HMRC Admin 10
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RE: Process for paying CGT on a house when HMRC have not formally approved probate valuation
Hi
Replacing a boiler with a new one with a higher specification, would not qualify for capital expenses, as the function of the boiler remains unchanged, ie heat the property.
A function of a window is to let light in.
This does not change, whether the previous window was single, double or triple glazed, so would not qualify for capital expenses.
A replacement kitchen, where the replacement is like for like, would not qualify.
A kitchen that has marble worktops, replacing a standard worktop; hot and cold water taps, changed to a single mixer tap, a cooker replace with a hob and fitted ovens and so on would qualify for capital expenses, as there is a change in function.
These are grey areas and each one needs to be considered on its own merit.
It is largely a question of fact and degree in each case whether expenditure on a property leads to an improvement. -
RE: US Social Security
Hi
This has been determined by legislation and the double taxation treaty. -
RE: Bonus clawback - where to log this on self assessment
Hi
If you’ve had to pay back money to your employer due to a contractual agreement (often known as claw back), reduce the amount of pay in box 1 by the amount paid back.
Example of a P60
If the result is a negative amount, enter zero in box 1.
Include the negative amount, but as a positive figure, in the ‘Post-cessation trade relief and certain other losses’ box, box 6 in the ‘Other Tax
Reliefs’ section on page Ai2 of the Additional information page (SA101).
Enter a note to explain why you’ve done this in box 19 ‘Any other information’ on the SA100. -
RE: Second automatic UK test - Oversea home period
Hi
No more than 30 days in the overseas home in the tax year. -
RE: Foreign Stock Dividends - Income or capital?
Hi
I would refer you again to the clarification provided below of HMRC's position on foreign stock dividends.
Given the complexity of this area of taxation, Customer Forum advisors are unable to provide any further guidance.
“Stock dividends”, if they are traditionally structured bonus issues, are neither dividends, since nothing leaves the company, nor capital reductions, but rather reflect a capital reconstruction.
Stock dividends as defined in the legislation are treated as income by virtue of S1049 CTA10 and, where undertaken by UK resident company, are taxable as savings income under S409 to S414 CHAPTER 5, Part 4 ITTOIA05.
However, there is no equivalent charge for stock dividend income from a non-UK resident company. Furthermore, the charging provision for dividends from non-UK resident companies (‘overseas dividends’) is quite different from the charging provision for UK dividends and other distributions at section 383 ITTOIA 2005. Section 402 ITTOIA 2005 is narrower, for example it excludes ‘dividends of a capital nature’.
This means that to be charged to Income Tax under s402 ITTOIA, something described as a “stock dividend” by a non-UK resident company would need to be a dividend of an income nature.
It is the company law mechanism of payment that determines whether the payment is a ‘dividend’ or not.
This is set out in more detail by the Court of Appeal in HMRC v First Nationwide.
This case determined that whether an issue of share capital by an overseas company is chargeable to UK income Tax, the primary question is whether the distribution is paid by a dividend mechanism.
The dividend will only escape the charge to Income Tax if it is accompanied by a reduction in capital or paid in a liquidation.
There is further guidance on the meaning of stock dividend below, and a specific comment on ‘Dividend Reinvestment Plans’.
CTM17005 - Distributions: stock dividends: introduction
Applying this to the question raised here it is necessary to look at the exact mechanism being used to achieve any sort of “stock dividend” by a foreign company.
If the transaction in question is a true “bonus issue”, then a SCRIP dividend will not give rise to a charge under section 402, ITTOIA 2005 for the reasons set out above, nothing has left the company and there has been no capital reduction.
However, where alternative methods are used, such as the DRIP scheme you note in your query, it is possible that a dividend chargeable under section 402 has been received, but it always depends on the exact mechanism used in the particular jurisdiction. -
RE: Registering as an agent
Hi Karen Evans
The business is not currently registered as an agent and therefore they can say no they are not an agent on the AML application form, this can be changed at a later date via the business Government Gateway account. -
When can I claim EIS loss relief?
Hi
You need to wait until your are filing the 23/24 tax return as in year losses needed to be used against in year gains first.