Tax & IHT guidance - Intelligent Money Private Clients

[Mr Pointy]

PM3 said:

Its probably been said before a number of times, but I'll ask ( out of paranoia )

Referring to IM funds in my instance ; I can sell one fund in my GIA and buy again ( same fund ) inside my ISA WITHIN 30 days and it does not fall foul of the 30 day rule for CGT purpose ??????? True or False

Yes you can.

[PM3]

Mr Pointy said:

PM3 said:

Its probably been said before a number of times, but I'll ask ( out of paranoia )

Referring to IM funds in my instance ; I can sell one fund in my GIA and buy again ( same fund ) inside my ISA WITHIN 30 days and it does not fall foul of the 30 day rule for CGT purpose ??????? True or False

Yes you can.

Thankyou very much for the feedback . I've gone mad looking up soooooo many examples on google , all quite neatly not really ever getting to the simple conclusion .

[Julia454]

Hi, long term lurker and was wondering if someone could clarify a tax question I have. Can you claim back business expenses when you don't pay enough tax to deduct it? I earn just under 18,000 a year outside an Isa which keeps me under the tax threshold. The rest of my income comes from my isa and is none taxable. I pay the usual buying and selling fees but that's all my expenses. I am not registered as self employed I need some equipment and more space to work but I don't know if I can claim it back. Any assistance would be really helpful. Thank you.

[Steve H]

Julia454 said:

Hi, long term lurker and was wondering if someone could clarify a tax question I have. Can you claim back business expenses when you don't pay enough tax to deduct it? I earn just under 18,000 a year outside an Isa which keeps me under the tax threshold. The rest of my income comes from my isa and is none taxable. I pay the usual buying and selling fees but that's all my expenses. I am not registered as self employed I need some equipment and more space to work but I don't know if I can claim it back. Any assistance would be really helpful. Thank you.

You may need to provide some details as there’s a couple things I don’t understand there.

£18k income pa would put you into basic tax @20% on about £5500 wouldn’t it?

If you are not self employed are you paying tax as PAYE?


It sounds more like you have a potentially taxable income that isn’t PAYE in which case I would say you need to complete a tax return for it irrespective of if you have registered as self employed.

The good news would be that any expenses that you had related to your work would be deductible in one way or another against that income. What I mean by that is normal expenses would simply be set against your taxable income for that year but larger long term purchases may have to be depreciated and the tax deduction spread over a longer term.

[Julia454]

Hi Steve H and thanks for your response. I don't think I need to pay tax on the £18,000 because of the way it is made up: £12,750 personal allowance, £5,000 starting savings rate and 1,000 personal savings allowance. I thought you only had to fill in a tax return if you had something to declare.

[Steve H]

Possibly then. It sounds like it would depend on how much of your income you are actually earning and how much you are drawing from existing savings and how much interest those savings are making.

I think the interest part would be determined by the amount of interest the savings actually generate in a year and not the amount you would draw out from them as that is effectively just your own money anyway and the growth would be the thing that is important for tax.

Also I assume there is a difference between savings on a fixed interest, and some investments where Capital Gains Tax would apply (and would have it’s own separate allowance).

But I imagine Nik from IM could detail more.

[Carbon Sasquatch]

Julia454 said:

I don't think I need to pay tax on the £18,000 because of the way it is made up: £12,750 personal allowance, £5,000 starting savings rate and 1,000 personal savings allowance.

So are you earning 18k & saving 6k of it - or earning 12k & topping up with 6k taken from savings ?

[Julia454]

Carbon Sasquatch said:

So are you earning 18k & saving 6k of it - or earning 12k & topping up with 6k taken from savings ?

Hello Carbon Sasquatch

I am not withdrawing any money from my original investments at all. The £18,0000 is money made from either savings interest *£6,000 or from stock market dividends *£12,750 generated from my original investment. My understanding is I do not need to pay any tax on this money because I am under the personal allowance threshold. My question is can I claim for business expenses even though I am not paying any tax?

[Carbon Sasquatch]

I'm not following - claim what & from whom ?

You haven't paid any tax to try to reclaim.
The business doesn't exist - at least it's not registered nor generating an income ?

SteveH seems to have answered it above - expenses for a business should be able to be offset against income from said business & tax payable only on the profit.

[pingu393]

Julia454 said:

Carbon Sasquatch said:

So are you earning 18k & saving 6k of it - or earning 12k & topping up with 6k taken from savings ?

Hello Carbon Sasquatch

I am not withdrawing any money from my original investments at all. The £18,0000 is money made from either savings interest *£6,000 or from stock market dividends *£12,750 generated from my original investment. My understanding is I do not need to pay any tax on this money because I am under the personal allowance threshold. My question is can I claim for business expenses even though I am not paying any tax?

As I see it, the problem that Julia has is that the tax due on her business is INCOME TAX. The tax that would be due on her dividends is CAPITAL GAINS TAX, so there will be no ability to offset the £12,570.

The tax due on her £6000 is income tax, but someone else would need to confirm if this tax can be avoided by offsetting it against a business expense. I don't think that interest can be used to offset, but I'm not sure.

[Julia454]

Carbon Sasquatch said:

I'm not following - claim what & from whom ?

You haven't paid any tax to try to reclaim.
The business doesn't exist - at least it's not registered nor generating an income ?

SteveH seems to have answered it above - expenses for a business should be able to be offset against income from said business & tax payable only on the profit.

Ahh ok thanks both, I think I have it now. I cannot claim expenses not because I am below the tax threshold but because I am neither generating a profit over that threshold or, registered as a business. So, if I have that right if I registered as a business I should be able to claim back my dealing charges plus tax and stamp duty from buying and selling shares up to and including the total amount of money I have been charged. I have gone over the £12,750 personal allowance if I had not deducted the buying and selling costs.

Thanks for your help on this Steve and Carbon, I did not realise how quickly this would become complicated.

[Carbon Sasquatch]

Julia454 said:

So, if I have that right if I registered as a business I should be able to claim back my dealing charges plus tax and stamp duty from buying and selling shares up to and including the total amount of money I have been charged.

Hmm - that's not what you asked

Julia454 said:

I am not registered as self employed I need some equipment and more space to work but I don't know if I can claim it back.

If you want to set up a financial trading business & transfer all of your assets to it, that's a thread all of it's own......

[pingu393]

Julia454 said:

Carbon Sasquatch said:

I'm not following - claim what & from whom ?

You haven't paid any tax to try to reclaim.
The business doesn't exist - at least it's not registered nor generating an income ?

SteveH seems to have answered it above - expenses for a business should be able to be offset against income from said business & tax payable only on the profit.

Ahh ok thanks both, I think I have it now. I cannot claim expenses not because I am below the tax threshold but because I am neither generating a profit over that threshold or, registered as a business. So, if I have that right if I registered as a business I should be able to claim back my dealing charges plus tax and stamp duty from buying and selling shares up to and including the total amount of money I have been charged. I have gone over the £12,750 personal allowance if I had not deducted the buying and selling costs.

Thanks for your help on this Steve and Carbon, I did not realise how quickly this would become complicated.

You are a business if you sell a service or a product. You become a business after your first sale. You do not need to register as a business until you reach certain limits of turnover or profit, but you do need to pay the correct amount of tax.

You cannot offset business expenses against profits until you have declared yourself as a business with HMRC.

If you are planning to buy and sell shares as a business, you must be doing it on behalf of someone else.

Is this your plan?

[Spunagain]

Slightly obscure Inheritance tax question, which might interest a few.

A mate’s father in law (FiL) is in his 90s and sits on an estate which nudges into being big enough to incur inheritance tax (IHT). He knows this from sorting out probate when his mother died a few years ago.

FiL is supporting mates brother regularly to the tune of £20k-£30k per year – possible more now from his pension. His Brother and wife are full time carers for a teenager with severe autism – not the TV friendly kind with special skills but the kind with no communication or interaction with anyone else and does his own thing and is a 24hr a day job.

Mate’s understanding is that these payments which have been ongoing for over a decade now will not be covered by IHT as they are “Dependent payments” supporting an under 18 year old relative and are made on a regular basis.

FIL is now asking my mate to help cancel a number of other regular charitable donations, and mate suspects FIL wants to increase the Dependent payments.

My mate’s understanding is that the Dependent payments rules are that they should not affect the standard of living of FiL to remain exempt of IHT, but the question is how is this measured? While FiL has a simple life and few outgoings, would cancellation of charitable donations raise a red flag? Is there a proportion or amount which would be seen as acceptable or breaking the rules.

My mate is loath to interfere as FIL can be quite prickly, but suspects that his Brother is not claiming all he is entitled to from the state and if he needs more funds then would it be better to steer him that way rather than risk (if his FIL passes any time soon) of becoming liable for IHT on another £150k+ of what could be seen as gifts if they were seen by the tax man as not “Dependent payments”?

Cheers for what has been a very useful thread BTW!

Any thoughts?

[IJWS15]

Stamp duty query. Am considering moving in with my son and jointly buying a property. We both own our own homes and he has a second house rented out.

Do we pay standard rate on the joint house because we all intend to live in it (main home as we are both selling our existing main homes) or do we pay the higher rate because he has a second property?

Government website implies we do.

[pingu393]

IJWS15 said:

Stamp duty query. Am considering moving in with my son and jointly buying a property. We both own our own homes and he has a second house rented out.

Do we pay standard rate on the joint house because we all intend to live in it (main home as we are both selling our existing main homes) or do we pay the higher rate because he has a second property?

Government website implies we do.

I suspect that each half will be treated separately. Your half will be standard. His half will be either standard or second home rate, depending upon which home he declared as his second.

You need better advice than from a bloke in the pub on the internet.

[IJWS15]

That may be the case, I thought IM were supposed to be a little more informed than the average bloke on the internet.

If/when we get closer and appoint a solicitor we can check with them but looking for some advice for planning what we can afford.

[Jockman]

IJWS15 said:

Stamp duty query. Am considering moving in with my son and jointly buying a property. We both own our own homes and he has a second house rented out.

Do we pay standard rate on the joint house because we all intend to live in it (main home as we are both selling our existing main homes) or do we pay the higher rate because he has a second property?

Government website implies we do.

Agreed. One of you will still own a second property on the date of purchase and it looks like that will suffice to tip you into higher rate SDLT.

[Sheepshanks]

IJWS15 said:

Stamp duty query. Am considering moving in with my son and jointly buying a property. We both own our own homes and he has a second house rented out.

Do we pay standard rate on the joint house because we all intend to live in it (main home as we are both selling our existing main homes) or do we pay the higher rate because he has a second property?

Government website implies we do.

I thought you didn't pay it if selling your main home.

What are you reading that makes you think your son (or maybe both of you) will be liable for the higher rate?

There are gotchas in the rules though - it's considered it was very poorly written.


TBH this isn't something I'd think IM would necessarily be experts in.

[Jockman]

Sheepshanks said:

I thought you didn't pay it if selling your main home.

What are you reading that makes you think your son (or maybe both of you) will be liable for the higher rate?

There are gotchas in the rules though - it's considered it was very poorly written.


TBH this isn't something I'd think IM would necessarily be experts in.

You’re correct on primary residence but the existence of a rented property is what complicates the issue.