Boon Tan, Managing Director of CST in Singapore, recently joined Hemandra Tanapalan, Chief Executive Officer at Mstige Holdings, to discuss the intricate world of Web3. Together they unpack the tax implications of trading NFTs, investment strategies, and the vibrant community dynamics within the space.

In this podcast, Boon delves into topics such as DAOs, GameFI, and opportunities for additional income in Web3. Learn how to manage crypto and NFT profit taxes while navigating the evolving landscape of decentralized finance.

Listen to the podcast on Spotify.

To get the podcast transcript, click this link.

Our Managing Director in Singapore, Boon Tan, will be participating in Singapore Global Network’s “Relocation to Singapore” webinar.

The webinar is designed for foreigners relocating to Singapore, including job seekers, trailing spouses, and students.

Boon will be joined by Ms Marina Lopes, who has been residing in Singapore with her family since 2021. Boon and Marina will guide you through the process to ensure you embark on your Singaporean adventure with confidence.  

Hear from the personal experiences of those who have made the move, on various topics such as housing, transportation, children’s education, navigating work culture, social norms, and career options for trailing spouses.   

Whether you’re in the initial stages of planning or have already made the decision to relocate, we aim to assist you in assimilating seamlessly to our beautiful island, Singapore!  

Event sign up page: https://community.singaporeglobalnetwork.gov.sg/events/4585

The Chancellor Rishi Sunak presented his second Budget on Wednesday 3 March 2021. Against the backdrop of COVID and a 10% contraction in the economy, he set out a three step plan to ‘…protect the jobs and livelihoods of the British people’.

The Budget introduced a new super deduction for capital investment, an announcement on the creation of freeports, further support for skills and a focus on job protection and creation – all of which advance the Government’s ‘levelling up’ agenda.

Our summary focuses on the tax measures which may affect you, your family and your business. To help you decipher what was said we have included our own comments. If you have any questions please contact us for advice.

Download UK Budget 2021 Summary

Current Government rules and guidance around quarantine and travel restrictions could lead to an individual staying longer in the UK than originally intended – leading to an adverse impact on their tax residence status as a result of the day counting tests under the UK’s statutory residence test (SRT).

Planned changes to the SRT to allow for the COVID-19 situation have now been enacted into UK tax legislation which will alleviate many (but not all) situations that international workers now find themselves in.

Broadly, the amendments mean that days spent in the UK will not count towards certain elements of the day count tests where:

• The day falls within the period 1 March 2020 to 1 June 2020.
• The individual is in the UK as a medical/healthcare professional for purposes connected with the detection, treatment or prevention of coronavirus disease, or for purposes connected with the development or production of medicinal products (including vaccines), devices, equipment or facilities related to the detection, treatment of prevention of coronavirus disease; and
• In the tax year under review (being either 2019/20 or 2020/21) the individual is resident outside the UK.

Unfortunately, this does not provide much comfort for those working outside the medical or research professions.

However, the existing tests provide that where up to 60 days are spent in the UK for ‘exceptional circumstances’ these are disregarded for the purposes of the tests.

Exceptional Circumstances

Under HMRC Guidance (not legislation) there is existing limited relief for situations where days are spent in the UK and the circumstances are considered ‘exceptional’. The SRT consists of a number of days counting tests for specific situations (derived from long standing case law) and HMRC’s detailed guidance outlines which of these specific SRT day-counting tests allow relief for days of ‘exceptional circumstances’. Currently, the relief is not available for a number of the tests. The guidance also explains what circumstances might be considered as ‘exceptional’.

Where relief is available, currently, there is a general limit of 60 days of relief allowed for any circumstance that qualifies as ‘exceptional’. HMRC have confirmed this limit will continue to apply in COVID-19 related cases.

COVID-19 – ‘Exceptional’?

COVID-19 guidance published by HMRC on 19 March confirms that where an individual remains in the UK, this will fall within the ‘exceptional circumstances’ definition where this is due to being:

• Quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus.
• Advised by official government not to travel from the UK as a result of the virus.
• Unable to leave the UK as a result of the closure of international borders.
• Asked by your employer to return to the UK temporarily as a result of the virus.

One of the key characteristics of a successful business is its ability to move with the times – by innovating and developing new product lines, features and improved processes. 

The Government actively encourages this ‘path to success’ with a valuable tax break –Research & Development (R&D) Tax Relief.  

Many businesses don’t take advantage of these great tax breaks because:  

• They don’t realise it exists.
• It sounds like it might be complicated.
• They don’t understand how to take advantage of it.

It can mean you get tax credits or cash back, and it can make the ongoing, or even earlier development of your product line really worthwhile!  

What qualifies for R&D?

If your company is innovating and you’re staying one step ahead of the competition, the chances are you’re undertaking qualifying R&D work without realising it – whatever sector you are in, R&D tax relief doesn’t only apply to the scientific sector!

In fact, any sector could qualify for R&D relief. You’ll need, of course, to demonstrate that the project improved knowledge in your field, which could be food technology, engineering, metalwork, the IT sector or even retail. It is not overly difficult, just demonstrate a new or improved process or product has been created that improves overall knowledge in that field.

We can lead you through the process.

What’s in it for my company?

In blunt terms it means you can effectively deduct 230% of relevant costs from your profits, more than double what you paid out!  

The R&D SME regime is a tax relief scheme introduced by the Government back in 2000 to help innovative businesses, like yours, progress.  It takes all allowable expenditure incurred during the R&D project and allows you to gross it up by 130%. The typical benefits are either a reduction in tax payable or a repayment of tax already paid by the company.  

What expenditure qualifies?

The range of qualifying expenditure is quite broad and includes a range of recognisable costs, including: 

• Materials
• Staff costs
• Subcontracts costs
• Include apportionments of overheads that were relevant to the R&D project. 

With such a wide scope, the tax break is really beneficial. 

Loss-making Company?

The good news is loss-making companies also benefit under this scheme.  Although they are not paying tax, they can opt for a cash payment of 14.5% of the losses made.  This can be a valuable cash injection.  Alternatively, you can carry the loss forward to offset against company profits in the future and save tax at the main corporation tax rate (19% currently).   

Good News – it is not too late to claim!

Don’t worry if you’ve undertaken R&D in previous years and think you’re way too late to benefit – claims can be made up to two years after the end of the accounting period in which the project was undertaken.

Find out more about R&D tax breaks

If you would like to know more about how your company can access this valuable tax break, contact the Tax Team at CST Tax for a discovery chat over a coffee.

Disclaimer
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication

It’s not often that we get the chance to write about a great tax incentive from HMRC on company cars – like never!

For years, employees with a company car have been hammered for tax alongside their employers. 

This is about to change in the pursuit of going green.

Following a 3-year delay from consultation (2017) to implementation, HMRC are due to radically overhaul their Benefit in Kind (BiK) rates for electric vehicles from April 2020.

Recognising that company purchases equate to approximately half of all new car sales, the Government have decided that amending the BiK rates will incentivise drivers of company cars and businesses who offer them, to adopt low emission vehicles.

Let’s assume:

• that you are a higher rate taxpayer (40% in the 2019/20 tax year)  
• you would like to drive a BMW i3 94AH (0 g/km of CO2 emissions)
• with a list price of £34,075

How to save the most tax

The way for you to save most tax is for the company to buy the electric vehicle. 

This is because under the new government incentive the company will get 100% corporation tax relief on the purchase price of the car.

It does mean spending to save, but using the BMW above this would mean a corporation tax saving of 19%*£34,075 = £6,474.

When you purchase the car will determine when you benefit from the tax saving, it’s a deduction from your next corporation tax bill so it all depends on when your company year-end is, and when your next tax payment is due.

If you are a March 2020 year-end, your next tax payment is due 1^st January 2021, so if you buy the car before 31^st March 2020 the benefit is realised in January 2021. If you don’t buy it until April 2021 then you must wait until January 2022!

What if cash flow doesn’t allow the company to buy the car?

There are several lease options available that would still allow you to drive your electric vehicle. You don’t get the 100% tax relief in the same way as if you bought it, but it’s not all bad news.

If you take a lease where you don’t own the car at the end, then your monthly lease instalments are accounted for as expenses, thus reducing your profit and therefore your tax bill. You also get half the VAT back on the instalment amounts. 

What does it mean for the individual? 

This is where HMRC are really making the changes that you or your employees can benefit from.

From April 2020 they are reducing the Benefit in Kind rate to 0% where the vehicle has 0g/kg emissions, this is compared to a rate of 16% in the 19/20 tax year.

That is a huge change and, in our scenario, would result in a £181.73 tax saving – each month!

In the 2019/20 tax year, the tax on the BiK would be:

BIK Value – £34,075 (list price) x 16% (g/kg rate for the year) = £5,452

Tax due – £5,452 x 40% (income tax rate) = £2,180.80 per year (£181.73 per month)

In contrast, when the new rates are implemented in 2020/21, the tax on the BiK will now be:

BIK Value – £34,075 (list price) x 0% (0g/kg rate for the year) = £0.

Tax due on a BIK value of 0 = £0!!

Are there any more benefits to the company?

In addition to the corporation tax savings if you buy or lease the car there are National Insurance savings on the BiK too.

Companies pay employers National Insurance at a current rate of 13.8% on the car’s BiK value. This means 13.8% multiplied by the BiK amount, which in this case is £0, therefore the associated National Insurance is also £0. 

What to do next

If the above has tempted you and you are interested to know more about Benefits in Kind, whether you are an employee with a company car or a business that offers company cars to its staff, please get in touch.

If you’re not quite convinced and want to look at some options that might convince you, then have a look at the links below:

Jaguar – https://www.jaguar.co.uk/jaguar-range/i-pace/models/index.html

Tesla – https://www.tesla.com/en_gb

BMW – https://www.bmw.co.uk/en/all-models/bmw-i.html

Volkswagen – https://www.volkswagen.co.uk/electric/ev-cars/new-electric-cars

Other brands are available!

The small print

At the time of writing, the Revenue has published the rates for the 2021/22 and 2022/23 tax year where you will see the rates increase by 1% each year.

Currently we are unaware of how the rates will change going forward which is the only uncertainty around what is otherwise a fantastic way for employers and employees to save a lot of money whilst retaining the same benefit as before.

There are HMRC limits on the total value of assets that can receive tax relief in single tax years, so if you’re thinking about buying a fleet we should definitely have a conversation before you do!

Disclaimer
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication

Residential property owners will need to be on the ball from 6 April 2020, when new rules come in for the reporting of Capital Gains and payment of Capital Gains Tax.

New Capital Gains Tax legislation has been passed affecting Individuals and Trusts which will have a major impact on their filing and tax payment obligations when they sell UK residential property from 6 April 2020. The legislation applies to capital gains tax (CGT) only and does not apply to companies.

The April 2020 changes are an extension of the current rules which have applied to the disposal of UK property by non-resident persons from 6 April 2015.

Disposals before 6 April 2020 (UK resident individuals and trusts)

Before 6 April 2020, a UK resident individual or trust disposing of UK property that resulted in a taxable gain was required to report that gain on their annual UK self-assessment tax return or by using the HMRC ‘Real Time’ capital gains tax service. The deadline for reporting the gain and paying the tax due was either the 31^st of December or the 31^st  of January following the year of the disposal, depending on which option was used.

Disposals from 6 April 2020 onwards (UK resident individuals and trusts)

From 6 April 2020, a UK resident individual or trust disposing of UK residential property will be required to file a ‘UK land return’ within 30 days of the completion date of the disposal. Where properties are held jointly or in partnership, each owner is required to submit a UK Land return (and pay the tax) in respect of their share of the disposal. Penalties will apply if the return is filed late.

The seller will also be required to pay an estimate of the CGT 30 days from the completion date. This will be treated as a “payment on account” against their total income tax and CGT liability for that year when the annual self-assessment tax return is submitted.

The individual or trust will, therefore, be required to estimate how much tax is payable. This will depend on several factors which could result in a refund/additional liability being due when the annual self-assessment return is submitted. If additional tax is due when the annual return is filed, then interest will be payable at the standard rates set by HMRC.

Exceptions

Some common examples of where a UK land return will not be required are:

• Where the gain is fully covered by principal private residence relief (‘PPR’) throughout the duration of the taxpayer’s ownership. 
• If a loss arises on the sale of the property
• The gain is sheltered by capital losses crystallised before the sale takes place
• The gain is small enough to be covered by the individual’s annual exemption for the year of disposal.

In practice, a UK land return will be required for let properties, second/holiday homes and homes with extensive grounds and gardens not fully covered by PPR, in so far as such disposals give rise to a CGT liability.

The return and payment on account will not be required where the property disposed of is not residential property or where the property is situated outside the UK.

The above list is not exhaustive and, if you have any doubt over whether a return will need to be submitted, please contact one of our team to discuss.

From a practical perspective, the taxpayer will need to rapidly determine whether (or to what extent) their gain is sheltered through PPR relief and, if it is not fully sheltered, what the gain will be and to what extent it will be sheltered by crystallised capital losses or their annual exemption. These calculations can be complex and in some cases even require valuations be obtained. Taxpayers should contact their tax advisers as soon as they decide to put their UK residential property on the market. 

Non-UK residents

Non-UK residents have already been required to file returns within 30 days when they have disposed of UK property, both residential and non-residential, since 6 April 2015 and 6 April 2019 respectively. There are no changes for disposals by non-UK resident individuals or trusts from 6 April 2020.  Fewer exceptions exist for Non-Resident CGT returns, which are still required even where there is no NRCGT payable.

Non-resident companies were within NRCGT for disposals of UK residential property before 6 April 2019, but are now within corporation tax and no longer subject to the reporting obligations described herein.

Filing Procedures

Currently the NRCGT returns must be submitted through the HMRC website. HMRC has stated that it is developing a new process for the UK land returns; it is expected to be similarly accessed through the HMRC website.

Penalties

Penalties for filing the UK land return start at £100 immediately.  If the return is more than 6 months late a penalty equal to the higher of £300 or 5% of the tax due is payable.  If more than 12 months late, a further penalty of either £300 or 5% of the tax will again be due.  £10 daily penalties may also be levied for up to 90 days (between 3 months and 6 months of filing date), but by concession HMRC has stated that it will not usually charge these. For larger transactions, the 10% penalty could be quite significant.

As with other penalties, a taxpayer may be able to appeal on the basis of having a reasonable excuse, but, as has been seen with Non-resident CGT returns, HMRC can be resistant and taking appeals to the tax tribunals can be a lottery. 

Action after 5 April 2020

The application of this legislation to UK residents will be a ‘game-changer’ in the sense that the tax filing and payment obligations need to be considered immediately on completion of the sale rather than left until after the end of the tax year.

It will be common for individuals not to know exactly what their CGT liability will be at the time of the sale and a lot of the relevant information may not be known until after the end of the tax year. For example, this could be the case where the tax liability depends on other disposals or other income in the same tax year. You should contact your tax adviser much sooner (ideally when the property is first put on the market) when making residential property disposals in order to submit the returns on time and to determine an appropriate estimate of the CGT liability.

FAQ’s

Q: Do I have to make a return if there is no gain?

A: No, a return is also not required if the gain is covered by your capital gains tax allowance for the year (£12,000 tax free for the 19/20 tax year).

Q: Can I offset capital losses when calculating the gain arising

A: Capital losses can be offset but only if they arose prior to the gain.  Losses arising in the same year but after the property disposal can only be taken into account on your annual tax return.

Potentially this means paying a capital gains tax bill within 30 days and then having to reclaim the overpaid tax many months later in your self-assessment tax return.

Q: What if I don’t have all of the information to calculate the capital gain?

A:  You can make reasonable estimates and assumptions when preparing the return.  However, if tax is subsequently found to be underpaid when the self-assessment tax return is submitted, interest will run on the amount underpaid to the date of final payment.

Q: Can I amend the return after submission?

A: The return can be amended with actual figures any time up to the filing of the annual self-assessment tax return.  It cannot however be amended for events that occur after the return date.

Q: What happens if I miss the 30 day deadline?

A: HMRC will charge an automatic £100 penalty for a late return; if 6 months late, the higher of £300 or 5% of the tax due; if 12 months late, a further penalty of the £300 or 5%.  In addition, HMRC have the discretion to levy daily penalties of £10 for the 90 days between 3 and 6 months late.

Q:  If I make more than one disposal can I make just one return?

A: No, if there is more than one completion date then a return is required for each disposal.  Property sales with the same completion date must however go on one return.

Q:  I’m selling a shop with a flat above; how do I deal with this?

A: Any gain arising on the entire disposal will need to be apportioned between the shop and the residential property i.e. the flat.  The gain arising on the flat only will need to be reported within 30 days.  The calculation in such cases can be complex and it is important that your accountant is informed as soon as possible and preferably before the sale. 

Disclaimer
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication

Our Founder, John Marcarian, has won the prestigious Longevity Award in The Finder’s Expatpreneuer Awards 2019.

The Expatpreneur Awards honour foreign-born entrepreneurs running successful expat-owned businesses in or from Singapore.

Read more on the finder website.

CST Tax Advisors in partnership with Littler and the Trade and Investment offices of Australia, invite you to attend this event aimed at providing essential information to companies looking to expand into Australia. Topics include:

• Setting up initial operations
• Obtaining investors
• Available visa options
• Engaging contractors
• Sending employees to a new market on international assignment or secondment — what is required? Is local employment necessary?
• Immigration and tax considerations
• Other global issues to consider in international expansion

For further details please click on the link

http://shared.littler.com/tikit/2017/17_Global/17_AUS_UK_Market_Entry/17_AUS_UK_Market_Entry_SaveTheDate2.html

November 23, 2016

Overview

The new UK Chancellor, Philip Hammond, gave his first Autumn Statement on 23 November 2016. As expected, the government confirmed that the reforms to the taxation of non-UK domiciled individuals and UK residential property will go ahead from 6 April 2017.

Details

The key points are as follows:

• From April 2017, non-domiciled individuals will be deemed UK-domiciled for tax purposes if they have been UK resident for 15 out of the past 20 years, or if they were born in the UK with a UK domicile of origin. As such, an individual who is “deemed domicile” in the UK will be subject to tax on their worldwide income and liable to UK inheritance tax on their global estate.
• Draft legislation will be published on 5 December 2016 and therefore this leaves a very short time frame for impacted individuals to take action to mitigate the impact of the new rules.
• As previously announced, the government has reiterated that non-domiciled individuals who have a non-resident trust established before they are deemed domiciled (under the 15/20 year rule) should not be taxed on income and gains arising outside the UK and retained in the trust. Therefore, settlors of non-resident trusts should urgently review existing structures before 5 December 2016.
• Non-domiciled individuals who own UK residential property through an offshore structure should also seek urgent advice and restructure prior to April 2017 to reduce any inheritance tax exposure. Unfortunately, no relief from CGT or stamp duty for non-doms who “deenvelope” their UK property will be available.
• The government will change the rules for the Business Investment Relief scheme from April 2017 to make it easier for non-domiciled individuals to bring money into the UK to invest in UK businesses. Non-domiciled individuals who may be affected by the proposed reforms should seek tax advice as soon as possible to ensure they have sufficient time to plan before the changes take effect in April 2017.

Please visit https://csttax.com/en-gb/ for more.

Disclaimer
This document is intended as an information source only. The comments and references to legislation and other sources in this publication do not constitute legal advice and should not be relied upon as such. You should seek advice from a professional adviser regarding the application of any of the comments in this document to your fact scenario. Information in this publication does not take into account any person’s personal objectives, needs or financial situations. Accordingly, you should consider the appropriateness of any information, having regard to your own objectives, financial situation and needs and seek professional advice before acting on it. CST Tax Advisors exclude all liability (including liability for negligence) in relation to your reliance in this publication