BLOOMSBURY PROFESSIONAL INCOME TAX 2021/22

713 Pages·2021·5.409 MB·English

by  NOT AVAILABLE.

Income Tax 2021/22

Income Tax 2021/22
John Hiddleston, Azets
Contributing Author (Scotland): Joanne Walker PhD ACA CTA
Series General Editor: Mark McLaughlin CTA (Fellow) ATT (Fellow) TEP
Bloomsbury Professional
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Preface
Income Tax 2021/22 is the sixteenth edition of this publication and is part of the
Tax Annual series published by Bloomsbury Professional. The book is designed
to provide a clear, concise reference to all aspects of income tax law and practice,
with cross-references to legislation, case law, and other source material.
This edition has been comprehensively reviewed and is up to date to June 2021.
Changes implemented by the Finance Act 2021, which received Royal Assent on
10 June 2021, and proposals for future changes, are fully reflected throughout,
as are other new developments which have taken place since the last published
edition.
The book includes chapters covering both Scottish income tax and Welsh income tax.
The Scottish income tax chapter has been updated by Joanne Walker, a Technical
Officer for the Chartered Institute of Taxation and its Low Incomes Tax Reform
Group.
The Welsh income tax chapter has been updated by Leighton Reed, a tax partner
with Azets who is based at that firm’s Cardiff office, and my grateful thanks go both
to Leighton and to Joanne for their help and expertise on each of these subjects.
Although Income Tax 2021/22 is part of Bloomsbury Professional’s Tax Annuals
series (see back cover for further details), it is also a useful stand-alone guide to
the UK’s income tax system. Hopefully readers will find it easy to navigate and
more digestible than other reference material. The objective of the book is to
provide an easy-to-use, straightforward solution to many common income tax
issues, with an emphasis on practical rather than theoretical points.
Bullet points, checklists, summaries, worked examples and tables have been used
throughout to aid comprehension.
We have included ‘Signposts’ at the start of each chapter, which aim to provide a
useful summary of the contents of the following chapter. Each chapter also contains
a series of ‘Focus’ points. These are additional points that have been picked out to
draw the reader’s attention to new developments and proposed changes, planning
or practice points, or to provide details of further reference material.
I hope that you find this book useful. We always welcome any comments or
suggestions for future editions.
John Hiddleston
[email protected]
June 2021
v

Contents
Preface v
Table of examples xi
Table of statutes xv
Table of statutory instruments and other guidance xxix
Table of cases xxxv
List of abbreviations xliii
Chapter 1 The UK tax system 1
Signposts 1
Introduction 2
Income or capital 12
Reliefs, allowances and deductions 13
How income tax is calculated 35
Chapter 2 Income tax compliance 55
Signposts 55
Income tax self-assessment 56
Tax returns 61
Tax payments 68
Interest and penalties 73
HMRC enquiries 88
Tax tribunal 97
HMRC review 99
Alternative dispute resolution service 102
HMRC’s litigation and settlement strategy 103
Publishing details of deliberate tax defaulters 104
PAYE compliance 105
Disclosure of tax avoidance schemes 112
EU DAC6/OECD MDR 116
Serial Tax Avoidance Regime 116
Offshore tax evaders 117
Chapter 3 Scottish income tax 120
Signposts 120
Background to Scottish income tax 121
Scottish income tax 123
The need for awareness of Scottish income tax 133
Setting the Scottish rates and thresholds 134
vii
Contents
Interaction of UK and SIT rates and thresholds 135
Definition of a Scottish taxpayer 137
Income subject to Scottish income tax 148
Transferable tax allowance for couples 149
Partnership income 150
Non-UK income 150
Gifts to charities 150
Finance cost relief for residential landlords 152
General reliefs from income tax 152
Pension scheme contributions 153
Income from trusts 155
Social security lump sums 158
Impact on capital gains tax 158
Payroll issues for employers 159
Construction industry scheme 161
Administration of Scottish income tax 161
Behavioural repercussions of increasing divergence 164
Chapter 4 Welsh income tax 167
Devolution in Wales: a process not an event 167
Devolution and evolution 167
The mechanics of the Welsh rates of income tax 169
Administration of Welsh income tax 170
Further changes and further devolution? 180
Chapter 5 Savings and investments 182
Signposts 182
Taxable and exempt income 183
Tax on investments 189
Foreign savings and investments 207
Life assurance gains 209
Tax-efficient investments 210
Chapter 6 Pensions and benefits 233
Signposts 233
UK pensions 233
Taxation of pensions 238
Foreign pensions 251
Non-taxable state benefits 256
Taxable state benefits 258
Class 3 national insurance contributions 267
Chapter 7 Employment 271
Signposts 271
Employment 272
PAYE 283
Taxable and tax-free benefits 308
viii
Contents
Share schemes 362
Personal services provided through intermediaries 369
Chapter 8 Self-employment 385
Signposts 385
Starting a business 386
Covid-19: Self-employment Income Support Scheme (SEISS) 394
Basis of assessment 400
Computing profits 403
Capital allowances 421
Losses 436
National insurance contributions for the self-employed 444
Sole trader or partnership? 447
Farming and market gardening 459
Subcontractors 465
Chapter 9 Property income 476
Signposts 476
Property business profits and losses 477
Rent-a-room relief 492
Furnished holiday lettings 497
Rent from property outside the UK 502
Non-resident Landlords Scheme 505
Annual tax on enveloped dwellings 514
Chapter 10 Trusts and estates 576
Signposts 576
Trusts and settlements 517
Types of trust 527
Resident and non-resident settlements 535
Administration of trusts 537
Taxation of estates 540
Pre-owned assets 548
Chapter 11 Non-residents 561
Signposts 561
Residence status 562
Personal reliefs for non-residents 572
Employment matters 573
PAYE matters 583
Trading 589
Domicile 592
Remittances 601
Double taxation relief 609
Index 617
ix