June 2021

Technical and Client Update

In this issue

Hove office move 18 June

Check that your shares qualify for CGT business asset disposal relief

Self-employment Income Support Scheme fifth grant

Trust Registration Service - increase in trust registration

Hove office move 18 June

It is with great excitement that we can now announce that we have relocated our Hove office. We have enjoyed 18 years at Curtis House however the time has come to move to larger, fresher and more spacious offices. 

The new office address is as follows:-
1A City Gate
185 Dyke Road

Check that your shares qualify for CGT business asset disposal relief

A recent case before the tax tribunal has confirmed that all of a company’s shares are ordinary shares except those that carry a fixed rate of return.

This is crucial as CGT business asset disposal relief (BADR) requires a shareholder to be entitled to at least 5% of a company’s ordinary share capital in addition to being an officer or employee of the company, and for the company to be a trading company or the holding company of a trading group.

These conditions need to be satisfied throughout the 24 months prior to the disposal of the shares. This two-year rule is important if you are considering transferring some of your shares to other family members now that only the first £1 million qualifies for CGT BADR.

There are a number of further conditions that need to be satisfied by the shareholding in addition to the 5% ordinary share capital test. The shareholder must have 5% or more voting control, be entitled to 5% or more of the company’s distributable profits and 5% or more of its assets should the company be wound up. Those final two conditions do not need to be satisfied where the shareholder would be entitled to receive at least 5% of the proceeds on the hypothetical sale of the whole company.

This tends to be a problem area where a company has a number of different classes of shares.

If that is the case please contact us so that we can check the eligibility of different shareholders.

Self-employment Income Support Scheme fifth grant

Claims for the fourth SEISS grant have now closed. The last date for making a claim for the fourth grant was 1 June 2021.

A fifth grant covering May 2021 to September 2021 will be open to claims from late July 2021. The grant is taxable and will be paid out in a single instalment. Guidance for claiming the grant will be available by the end of June 2021.

How the fifth grant is different

The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.

HMRC will provide more information and support by the end of June 2021 to help you work out how your turnover was affected.

How much you’ll get

Turnover reduction  How much you’ll get Maximum grant
30% or more 80% of 3 months’ average trading profits £7,500
less than 30% 30% of 3 months’ average trading profits £2,850

Find out more about the fifth SEISS grant here.

Trust Registration Service - increase in trust registration

Further to our article in the August 2020 E-news, the expected deadline for registering non-taxable express trusts with HM Revenue & Customs (HMRC) Trust Registration Service (TRS) has been extended. Instead of March 2022, it is expected to be late summer or autumn of 2022. This is due to delays in the updates required to HMRC’s system to manage the additional registrations.  

HMRC are expecting this system to be available to non-taxable trusts from this summer, leaving approximately a year for all affected trusts to be registered on TRS.

The information required for registration is comprehensive and includes personal details of various parties to the trust, namely the person who set up the trust, known as the settlor, the people who manage the trust, known as the trustees, and the people who can benefit from the trust, the beneficiaries. In addition, details of the trust assets are required.

A comprehensive list of trusts that are included and the key exclusions from TRS can be found opposite.

If you are a trustee, whether of a taxable or non-taxable trust, and need advice on whether your trust should be registered with HMRC, please do contact our Trust and Estate Support Services team at tess@humph.co.uk or call the office and speak with Sue Pocklington or Amanda Eade.

Trusts to be registered with TRS:

  • All UK trusts, whether they have a tax liability or not.
  • Non-UK trusts that have a UK tax liability (these should already be registered with TRS).
  • Non-UK trusts that acquire an interest in land after 5 October 2020.
  • Non-UK trusts with at least one UK trustee that after 5 April 2020, enters into a business relationship with a UK relevant person (for example tax advisers and financial institutions) which is expected to last for at least 12 months.

Non-taxable trusts excluded from TRS:

  • Ones that hold life insurance or retirement policies that only pay out on death, terminal or critical illness or permanent disablement or to pay healthcare costs.
  • UK registered charitable trusts.
  • Co-ownership trusts where the trustees and the beneficiaries are the same persons.
  • UK registered pension schemes.
  • Certain share incentive plans.
  • Trusts for bereaved minors and vulnerable beneficiaries.
  • Will trusts which are wound up within two years of death.
  • Trusts in existence before 6 October 2020 which hold no more than £100.