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November Question and Answer Section
Newsletter issue - November 2012.
Q. My business needs to move to smaller cheaper premises, but my current landlord wants me to pay a fee to surrender the property lease earlier than the next break point. Can I claim that lease-surrender payment as a business expense?
A. Unfortunately you can't get a tax deduction for this payment to your landlord, as a fee to release you from the continuing obligation to make payments under the lease is regarded as a capital payment. There is also no tax relief for this payment under the capital gains tax rules as it doesn't represent a cost of purchase or a cost of disposal of an asset. So for you it's a 'tax nothing'.
Q. I sold a property in August 2012 which made a gain of £50,000. It consisted of a cafe on the ground floor which I ran as a sole trader until August 2010, and a residential flat above, both of which were let out from August 2010 until the date of sale. Can I claim entrepreneurs' relief on the gain?
A. Assuming you ceased the cafe business in August 2010 (and did not continue the same business elsewhere), you should be eligible to claim entrepreneurs' relief on the part of the gain that relates to the cafe section of the property. This is on the basis that the ground floor was used for the purpose of your cafe business to the day you ceased to operate that business, and you sold the property within three years of that date. The gain relating to the flat will not qualify for entrepreneurs' relief.
Q. The Taxman is always demanding money from me for VAT, PAYE, corporation tax, Class 1A NICs, excise duty, the list goes on and on. I am terrified of mixing up the payments and paying the wrong amount to the wrong part of the great tax department. How can I make sure I get it right?
A. The Taxman has recently set-up a really helpful page on his website: www.hmrc.gov.uk/bankaccounts/, which lists alphabetically all the taxes and charges it administers. When you click on the name of a tax or charge, the website tells you how to pay, including the bank account numbers and how to check you have the correct reference.
