CAAV West MidlandsTaxation Update

Reaseheath College

Charles Cowap

5 July 2012

http://www.slideshare.net/cdcowap

Today:

Budget 2012

Valuation ….

http://www.hmrc.gov.uk/budget2012/ootlar-main.pdf

2012-13– Personal Allowance to become £8,105– Higher Rate Threshold to become £34,370

Lower Rate applies where >10% of estate given to charity

Bulk Purchase Rules Price averaged

Min 1% rateResidential Property

Broadly suitable for use as a dwelling Non-residential

includes mixed use and > 6 dwellings

http://www.hmrc.gov.uk/sdlt/intro/rates-thresholds.htm#2

Non Natural Persons, SDLT and residential property > £2 million

‘Non natural persons’: 15% rate for res

property > £2 million

Business Travel

• Approved Mileage Rate up to 45p/mile from April 2011 (was 40p)

• First 10,000 miles• No change above 10,000, stays at 25p

• Employer pays less than 45p?– Claim Mileage Allowance Relief on shortfall

CLAIM THE DIFFERENCE

Capital Allowances

Effects• Severe reduction of Annual Investment

Allowance (down to £25,000 from £100,000) wef 2012

• WDA also down by 2% wef 2012

• But Good News:

• Extension of Short Life Asset treatment from 4 to 8 years

Short Life Asset

• Previously restricted to 4 yrs, now 8 yrs• Treatment

– Treated separately from ‘pool’– Ordinary claims at 18% pa during ownership– Sell for LESS than balance claim difference– Sell for MORE than balance pay balancing

charge

• After 4 yrs/8 yrs, if not sold then transferred to general pool of P&M

• £100,000 machine

• Balance after 4 yrs @ 18% pa = £45,212

• Balance after 8 yrs @ 18% pa = £20,441

• So sell Yr 4 for £30,000, claim £15,212 balancing allowance

• New approach extends availability to 8 yrs

See: http://bit.ly/lQ6K9n for more

Furnished Holiday Lettings

• What was good for tax:– Claim Capital Allowances– Claim Loss Relief– Rollover Relief from CGT– Holdover Relief from CGT– Entrepreneurs’ Relief from CGT– Pension relief– Business Asset for IHT

• Looked as if we were going to lose this ….

FHLs: the changes

Was

• UK• Commercial, view to profit• Longer lettings no more

than 155 days pa• No single let more than

31 days• Available for holiday

letting 140 days• Actually let 70 days

Will be

• UK and EEA• Same• ?

• Available for 210 days from April 2012

• 105 days from 4.12• Losses restricted to FHLsLosses restricted to FHLs

VAT

New VAT guidance on land and property

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_PROD1_023492&propertyType=document

VAT on Listed Building Alterations

• Proposed to be Standard Rate VAT wef 1 October 2012

Business Rates

Farmhouses …• Rachel Dixon and her Westmorland

Damsons

• The Rosser’s retirement home

• Mr Higginson’s Irish shooting lodge

• Rosemary Antrobus Cookhill Priority (I & II)

• Sir Reginald McKenna, Rosteague House

• Mr Farmer and his diversified farm

• Ragley Hall’s business

• Mrs McKenna’s Conacre Field

• Brander (or Balfour), a Scottish business

• Mr Atkinson’s partners in Lancashire

• Mr Golding’s very small smallholding

http://bit.ly/n0Gdjq

• Hanson v HMRC [2012] UKFTT 95 (TC)

• Pawson v HMRC [2012] UKFTT 51 (TC)

Implications for Professional Practice and Instructions?

• Market Valuation: s160, Red Book

• Define Agricultural Property: s115– Land to which buildings and woods are

ancillary– Tenure considerations

• Define farmhouses, cottages, farm buildings (s115)

Advise on ‘character appropriate’ (s115)

• Size, content and layout considering AREA of land

• Size, content and layout considering FARMING ACTIVITIES

• Elephant Test?!• House with land, or a farm?• History• NB Retirement Homes!

• Opinion/evidence on satisfaction of occupation requirements: 2 years/7 years before death (s117)

• Full Valuation Report: Valuation and Report for Inheritance Tax Purposes (but NOT a probate valuation)

Red Book

• Definition of Market Value

‘Fair Value’

Other Recent Guidance

Value this farm for IHT

• 5 bedroom farmhouse• 3 cottages, 2 occupied by farmworkers, 1 let

on AST• 200 ha: 50 ha Grade 2, 140 ha Grade 3, 4 ha

yards and waste, 6 ha Grade 4• 200 dairy cows, followers, 80 ha arable• Ice cream business: 500 000 l pa @ £1/l• 5 000 sq m of ‘modern’ farm buildings• 500 sq m office conversion, fully let• 500 sq m with pp for holiday conversion

Contact Details

In-house CPD programmes, professional-technical updates, organisational consultancy, and more:

cdcowap@gmail.com

07947 706505

Twitter: @charlescowap

Blog: http://charlescowap.wordpress.com/

http://www.slideshare.net/cdcowap

Conclusions and Discussion