Want some Tax tips for the summer? Read on…
Using your home as an office for business use
If you use your home for business use, for example you have a room that you use as an office sometimes, you can claim a proportion of your home’s heat and light, maintenance and insurance as a legitimate business expense. In response to this tax saving tip I have often heard suggested that if you claim for use of your house against your own income it means that you may be liable for capital gains tax on any profits you make when selling your home.
What the rules actually state is that if you use any part of your home exclusively for business use, then that part of your home is excluded from the capital gains tax exemption that normally applies on the sale of your house.
So the key aspect here is:
- Don’t make the part of your home that you use as an office exclusive, it needs to be occasionally used for personal purposes.
Tax-free income roll up
How about using an offshore trust, which defers income tax, perhaps forever?
Offshore trusts have come in for a lot of attention from our legislators in recent years. A lot of commentators have suggested that they are dead in the water. I would beg to disagree.
UK residents can place assets in trust and as long as they exclude themselves from benefiting from the trust, the income is not chargeable to UK tax until the trustees pay out the income to beneficiaries in the UK.
Now, it may just happen that the beneficiary spends some time abroad and for a period of time becomes a non-UK resident. If the income was payable to that non-UK resident it would no longer be liable to UK tax. So any investment made could roll up tax-free and be paid out when it was convenient and tax efficient to do so.
Contact us for further information on this type of tax planning.