Zurich Tax Handbook, 2011-2012



By Lisa Macpherson
December 2011
Pearson Education
Distributed by the Trans-Atlantic Publications
ISBN: 9780273759638
940 Pages
$125.00 Hardcover


Table of Contents

Key changes
Preface
Contributors
Abbreviations

1 INTRODUCTION: PRINCIPLES OF TAX PLANNING AND HOW TO USE THIS BOOK

1.1 Introduction 
1.2 What's new for 2011/2012?
1.3 General strategy
1.4 Planning points if you are employed
1.5 If you are thinking of becoming self-employed
1.6 If you are already in business
1.7 Investments and capital gains tax
1.8 Business tax and finance
1.9 Managing your investments and your family’s financial affairs
1.10 Tax issues if you are non-resident or have a foreign domicile
1.11 Ensure that all important deadlines are kept

PART 1 SELF-ASSESSMENT

2 SELF–ASSESSMENT

2.1 Self-assessment (SA)
2.2 New features of the 2011 SA form
2.3 Online filing of SA tax returns
2.4 Short tax return 2011
2.5 Ten golden rules for dealing with your 2011 tax return
2.6 Common errors
2.7 Providing additional information
2.8 Finding your way around the SA form

3 HMRC & YOU

3.1 Understanding your responsibilities and rights
3.2 The tax return process
3.3 Revenue enquiries into tax returns
3.4 What penalties can the Revenue impose?
3.5 Remission of tax by the Revenue
3.6 Error or mistake relief 
3.7 Codes of practice
3.8 Revenue information and advice
3.9 Statements of practice and extra-statutory concessions
3.10 Complaints and compensation
3.11 Revenue Adjudicator

4 EMPLOYMENT

4.1 Basis of assessment
4.2 How tax is collected
4.3 Allowable expenses
4.4 Benefits-in-kind in general
4.5 Company cars 
4.6 Free use of assets
4.7 Beneficial loans
4.8 Living accommodation 
4.9 Miscellaneous benefits
4.10 Share incentives
4.11 Options to acquire gilts
4.12 Options to acquire other company assets
4.13 Golden hellos
4.14 Restrictive covenants
4.15 Redundancy payments
4.16 Golden handshakes, other termination payments and continuing benefits
4.17 Designing a ‘tax efficient’ remuneration package

5 SHARE INCENTIVES

5.1 Gifts of shares
5.2 Profit-sharing schemes
5.3 Non-approved share options
5.4 Approved share option schemes
5.5 Enterprise Management Incentives (EMI)
5.6 Special shares, etc
5.7 The employer’s perspective
5.8 Some tax planning ideas

6 SELF-EMPLOYMENT

6.1 How self-employed individuals pay tax
6.2 Are you really self–employed?
6.3 Basis of assessment 
6.4 Partnerships
6.5 Limited liability partnerships (LLPs)
6.6 Partnerships controlled outside the UK 
6.7 Relief for trading losses

7 INCOME FROM UK PROPERTY

7.1 Basis of assessment and administration
7.2 How to calculate your taxable profit 
7.3 Lump sums deemed to be rent (premiums)
7.4 ‘Rent-a-room’ relief 
7.5 Furnished holiday accommodation
7.6 ‘Buy to let’ investments 
7.7 Capital allowances on investment properties
7.8 Mineral royalties 
7.9 Woodlands
7.10 Pros and cons of having a property investment company
7.11 VAT considerations
7.12 Interest earned on trust funds for service charges and sinking funds

8 SAVINGS INCOME

8.1 Bank and building society interest 
8.2 Other interest income 
8.3 Loans to individuals and other private loans
8.4 Gilts and loan stocks 
8.5 Rate of tax deducted at source 
8.6 Accrued income scheme 
8.7 Deeply discounted securities 
8.8 Dividends 
8.9 Sundry receipts treated as dividends 
8.10 Foreign interest and dividends
8.11 Tax treatment of exchange–traded f;
9.2 Alimony and maintenance payments
9.3 Investment in overseas partnerships 
9.4 Double tax relief
9.5 Foreign pensions
9.6 Sale of certificates of deposit
9.7 Gains from roll–up, and other offshore, funds
9.8 Miscellaneous income
9.9 Taxation of commission, cashbacks and discounts
9.10 Annuities, trust income, etc

10 ALLOWABLE DEDUCTIONS

10.1 Alimony and maintenance 
10.2 Loans used to purchase an annuity from an insurance company
10.3 Loans to purchase investment property
10.4 Loans to invest in partnerships
10.5 Loans to invest in close companies 
10.6 Loans to invest in employee-controlled companies
10.7 Loans to purchase plant and machinery
10.8 Alternative finance ‘products’
10.9 Gift Aid 
10.10 Gift of listed shares and securities
10.11 Gift of land and buildings 
10.12 Annuities, etc 
10.13 Trade union and friendly society subscriptions 
10.14 Life assurance premiums
10.15 Community Investment Tax Credit (CITC)

11 ALLOWANCES AND TAX CREDITS

11.1 Personal allowances 
11.2 The basic personal allowance 
11.3 Married couple’s allowance 
11.4 Pensioner couples 
11.5 Allowances recently abolished 
11.6 Blind persons
11.7 Time limits
11.8 Tax credits from 6 April 2003

12 CAPITAL GAINS TAX

12.1 Outline of CGT
12.2 CGT and the self–assessment form 
12.3 Who is subject to CGT? 
12.4 What assets are chargeable assets? 
12.5 Which types of transaction may produce a chargeable gain? 
12.6 Hold–over relief where a gift is a chargeable transfer for IHT purposes
12.7 Amount to be brought in as disposal value 
12.8 What costs are allowable?
12.9 Assets held at 31 March 1982 and 6 April 1965 
12.10 Other acquisition values 
12.11 Taper relief 
12.12 Indexation
12.13 Working out your capital gain
12.14 Assets that have attracted capital allowances 
12.15 How gains are computed on quoted securities 
12.16 Unquoted shares
12.17 When may a chargeable gain arise on foreign currency? 
12.18 Special rules for disposals of chattels 
12.19 Specific rules that apply to disposals of land and investment properties 
12.20 Disposal of foreign property 
12.21 Gains and losses on second–hand insurance policies

13 YOUR MAIN RESIDENCE

13.1 Main residence exemption 
13.2 Possible restrictions on exemption 
13.3 Living in job–related accommodation 
13.4 Treatment where property not occupied throughout ownership period 
13.5 Passing on the family home – CGT considerations 
13.6 Anti-avoidance provisions
13.7 Stamp duty

14 THE TAX CALCULATION

14.1 Some points to look out for

PART 2 BUSINESS TAX AND FINANCE

15 COMPUTATION OF BUSINESS PROFITS AND CAPITAL ALLOWANCES

15.1 Computation of trading profits
15.2 Capital allowances 
15.3 Pre-trading expenditure
15.4 Post-cessation receipts
15.5 Post–cessation expenses

16 CAPITAL GAINS TAX AND BUSINESS TRANSACTIONS

16.1 Loans to private businesses 
16.2 Losses on unquoted shares 
16.3 Relief for replacement of business assets 
16.4 Hold-over relief for gifts of business property
16.5 Partnerships and capital gains 
16.6 Transfer of a business to a company 
16.7 Business taper relief 
16.8 Entrepreneurs relief
16.9 Earn–outs
16.10 Sales of shares to all–employee share trusts

17 TAX AND COMPANIES

17.1 Who pays corporation tax?
17.2 Self-assessment
17.3 How ‘profits’ are defined 
17.4 Accounting periods, rates and payment of tax 
17.5 Loan relationships 
17.6 Intangible assets
17.7 Companies’ capital gains 
17.8 Dividends
17.9 Losses 
17.10 Double taxation relief on foreign income 
17.11 Groups of companies
17.12 Investment companies 
17.13 Close companies 
17.14 Real Estate Investment Trusts (REITs) 
17.15 Corporate venturing 
17.16 Research and Development (R&D) tax credits 
17.17 ECA tax credits
17.18 Transfer pricing rules
17.19 Claims, elections and penalties

18 FINANCING YOUR BUSINESS

18.1 Financing through own resources 
18.2 Financing through personal borrowing 
18.3 Issuing additional shares (with and without tax incentives) 
18.4 Borrowing through the business 
18.5 Financing assets 
18.6 Cash flow management

19 SHOULD YOU OPERATE THROUGH A COMPANY?

19.1 nbsp; Possible disadvantages
19.3 Capital gains tbusiness to a company or LLP

20 &nHMRC

20.1 E;
20.3 IR35
20.4 Managed Service Companies (MSCs)
20.5 Non–resident landlord scheme
20.6 Non–resident sportsmen and entertainers
20.7 Other payments to non–UK resident persons

21 OUTLINE OF VAT

21.1 Introduction
21.2 Legal authorities
21.3 Liability to VAT
21.4 Practical implications
21.5 Anti–avoidance measures
21.6 Special schemes
21.7 Control and enforcement procedures
21.8 Fraud
21.9 Appeals

22 NATIONAL INSURANCE CONTRIBUTIONS

22.1 Class 1 contributions
22.2 Class 2 contributions
22.3 Class 3 contributions
22.4 Class 4 contributions

PART 3 WEALTH PLANNING

23 WEALTH PLANNING BY MANAGING YOUR FINANCIAL AFFAIRS

23.1 Your family and personal financial planning
23.2 Managing your investments
23.3 Tax deductible investments
23.4 Some special situations
23.5 Planning for retirement
23.6 Helping the next generation
23.7 Estate planning

24 TAX EFFICIENT INVESTMENT

Investments providing tax exempt return

24.1 Individual savings accounts (ISAs)
24.2 Personal equity plans (PEPs)
24.3 National Savings investments
24.4 Friendly society investments

Investments qualifying for tax deduction

24.5 Enterprise investment scheme (EIS)
24.6 Venture capital trusts (VCTs)
24.7 Enterprise zone trusts
24.8 Investment in film partnerships

25 PENSIONS

Registered pension schemes

25.1 New regime that came into force on ‘A’ Day
25.2 Retirement benefits under the new regime
25.3 Pension scheme investments under the new regime
25.4 Tax relief for contributions

Other retirement benefit schemes

25.5 Unapproved schemes

State benefits

25.6 State pension benefits
25.7 Contracting out

26 INVESTING IN REAL ESTATE

26.1 ‘Buy to let’ investments
26.2 Private investment companies
26.3 Limited liability partnerships (LLPs)
26.4 Investing surplus funds within a trading company
26.5 Buying overseas property
26.6 Quoted property companies
26.7 Property funds offered by insurance companies
26.8 Pension funds

27 LIFE ASSURANCE

27.1 Introduction
27.2 Qualifying and non–qualifying policies
27.3 Taxation of life policy proceeds
27.4 Offshore life policies
27.5 Annuities
27.6 Permanent health insurance (PHI)
27.7 Pre–owned assets charge
27.8 Life policies effected by companies
27.9 Life policies in trust affected by FA 2006 IHT changes
27.10 Discounted gift schemes

28 CAPITAL GAINS TAX PLANNING

28.1 Make use of annual exemptions for both spouses/civil partners
28.2 Realise gains to avoid wasting the annual exemption
28.3 Make sure you get relief for capital losses
28.4 Save tax by making gifts to relatives
28.5 Claim roll–over relief on furnished holiday accommodation
28.6 Make the most of entrepreneur’s relief
28.7 Selling the family company

29 INHERITANCE TAX AND INDIVIDUALS

29.1 Who is subject to IHT?
29.2 When may a charge arise?
29.3 Transfers of value
29.4 Certain gifts are not transfers of value
29.5 Exempt transfers
29.6 Potentially exempt transfers
29.7 Reservation of benefit
29.8 Business property
29.9 Agricultural property and woodlands
29.10 Computation of tax payable on lifetime transfers
29.11 Tax payable on death
29.12 Life assurance and pension policies
29.13 Heritage property
29.14 Planning: the first step

30 THE TAXATION OF TRUSTS

30.1 When are trustees liable to pay income tax?
30.2 When are trustees liable for UK capnbsp; Bare trusts
30.4 Fixed–interest trusts
30.5 Accumulation and maintenance trusts
30.7 Trusts for the disabled
30.8 Protective trusts
30.9 Trusts for the most vulnerable
30.10 Charitable trusts
30.11 Miscellaneous aspects
30.12 Executors and personal representatives
30.13 Some planning points

31 PASSING ON YOUR FAMILY BUSINESS

31.1 Basic strategy
31.2 Setting up children in business
31.3 Bringing a child into partnership
31.4 Bringing a child into the family company
31.5 Outright gifts of shares
31.6 Why trusts are still often a suitable vehicle
31.7 Demergers

PART 4 ANTI–AVOIDANCE LEGISLATION

32 ANTI–AVOIDANCE

Income tax

32.1 Interest income
32.2 Transactions in land
32.3 Transactions in securities
32.4 Transfer of assets overseas
32.5 Trust income taxed on the settler
32.6 Transactions involving loans or credit
32.7 Pre–owned assets

Capital gains tax

32.8 Bed and breakfast transactions
32.9 Disposals by a series of transactions
32.10 Transfers to a connected person
32.11 Qualifying corporate bonds (QCBs)
32.12 Value shifting
32.13 Trusts and main residence exemption
32.14 UK–resident settlements where settler has retained an interest
32.15 Deemed disposal when a trust ceases to be resident
32.16 Offshore companies
32.17 Non–resident trusts

Inheritance tax

32.18 Purchased interests in excluded property settlements
32.19 Ramsay principle
32.20 Registration of tax schemes
32.21 Specific income tax avoidance schemes that have been blocked

PART 5 RESIDENCE, DOMICILE AND INTERNATIONAL MATTERS

33 RESIDENCE STATUS

33.1 Consequences of residence in the UK
33.2 Various criteria for determining residence status
33.3 Individuals who are resident but not ordinarily resident
33.4 Basis on which individuals are regarded as ordinarily resident
33.5 Ceasing to be resident in the UK
33.6 UK income and capital gains received by non–residents
33.7 Non–resident investment companies
33.8 When tax should be withheld from payments to non–residents

34 THE INCOME AND CAPITAL GAINS OF FOREIGN DOMICILIARIES

34.1 Meaning of ‘domicile’
34.2 £30,000 special charge for some remittance basis users from 2009–9
34.3 What constitutes a remittance?

Earned income

34.4 Foreign emoluments
34.5 Travelling expenses
34.6 Subsistence allowances for employees seconded to the UK
34.7 ‘Corresponding payments’
34.8 Overseas pension funds
34.9 Self–employment
34.10 Partnerships controlled outside the UK
34.11 Pension benefits

Investment income

34.12 The remittance basis for investment income
34.13 Position if foreign domiciliary acquires UK domicile
34.14 Managing the remittance basis

Capital gains tax

34.15 Remittance basis for capital gains on foreign assets
34.16 Use of offshore companies and trusts

Inheritance tax

34.17 UK and foreign situs property

35 BEING SUBJECT TO TWO TAX REGIMES

35.1 General principles
35.2 Working abroad
35.3 US citizens living in the UK
35.4 UK nationals with second home overseas
35.5 Exchange of information

36 SOME SPECIAL TYPES OF TAXPAYER

Specific occupations and trades

36.1 Authors
36.2 Barristers and advocates
36.3 Doctors
36.4 Dentists
36.5 Farmers
36.6 Independent financial advisers (IFAs) and insurance agents
36.7 Lloyd’s underwriters (‘Names’)
36.8 Ministers of religion
36.9 Members of parliament
36.10 Sub–postmasters
36.11 University lecturers
36.12 Venture capitalists and participants in MBOs
36.13 Seafarers
36.14 Entertainers
36.15 Business economic notes

Specific rules for certain types of individuals

36.16 Crown servants working overseas
36.17 Irish nationals living in the UK
36.18&nHARITIES AND NOT FOR PROFIT ORGANISATIONS

37.1 Charities
37.2 Community amateur sports clubs
37.3 thrift funds
37.5 Investment clubs

38 STAMP DUTIES

38.1 Stamp duty reserve tax (SDRT)
38.2 Stamp duty land tax (SDLT)

39 SOCIAL SECURITY BENEFITS

39.1 Taxable benefits
39.2 Non–taxable benefits
39.3 Tax credits

40 TAX TABLES

Glossary
Index


 

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