Lease Premiums – capital or income? – a statutory interlude

 CGT, Income Tax, Property Tax, Statutory Interpretation  Comments Off on Lease Premiums – capital or income? – a statutory interlude
Nov 132013
 

The following is a statutory analysis of the position when a lease of land is granted for a premium. We have already seen how this works in previous articles on the Lease Premium Rules. The first article was about how the rules operate to modify the capital gains treatment of the landlord, and the second article concerned how the landlord could use these rules to his advantage in claiming tax relief for the property.

However, these two articles raise some important questions concerning the nature of the premium and how it is taxed. Why should a landlord receiving a premium be taxed under the capital gains legislation, and a property trader be taxed under the income tax rules? More importantly:

“How does this result come about under the legislation?”

We shall discuss this more fully below. Continue reading »

Budget 2013 – New Limits on Income Tax Reliefs

 Budget 2013, Income Tax  Comments Off on Budget 2013 – New Limits on Income Tax Reliefs
Apr 102013
 

Budget 2013 has produced a few nasty restrictions on income tax reliefs, which cannot be said to be business friendly at all. In a nutshell, certain types of tax deduction will be capped at 25% of an individual’s annual income, or £50,000, whichever is the greater number.

The Draft Guidance sets out a list of the reliefs affected, and examples of how to do the sums. Perhaps the most significant impact will be felt by individuals setting up their own business, whether as a sole trader or in partnership. Continue reading »