There are certain gifts you can make that will not create a capital gains tax (CGT) charge, but care should be taken as there are exceptions. This article outlines some of the more common issues that need to be considered.

Gifts to your spouse or civil partner

Ordinarily, you will not pay CGT if you gift assets – that would normally create a charge to CGT if sold elsewhere – to your spouse or civil partner.

The major exception to this rule is if you were separated and did not live together at any time during the tax year in which your gift was made (the tax year ends 5 April).

Another exception is if you gave them goods to sell-on as part of their business activity.

When the receiving partner subsequently sells the gifted item, they will pay CGT on the difference between the sales proceeds less the cost when the asset was first purchased. For example, If Jon buys shares for £1,000, keeps them for two years and then gives them to his civil partner Tim – when the shares are worth £5,000 – and Tim subsequently sells the shares a year later for £10,000; Tim’s CGT charge will be based on a gain of £9,000 (£10,000 less the original cost £1,000).

For this reason, it is recommended that the person gifting assets should provide evidence of the original purchase as this will be needed to calculate the amount of any future capital gain.

Gifts to a charity

You should not have to pay CGT if you gift a chargeable asset to a charity.

However, you may create a CGT charge if you sell an asset to a charity for more than you paid for it or less than its market value.

The CGT gain would be worked out based on the amount the charity pays you rather than the value of the asset when sold.

Planning options

If you are considering making a significant gift it is always advisable to check out any tax consequences before transferring ownership. Aside from CGT, there may also be stamp duty or inheritance tax complications. Please call so we can help you consider your options.

Most property owners who let property under the Furnished Holiday Let (FHL) tax rules, submit their income and expenditure details on their tax return each year.

This article considers occupancy, and the need to review occupancy of FHL properties each year.

If your FHL business accounts year is the end of the tax year, 31 March (5 April), we suggest that you take out your calculator and booking diary before this date. If you do not meet HMRC’s criteria you may lose some or all of the valuable tax concessions for which FHL businesses qualify.

Here’s HMRC’s summary of the occupancy regulations:

The pattern of occupation condition

If the total of all lettings that exceed 31 continuous days is more than 155 days during the year, this condition isn’t met so your property won’t be a FHL for that year.

Availability conditions

Your property must be available for letting as furnished holiday accommodation letting for at least 210 days in the year.

Don’t count any days when you’re staying in the property. HMRC don’t consider the property to be available for letting while you’re staying there.

The letting condition

You must let the property commercially as furnished holiday accommodation to the public for at least 105 days in the year.

Don’t count any days when you let the property to friends or relatives at zero or reduced rates as this isn’t a commercial let.

Don’t count longer-term lets of more than 31 days, unless the 31 days is exceeded because something unforeseen happens.

The averaging election – if you’ve more than one property

A period of grace election – if your property reaches the occupancy threshold in some years but not in others.

If your initial run-through of the number crunching indicates that you may not meet the requirements to qualify as an FHL on one or more properties, please call so that we can help you check your calculations and see if the averaging rules apply in your favour.

1 February 2020 – Due date for Corporation Tax payable for the year ended 30 April 2019.

19 February 2020 – PAYE and NIC deductions due for month ended 5 February 2020. (If you pay your tax electronically the due date is 22 February 2020)

19 February 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2020.

19 February 2020 – CIS tax deducted for the month ended 5 February 2020 is payable by today.

1 March 2020 – Due date for Corporation Tax due for the year ended 31 May 2019.

2 March 2020 – Self assessment tax for 2019/19 paid after this date will incur a 5% surcharge.

19 March 2020 – PAYE and NIC deductions due for month ended 5 March 2020. (If you pay your tax electronically the due date is 22 March 2020)

19 March 2020 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2020.

19 March 2020 – CIS tax deducted for the month ended 5 March 2020 is payable by today.

To assist with your calculations, see previous article, we have reproduced below the current, HMRC Advisory Fuel Rates. They are:

These rates apply from 1 December 2019.

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Advisory Electricity Rate

The Advisory Electricity Rate for fully electric cars is 4 pence per mile. Electricity is not a fuel for car fuel benefit purposes.

At first sight, company car drivers whose private fuel costs are met by their employers may seem to be onto a good thing, but there is a nasty tax hit…

Enter, the Car Fuel Benefit charge.

Let’s say the following circumstances apply:

• list price of your car when new was £30,000
• your employer pays for all your private fuel
• CO2 emissions are 147 g/km, and
• the car has a diesel engine, 2000 cc.

The 2019-20 benefit in kind charge for the use of the car (this is added to your taxable income for the year) is £9,900. This would cost a standard rate taxpayer £165 a month in Income Tax.

But then the provision of private fuel would trigger an additional Car Fuel Benefit charge of £7,953. This would cost a standard rate taxpayer an extra £133 a month.

As the title of this article suggests it is possible to reimburse your employer for private fuel provided and avoid this Car Fuel Benefit charge completely. Here’s what you would need to do:

• First of all, calculate your private mileage for the 2019-20 tax year. Estimates won’t do, you will need to create evidence, a mileage log for example.
• Multiply this private mileage by HMRC’s Advisory Fuel Rate. The present rate per mile for a 2000 cc diesel car is 11p.

Armed with this information you can now do the sums. In the above example, if the driver’s private mileage was 5,000 miles during 2019-20, the amount that needs to be repaid to the employer is £550. That’s just £46 per month.

Which means, for an effective outlay of £550, the car driver – if a basic rate tax payer – will save £1,593 in tax (£7,953 x 20%). That’s an overall cash saving of £1,043.

If you are receiving private fuel from your employer, or indeed providing private fuel for your employees, it is well worth crunching the numbers to see if there is a cash advantage to repaying any private fuel.

There are deadlines to consider and we can help you with the math and the reporting processes required.

Final planning note for employers

The Car Fuel Benefit Charge not only creates a tax charge for the employee, it also creates a National Insurance charge for the employer. And so, allowing employees to repay their private fuel costs will also reduce your NIC costs. A classic win-win outcome.