Technical and Insight
PPR changes explained

Proposed changes may have an impact on the decisions clients will take over the coming year.

Proposed changes may have an impact on the decisions clients will take over the coming year.


The 2018 Budget proposed changes to Principal Private Residence relief (PPR) which in turn affects whether or not an individual is liable for capital gains tax (CGT) on disposal of a property. On 1 April 2019 HMRC published a consultation document, which is due to close 1 June 2019. The government will subsequently publish its response and draft legislation in summer 2019.



Taxation of Chargeable Gains Act 1992 s222 –s226 addresses the capital gains provisions for disposal of a private residence. PPR keeps main residences out of capital gains tax (CGT) so when individuals sell their main residence, they do not have to pay CGT on any gains made in that sale.


To protect gains made by people in certain circumstances, there are several ancillary reliefs that extend the benefit of PPR beyond those who are occupying their main residence.

For example, when somebody is absent from their main residence for any reason, the gains they make for up to three years are protected - s223(3)(a); working abroad for the reason of employment - s223 (3)(b); working elsewhere - s223(3)(c); letting relief - s223(4); and final period relief - s223(2).


Changes to ancillary reliefs
To ensure that PPR is better focused on owner-occupiers, from April 2020 the rules on two ancillary reliefs will change.


HMRC is seeking views on the following changes to the ancillary reliefs:

1. Final period exemption being reduced from 18 months to nine months - s223(2)

  • Currently, the owner does not have to pay CGT on gains made in the final 18 months of ownership. However, this means that owners can accrue relief on multiple properties. This is at odds with the intent of the relief, to protect those who wish to move into a new property but are unable to immediately sell their old one.
  • From April 2020, the exemption will be reduced to nine months. The existing relief for those with a disability or moving into social care will remain at 36 months.


2. Lettings relief only permitted in cases where the owner remains in ‘shared occupancy’ with the tenant.

  • Currently, lettings relief provides up to £40,000 of relief (£80,000 for a couple) to those who let out a property that is, or has been in the past, their main residence.

The initial aim of this relief was to enable people to rent out spare rooms easily, but has since been used for relief in cases where a whole property is let out (provided the property was at some point the owner’s main residence).

  • From April 2020 the relief will change and only be available to those who are in shared occupancy with a tenant.


Married persons

The current rules provide that where one spouse makes a transfer of their only or main residence to the other, the receiving spouse’s period of ownership of the dwelling is the same as that of the transferring spouse, even if that period started before marriage. The receiving spouse also qualifies for PPR for any period before the transfer that the property was the only or main residence of the transferring spouse, so long as the property is the couple’s only or main residence at the time of transfer.


So, if one person owns a property for many years and on marriage his/her partner moves into the property and lives in the house as their main residence, the rules ensure that full PPR is available on the full disposal proceeds for both spouses.

However, where a property was not the main residence at the time of transfer, for the receiving spouse the period of ownership over which any PPR is calculated starts from the date an interest in the property was transferred up to the date of sale.


In certain cases, these rules can mean that PPR can be claimed for the whole gain, resulting in no CGT being due, even where the property was previously let out and was not used as a main residence.

For example:

  1. Person A purchased a buy to let property many years ago
  2. if A marries B and, on marriage, A transfers full ownership of the property to B, no CGT is due on transfer as A and B are married
  3. if, immediately after transfer, B moves into the property and they both live in the house as their main residence, on a subsequent disposal by B there would be no CGT because the property was B’s main residence throughout the whole period of ownership.


These rules can also work by denying PPR on a property that may have been used as a main residence in the past, but is not so used at the date of transfer, to a spouse who never uses it as a main home. This may be the case, for example, where a property which was a residence in the past is let out at the date of transfer and afterwards. In such cases, CGT would be due on the full disposal proceeds.


For example:

  1. Person C owned a property for many years and used it as his main residence
  2. before his marriage with D, they both took up residency in D’s house while C’s house was rented out
  3. after the wedding, C transferred 50% of his rented house to D
  4. no CGT was due on transfer because C and D are married.
  5. on future disposal, C would be able to claim PRR on his share of his gain (including final period exemption)
  6. however, as D only used the property for letting purposes during the period of ownership his/her share of the gain will be subject to CGT with no PRR being available.


The government is considering whether these outcomes should be reformed and made fairer, so that the receiving spouse should always inherit the transferring spouse’s period of ownership and the use to which the property was put during that time.


In the examples above, if we took into account the transferring spouse’s ownership and use of the property:

  1. B would be prevented from being able to claim full PRR; and
  2. D would be allowed to claim an element of PRR based on his/her spouse’s historic use of the properties.
Completing P11Ds and employers’ end of year returns

Help is at hand if you have clients with employers’ end of year forms.

Help is at hand if you have clients with employers’ end of year forms.


Help is at hand if you have clients with employers’ end of year forms – including P11D, P11D(b) and P9D.


HMRC has issued an expenses and benefits toolkit which is aimed at helping and supporting tax agents and advisers in completing employers’ end of year forms (P11D and P11D(b)) on behalf of their clients. It will also be of use to employers or anyone who is completing these forms or as a general source of reference for tax agents.


The toolkit is designed to help reduce the most common errors that HMRC comes across and contains:

  • a checklist
  • explanatory notes
  • cross-references to legislation and HMRC's internal tax manuals. 


Although not mandatory, it is best practice to use it, especially when you come across a more complicated benefit in kind /end of year return situation.


The full list of agent toolkits is accessible here.

Living accommodation taxable benefit

Your taxable benefit questions answered with worked examples for 2018/19.

Your taxable benefit questions answered with worked examples for 2018/19.


This article seeks to answer your taxable benefit questions – with worked examples for 2018/19 – on houses, flats, houseboats, holiday villas and apartments but also workshops, garages or offices - plus highlight an important living accommodation taxable benefit change that applies for 2019/20.


A charge to tax (ITEPA 2003 Part 3 Chapter 5) arises when an employee is provided with living accommodation by his employer (or by another person) where the provision is by reason of the employment and the accommodation is provided:

  • rent free, or
  • at a rent less than that paid by the person providing it, or
  • at a rent less than the amount chargeable under section 103 ITEPA 2003.

There is no statutory definition of ‘living accommodation’ and so it is given its everyday meaning. Examples of what is clearly ‘living accommodation’ are houses, flats, houseboats, holiday villas and apartments.


By contrast it does not cover accommodation in a hotel room nor other forms of board and lodging. It cover non-residential accommodation such as workshops, garages or offices. These items are all accommodation other than living accommodation.


Exempt accommodation
Accommodation provided for the better performance of the employee’s duties or provided by the employer because there is a threat to the employee’s physical security is an exempt benefit (s99 & s100 ITEPA 2003). The exemption would also apply if it is ‘customary’ for employers to provide living accommodation for employees.

HMRC manual EIM 11351 accepts the following classes of employee as receiving exempt accommodation:

  • police officers and Ministry of Defence police
  • prison governors, officers and chaplains
  • clergymen and ministers of religion unless engaged on purely administrative duties
  • pre-registration house officers before 1 August 2008 (see EIM61012)
  • members of HM Forces
  • members of the Diplomatic Service
  • managers of newsagent shops that have paper rounds, but not those that do not
  • managers of public houses living on the premises
  • managers of traditional off-licence shops, that is those with opening hours broadly equivalent to those of a public house, but not those only open from 9 until 5 or similar
  • stable staff of racehorse trainers, certain key workers who live on the premises or close to the stables


Additionally, exempt accommodation rules also apply in boarding schools where staff are provided with accommodation on or near the school premises. The qualifying personnel are:

    • head teacher
    • other teachers with pastoral or other irregular contractual responsibilities outside normal school hours (for example house masters)
    • bursar
    • matron, nurse and doctor

(Boarding schools include schools where some of the pupils are boarders.)

From 6 April 2019 HMRC will no longer accept that the ‘customary’ exemption would apply to job-related accommodation provided by employers to employees within the higher and further education sector. Educational sectors that provide purely ‘school-age’ education are not affected by this change.


This article continues with an explanation of the calculation of benefit and a number of worked examples.

Tax allowances available when working from home

Employees and self-employed can claim certain reliefs when they work from home.

Employees and self-employed can claim certain reliefs when they work from home.


This will depend on a number of conditions.


Employees working from home

It is a condition for tax relief under section 336 ITEPA 2003 that the expenses must be incurred ‘wholly and exclusively’ in the performance of the employee’s duties. In practice that means that tax relief can only be allowed for:

  • the additional unit costs of gas and electricity consumed while a room is being used for work
  • the metered cost of water used ‘in the performance of the duties’ (if any). As regards water rates no tax relief would be available
  • the unit costs of business telephone calls (including ‘dial up’ internet access).


From 6 April 2012 HMRC has normally accepted that employees who satisfy the conditions for relief are entitled to a deduction of £4 per week (or £18 per month) for each week/month that they are required to work at home, without having to justify that figure.


Employees who wish to deduct more than £4 per week (or £18 per month) will be expected to keep records and to be able to show how their figure has been calculated.


The following expenses are not treated as allowable for employee tax purposes, because the employee will be required to make the payments whether or not they are working from home:

  • council tax (rates)
  • rent
  • water rates
  • mortgage interest/endowment premiums
  • insurance for the property or its contents.


HMRC will usually accept that an employee is entitled to claim allowable expenses under section 336 ITEPA 2003 if all of the following conditions apply:

  • the duties that the employee performs at home are substantive duties of the employment (these are duties that an employee has to carry out and that represent all or part of the central duties of the employment)
  • those duties cannot be performed without the use of appropriate facilities
  • no such appropriate facilities are available to the employee on the employer’s premises (or the nature of the job requires the employee to live so far from the employer’s premises that it is unreasonable to expect him or her to travel to those premises on a daily basis)
  • at no time either before or after the employment contract is drawn up is the employee able to choose between working at the employer’s premises or elsewhere.


Self-employed working from home – simplified expenses

Self-employed can calculate their allowable expenses using a flat rate based on the number of hours they worked from home each month. This simplified method can only be used if the person works for 25 hours or more a month from home. The allowance is a flat rate based on the number of hours worked from home each month as follows:


Hours worked at home per month                         Flat rate allowed per month

25 to 50 hours                                                          £10

51 to 100 hours                                                        £18

101 hours or more                                                   £26


If the flat rate allowance is used, this is instead of taking the proportion of expenses relating to the home. Although even if the flat rate is used the self-employed person can also claim telephone and internet costs which relate to the business.


The flat rate allowance may vary throughout the year if the self-employed person works for different hours in his/her home from month to month.


For example a self-employed person may work from home for 20 hours per month for three months, for 30 hours per month for four months and for 55 hours per month for five months. The total flat rate allowances which can be claimed would be £0 x 3 plus £10 x 4 plus £18 x 5 being £130 in total for the year.


Simplified expenses (if living at your business premises)

Some self-employed people use the business premises as their home (eg a guest-house, bed and breakfast, care home etc.). There is a simplified method of determining the business expenses based on the number of people living in the household of the self-employed person.


The total costs of running the premises are determined then a flat rate is deducted for ‘personal use’ and the balance can be claimed as a business expense. The flat rate deduction is based on the following table:


Number of people in household                Flat rate per month

1                                                                      £350

2                                                                      £500

3 or more                                                       £650



Mr X is self-employed and his business is running a care home. He lives in the care home with his wife and son for 10 months of the year, and he lives in the care home for the other two months of the year without his wife and son.


The total costs of running the premises (such as light and heat, insurance, repairs, security etc.) for the year is £25,000. The personal use based on the flat rate system is £650 x 10 plus £350 x 2 which is £7,200 for the year. Therefore the business use which can be claimed by Mr X is £25,000 less £7,200 = £17,800.


General rule, apportioning the expenditure

The general tax rule is that an expense is only allowable as a deduction for self-employed purposes if it is incurred ‘wholly and exclusively for the purposes of the trade’.


Wholly and exclusively does not mean that:

  • trade expenditure must be separately billed, or
  • part of the home must be permanently used for trade purposes and not used for any other purpose at any other time.


Wholly and exclusively does mean that when part of the home is being used for the trade then that is the sole use for that part at that time.


In many cases there is more than one method of arriving at a reasonable apportionment, although some methods may be more appropriate for a particular type of expense. The following are some examples of expenditure and methods of apportioning those costs.


In general, fixed costs relating to the home can normally be apportioned based on area and time; these would include insurance, council tax, mortgage interest, rent, repairs and maintenance. Also consider:

  • insurance can usually be apportioned on an area and time basis. However, if the trade is covered by a separate policy that cost is allowed in full
  • council tax or business rates can be apportioned between business element and non-business element on an appropriate basis
  • mortgage interest can be claimed if part of the home is used solely for the trade, then it could be apportioned on an area and time basis. Repayment of capital is not allowed. If profit is computed using cash basis, the maximum that can be claimed each year is £500 for interest and costs of obtaining finance
  • rent can be claimed when the home is rented from a landlord and part is used solely for trade purposes. This would usually be on an area and time basis. An individual cannot charge rent to his/her own self-employment business
  • repairs and maintenance that relate solely to part of the house that is not used for the trade are not allowable. Although if a room is used solely for trade purposes, then the cost of redecorating that room could be wholly allowable. General repairs and maintenance (such as repairs to the roof) could be apportioned on an area and time basis
  • cleaning may have an apportionment based on the facts. For example a trader may ask the cleaner not to clean the office area of his/her home in which case none of the costs would be allowable. Alternatively, the trade may require specific cleaning requirements in which case a higher proportion of the costs may be claimed, if justifiable
  • heat, light and power can be apportioned on a reasonable basis. The apportionment should reflect the actual usage. If a room is used partly to write up records then an area and time basis may be appropriate, whereas if specialist equipment is used which requires more electricity a higher proportion may be allowed
  • metered water charges may be allowed in cases of heavy usage for the trade, whereas for minor trade use, such as writing up books, none of the water charge would normally be allowable
  • telephone costs for business calls are allowable. A proportion of the line rental (based on the ratio of trade use to total use). Some packages are all inclusive of telephone, broadband and possibly television in which case a reasonable apportionment should be allowable for the business use of telephone and broadband; in most cases the costs relating to the television will not be allowable
  • broadband/internet connection costs are allowable to the extent that the service will be used for business purposes. An apportionment similar to the telephone usage basis should be used. 


Possible effect on CGT private residence relief

If part of the home (property or grounds) is used exclusively for the purposes of a trade or exclusively for the purposes of employment this would reduce the capital gains tax private residence exemption when the property is sold. The reduction in the private residence exemption would not be required if the part of the home which is mainly used for business purposes is also used for non-business purposes from time to time.


For example, an accountant may have an office at his/her home which is used for business purposes. The office has a telephone (either landline or a mobile device) and the accountant makes both business calls and non-business calls from the office. In this example it could be argued that the office is not used exclusively for business purposes and therefore there would be no need to reduce the private residence exemption for capital gains tax purposes.


HMRC has information on this subject in its manuals as follows:


Specific deductions: use of home: contents


Simplified expenses: use of home for business purposes


Simplified expenses: private use of business premises


Deductions: expenses other than travel: table of contents: expenses from F to Z



The full range of benefits in kind

There’s a lot to consider when it comes to employees using assets for private use.

There’s a lot to consider when it comes to employees using assets for private use.


Start with a simple or not so simple question – what is the taxable benefit in kind to an employee or director when the employer allows the employee to use an asset for private use?


The simple answer is that the employee will have a taxable benefit in kind of the ‘cash equivalent of the benefit’ which is:


The annual value (or if higher, the rent or hire charge paid by those providing the benefit)



Any expenses related to the asset’s provision (excluding the cost of acquiring or producing it and excluding also any rent or hire charge payable for the asset by those providing the benefit).



Any part made good by the employee to those providing the benefit.

HMRC will treat an asset as being available for private use unless private use of the asset is specifically prohibited and no private use is, in fact, made of it.


The annual value of the use of an asset is:


    1. For land, its ‘annual rental value’ under ITEPA 2003 section 207
    2. For assets other than land, cars and vans, 20% of market value at time asset was first provided as a benefit.


‘Made good’ is where an employee gives something (usually a cash payment) to the person providing the benefit-in-kind in return for it. With effect for all benefits provided in 2017/18 or subsequent years, a general deadline of 6 July following the tax year in which the benefit is provided is introduced by which employees need to make good any part of the cost of the benefit if a deduction is to be allowed for that tax year. Voluntary pay-rolled benefits have their own deadlines for making good.


From 2017/18 the taxable value and the value on which Class 1A NICs are payable is reduced only if the benefit is made good by 6 July following the end of the tax year in which the benefit in kind is provided.


If the employee wants to make good by waiver of remuneration the ‘making good’ payment will need to be made from net earnings after deduction of PAYE and NI in the normal way.


Another key question is: what is cash equivalent?

The expense to be included in the calculation of the cash equivalent of an in-house benefit is the marginal additional expense of providing the benefit. This is the expense that the employer would have saved if the benefit had not been provided to the employee. This was established in the case of Pepper v Hart in 1992.


There are always anomalies and it is worthwhile checking through HMRC manuals. Examples include:


  • school fees where HMRC will normally accept that no additional benefit arises where teachers pay 15% or more of normal school fees if their child or children attend the school in which they teach
  • where a negligible cost arises. HMRC has indicated that nil or negligible cost arises in the following cases:
    • rail or bus travel by employees (provided fare-payers are not displaced);
    • goods sold to employees for less than the wholesale price; and
    • provision of professional services not requiring additional staffing (excluding disbursements).


There will always be a number of adjustments to be made. Errors can occur around areas such as transfer of a used asset and apportionment of the cash equivalent of the benefit.


Transfer of a used asset

Where the benefit is the transfer of an asset after it has been used or has depreciated since the transferor acquired it, the cost of the benefit is the market value at the time of the transfer.


If the asset (other than a car or van) was first applied for the provision of any benefit for a person or for members of his family or household by reason of his employment after 5 April 1980 – and a person (whether or not the present transferee) has been chargeable to tax on its use – the cost of the benefit (unless a higher benefit is obtained by taking market value at the time of transfer) is its market value when it was first applied less the total cost of the benefit of the use of the asset in the years up to and including the year of transfer. This alternative does not apply to computer equipment or cycles for which different rules apply.


Apportionment of the cash equivalent of the benefit

For 2017/18 onwards, if the asset is unavailable for private use for part of the year, then the cost of the benefit (computed as above) is time-apportioned by reference to the number of days in the tax year on which the asset is available for private use.

Also for 2017/18 onwards, if an asset is available for more than one employee’s private use at the same time, the cost of the benefit for each employee is reduced on a just and reasonable basis, with the proviso that the aggregate for all such employees cannot exceed the total cost of the benefit (before any apportionment).


Typical example

On 5 April 2019  employer A Ltd sold some furniture to their employee Mr B for £200. A Ltd had previously leased the furniture to Mr B for £10 per month from 6 April 2017 when the market value was £2,000. At 5 April 2019 the market value of the furniture was £500. A Ltd bought the furniture on 5 April 2017; its business is not connected with the manufacture of furniture.


View this worked example for further insight






Take-up of payrolling benefits below expectations

HMRC’s launch of payrolling benefits has largely fallen flat.

HMRC’s launch of payrolling benefits has largely fallen flat.


The take-up for payrolling benefits has been poor and HMRC would like to understand why this is the case.


In April 2016 HMRC introduced the facility for employers to payroll the taxable benefits provided to their employees. This is voluntary for employers to apply for if they so choose. If an employer wants to use this they must register with HMRC before the start of the tax year, therefore if they want to use it for the tax year starting on 6 April 2020 they need to register by 5 April 2020.


During the registration process the employer will tell HMRC which benefits they want to payroll.


The main benefit of this facility is that the employer will not have to submit a form P11D. Also the tax codes for the employees supplied by HMRC to the employer using the Notice of Coding should not change as often. Employers will only need to complete forms P11Ds for the benefits that have not been payrolled.


The main disadvantage is that the employer needs to calculate the ‘cash equivalent’ of the benefit and then spread this over the year so that the correct amount is shown in each payroll.


The employers’ class 1A National Insurance will still be due on the normal due date for payrolled benefits and any other benefits, using the usual form P11D(b) procedure.


The employer can payroll all benefits except employer provided living accommodation and interest free and low interest (beneficial) loans and can register online for these payrolling benefits.


HMRC has issued guidance on payrolling benefits.





A guide to processing Subject Access Requests (SARs)

Addressing SARs requirements top tips for dealing with these.

Addressing SARs requirements top tips for dealing with these.


Since the introduction of the GDPR in May 2018, individuals have become much more aware of their rights of access to their personal data. It is therefore extremely important that you have a clear action plan in place to process subject access requests (SARs) within the short statutory timescale to avoid fines or censure.


The requirements

Article 15 of the GDPR sets out the legislative ‘Right of Access by the Data Subject’ as follows:


The data subject shall have the right to obtain from the controller confirmation as to whether or not personal data concerning him or her are being processed, and, where that is the case, access to the personal data and the following information:

  1. The purpose of the processing
  2. The categories of personal data concerned
  3. The recipients or categories of recipient to whom the personal data have been or will be disclosed, in particular  recipients in third countries or international organisations
  4. The envisaged period for which the personal data will be stored, or if not possible the criteria used to determine that period
  5. The existence of the right to request from the controller rectification or erasure of personal data or restriction of processing of the personal data concerning the data subject or to object to such processing
  6. The right to lodge a complaint with a supervisory authority
  7. Where the personal data are not collected from the data subject, any available information as to their source;
  8. The existence of automated decision-making, including profiling.


Art 15.3 -The Controller shall provide a copy of the personal data undergoing processing.


Also see ICO guidance on Subject Access Requests


Can you extend the statutory time period for response?

Only if the request appears complex, or the data subject has made several requests. If so, you can extend the time for response to two months but you must notify the data subject if you intend to do this and be able to justify doing so (you may

have to explain this if the data subject complains to the ICO). As a rule you will need to reply to the vast majority of requests within one month.


What are data subjects entitled to?

Data subjects are entitled to obtain the following from you:

  • confirmation that you are processing their personal data
  • a copy of their personal data
  • other supplementary information listed in Article 15 (largely covered by your privacy notice).


Personal data (as defined in the GDPR) will typically include name, address, telephone number, email address, and any other data which will be determined by the type of services you provide (e.g. national insurance numbers etc). You may also be processing special category data like criminal records and convictions data.


The ICO published guidance helps businesses determine what personal data they hold.


Do you have to send a full copy of everything on the file?

No, providing a copy of the personal data does not mean that you have to copy the entire file – just the actual personal data.


Remind employees to take care

It is really important to remind your employees that anything they record in writing, including in email or file may potentially be disclosable under a SAR. The general rule should be that you should not write down anything you would not want an

individual to see.


What if the data includes information on other individuals?

The DPA 2018 says that you do not have to comply with the request if it would mean

disclosing information about another individual who can be identified from that information, except if:

  • the other individual has consented to the disclosure
  • it is reasonable to comply with the request without that individual’s consent.


In determining whether it is reasonable to disclose the information and what should be withheld (e.g. redacted), you must take into account all of the relevant circumstances, including:

  • any duty of confidentiality you owe to the other individual;
  • any steps you have taken to seek consent from the other individual;
  • whether the other individual is capable of giving consent; and
  • any express refusal of consent by the other individual.


If the other individual consents to the information being released then it would be unreasonable not to do so.


Can you refuse a request?

Yes, but only in very limited circumstances you must be able to show justification for doing so. You can refuse to comply with a request if it is ‘manifestly unfounded or excessive’, taking into account whether the request is repetitive in nature. In such cases you can request a ‘reasonable fee’, to be paid before dealing with the request (based on the cost of processing the request); or refuse to deal with the request. If

you intend to charge a fee you should notify the individual promptly.



The DPA 2018 contains a number of exemptions to the obligation to disclose, arguably the most relevant is where a duty of confidentiality is owed to clients. Other notable exemptions include references given in confidence, personal data processed

for the purposes of management forecasting or planning and negotiations between employer and employee.


Also see further information on exemptions.


What should you do when you refuse to comply with a request?

Inform the individual without undue delay and within one month of receipt of the request. Confirm your position and advise them of:

  • The reasons why you are not taking action;
  • Their right to make a complaint to the ICO or any other supervisory authority; and
  • Their ability to seek to enforce this right through a judicial remedy.


You should also provide this information if you request a reasonable fee or need additional information to identify the individual.


What if the client is deceased?

Data relating to deceased individuals is not personal data and is not subject to the requirements of the GDPR. You may, however, receive requests for information from others (such as relatives or executors of an estate). You will need to verify the identity of the individual requesting the data and the basis of the request before releasing information.


What form of response?

If requested electronically then you can respond electronically unless a specific format has been requested by the data subject. Be mindful of security – send information encrypted/password protected wherever possible – anything being sent by post should be sent by traceable delivery method.


The response

Your final response in whichever format must contain the following:

  • All of the information set out in Article 15.1. Much of this information will be contained in your privacy notice. You can refer to your privacy notice in the letter or attach a copy.
  • Details of the source of the data if you didn’t collect it directly from the data subject.
  • Details of any information you have not included and the reason why.
  • A statement that the data subject can contact the ICO if they are not satisfied.


What if the data subject complains to the ICO regarding a SAR?

There may be occasions where an individual complains to the ICO, so you should always be ready to justify any decisions made. If an individual complains, you will receive an email from an ICO caseworker detailing the complaint and asking you to comment. Typically you will be given 14 days to respond. Your response should include:

  • a description of the personal data that you have disclosed (e.g. list volume of emails and documents and number of call recordings)
  • the date of the response and the method you used to send it
  • details of any data not disclosed and the reason why not (e.g. use of an exemption or because it contains personal data belonging to another individual)
  • answers to any specific questions.


Top tips

  1. Be Prepared.
  2. Have a clear policy for dealing with SARs. Draft a precedent response letter.
  3. Know where you hold personal data. Check everything including email systems, telephone/meeting note recordings, any client management system used, paper files. Remember: generally the data subject will know what they are looking for.
  4. Check information before disclosing to make sure it does not contain the personal data of another data subject.
  5. Ensure all staff: (i) can recognise a SAR and (ii) know that anything they write in emails/correspondence/file notes is potentially disclosable.
  6. Consider exemptions to disclosure.
  7. Keep a central record of all SARs and how they are dealt with/any issues.


If you have any questions, please contact Roselin Ali or Catherine Davis, Lockton Companies LLP


0117 9065057


New regulations for letting agents

Rules tightened around client money protection.

Rules tightened around client money protection.


From 1 April 2019 all property agents in England who hold client money must be a member of an approved or designated client money protection scheme. In most cases the client money protection schemes require property agents to obtain a report from an accountant on an annual basis. These schemes are set up slightly differently by each body and it is important to check the requirements with your clients.


This legislation was introduced by Statutory Instrument 2019 number 386. The term ‘property agent’ is defined in the Housing and Planning Act 2016 section 133(4) as follows:

  1. a person who engages in English letting agency work within the meaning of section 54, or
  2. a person who engages in English property management work within the meaning of section 55,


Other than a person who engages in that work in the course of the person’s employment under a contract of employment.


There are a number of approved or designated client money protection schemes including the following:

  • Association of Residential Letting Agents (ARLA)
  • Client Money Protect (CMP)
  • National Approved Lettings Scheme (NALS)
  • Royal Institute of Chartered Surveyors (RICS)
  • United Kingdom Association of Letting Agents (UKALA).


The legislation which introduced client money protection schemes was Statutory Instrument 2018 number 751. Each of the client money protection schemes have their own requirements which property agents need to comply with in order to be a member of the scheme.


In most cases this includes obtaining a report from an accountant on an annual basis. ACCA members who hold a general practising certificate should be able to undertake this work.

Can a child own shares in a private company?

Let’s look at the key considerations of giving shares to minors.

Let’s look at the key considerations of giving shares to minors.


The short answer to this is yes, it is possible. In England and Wales there are no statutory provisions prohibiting a child (under the age of 18) from owning shares. However, some companies do not accept minor shareholders by provision in their articles or terms of issue. Even though children can own shares at any age, they have to be over the age of 16 to become a director of the company.

Benefits of allotting shares to children

Some family-owned companies allot shares to children as a means of providing them with:

  • capital assets which may be likely to increase in value as part of longer term inheritance and capital gains tax planning
  • dividend income on such shares to utilise children’s personal allowance and lower tax rates applicable to dividends.


Settlement provisions

Even though a child can own shares, nevertheless one must not forget the settlement legislation under ITTOIA S629. These provisions apply to arrangements where the settlor, or their spouse or civil partner, retains an interest in the settlement.

Where ITTOIA/S629 applies, the income (over £100 per annum) paid or made available to a minor child or step child will be taxable in the hands of parents and not treated as the child’s income for tax purposes. A step child includes the child of a civil partner. This means that any income to a child on the allotted shares in a family owned company, directly or indirectly, is deemed to be that of the parents for tax purposes.


It is a similar position if they try to create a trust where the child is a beneficiary. For any income in a bare, discretionary or interest in possession trust, ITTOIA/S629 applies to treat the income belonging to the child as that of the parent for tax purposes whether or not it is paid to the child.


Example: A parent creates a bare trust (see TSEM1563) for a child on 1 January 2008. No payments are made out, and the trustees retain all the income which exceeds £100. Although no income is paid to or for the benefit of the child, ITTOIA/S629 applies to treat the income as that of the parent because the income belongs to the child.


Disadvantages of allocating shares to children

At common law a child will not be bound by a contract to buy shares as they are not 'necessaries', so theoretically, a child could relinquish obligations placed upon them by owning shares, particularly where there are unpaid shares. Thus, normally public companies exclude minors from holding their shares.


Sometimes it is hard for the company to attract new investors due to the restricted obligations of minor shareholders.

The dividend income (more than £100 per annum) on shares given in family owned company is taxed in the hands of the parents under settlement rules as mentioned above. 


It may create fragmentation of control of the company. Children owning shares control part of the business. Sometimes it becomes very difficult if you want to resurrect the full control of the company, especially when they disagree with any of your proposals or resolutions.


Key considerations when giving shares to a minor

If you are issuing new shares to a minor child, consider taking professional advice on whether you should issue the existing share class or if you should create a new share class.


Before issuing any shares to the children, consider what impact it makes on your employees. It may demotivate your hard working key employees who are looking forward to owning a share and gaining larger influence over the company. They may believe their efforts are in vain, hence it can be hard to maintain their support in ‘family companies’.


Allowances for property are back

Businesses spending money on property structures can obtain tax relief.

Businesses spending money on property structures can obtain tax relief.


A very common query that the ACCA Technical Advisory team answers relates to the availability or non-availability of capital allowances where a business spends money on the structure of a property. While the changes will mean the non-availability almost disappears there will still be the difference in tax treatment for integral features to property and the actual structural asset.


What is changing?

The Chancellor announced on 29 October 2018 the introduction of a new capital allowance for new non-residential structures and buildings (SBA). This was designed to address the tax gap and will be good news for businesses. A summary of the core tax relief and timing is:

  1. relief will be given at a flat rate of 2% over a 50-year period
  2. relief will be available for new commercial structures and buildings, including costs for new conversions or renovations
  3. relief is available for UK and overseas structures and buildings, where the business is within the charge to UK tax
  4. relief will be limited to the costs of physically constructing the structure or building including costs of demolition or land alterations necessary for construction and direct costs required to bring the asset into existence
  5. relief is available for eligible expenditure incurred where all the contracts for the physical construction works were entered into on or after 29 October 2018
  6. claims can only be made from when a structure or building first comes into use
  7. land costs or rights over land will not be eligible for relief, nor will the costs of obtaining planning permission
  8. the claimant must have an interest in the land on which the structure or building is constructed
  9. dwelling houses will not qualify, nor any part of a building used as a dwelling where the remainder of the building is commercial
  10. sale of the asset will not result in a balancing adjustment - instead, the purchaser takes over the remainder of the allowances written down over the remaining part of the 50-year period
  11. expenditure on integral features and fittings of a structure or building that are currently allowable as expenditure on plant and machinery will continue to qualify for writing down allowances for plant and machinery including the Annual Investment Allowance (AIA) up to its annual limit
  12. SBA expenditure will not qualify for the AIA
  13. where a structure or building is renovated or converted so that it becomes a qualifying asset, the expenditure will qualify for a separate 2% relief over the next 50 years.


Progress of the legislation

On 29 October 2018 a technical note was issued outlining the effects of the proposed legislation. Note that the above summary remains the same as per the original technical note.


A number of meetings with interested groups were held which resulted in certain changes to the draft legislation and an introductory note to draft secondary legislation was issued on 13 March 2019.


The government invited comment by 24 April 2019 on the detailed draft secondary legislation. An overall response to consultation responses will be published in May 2019.


The final, published version of this legislation will be in the format of a Statutory Instrument. Once in force, the legislation will apply to eligible costs incurred on or after 29 October 2018 in line with the commencement provisions


Further information

Full details of the measures and the introductory note to draft secondary legislation (13 March 2019) are available here.


The original technical note (29 October 2018) is available here.

Could your client be due a SDLT surcharge refund?

A current Tribunal case could open up challenges over other SDLT bills.

A current Tribunal case could open up challenges over other SDLT bills.


In PN Bewley Ltd v HMRC, 2019 UKFTT 0065 TC, the first tier tribunal ruled that higher rate stamp duty does not apply to the purchase of a buy to let property that is too dilapidated to be considered a dwelling.


Higher rates of stamp duty land tax (SDLT) apply to additional residential properties or those acquired by a company. SDLT surcharge does not apply to a commercial property or a mixed use property with a commercial element.


The facts

Mr and Mrs Bewley acquired through a limited company a derelict bungalow and plot of land with a planning permission for development. In summary:

  • at the point of purchase the property had been vacant for several years
  • heating, piping and floorboards had been removed
  • the property was constructed from asbestos which had to be removed
  • according to the demolition contractor for the bungalow, the removal of asbestos necessitated the structure to be dismantled, leaving the dwelling uninhabitable
  • the property was damaged as a result of intrusive survey techniques, including breaking into floors and walls
  • the bank’s survey report referred to the building as ‘a derelict bungalow to be demolished’
  • the estate agent marketed the property as ‘an ideal refurbishment project’ and included no photos.


The taxpayer argued the property is not habitable as a dwelling and that refurbishment was not viable. Normal SDLT rates were paid.


HMRC argued that despite its dilapidated state the building was a dwelling which could be renovated and issued an amendment to the return, resulting in an additional £6,000 of tax. This decision was later subject to HMRC’s own review and upheld.

HMRC claimed that:

  • a dwelling takes its ordinary meaning per Oxford English Dictionary and the National Census
  • a property does not have to be mortgageable or be of a certain standard to be a dwelling
  • a dwelling does not change its nature because it falls into dilapidation
  • the building came within the meaning of ‘residential property’ for the purposes of s55 FA 2003 (which makes a distinction between SDLT rates for residential and non-residential properties) because it was not excluded by s116 FA 2003 (a residential property)
  • the plot was a residential plot in a residential area, and supported by a planning application
  • the intention was at all times for the plot to continue to be a residential plot comprising a dwelling and its grounds
  • the appellant used a code on the SDLT return which identified it as residential
  • the presence of asbestos did not prevent its renovation or reoccupation, as the critical risk would come during demolition.


The ruling

The tribunal disagreed with HMRC. When considering the facts, the judge rejected as irrelevant HMRC’s arguments and assumptions which went beyond the statutory wording to determine what the test should be.


Paragraph 18 of Schedule 4ZA FA 2003 says that a dwelling is a building which is used or is suitable for use as a dwelling or is in the process of being constructed or adapted for such use.


The judge considered what ‘suitable for use’ means and decided that:

  • it is not the same as ‘capable’ to be used a dwelling – ‘…a passing tramp or group of squatters could have lived [there] but that was not enough’
  • it is irrelevant whether the property could be a dwelling after renovation – the building had to be suitable for use as a dwelling on the day of purchase
  • the judge pointed out that the term ‘suitable’, at the centre of the debate, didn’t actually appear anywhere in the written case which HMRC put forward.


In addition the judge ruled that non-residential SDLT rates apply to the purchase of land because the bungalow on that land does not meet the definition of ‘residential property’.


Per s116(1) FA 2003 a ‘residential property’ is a building used or suitable for use as a dwelling and land that forms part of the garden of that dwelling. A property which does not meet those conditions is non-residential.


Accordingly the judge ruled that the Bewleys had been overcharged, and reduced the self-assessment by the effect of the incorrect 3% surcharge and by the excess of SDLT paid as a result of the incorrectly used residential rates instead of non-residential rates.


The original SDLT bill of £1,500 per self-assessment, later amended by HMRC to £7,500, ended up costing the company only £1,000.


Case law and guidance considered

The tribunal referred to case law and HMRC’s own guidance to test and support its judgement:


Per Uratemp, ‘dwelling’ connotes a place where one lives, regarding and treating it as home. This assumed the presence of facilities to wash, eat and sleep, which the bungalow at the date of completion did not have.   


ACC Loan Management Ltd v Browne and another [2015] IEHC 722 was a Consumer Credit Act 1995 case which defined a house as ‘any building or part of a building used or suitable for use as a dwelling and any out-office, yard, garden or other land appurtenant thereto or usually enjoyed therewith’.


Stamp Duty Land Tax Manual, Paragraph 00365:

‘Use at the effective date of the transaction overrides any past or intended future uses for this purpose. If a building is not in use at the effective date but its last use was as a dwelling, it will be taken to be ‘suitable for use as a dwelling’ and treated as residential property, unless evidence is produced to the contrary.’



‘Where it is claimed that a previously residential property is no longer suitable for use as a dwelling, perhaps because it is derelict or has been substantially altered, the claimant will need to provide evidence that this is the case.’


The judge considered that suitable evidence to the contrary was produced.


HMRC’s guidance note on ‘Stamp Duty Land Tax: higher rates for purchases of additional residential properties.’

‘2.7 “Dwelling” takes its everyday meaning; that is a building, or a part of a building that affords those who use it the facilities required for day-to-day private domestic existence. In most cases, there should be little difficulty in deciding whether or not particular premises are a dwelling.’


It was clear that such facilities were not present in the bungalow on the completion date.


What’s next?

If HMRC does not appeal and the judgement prevails, the Bewleys’ case could open up challenges over similar SDLT bills.

HMRC names and shames companies ignoring money laundering legislation

HMRC has published an updated list of businesses that have not complied with AML regulations.

HMRC has published an updated list of businesses that have not complied with AML regulations.


As a supervisor of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 – which came into effect on 26 June 2017 – HMRC has a duty to publish details of businesses that have been penalised.


These details will be published regularly on GOV.UK and will be available to view for at least five years. They apply only to breaches under the 2017 regulations and can include:

  • details of businesses that have received penalties for non-compliance with the regulations
  • details of businesses that have not registered for HMRC supervision under the regulations
  • a list of breaches where HMRC has decided that the business should be anonymous
  • the total number and value of minor penalties issued under the 2017 regulations.


The list includes some big household names such as Countrywide Estate Agents (penalty £215,000) and Tepilo Limited (penalty £68,595).


Typical breaches include failing to ensure policies, controls and procedures at group level;  failures in conducting due diligence; timing of verification and proper record keeping.


ACCA Money Laundering Regulations advice

ACCA has a full range of guidance for members and firms including sample policies and procedures, while HMRC has a full list of non-compliant businesses

Pension scheme lifetime allowance protection

Understanding options around pension allowances.

Understanding options around pension allowances.


An individual has a single lifetime allowance in relation to the value of benefits they can draw from their pension scheme(s) – currently £1,055,000. The value of any authorised benefits paid out in excess of their allowance is subject to a tax charge known as the lifetime allowance charge.


An individual may decide to draw part of their pension benefits in stages. An event that could result in lifetime allowance being used up is called a ‘benefit crystallisation event’ (BCE). This usually happens when the individual starts to draw a pension but there are other occasions that could trigger a lifetime allowance charge. If the pension benefit being tested exceeds the member’s available lifetime allowance at that point, a lifetime allowance charge will be due on the excess.


The lifetime allowance charge applies when, at a BCE, the value crystallising in an individual’s pension scheme is worth more than their available lifetime allowance:

  • if the excess is a pension, there is a 25% charge

if the excess is a lump sum, there is a 55% charge.


If an individual considers that they may be liable to the lifetime allowance charge they may decide to consider taking steps to increase the current lifetime allowance. There are two options available: one is called ‘fixed protection 2016’ and the second is called ‘individual protection 2016’.


There are a number of conditions attached to these options, but if those conditions have been met then the lifetime allowance may be able to be increased from the current level of £1,055,000 to as much as £1,250,000.


Read more in our factsheet

VAT return adjustments

New rules from HMRC will affect how VAT returns are adjusted.

New rules from HMRC will affect how VAT returns are adjusted.


Draft regulations from HMRC will change Regulation 38. The changes are designed to ensure that businesses can only adjust their output tax where there has been a genuine price reduction and they have refunded money to customers.


What are the new regulations about?

This involves potential changes to VAT Regulation 38 which affects businesses making adjustments to their VAT liabilities after a sale has taken place, for instance when a new price was negotiated. HMRC is seeking to tighten the use of the regulation, in particular requiring businesses to issue a credit note and give a refund to customers when a price reduction occurs before a VAT adjustment can be made.


At the moment Regulation 38 requires that an adjustment shall be made to the VAT return covering the period in which the change takes place. This changes the output tax the supplier is liable to pay to HMRC.


HMRC states that it has evidence that some businesses are attempting to abuse Regulation 38 by applying it to situations which should properly be dealt with under error correction provisions. It claims this enables it to make adjustments to its output tax even when no refund is given to the customer, and to circumvent the four year time limit.


Clearly where a business simply alters the VAT return rather than using the error correction method, there may be a financial advantage.


What are the proposed new regulations?

  • Regulations 15, 24 and 38 of the VAT Regulations 1995 will be amended by Statutory Instrument. The changes will ensure that adjustments can only be made under Regulation 38 when the supplier has issued a credit note to the customer, and has given them a refund
  • it will also ensure that errors resulting from a failure to make adjustments must be corrected in accordance with the existing error correction provisions under section 80 VATA.


Further information

The draft statutory instrument is available here.


The consultation on the proposed changes closed on 15 April 2019, with the measure expected to be introduced by September 2019.

Changes for R&D tax credits

Businesses considering making an R&D claim need to understand the ‘capping’ changes made by the Chancellor.

Businesses that are considering making an R&D claim need to understand the ‘capping’ changes made by the Chancellor.


When first introduced, the small and medium enterprise (SME) R&D scheme had a cap on the amount of credits that could be claimed. This was linked to the levels of PAYE/NIC paid. However, back in 2012 this cap was removed.


What is changing?

HMRC is concerned that fraudulent R&D claims were being made in situations where the SME had low levels of employment or other activity. This includes a substantial rise in ‘abusive’ claims since the PAYE cap was removed. In particular:

  • HMRC has identified and prevented a number of fraudulent claims, worth over £300m in total, involving companies that were set up to claim payable tax credit even though they undertook no R&D
  • It has also identified a number of structures where expenditure outside the UK has been re-routed through a UK entity. These entities have little or no employment or activity and are set up wholly or mainly for the purpose of accessing the payable tax credit.


To counter this, the Chancellor announced the re-introduction of the PAYE/NIC linked cap.


How does the cap work?

The government has stated its intention that genuine companies undertaking R&D should not be adversely impacted by the cap. So although the original cap was one times the PAYE/NIC paid in the period, the proposed new cap is set at three times the payments. The main points contained in the consultation:

  • to mitigate the administrative burden on smaller companies, the government is considering applying the cap only to payable tax credit claims above a certain ‘threshold’, so that the smallest claims would be unaffected
  • groups of companies will be limited to one ‘below threshold’ claim
  • there are specific rules for groups making larger claims
  • if a company’s payable tax credit is limited by the cap, it will still be able to claim a payable tax credit up to the level of the cap and carry forward any unused losses against future profits in the normal way
  • there are detailed proposals for surrendering carried forward losses
  • HMRC states that genuine companies are not the intended targets of the cap and so it will work with stakeholders to refine its application so that legitimate companies and business models will be protected as far as possible – whilst preventing the abuse that has been identified.


Examples from HMRC of how the cap will work in practice

  1. Company A is loss-making. It spends £100,000 on R&D in 2025. The R&D relief increases its loss by £130,000 (=130% x 100,000). The company surrenders losses of £230,000 for a payable tax credit of £33,350 (=14.5% x 230,000). In the same year, Company A is liable for total PAYE and NICs of £40,000.
  2. The company could therefore receive a maximum payable tax credit of £120,000 (=300% x 40,000). If there were a 'threshold' set at £10,000 (for the purpose of this example), the company would not be affected by the cap since it has enough PAYE and NIC liability to go beyond the threshold level. The company would receive its entire R&D payable tax credit claim.
  3. Company B has the same R&D spend as Company A but a lower PAYE and NICs liability of £3,000, so it doesn’t have enough PAYE and NICs liability to go above the threshold level and can receive a maximum of £10,000 payable credit. The company would need to have just under £11,117 (33,351 =300% x 11,117) of PAYE/ NIC liability to claim all its potential payable tax credit, but it can make a claim at the threshold level instead. Therefore, it would receive a payable tax credit of £10,000.
  4. This is equivalent to surrendering losses of £68,965 (14.5% x 68,965 = 10,000). The company would be able to carry the remaining £161,035 (=230,000 – 68,965) losses forward to 2026 to use against future profits.
  5. If Company B conducts less R&D in 2026, or employs more staff, it may be able to surrender some of that £161,035 in that later year to claim a payable credit of £23,350. This would be in addition to any other eligible losses in that year.


Further information

Full details of the proposals are contained within the consultation document released on 28 March 2019 entitled ‘Preventing abuse of the R&D tax relief for SMEs’. This includes details of how to respond.

Voice scams impersonating HMRC

HMRC issues warning about bogus calls.

HMRC issues warning about bogus calls.


HMRC has been raising awareness of voice scams impersonating HMRC, stating that it will never use robotic recorded voice calls to contact customers.


HMRC highlights that these calls typically take the format of an automated voice call claiming to represent HMRC, threatening legal action unless payment of a tax debt is made immediately. The caller spoofs a valid HMRC telephone number in the caller ID field and provides a return number for victims to call to facilitate payment.


Once the customer makes contact they are advised that a legal action against them is underway and they owe HMRC differing amounts, usually demanding payment in the region of £4k for proceedings to be halted. This approach has been described as aggressive, threatening, and very convincing.


If your practice or a client receives such a call, send details to (including the telephone number that was presented by the call (caller ID), any number you have obtained by dialling 1471 after the call and the telephone number the scammer requested the call back on).


If you or your clients have suffered any financial loss as a consequence of one of these calls please report this to Action Fraud


HMRC Talking Points webinars

Register now for these informative webinars from HMRC.

Register now for these informative webinars from HMRC.

  • Payroll Annual Reporting & Tasks: This webinar is designed to help with the end-of-year processes regardless of the system used. The webinar covers end-of-year tasks, the P60 form, sending the last full payroll submission to HMRC, and preparing for the new tax year. HMRC subject matter experts will be online during the webinar to take your questions. Monday 29 April – midday to 1pm
  • An introduction to copyright: Every business owns or uses copyright. Find out how it impacts on you and your clients, in this, the third in a series of webinars by the Intellectual Property Office. We will talk about the important areas of copyright and this basic introduction will offer an insight into what it is, what it covers, how long it lasts and who actually owns it. Wednesday 1 May – midday to 1pm
  • Capital Allowances, Plant & Machinery: This webinar will give agents the step-by-step approach to applying Capital Allowances legislation to claims for Plant & Machinery Allowances. Monday 13 May – midday to 1pm 

  • Making Tax Digital – your Agent Services Account: This webinar will provide the latest information, including the new Agent Services Account and signing clients up to Making Tax Digital.
    Thursday 16 May – 10am to 11am OR Thursday 16 May – midday to 1pm

  • Expenses & benefits – Employee travel: This webinar covers reimbursing employees undertaking travel on behalf of the employer. It provides an overview of the tax treatment of: 
    travel and subsistence payments to employees
    mileage payments for employees using their own vehicle.
    Thursday 16 May – 2pm to 3pm
Welsh rates of income tax (WRIT)

Welsh rates of income tax (WRIT) came into effect from 6 April 2019.

Welsh rates of income tax (WRIT) came into effect from 6 April 2019.


HMRC will tell employers which tax code is appropriate to apply to an employee in advance of the introduction of the Welsh rates of income tax.


Tax codes for Welsh taxpayers will be prefixed with a ‘C’. If an employee has been identified as a Welsh taxpayer it will be because they:

  • are resident in the UK for tax purposes
  • have had a main place of residence in Wales for more of the year than in any other part of the UK.


If an individual is a UK taxpayer and their main place of residence is in Wales, they’ll be a Welsh taxpayer.


However, if an individual cannot identify one place in Wales, the rest of the UK (England/Northern Ireland), or Scotland as their main place of residence they’ll need to determine where they’ve spent the most days; if this is Wales they’ll be a Welsh taxpayer.


Employers need to use payroll software or operate a set of tax tables to perform a tax calculation for those employees who are Welsh taxpayers. There’ll be no change to reporting or how payments for income tax are made to HMRC other than to apply the appropriate Welsh tax code to Welsh employees for all pay frequencies. Personal allowances will remain the same as in the rest of the UK. Tax bands will remain the same as in England and Northern Ireland.


The factsheets are available here and cover: 

  • General 
  • PAYE
  • Self Assessment
  • Employer
  • Pensioner


Welsh language versions are also available



Structures and buildings allowance legislation taking shape

Consultation response and new legislation expected next month.

The consultation responses and the final version of the legislation on the ‘new’ capital allowance for new non-residential structures and buildings (SBA) are expected in May.


As a reminder:

  • relief is a flat rate of 2% over a 50-year period
  • relief will be available for new commercial structures and buildings, including costs for new conversions or renovations
  • relief is available for UK and overseas structures and buildings, where the business is within the charge to UK tax
  • relief is available for the costs of physically constructing the structure or building, including costs of demolition or land alterations necessary for construction, and direct costs required to bring the asset into existence
  • relief is available for eligible costs incurred on or after 29 October 2018
  • the separation for AIA will continue broadly unchanged.


It’s important to note that the first draft of legislation on Structures and Buildings Allowance differs from the original proposals announced in October 2018.


SBA is available at 2% pa (adjusted for longer or shorter accounting period) on a straight line basis of eligible construction costs incurred after 29/10/18, over 50 years, once the structure comes into use.


Per Oct 2018 budget announcement

Amendments in 2019

  • Allowances to be paused during periods of temporary disuse
  • Removed, as too complex to manage
  • Allowance will only be removed for periods during which property is used for a non-qualifying purpose (for example residential use)
  • SBA does not stop when the building is demolished, but continues for the remaining term until it reaches 50 years
  • SBA to cease during demolition
  • Unclaimed SBA to still be available for prior periods


Two new provisions have been added:

  • expenditure incurred on repairs incidental to qualifying renovation or conversion works will be deemed to be capital and will be within the SBA rules
  • allowance statement must be issued by the property owner and passed to subsequent owners to enable them to claim SBAs. Without this statement the qualifying expenditure will be treated as nil.
Tricks and traps of associated disposals

Examining the application of entrepreneurs’ relief to associated disposals.

Examining the application of entrepreneurs’ relief to associated disposals.


This relief is given to a shareholder and partner on disposal of assets held privately and used in the trade of their personal company or partnership, when qualifying conditions are met.


Associated disposals do not apply to sole traders, as there is no separation in ownership of assets between the trade and the individual carrying that trade. In these cases the asset is always deemed to be within the business.



  1. Material disposal

An associated disposal must be part of a wider material disposal of a trading business where the asset was used. The definition of a material disposal of business was changed in 2015:


For associated disposals before 18 March 2015

  • All or part of the business of a partnership. Part is not defined.
  • Any stake in a personal company; there is no de-minimis for the reduction of the shareholding.


For associated disposals after 18 March 2015

  • For a partnership minimum 5% of total partnership assets, and there must be no partnership interest repurchase arrangements in place.
  • If at the point of disposal less than 5% interest is held – disposal of the whole interest held and the individual held at least 5% interest in the partnership for at least three continuous years out of 8 years preceding disposal.
  • For a company minimum 5% of company’s ordinary shares or securities, carrying 5% voting rights, and there must be no share purchase arrangements in place.


Partnership or share purchase arrangements are arrangements under which the seller of the asset subject to the associated disposal, or a person connected with them, is entitled to acquire a new or additional interest in the partnership or stake in the company where the asset was used or company in the same trading group.


‘Arrangements’ may include an ‘agreement, understanding, scheme, transaction or series of transactions’ whether or not legally enforceable. 


If such arrangements are in place, no ER will apply to the associated disposal. For ER to be denied as a result of such arrangements, they must be in place at the time of the material disposal or the associated disposal.


If such arrangements were made before both the material disposal and the associated disposal, and without regard to either of them, they will not affect entitlement to entrepreneurs’ relief. This means that pre-arranged family succession plans are not considered ‘arrangements’.



  1. A father sells land, used by his partnership, to his children when he retires from the partnership. Gain on the land would not qualify for ER if at the time of the sale of his partnership interest or the disposal of land, there was an understanding that the father would buy back an interest in the partnership at some point in future.  
  2. At the time of material disposal of shares in his personal company, the shareholder-director agrees to purchase the shares of another trading company in the same group or a company which is to become part of such a trading group.


A company share buy-back treated as capital distribution is not a share purchase arrangement for these purposes.


  1. Withdrawal from participation in the business

The associated disposal must be made as part of a wider withdrawal of the individual from the business. The practical application of this condition created some difficulties.


The following examples have been provided by HMRC ( CG63998 ) to illustrate circumstances when the condition is met:

  1. In a father/son partnership, the father reduces his interest from 3/5 to 1/5 in favour of his son, and passes to his son premises previously owned by the father and used by the partnership. Father continues to work in the business as before. Father meets the condition of withdrawal from the participation in the business by significantly reducing his partnership interest, and therefore will qualify for entrepreneur’s relief on the sale of the premises.  
  2. A sole shareholder and full time director sells her company and factory unit held by her privately and used by the company. She remains the director. She meets the condition of withdrawal from the participation in the business by selling her whole stake in the company therefore the gain on the factory unit will qualify for entrepreneur’s relief.


Whether or not a wider withdrawal from the business has taken place should be considered on all relevant facts. For example a reduction of working hours alone, without considering a wider context, is unlikely to be sufficient or conclusive.

Usually, a material disposal of business is closely linked with the withdrawal from participation in that business. The withdrawal is the consequence of the disposal and closely related to it. It is not necessary to completely withdraw from participation in the business, but the withdrawal needs to be material and significant.


Sometimes however, a material disposal of a business, including an associated disposal, will not be synonymous with a withdrawal from the participation in the business.  This may be the case when the individual continues to make or influence decisions of the business in the same way as before, or continues to be involved.


As the “material disposal” and the “associated disposal” must be part and parcel of one single event of withdrawal from participation in the business, HMRC’s expectation is that there will be no significant break between the two disposals.

However, in some circumstances, where a business ceases to trade, the “material disposal” and the “associated disposal” may not be concurrent. For example the seller may need more time to find a buyer for the asset, or enable the buyer to secure funding.


In some cases the business subject to material disposal ceases, and the asset associated is no longer used in that business at the time of associated disposal.

HMRC’s view is that entrepreneur’s relief is likely to be granted if the associated disposal is completed:

  • within one year of the cessation of a business – even if the asset is put to other use following the cessation of the business, ER will still be available on the asset, as long as it is sold within one year of cessation. 
  • within three years of the cessation of a business if the asset has not been leased or used for any other purpose at any time after the business ceased;
  • where the business has not ceased, within three years of the material disposal, provided the asset has not been used for any purpose other than that of the business.


The above timescales are not statutory provisions. A longer break between the material and associated disposals may be allowed if there is evidence that the two disposals are still part of the same event of withdrawal from the business. To the extent when cessation can be planned for, the rules create some tax planning opportunities in order to preserve ER.


  1. Length of time the asset was used in the business

To qualify for entrepreneur’s relief as an associated disposal, assets must be used / owned in the business for a specific time.


If the asset was acquired before 13 June 2016

How long the asset is used is considered. How long the asset is owned vs. used, is not a qualifying condition, but may restrict relief (see “Relief restrictions” below).

  • Used for 1 year – disposal of business, with which the disposal of asset is associated, was before 6 April 2019
  • Used for 2 years – if disposal of business, with which the disposal of asset was associated, was after 6 April 2016 or business ceased on or after 29 October 2019 (date of 2018 budget)


If the asset was acquired on or after 13 June 2016

In addition to the one or two year period of use, the asset must also be owned for the period of three years, for the associated disposal to qualify for ER.

If the asset or its share is not owned for three years ending with cessation or disposal, that asset or its relevant share will not qualify for ER. This poses problems when assets held jointly are sold or gifted to remaining joint owners.



Husband, wife and their son own land in equal shares since before 13 June 2016. They provide the land free to a trading partnership carried by husband and son.

In August 2016 (after 13/06/16), the wife dies and leaves her 1/3 share of land to the son and her daughter in equal proportions.


Land and partnership is sold by joint owners on 31 July 2018. As at the date of disposal, the entitlement of partners to ER on the disposal of land is as follows:


  • Father - 1/3 share - acquired before 13/06/16. Used in partnership for more than a year. ER applies in full.
  • Son:
    • 1/3 - acquired before 13/06/16. Used in partnership for more than a year . ER applies in full.
    • 1/6 of land acquired after 13/06/18. Used in partnership for more than a year, but owned by son for less than three years (from August 16 when he got it from mother to July 18 when the land is sold). No ER applies to this 1/6 share.


Restriction of relief

Entrepreneurs’ relief will be restricted on an associated disposal if:

  1. the asset is used in the business for only part of the ownership period
  2. the asset is only partly used in the business (i.e. private use element)
  3. the individual is not involved in the business (as a partner, officer or employee) throughout the period the asset was in business use
  4. rent is charged on the asset from 6 April 2008


Other available resources

More information on the entrepreneur’s relief, the changes it has undergone and their impacts has been published on our website and in our In Practice magazine.


These can be accessed at the following links:


In Practice - Update on entrepreneurs’ relief changes
CPD Online Entrepreneurs Relief 


A useful webinar on this topic is available on demand on our website: Changes to Entrepreneur's Relief Webinar.


What to expect this month? Watch our video highlights

Top tips for May

WATCH: In our 'top tips for May' three of our Passionate Practitioners explain their secrets behind running a successful practice.

In our 'top tips for May' three of our Passionate Practitioners explain their secrets behind running a successful practice.



Three Passionate Practitioners Top Tip

Buying and selling your practice

Whatever stage you are at in your journey we want to support you.

Whatever stage you are at in your journey we want to support you.


If you are currently looking to grow – or dispose of – your practice, help is at hand.


Take a moment to browse our guidance on buying a practice and also selling a practice.


In 2019 we have also published articles by Foulger Underwood here in In Practice looking at Why digital is changing the value of all practices and  An alternative to MTD – selling your practice


Foulger Underwood offer confidential advice on buying and selling a practice and will be exhibiting at Accountex next week. Do visit their stand at 490 for an informal chat.


Creating opportunities

We are here to help ACCA firms wishing to acquire or sell a practice. Over the coming months we will highlight new business opportunities. We begin this month with details of two firms who are looking to acquire practices to support their growth plans. Find out more now:


To explore selling your firm – or merging – with either of these firms, please contact them directly for a confidential discussion.


We will highlight further opportunities in future issues. If you would like to be included, set out in brief your position and send it to (please ensure you include your ACCA membership and firm details).


The Passionate Practitioner
Essential reading: Developing the digitalised small and medium practice.

Digitalisation represents the greatest opportunity accountants have had to transform their businesses since the invention of the spread-sheet. Such innovations aren’t only transforming ways of work, but they are also changing the role of the accountant itself. Practices that fail to adapt to those new ways of working run the risk of being left behind.


Our new report The Passionate Practitioner, which is based upon a series of interviews with leading practitioners, examines the experiences of several accountancy firms that are on various stages of the journey to digitalisation. From their insights and lessons, ACCA has consolidated a roadmap that guides those embarking on, or on the path of, that journey.


Read this one page summary now or explore the full report on our website. Do share this within your practice and use it to help share the future of your firm.

Get to grips with digital and MTD at Accountex 2019

There is still time to register for your FREE ticket to join us at Accountex 2019 next week!

There is still time to register for your FREE ticket to join us at Accountex 2019 at London's ExCeL on 1-2 May.


This essential show will help you stay on top of trends, tools and innovations that are redefining the way modern accountants work.


Ensure you first action is to visit ACCA on stand 130 and check which sessions you won't want to miss in our always-popular theatre, including:

  • Xero - the digital practice journey
  • Are you and your firm ready for advisory?
  • Attracting and retaining talent in practice
  • The future of practice - embracing technology.

Register now to meet big global brands and cutting edge start-ups to source the technology and solutions that will take your business to the next level.


By attending Accountex you can stay up-to-date and get advice from key industry figures in 200+ seminar sessions, gain 8 CPD units, meet over 250 top suppliers that are mapping the future of the profession and discover the latest products and solutions to revolutionise your business.

We need to hear from you: HMRC’s intermediaries’ legislation

Complete our survey to help inform our consultations with government.

Complete our survey to help inform our consultations with government.


HMRC is reforming the intermediaries’ legislation which could mean workers providing their services through an intermediary such as a private limited company might be required to pay the same income tax and national insurance as they would if they were an employee of their client. The status of the contractor will depend on the contract and working practices with the client.


This reform could mean private sector businesses assume responsibility for determining the employment status of an off-payroll worker. The status would have to be decided and communicated to the worker before the contract can start.


Only large businesses will be required to do this for their contractors ie those for which two of the following apply: more than 50 employees; annual turnover of more than £10.2m; or assets worth more than £5.1m.


Responsibility for communicating and enforcing status determinations is likely to be passed down the supply chain so even if the reform does not apply directly to you, your supply chains might be affected. For practitioners working through intermediaries there may be a direct impact on contracts with larger clients.


We need to hear from you to inform our conversations with government. This survey should take no longer than three minutes to complete. All responses are anonymous and will ensure your voice is heard.


2019 British Accountancy Awards - how to create a winning entry

Get expert advice from ACCA and Mark Lee and then submit your entry to the British Accountancy Awards. 

Do you want to stand out from the crowd, motivate your employees and generate great publicity?


Then considering submitting your entry to the British Accountancy Awards 2019 before the deadline of 17 May! There are a variety of categories, including those which recognise the best independent firms across the UK as well as individual awards for the best partner and rising star of the year. View the categories and how to enter now


To help you prepare your entry, take a look at the guidance we have created and watch this video where Mark Lee shares his top five tips for creating a successful entry.

News and tools for you

Retirement planning, SME finance conference, a practical guide to apprenticeships and more.

Will I have enough for my retirement?

SME Finance Conference

App partners - special offers for ACCA members

Demonstrate your excellence in Xero

ACCA’s practical guide to apprenticeships



Will I have enough for my retirement?
Join ACCA and Netwealth for a live, interactive 60-minute webinar as we explore how to ensure your pension pot lasts for your retirement.

Knowing how much to save for your retirement, and if you are on-track to achieve this, is an important part of your personal financial planning. Inefficient planning could affect the income available to you, or even run the risk of not having enough.

In this live, one-hour webinar our investment team will provide insight into the important factors to model for and the elements to control when planning and funding your retirement. They will also discuss the Annual and Lifetime Allowances, and strategies to utilise them efficiently.

Get an expert view:

  • How to manage your various tax allowances and exemptions to minimise your overall tax burden in retirement.
  • Understand your appropriate level of risk for your retirement pot, given increasing longevity in the UK.
  • Learn more about the Lifetime Allowance and why sometimes it is worth paying the related tax charge.
  • The balance between your income in retirement and IHT tax planning.

Register today

SME Finance Conference
The UK Finance Festival and SME Banking and Commercial Finance Conference will take place in Belfast’s Titanic Museum on Wednesday 1 May.

This conference will deliver a lively mix of debate and interactive discussion, focusing on traditional and alternative access to finance, and new developments in digital banking. The conference will also focus on how the industry can help ease the challenges faced by SMEs, looking at the accessibility of financial tools and services, and the ability to harness new digital platforms increasingly available in the sector. Further conference topics include:

  • putting the customer first: convenience vs control
  • understanding micro-businesses in Northern Ireland
  • SME finance, past, present & future
  • alternative finance: meeting the needs of millennial business leaders.


App partners - special offers for ACCA members

Our members continue to benefit from a number of special offers provided by the app partners who joined Xero in attend our ‘future proof your practice’ roadshows last autumn. Check out these offers now: 

  • Practice Ignition is offering your first two months free. Simply get ten proposals signed within your first two months and they won’t bill you a penny for this period. Sign up today and contact  who will apply the ACCA Exclusive code for you

  • Float will give every ACCA accountant who signs up for Float a free account for their practice and 20% off their first three months' subscription to Float’s partner programme. Visit

  • Xero will give any ACCA accountant that signs up its partner programme 50% off Xero for three months on their first five Business Edition subscriptions – valid until 30 June 2019. Sign up to the partner programme at and when you're signed up, add clients using the promo code ACCAXERO.


Demonstrate your excellence in Xero

Does your practice use Xero? Thanks to the Memorandum of Understanding we signed with Xero in August, your firm can now benefit from free access to Xero Advisor Certification. Completing the Xero Certification Equivalency Course is a great step towards gaining an extremely solid understanding of all things cloud accounting and of Xero. It’s also great for employability because demand for these skills has never been greater, both at bookkeeping and accounting practices and at more than 300,000 subscribers across the UK. Access this benefit now (use promo code ACCAX12m).



ACCA’s practical guide to apprenticeships

From funding and contracts to off-the-job training and further study, this is what you need to know about apprenticeships. They represent a highly cost-effective way for you to recruit and develop ambitious new talent to help you realise your business ambitions. Apprenticeships also have the added benefits of being able to offer high quality training, on-the-job experience and local employment opportunities. Apprenticeships can be complex so we have developed this guide that includes all the practicalities you need to consider if you are interested in taking advantage of the government’s funding to grow your own talent.


Your first choice for CPD

ACCA's Professional Courses provide the widest range of CPD events tailored to the needs of practitioners.

All Professional Courses events are open to both ACCA members and non-members. Please feel free to share details of the events below with your colleagues.



Find full details in the dedicated flyer


Saturday CPD conference two

Bristol, 11 May

Swansea, 18 May

Glasgow, 01 June

London, 08 June

Birmingham, 15 June

Manchester, 22 June

Sheffield, 29 June

London, 06 July


Saturday CPD conference three

London, 28 September

Glasgow, 05 October

Birmingham, 12 October

Bristol, 19 October

Swansea, 02 November

London, 09 November

Manchester, 16 November

Sheffield, 30 November

London, 07 December





Accounting and auditing conference

02 November, London


Taxation conference

14 December, London


CPD: 7 CPD units per conference, or attend three to gain 21 units.



1 conference                        £159 

2 conferences                      £147 per conference/delegate

3 or more conferences        £133 per conference/delegate




Guide to practical audit compliance for partners and managers

1-2 October, London

13-14 November, Manchester

17-18 December, London


CPD: 14 units

Fee: £510. Book your place up to 60 days before the start date of the workshop and pay the discounted fee of £459 per person.


Practical guide to ISQC 1 for partners and managers

4 December, London


CPD: 7 Units

Fee: £298. Book place up to 60 days before the start of the workshop and pay the discounted fee of £277 per person.


Internal Audit Conference – Collaborative Independence

16 May, Birmingham




General tax update for accountants

London, 31 May

Leeds, 8 October

Birmingham, 11 October

Bristol, 18 October

Newcastle, 6 November

Cardiff, 26 November

Norwich, 28 November

Bournemouth, 3 December

London, 11 December


Accounting standards update

Newcastle, 9 October

Nottingham, 10 October

Bournemouth, 15 October

Cardiff, 17 October

Norwich, 29 October

Leeds, 7 November

Bristol, 27 November

London, 12 December


Fee: £226 per person

Book up to three calendar months before the start date and pay just £205 per person.



Residential Conference for Practitioners

21-23 November, Chester



Channel Island conference

12-14 June, Radisson Blu Waterfront Hotel, Jersey

CPD: 21 units

Serving on committees

Have you considered giving something back to the profession?

Have you considered giving something back to the profession?


We are recruiting members to sit on our regulatory and disciplinary committees – and would love to see you become involved!


In particular we are looking for members to sit on the panels below. Click on the title for more details about the nature and scope of the role, including primary responsibilities:


Accountant panel member


Regulatory assessor


A professional body exists to support its members and ensure they are respected and trusted. Integral to that trust is a robust regulatory process that includes independent adjudication. So when ACCA receives a complaint against a member, or a member or firm is considered to have fallen short of the required standard, the regulatory processes that ensue are of the utmost importance.


Committee members come from a variety of backgrounds, and those who are accountants work in various different sectors. All panel members are bound by a code of conduct, which makes clear the importance of principles such as integrity and objectivity.


Panel members eligible to sit on ACCA committees are expected to do so approximately 12 to 18 times a year – sufficient to maintain competence but not so frequently that it interferes with other responsibilities. They are also expected to attend occasional meetings and training sessions.


Benefits to you of participating

  • Fees and expenses are paid for attending hearings and meetings
  • Working in the public interest by providing independent decision making to ACCAs regulatory and disciplinary processes
  • A new perspective and outlook after working with a range of people you have not previously met
  • Adding new skills and experience to your CV / LinkedIn profile.


Find out more now. You can also browse information on our website about committees and hearings.


Please note, the deadline to express your interest has been extended to 12:00 on Tuesday 30 April.