I have a client who has hurdle shares which he has contributed cash to purchase in their employer. in the contract of employment and share agreement, he negotiated an option that on any exit unvested shares which is what he has would vest automatically. this is still at boards discretion which they are fine with.
The question is, if those shares are vested if he decides to leave, will he pay CGT on the gain or will he pay Income tax?
“If they purchased shares at the market value when they were offered, the resulting sale of the shares will give rise to a capital gain on any growth in value. However, given a hurdle share is a common type of restricted security whereby the employee cannot do anything with them until certain criteria have been met, did the employer and employee make an election under section 431 ITEPA 2003 which allows the employer and employee to ignore the restrictions in place allowing the employee to pay the MV on acquisition? If so, the employee will be subject to CGT only. If not, the employee will be potentially subject to income tax under chapter 2 of part 7 ITEPA 2003 ‘restricted securities’.
See HMRC commentary on the principle of the calculation of charge to income tax (if applicable) in ERSM30400 along with worked examples in ERSM30420 & ERSM30430.”
One of my clients, a company director, is using company car Tesla with a list price of £58,000.
How are we calculating the P11D.
All the associated costs of the employer (the company) providing the car (i.e. the costs of repairs and insurance) are already included as part of the car benefit calculation, so there is no need to report a separate benefit for the repairs or insurance (and I don’t believe there is the box to do this on the P11D form regardless)
For reference, HMRC guidance at EIM44105 refers to this explaining that as below:
‘When a car is made available to an employee, the employee is often provided with connected benefits such as insurance, servicing, vehicle tax and breakdown recovery. The exemption under section 239 ITEPA 2003 means that there is no separate charge to tax under the benefits code in respect of those connected benefits.’
I have a client that wishes to list a property on AirBNB and other online hosting services.
I am under the impression having looked at HMRC that this rental income ( from an inherited property ) however the client has read the following online …
If you simply rent out a room or property without providing additional services, it’s likely to be treated as a rental investment.
However, if you offer services beyond basic accommodation, like cleaning, linens, or amenities, it’s more likely to be classified as a trading business
For clarification we will be offering services beyond accommodation, including cleaning, linens and amenities possibly in the form of a hot tub or gym / workout room, access to gardens and log burner, guided local walks, locally supplied produce from local farm shops as a welcome hamper etc.
With this in mind we are thinking it will fall more into the trading classification than investment?
“We have rental investment income, a business, and a trade. We need to draw a distinction between them.
This has echoes of the Ramsay case and in particular incorporation relief. This case eventually resulted in HMRC accepting that the letting of property could qualify for relief even though they typically see rental income as an investment activity – if the owner spent typically 20 hours a week on the matter and there were other indications that a ‘business’ was being carried on. If this is not met then it would fall back to being letting/investment income.
The Ramsay case did not make letting a trade. It made it a business.
However, depending on the scale of the guided walks etc there may be an argument to be made that there is a trade. This would have to become the focal point of any business.
The question is are you substantially offering more services than a passive investment landlord would be offering?
The provision of a gym and log burner etc and local produce are neither here nor there. These are all common offerings for higher end holiday lets.
At the moment, there is no trade. If they work on offering additional services and specifically services that are not minor and not incidental to letting then we might have to revisit this.”
Our client has moved overseas in the 24-25 tax year and is applying for split year treatment Case 1. He has sold shares in the overseas part of the year – is he liable to UK CGT?
For non-UK resident individuals, CGT is generally only applicable to the sale of UK-based assets, such as property or shares in UK companies. Non-residents are not subject to UK CGT on the disposal of assets outside the UK, unless they are specifically connected to UK activities, such as certain disposals of residential property or business assets.
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