Here are some more sample questions submitted by accountants to the ICPA/Qdos telephone helpline
Q: Is there an Annual Tax on Enveloped Dwellings (ATED) charge on a company that has got a freehold interest in residential properties and the leaseholders of the properties are also shareholders connected with the company?
A: Where two or more chargeable interests are held in the same dwelling by connected persons they will, as in the case where the separate interests are held by the same person, also be aggregated for the purposes of ATED.
However, special rules apply where one of the connected persons is an individual. Where there are two (or more interests) in a single dwelling interest where one is owned by a company and one by an individual who is a connected person to the company then the aggregation rules (section 110 FA 2013) only operate where the company’s interest is worth £500,000 or more. In order to calculate the company freehold interest in each individual dwelling, the total freehold interest should be divided by the number of individual dwellings. If the company freehold interest in each dwelling is below £500,000 then it is exempt from ATED.
Q: I have a husband-and-wife client whose main address is in Scotland, but they spend time in a holiday home that they own on the South Coast. Will they be liable to the Scottish rate of income tax or UK income tax and what are the rates?
A: Taxpayers pay Scottish income tax if they live in Scotland and it is paid to the Scottish Government. From what you have advised, if their main home is in Scotland then they will pay Scottish income tax.
There are also rules that individuals who don’t live in Scotland may also have to pay Scottish income tax if they:
- move to or from Scotland.
- have more than one home at the same time.
- have nowhere that they can identify as their home.
Further guidance on working out whether clients will pay Scottish Income Tax can be found at: https:// www.gov.uk/guidance/work-out-if-youll-pay-the-scottish-rate-of-income-tax
The rates for Scottish Income Tax do differ slightly from the rest of the UK – you can find these online.
Further guidance as to how these are applied to different types of income and whether personal allowances are available can be found at https:// www.gov.uk/scottish-rate-income-tax
Q: What is the interaction between 24 months rule and 40% working condition in a temporary workplace?
A: An employee may attend a workplace regularly and perform duties there which are not of limited duration (less than 24 months) without that workplace becoming a permanent workplace provided the purpose of each visit is for a temporary purpose. Where the employee has spent, or is likely to spend, 40% or more of their working time at that particular workplace over a period of more than 24 months, it will be a permanent workplace.
The test is whether the employee has spent, or is likely to spend more than 40% of their working time at a particular workplace over a period that lasts or is likely to last more than 24 months. For the 24-month rule to apply, both legs of the test must be met; for a workplace to be deemed permanent, the employee must have spent or be likely to spend more than 40% of their working time at a workplace and they must attend it or be likely to attend it over a period lasting more than 24 months.
Edward lives and works in Portsmouth where he is employed as an engineer. His employer sends him to work in Southampton for 11⁄2 days a week for 28 months. For the rest of the week he continues to work in Portsmouth, which remains a permanent workplace. In considering whether Edward is entitled to tax relief for travel between home and Southampton it is important to look at the amount of time he expects to spend there each week and for how long he expects to be in Southampton. Because he expects to be in Southampton, for less than 40% of his working time, albeit over a period longer than 24 months, and he retains a permanent workplace in Portsmouth, Southampton is a temporary workplace for Edward and he is entitled to tax relief for the cost of getting there and back.
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