Hot tax topics on our helplines

    Each month we review the emerging themes from the calls to our tax advice lines. In March, there have been three prominent topics: apprenticeship levy, non-domiciles and property development tax. Below is a short summary of the key points our team has been discussing with accountants.
     

    Apprenticeship levy

    All employers operating in the UK, with a pay bill over £3m each year, will need to start paying the apprenticeship levy from 6 April 2017. 

    The levy is charged at a rate of 0.5% of the annual pay bill and is payable through PAYE. It is being introduced to fund new apprenticeships, as the government aims to deliver an additional 3 million apprenticeship starts in England by 2020.

    Each employer will receive one annual allowance of £15,000 to offset against their levy payment.
    Further detailed information can be read on Gov.UK
     

    Non-domiciles

    Some non-domiciled individuals will be treated as if they were domiciled in the UK for income tax, inheritance tax and capital gains tax from the start of 2017/18.

    The changes will affect:

    • Non-domiciled individuals (non-doms) who have been resident in the UK for 15 out of the past 20 years

    • Individuals who were born in the UK with a UK domicile of origin who return to the UK having obtained a domicile of choice elsewhere

    • Settlors and beneficiaries of overseas trusts

    • Individuals who become deemed domicile from April 2017 who have overseas assets acquired before 6 April 2017

    • Individuals who have been taxed on the remittance basis in any tax year before 2017 to 2018 who hold a mixed fund in an overseas bank account

    They will be taxed on any arising worldwide income and gains in the same way as UK domiciles and this will bring to an end permanent non-dom tax status.

    Further detailed information can be read on Gov.UK
     

    Property tax development

    Last December, HMRC published guidance in relation to property development tax following the new legislation introduced within Finance Bill 2016.

    The new rules apply to resident and non-resident companies carrying on a trade of dealing in or developing UK land. HMRC published some factors which could indicate whether a business is carrying on a trade or investment in land:

    • Length of time the land is owned

    • Intention at purchase date

    • Any change of intention

    • How the acquisition is funded

    • The usage of the property by the owner

    • Whether it is developed or improved (rather than repaired) before disposal

    • Whether there is a connection with an existing trade

    The tax then applies if any of the following conditions are met:

    • The main purpose, or one of the main purposes, of acquiring the land was to realise a profit or gain from disposing of the land

    • The main purpose, or one of the main purposes of acquiring any property deriving its value from the land was to realise a profit or gain from disposing of the land

    • The land was held as trading stock

    • In the case where the land has been developed, the main purpose, or one of the main purposes, of developing the land was to realise a profit or gain from disposal of the land when developed

    Further detailed information is available in HMRC’s Business Income Manual