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New queries: 16 July 2020

14 July 2020
Issue: 4752 / Categories: Forum & Feedback

Family fortunes

Stamp duty on residential property transaction.

My client owns a residential buy-to-let property with his son. The property value is £750,000 and there is a mortgage on it for £300,000 in the names of my client and his son.

My client’s son, together with his newly wedded wife, will occupy the property as their only or main private residence after the existing tenancy finishes later on this year.

The plan is that the son and his wife will then obtain a mortgage from another lender in their own names for £300,000 and the original mortgage in the name of the client and his son will be paid off.

I have the following questions:

  • Will stamp duty under the Stamp Act 1891, s 57 be chargeable on the transaction and at what rate?
  • Can the statutory exemption under FA 2003, pt 4 apply if the sale transaction is structured so that £150,000 of the loan is between my client and his daughter-in-law who is a first-time buyer? This relief has been enhanced further by the chancellor’s summer statement that no stamp duty will be payable on residential property transactions below £500,000.

I would be grateful for Taxation readers’ views on these points.

Query 19,595 – Forty.

Going electric

Reliefs on a mixed-use electric motorbike.

My client is considering providing his employee(s) with an electric motorcycle for personal use and for attending client sites following the coronavirus epidemic, because public transport is much less appealing in the current circumstances.

The legislation and HMRC guidance refers to VAT relief, benefits in kind and mileage allowance for motorbikes and electric cars. But which category would electric motorbikes fall under and what is the best option for my client:

  • a personal purchase of the bike with an employer’s mileage allowance; or
  • a company motorcycle with a benefit-in-kind charge (or other alternative)?

I look forward to responses from Taxation readers.

Query 19,596 – Maxcap.

Return regularity

Request for a monthly VAT return.

A client has asked whether they can complete monthly VAT returns to assist with cashflow.

The client does not receive VAT refunds. However, I think they would find it easier to pay a lower amount of tax but on a more frequent basis rather than, as now, a larger amount every quarter. They still use manual records because I am still trying to make them compliant for making tax digital (MTD) purposes.

Of course, if there is an easier option to help with their cashflow I would prefer that to switching to monthly returns.

I wondered whether any other advisers have had a similar request from clients when dealing with their client’s VAT returns?

I would be grateful for advice here.

Query 19,597 – Adviser.

Furloughing confusion

Calculating the coronavirus job retention scheme grant.

I am trying to understand the rationale for the calculation of the grant payable under the coronavirus job retention scheme (CJRS) applicable from 1 July 2020 for part-time furloughing.

HMRC’s guidance on 12 June 2020 appears to use calendar days for the basis of the calculation which seems to produce somewhat inconsistent results in some circumstances.

For example, an employee on a fixed monthly salary of £2,000 will have daily pay of £64.52 for July 2020 (31 days). If they are furloughed each Wednesday (a total of five days), the grant receivable for that month is £258.08 (£322.60 at 80%) ignoring any claim for employer’s National Insurance and pension contributions). But if, instead, the employee is furloughed every Friday (again, a total of five days) so they return to work each Monday, I understand that the furlough periods then include Saturdays and Sundays (not normal working days), making a total claim for the month of £671.01 (calculated as 13 days at 64.52 x 80%).

If the calculation was, instead, to be based on normal working days, this would produce the same result regardless of which day of the week (Monday to Friday) the employee is furloughed. Using the above example, there are 23 normal workdays (Monday to Friday) in July 2020, making a daily pay rate of £86.96. The claim for the five days furloughed would then amount to £347.84 (being £434.80 at 80%).

Could readers please confirm (or otherwise) the following points.

First, it is not permissible to calculate the grant based on normal working days.

Second, if calendar days must be used to calculate the grant, it is valid to include Saturday and Sunday (not normal working days) in the overall number of days for the furlough period used for computing the grant so long as each preceding Friday is not worked.

Third, if the day of not working is a Monday (instead of Friday), the preceding Saturday and Sunday cannot be included in the overall number of days for the furlough period.

I look forward to replies.

Query 19,598 – Billy.

Issue: 4752 / Categories: Forum & Feedback
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