative value exceeded £1,700. While this is aimed at those evading tax, it will also affect compliant taxpayers selling exempt personal possessions online. Requirement to tell HMRC For exempt gains, there is no need to tell HMRC, register for self-assessment or submit a tax return. The only exception is if the proceeds exceed £50,000 and you are already completing a self-assessment tax return for another reason. If you make a loss from the sale of a non-exempt asset, you must notify HMRC of the details if you want to be able to use it to reduce CGT on gains made in the same or later years. If in doubt, use the online checking tool to see if you may have anything to report.
MTD ITSA – another step closer
MTD ITSA – another step closer HMRC has picked up the pace on using Making Tax Digital for Income Tax Self-Assessment (MTD ITSA). Its new guidance explains how to join the scheme part way through a tax year. Is now the time for you to get on board? Timetable In April 2026, just 15 months away, sole traders and landlords whose turnover exceeds £50,000 per year (based on figures for 2024/25) will need to use Making Tax Digital for Income Tax Self-Assessment (MTD ITSA). In April 2027 MTD ITSA will be mandatory for sole traders and landlords with turnover exceeding £30,000 for 2025/26. For those with lower turnovers MTD ITSA won’t be mandatory but can be used voluntarily. Get the Help you need, see our Personal Tax page. HMRC encouragement After a few false starts HMRC launched the MTD ITSA pilot in April 2024. However, reports of the many problems with its predecessor have deterred many from signing up for this version. In a move to bring more sole traders and landlords on board, at the end of 2024 HMRC published new guidance on how to bring records up to date so that you can join MTD ITSA part way through the current or 2025/26 tax year. It has also published a “toolkit” to help you and your accountant get to grips with the fundamentals. Most bookkeeping software is now or soon will be compatible with MTD ITSA, and HMRC’s latest guidance contains links to these. If you use spreadsheets instead of bookkeeping software it’s still possible for you to use the MTD ITSA pilot through so-called bridging software. Details of these options are also in HMRC’s guidance. No penalties During the voluntary period HMRC will not penalise you with fines for late reporting or mistakes you make if they relate to using MTD ITSA. Naturally, the usual penalties continue to apply for failing to declare income etc. Joining the pilot will put you ahead of the game and allow you to iron out bookkeeping and reporting issues before it becomes mandatory