December 2018

tax tips & finance e-newsletter

In this issue

Christmas is the time for giving
The IHT Annual Exemption - use it or lose it!
Gifts out of income are not taken into account for IHT
Certain gifts can have Capital Gains Tax consequences
Not all shares qualify for CGT Entrepreneurs’ Relief now
Collecting unpaid tax for 2017/18 through your PAYE coding
Keeping your firm’s mobile devices safe from Malware Attacks
Local Charity Support
Christmas Opening Hours

Christmas is the time for giving

Those thinking about making gifts at Christmas should take advantage of the various inheritance tax (IHT) exemptions and reliefs available to them.

Note that certain gifts can also have capital gains tax (CGT) implications.

The IHT Annual Exemption - use it or lose it!

Although not particularly generous at £3,000 per donor per annum if this annual IHT exemption is not used by 5 April it is lost, although it is possible to carry the allowance forward one year if unused. This means that if the annual allowance for 2017/18 was not used an individual may make gifts of up to £6,000 in 2018/19. 

Where the gifts to individuals exceed the annual exemption there may still be no inheritance tax to pay if they survive for 7 years following the gift or the gift falls within the £325,000 nil rate band.

Gifts out of income are not taken into account for IHT

A more generous inheritance tax exemption applies where the donor can prove that he or she is not transferring capital but is making gifts out of their income.

There are detailed conditions for this exemption to apply requiring records to be kept of income and expenditure in order to prove that there is sufficient surplus income each year to make regular gifts to the beneficiaries. We can of course assist you in keeping the necessary records to satisfy HMRC. 

Certain gifts can have Capital Gains Tax consequences

Although there will be no CGT on gifts of cash there may be CGT to pay where the gift comprises shares or other assets. This is because the transaction will generally be deemed to take place at market value between connected persons even though no money changes hands.

The amount of the gain would normally be determined by comparing the market value with the original cost of the asset gifted. Where the amount of this gain is within the annual CGT allowance (currently £11,700) then there would be no CGT payable.

Where the gift comprises shares in a trading company or other business assets it may be possible for donor and recipient to sign an election to hold over the gain so that no CGT is payable by the donor at the time of the gift. The effect of such an election is that the recipient of the asset will take over the donor’s original cost for subsequent disposal.

Please get in touch with us if you are considering making gifts of shares or other assets so that we can advise you fully of all the tax implications.

Not all shares qualify for CGT Entrepreneurs’ Relief now 

As the result of changes announced in the Autumn Budget, and now incorporated into the latest Finance Bill, not all ordinary shares necessarily qualify for the 10% CGT entrepreneurs’ relief rate on disposal.

As mentioned in last month’s Budget newsletter the definition of a personal company was tightened up so that from 29 October the shareholder must have entitlement to at least 5% of the company’s ordinary share capital, voting rights, profits available for distribution, and assets available on the winding up of the company.

The shareholder, as before, will also need to be an officer or employee of the company. This change means that certain “alphabet” and other shares with limited rights may no longer qualify for CGT entrepreneurs’ relief when disposed of. As a consequence of this change we may need to review the rights attaching to the shares that your company has issued and make changes to ensure that the shares qualify.

Collecting unpaid tax for 2017/18 through your PAYE coding

Under certain circumstances it is possible to arrange the collection of unpaid tax through your PAYE coding rather than making a balancing payment on 31 January.

This will depend upon the amount outstanding and the amount of income taxable under PAYE. 

There is a further condition that the return is submitted to HMRC online before 30 December 2018 in order that the 2017/18 tax be collected by amending the 2019/20 PAYE coding. So please get your tax return information to us as soon as possible if you would like to take advantage of this facility.

Keeping your firm’s mobile devices safe from Malware Attacks

Recent industry reports from cyber security firms such as McAfee and Kaspersky Lab have identified that mobile malware attacks are becoming increasingly widespread and more sophisticated.

Most business professionals use smartphones these days. These devices are basically small computers and can be infected with malware in a similar way to a PC - usually through malicious links or attachments sent via email. As people are now using smartphones to access corporate email accounts, make online payments, etc. there is an increased risk for businesses. Another risk exists where an employee's device is hacked and the firm's passwords and remote access logins are stolen. This can allow hackers to get inside a businesses' firewall and spread malware to computers across the company network.

So, what should businesses do to protect themselves? Mobile antivirus tools can help to a degree and all company data should be backed up regularly. That said, it is more important to teach your employees the basics of mobile security to eliminate putting themselves or the firm at risk in the first place. Basic training can involve teaching your employees how to identify suspicious emails and to avoid clicking on potentially dangerous links on their smartphones.

Fake apps are another serious risk. Cyber criminals often design apps that imitate legitimate apps or they might offer a game or utility app for free. In order to minimise this risk, your firm should create and publish an internal list of approved apps.

All employees that use company devices should receive regular communication regarding which apps are approved for use on company devices. It should also be made clear that no other apps can be installed on a company device without express permission from the relevant person(s).

Finally, your firm should have monitoring tools in place, which check for signs of unusual activity on the network, such as remote logins from unfamiliar IP addresses, large files moving out of the network over email, etc.

Local Charity Support

During 2018 we have supported Embrace and are very appreciative to all members of our staff who have helped to raise money for this very worthy cause. In total we have raised in excess of £2,000.

For more information visit: www.embraceeastsussex.uk


The firm is pleased to announce that our Charity of the Year for 2019 will be the Juvenile Diabetes Research Foundation a type 1 diabetes charity.

JDRF fund research to cure, treat and prevent type 1 diabetes. They work with government, academia and industry to accelerate research in the UK and within healthcare policy to ensure that the outcomes of research are delivered to people with type 1 in the UK. They also give support and a voice to people with type 1 and their families.

For more information visit: www.jdrf.org.uk.

We will update you on the funds raised during 2019 in future newsletters.

Christmas Opening Hours

We will close at 4.30pm on Friday, 21 December 2018

Our Opening Times during the Christmas Period will be:-

Monday 24 DecemberClosed
Tuesday 25 DecemberClosed
Wednesday 26 December Closed
Thursday 27 December Open
Friday 28 DecemberOpen
Monday 31 DecemberOpen
Tuesday 1 JanuaryClosed
Wednesday 2 JanuaryOpen

On behalf of everyone at Humphrey & Co we would like to wish all of our readers a very Merry Christmas and a happy, healthy and prosperous 2019.