HMRC notices

If your personal details change you may be required to notify HMRC as this can affect your entitlement to certain tax breaks and or benefits.

For example, you need to tell HMRC if:

• you get married or form a civil partnership; or
• you divorce, separate or stop living with your husband, wife or partner.

The sooner you advise HMRC the better as the change could result in you paying too much tax or paying too little and owing HMRC more money.

If you receive tax credits or Child Benefit you also need to tell HMRC separately about changes to your relationship or family.

In the sad event that your spouse or civil partner dies, it is also a requirement to report the death to HMRC as well as notifying of changes to your income. For example, the death of a spouse would mean that the surviving spouse was no longer entitled to claim the Married Couple's Allowance.

If you move home, it is advisable to let HMRC know as soon as possible so they can update your contact details. HMRC should also be informed if you change gender although the process is usually automatic when you change gender legally by applying for a Gender Recognition Certificate.

You must also notify HMRC about certain changes to your income such as when you start or stop receiving:

• income from a new source, such as money from self-employment or rent from property;
• taxable benefits, such as State Pension, Jobseeker’s Allowance and Carer’s Allowance;
• benefits from your job, such as a company car;
• income above your Personal Allowance;
• money over £85,000 from self-employment (you must register for VAT over this amount);
• lump sums from selling things you pay Capital Gains Tax on, such as shares or property that’s not your main home; and
• income from property, money or shares you inherit, such as dividends from shares or rent from property.

If you are selling your company, there are important actions you must take to properly finalise your affairs. Please note that this is not an exhaustive list, and it is important to check what else may be required.

We have summarised below some of the main steps you need to take if closing your business:

• Your responsibilities when selling a limited company will depend on whether you’re selling your entire shareholding, or the company is selling part of its business. 
• Keep staff informed about redundancy terms or relocation packages and be mindful not to breach your employees’ rights.
• If you are selling your entire shareholding, you should appoint new directors before you resign as a director yourself.
• Consider your liability to Capital Gains Tax and whether you can benefit from reliefs including Business Asset Disposal Relief, previously known as Entrepreneurs’ Relief.
• If there are charges against your company, for example a mortgage on your house to secure a business loan, you must let the provider know within 21 days of the sale.
• You may want to transfer your VAT registration to the new owner.

Charities can claim Gift Aid on donations made by eligible taxpayers. This can boost donations by an extra 25% if the donor makes a Gift Aid Declaration (GAD).

To claim Gift Aid, charities need to obtain a Gift Aid declaration from the donor. It should state that the donor:

• has paid the same amount or more in Income Tax or Capital Gains Tax in that tax year; and
• agrees to Gift Aid being claimed.

Charities must keep a record of Gift Aid declarations for 6 years after the most recent donations they claimed.

The Gift Aid Small Donations Scheme can be used on small donations of £30 or less and no GAD is required. The Gift Aid Small Donations Scheme (GASDS) scheme allows qualifying charities and Community Amateur Sports Clubs (CASCs) to claim a top-up equivalent to Gift Aid on small donations of money made without a Gift Aid declaration. A small donation is defined as a donation of £30 or less made in cash or using contactless technology, such as a contactless credit or debit card. Donations made by other methods of payments such as cheque or bank transfer do not count. 

The maximum annual amount of small donations that can be claimed through the GASDS is the lower of £8,000 or 10 times the amount the charity receives in Gift Aid donations – known as the matching rule. The £8,000 limit allows charities and CASCs to claim Gift Aid style top-up payments of up to £2,000 a year.

The gift aid scheme, which was originally introduced in 1990, allows charities to reclaim from HMRC the basic rate of Income Tax deducted from qualifying donations by UK taxpayers. This means that when a basic rate taxpayer claims gift aid on a £10 donation, the charity can reclaim from HMRC the £2.50 of tax paid on that donation.

If you are a higher rate or additional rate taxpayer, you are eligible to claim additional tax relief on the difference between the basic rate and your highest rate of tax.

For example:

If you donated £5,000 to charity, the total value of the donation to the charity is £6,250. You can claim back additional tax of:

• £1,250 if you pay tax at the higher rate of 40% (£6,250 × 20%),
• £1,562.50 if you pay tax at the additional rate of 45% (£6,250 × 25%).

Taxpayers have the option to carry back charitable donations to the previous tax year. A request to carry back the donation must be made before or at the same time as the previous year’s Self-Assessment return is completed.

This means that if you made a gift to charity in the current 2023-24 tax year that ends on 5 April 2024, you can accelerate repayment of any tax associated with your charitable giving. This can be a useful strategy to maximise tax relief if you are not paying higher rate tax in the current tax year but did in the previous tax year. This should be done as part of the Self-Assessment tax return for 2022-23 which must be submitted by 31 January 2024.

You can only claim if your donations qualify for gift aid. This means that your donations from both tax years together must not be more than 4 times what you paid in tax in the previous year.

In April 2022, the government announced a package of measures intended to make the UK a global cryptoasset technology hub. One of the issues raised at the time concerned the tax treatment of Decentralised Finance (DeFi) and staking.

DeFi lending and staking encompasses a range of activities that reward users who deposit cryptoasset tokens into a pool or lend them to other individuals or platforms for a certain period to earn passive income returns often described as interest.

The government was interested in ascertaining whether the administrative burdens and costs could be reduced for taxpayers engaging in this activity, and whether the tax treatment can be better aligned with the underlying economics of the transactions involved.

As part of the process, the government ran a Call for Evidence from 5 July to 31 August 2022. Most respondents agreed that a change in the tax rules would be beneficial for the industry and users.

A new consultation seeking views on a potential new taxation framework for cryptoasset loans and ‘staking’ in the context of DeFi was published on 27 April 2023 and represents the next stage of the policy making process. The consultation closes on 22 June 2023.

There are a number of responsibilities that fall on a landlord that is renting out a property. 

These include the requirements to:

• keep rented properties safe and free from health hazards;
• make sure all gas equipment and electrical equipment is safely installed and maintained;
• provide an Energy Performance Certificate for the property;
• protect their tenant’s deposit in a government-approved scheme;
• check their tenant has the right to rent your property if it’s in England; and
• give their tenant a copy of the How to rent checklist when they start renting from you (you can email it to them).

There are different rules for landlords in Scotland and landlords in Northern Ireland.

There are also requirements relating to fire safety, health and safety inspections, financial responsibilities and special rules for regulated tenancies (usually private tenancies starting before 15 January 1989).

The settlements legislation is contained in s.624 ITTOIA 2005. The legislation seeks to ensure that where a settlor has retained an interest in property in a settlement that the income arising is treated as the settlor’s income for all tax purposes. A settlor can be said to have retained an interest if the property or income may be applied for the benefit of the settlor, a spouse or civil partner.

In general, the settlements legislation can apply where an individual enters into an arrangement to divert income to someone else and in the process, tax is saved.

These arrangements must be:

• bounteous, or
• not commercial, or
• not at arm’s length, or
• in the case of a gift between spouses or civil partners, wholly or substantially a right to income.

However, there are a number of everyday scenarios where the settlements legislation does not apply. In fact, after much case law in this area, HMRC has confirmed that if there is no 'bounty' if the gift to a spouse or civil partner is an outright gift which is not wholly, or substantially, a right to income, and the legislation will not apply.

The Let Property Campaign provides landlords who have undeclared income from residential property lettings in the UK or abroad with an opportunity to regularise their affairs by disclosing any outstanding liabilities whether due to misunderstanding the tax rules or due to deliberate tax evasion. Participation in the campaign is open to all residential property landlords with undisclosed taxes. The campaign is not suitable for those letting out non-residential properties.

Landlords who do not avail of the opportunity and are targeted by HMRC can face penalties of up to 100% of the tax due together with possible criminal prosecution.

HMRC's guidance regarding the campaign has been updated for the current tax year.

Taxpayers that come forward will benefit from better terms and lower penalties for making a disclosure. Landlords that make an accurate voluntary disclosure are likely to face a maximum penalty of 0%, 10% or 20% – depending on the circumstances – plus any tax and interest due. There are higher penalties for offshore liabilities. 

There are three main stages to taking part in the campaign, notifying HMRC that you wish to take part, preparing an actual disclosure and making a formal offer together with payment. The campaign is open to all individual landlords renting out residential property. That includes landlords with multiple properties and single rentals as well as specialist landlords with student or workforce rentals.

HMRC’s guidance on making a disclosure has been updated. The sections titled ‘Income you should include in your disclosure’ and ‘How many years to include in your disclosure’ have been updated.

It was confirmed as part of the Spring Budget announcements that the Social investment tax relief (SITR) scheme will end as planned on 5 April 2023. New investments made on or after 6 April 2023 will no longer qualify for Income and Capital Gains Tax relief. The scheme was initially introduced to encourage individuals to support social enterprises and charities access new sources of finance.

For any investments made before 6 April 2023, the lifetime maximum amount of investment social enterprises can raise through the SITR is £1.5 million. This includes any money received by subsidiaries, former subsidiaries or businesses that have been acquired.

Individuals making an eligible investment in a SITR of up to £1,000,000 can deduct 30% of the cost of their investment from their Income Tax liability for the relevant later year in which the investment is made or the previous tax year. Qualifying investors can also benefit from Capital Gains Tax hold-over relief. To qualify for this relief, a Social enterprise must have been a community interest company, a community benefit society, with an asset lock or a charity. 

There are special rules where a property is let at less than a commercial rate or isn’t let on commercial terms. These rules also apply if a property is occupied rent free or at less than a commercial rate, for example, a property is occupied by a family member at a reduced or nil rent.

In these circumstances, HMRC can take the view that unless the landlord charges a full market rent for a property and imposes normal market lease conditions, it is unlikely that the expenses of the property are incurred ‘wholly and exclusively’ for business purposes.  Problems may also arise when considering the deduction of expenses during periods when the property is lived in by ‘house sitters’ who do not make any payment whilst staying at the property.

HMRC generally accepts that if a property is let at below the market rate (as opposed to providing it rent-free), the landlord can deduct the expenses of that property up to the rent they get from it. This means that the uncommercially let property produces neither a profit nor a loss, but the excess expenses cannot be carried forward to be used in a later year.

If the landlord is actively seeking a tenant and a relative house sits while it is empty, relief will not be restricted as long as the property remains genuinely available for letting. Relief for capital expenditure on uncommercial lettings may also be restricted.