caav tax tutorial july 2011
DESCRIPTION
CAAV tax update for examination candidates, 27 July 2011, Rodbaston College, Staffs, covering Budget 2011, Capital Allowances, Furnished Holiday Lets, Farmhouses and Inheritance Tax, and Stamp Duty Land TaxTRANSCRIPT
CAAV StaffordshireTaxation Update
Rodbaston College
Charles Cowap
27 July 2011
http://www.slideshare.net/cdcowap
Today:
Budget 2011
Business Travel
SDLT
Capital Allowances
FHLs
Farmhouses
http://www.hmrc.gov.uk/budget2011w.pdf
2012-13– Personal Allowance to become £8,105– Higher Rate Threshold to become £34,370
Bulk Purchase Rules to change (Residential)
Price averagedMin 1% rate
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
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 20% 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 @ 20% pa = £41,000
• Balance after 8 yrs @ 20% pa = £17,000
• So sell Yr 4 for £30,000, claim £11,000 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
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
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)
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 DetailsIn-house CPD programmes, professional-
technical updates, organisational consultancy, and more:
[email protected] 01952 815305
07947 706505
Twitter: @charlescowap
Blog: http://charlescowap.wordpress.com/
Conclusions and Discussion