Top 10 Tax Elections to Minimise Tax

24th January 2012

Examples of the most helpful and generous tax elections and claims include:

s222(5a) TCGA 1992 (Nomination of main residence)

This capital gains tax election, often referred to as ‘flipping’, enables taxpayers, who own and reside in more than one home, to inform HMRC which of these homes is their principal private residence. For those who own a holiday home, making such an election and then immediately reversing it, can result in sheltering gains on the eventual sale of the holiday home.

SA303 (Claim to reduce income tax payments on account)

Those individuals and trusts that self assess more than £1,000 per annum income tax and class 4 NIC are required to make estimated payments on account just before and after the 5th April fiscal year end. Where these taxpayers believe that their tax liability will be lower than the previous year, they can make a claim to reduce their 1st and 2nd payments on account.

s62(7) TCGA 1992 (Deed of variation)

This procedures allows a Will to me amended within two years of the date of death. There are many reasons why the beneficiaries of the original Will may wish to change their entitlement, including reducing the inheritance tax that the estate of the deceased is liable to pay.

s24(2) TCGA 1992 (Negligible value claim)

Under this legislation a taxpayer, who holds an asset which has become of negligible value, may make a claim to be treated as though the asset had been sold and then immediately reacquired for an amount equal to its value. The effect of crystallising such a ‘paper’ loss, without actually selling the asset, can often be useful for reducing income tax, corporation tax or capital gains tax.

s167(2) TIOPA 2010 (Disapply SME transfer pricing exemption)

Small and medium enterprises are exempted in legislation from transfer pricing principles on transactions between connected companies. An election to disapply this exemption can, however, be made, so that these transactions are taxed as if revalued on an arms length basis. Such an election can prove beneficial where a partnership owns a trading company subsidiary, which it receives under-valued charges from.

 

Form 17 (Declaration of beneficial interests in joint property & income)

Income and gains from jointly owned assets are usually taxed equally on spouses (or civil partners). Completion and submission of this claim specifies a different apportionment for tax purposes, which can be useful where owners are subject to different rates of income tax.

s131 ITA 2007 (Convert capital loss into an income loss)

Losses suffered on shares in qualifying unquoted companies are usually capital losses, eligible to be offset against current or future year capital gains. Under this section, a claim can be made to convert these capital losses into income losses, which are eligible to be offset against current year and previous year total income, which will usually yield a better and quicker tax result.

ss1134-1136 CTA 2009 (R&D connected sub-contractor)

Companies claiming R&D corporation tax relief on qualifying costs from an unconnected sub-contractor usually have to restrict this claim to 65% of the costs incurred. By making this joint election with the sub-contractor, the relationship is treated as if both parties are connected, entitling the claimant company to relief on 100% of the costs.

s12 FA 2011 (Short-life asset election)

Businesses obtain tax relief on purchased plant & machinery capital items via the capital allowances rules. These rules generally operate by grouping all capital assets within a ‘pool’, before capital allowances are calculated on the net carried forward total. For assets that are expected to be used within the business for a period of 8 years or less, and which will then have a nil or low disposal value, de-pooling these items into a separate short-life asset pool will accelerate the tax relief.

s1AB TMA 1970/Para 51 Sch 18 FA 1998 (Overpayment relief)

Since 1 April 2010 there is a single procedure to recover overpayment of all the main personal and business taxes. The taxpayer must make this claim within 4 years of the end of the relevant tax year or accounting period. The claim must be in the correct form and must state the amount that the person believes they have overpaid.

Disclaimer - All information in this post was correct at time of writing.
Other Blogs
Paul Jefferson
18th April 2024 Beware of VAT refund fraud

Beware of VAT refund fraud!   We have become aware of several recent cases where taxpayers’ bank account details have been amended on the HMRC portal, without their knowledge, so that VAT repayments have been fraudulently diverted to a third party.   It seems that HMRC have been acting on the basis of a fraudulent…

Andrew Band
17th April 2024 Whitings 2024 Annual Farming Seminar

Our Whitings 2024 Annual Farming Seminar is just around the corner.   Farming always has to cope with changing environment, weather, commodity prices, political changes, etc. This year these challenges feel heightened and this is why we are pleased to welcome back speakers from the Andersons Centre to inform us of these changes and what…

Amanda Newman
17th April 2024 Buy To Let through a Limited Company

There continues to be an ongoing debate when buying a residential property to let out about whether to buy this personally or set up a limited company to own it. Unlike our sole trader v limited company comparisons for a trading business there is not a clear division based on profits. There are a lot…

Nick Edgley
11th April 2024 Do you need to re-register for Child Benefits?

If you’ve heard about the changes post 5 April 2024 and are wondering whether you need to re-register for Child Benefits, this is the blog post for you.   If you have been affected by the increase in the High Income Child Benefit Charge cap to £60,000, then you may need to restart your Child…

Peter Brown
10th April 2024 Pension Contributions for directors

Are you thinking about planning ahead for retirement and want to find out more about Pension Contributions for directors?   When it comes to planning for your retirement, Company pension contributions can offer significant benefits in terms of reducing your company’s Corporation Tax bill. Here’s how you can use both personal and company contributions to…

Angelica Ferentinos
9th April 2024 Child Benefit changes – What you need to know

The new Child Benefit changes came into effect on 6 April 2024, with families receiving up to £1,331 per year (for the first or only child), and up to £881 per additional child, increasing by £83.20 and £54.60 respectively on the year before. This is paid directly into your bank account every 4 weeks. There…