Taxpayers are now required to report and pay CGT within 30 days for gains arising on UK residential properties. All disposals of UK real property made on and after 6 April 2020 by UK resident and UK non-residents must be reported through the new CGT on UK property account, which is separate to their personal tax account. The old NRCGT form can now only be used for disposals made prior to 6 April 2020.

HMRC has confirmed that it has fixed an issue with verification that was preventing some taxpayers (particularly overseas taxpayers) from setting up a Government Gateway account in order to access the CGT on UK property account.

Chancellor of the Exchequer, Rishi Sunak, was due to deliver the next Budget in autumn. However, the Treasury have recently announced that the Autumn Budget will be scrapped this year because of the coronavirus pandemic. After borrowing and spending billions on the COVID-19 response so far, the Chancellor was reportedly considering different ways for this money to be clawed back. According to reports, a few of the areas that were going to be looked at were raising capital gains tax and corporation tax.

Mr Sunak has previously said some taxes will need to rise over the medium term. The reported tax increases under consideration included a sharp jump in corporation tax – reports suggested increasing corporation tax from 19% to 24% to increase revenue. Additionally, it was also suggested that capital gains tax might also be paid at the same rate as income tax to increase revenue.

The Chancellor has however insisted that a “horror show of tax rises” were not on the horizon. Mr Sunak said that while the Government “will need to do some difficult things” in an effort to “overcome short-term challenges”, this did not mean “a horror show of tax rises with no end in sight.” Mr Sunak also said that ministers will need to be honest with the public about the challenges ahead and show them how the Government plans to “correct our public finances and give our country the dynamic, low-tax economy we all want to see.”

Despite there being no Autumn Budget this year, there will be a spending review to set out the overall shape of government spending. Typically, the government outlines the state of the country’s finances in the Budget and, crucially, proposes tax changes. But any such decisions will now be put on hold until next year. Instead, the government will reveal how much each department is allowed to spend.

This could mean that the proposed tax changes are now just delayed. It is worthwhile taking these potential proposed changes into account during this period of ongoing uncertainty.

Please do not hesitate to contact us if you wish to discuss any of the matters above.

A number of taxpayers have received letters from HMRC recently outlining that HMRC has information about their offshore income and gains. These letters seem to be different to previous letters which seemed to be ‘fishing expeditions’.

The latest version of the letter confirms that HMRC compared the information received under information exchange agreements with other countries, to the individual’s tax record and tax returns, before sending the letter. This indicates that the letter is not speculative. HMRC is taking a risk-based approach and is only contacting taxpayers where it is unable to reconcile the figures received under information exchange agreements to tax records and tax returns.

All the letters include a “certificate of tax position” form which HMRC asks the individual to complete and return whether they have additional tax liabilities to disclose or not. This is to encourage a response from the individual. HMRC generally gives 30 days from the date of the letter to respond.

If you have received such a letter, you should consider your position very carefully and the subsequent action that should be taken, especially whether the ‘certificate of tax position’ should be signed and returned. Frontier can of course assist with this matter, if you have received such a letter.

The IRS issued its annual inflation adjustment for health savings accounts for 2021, at a time when many taxpayers are worried about their health in the midst of the coronavirus pandemic.

In Revenue Procedure 2020-32, the IRS stated that for calendar year 2021, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,600 (increase from $3,550 the previous year). For 2021, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is $7,200 (increase from $7,100 the previous year).

A “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses do not exceed $7,000 for self-only coverage or $14,000 for family coverage.

The IRS announced in March that high-deductible health plans can now cover the cost of COVID-19 testing and treatment before the plan deductible is met.

As part of the CARES Act signed into law at the end of March, Congress is also now allowing people to use the HSA to pay for over-the counter drugs and medicine, such as pain relievers, without a doctor’s prescription. This essentially reverses a provision of the Affordable Care Act that required a prescription for such purchases. The CARES Act also allows the use of HSA’s for remote care services until 31st December 2021.

This summer for the first time, taxpayers will be able to electronically file their Form 1040-X, “Amended U.S. Individual Income Tax Return.” Making the 1040-X an electronically filed form has been a goal of the IRS for a number of years, adding that it’s also been an ongoing request from the tax professional community and a continuing recommendation from the Internal Revenue Service Advisory Council and the Electronic Tax Administration Advisory Committee.

About 3 million Forms 1040-X are filed each year. Currently, taxpayers must mail a completed 1040-X to the IRS for processing. For now, only tax year 2019 Forms 1040 and 1040-SR returns will be able to be amended electronically. In general, taxpayers will still have the option to submit a paper version of the Form 1040-X.

The US treasury department has now released proposed regulations in relation to changes to Like-Kind exchanges.

In Summary TCJA amended Section 1031 to limit its application to exchanges of real property. Deferral under section 1031, however, is not allowed for an exchange of real property held primarily for sale.

The proposed regulations add a definition for real property and address the receipt of personal property that is incidental to the real property exchange.

In the past the like-exchange rules applied to artwork and other collectibles for example.

It’s now been a few week since the IRS first started making Coronavirus stimulus payments, and for most taxpayers with an AGI up to $75,000 for single filers, $112,500 for Head of Household filers and $150,000 for married filing jointly filers, this payment is automatic, either by bank transfer if your bank details were on your prior year tax return or by cheque sent to the address the IRS holds for you. This payment ($1,200 per taxpayer and $500 per dependent) is not considered as taxable income. Taxpayers can usually track their payment directly on the IRS website at

https://www.irs.gov/coronavirus/get-my-payment

There are exceptions for some eligible taxpayers and their dependents where the payment is not being sent. An example is if the spouse has an ITIN instead of an SSN, the system does not allow automatic payments. In cases such as this one, there will be a new entry on the 2020 US return form for the stimulus payment, and taxpayers can claim their payment that way.

There is currently a proposed second stimulus payment package on which the Senate may start work on shortly. Debates are still ongoing within the US Government; therefore further details are to follow.

Recently we have seen an increase in the number of taxpayers being contacted by HMRC using the information they have received regarding taxpayer’s investment in Offshore Investment Funds.

It is important to understand the correct tax treatment of any income and gains arising from Offshore Investment Funds as these can be quite complex. If you think that you may have an investment in an Offshore Investment Fund, HMRC offers guidance on Offshore Funds to help you decide the status of your Offshore Investment Fund.

Some funds have applied to HMRC to be treated as ‘Approved offshore reporting funds’. To check if your investment is a Reporting Fund, you can visit www.gov.uk and search for ‘Approved Offshore Reporting Fund’. These Funds are treated differently compared to funds that do not have this status. The status of a fund will affect the tax treatment of any income and gains from these investments and the correct amount to be reported on your self-assessment Tax Return

Reporting Funds – UK Income Tax is due on all distributions made from a fund to an investor, or distributions they are deemed to have received such as Excess Reportable Income. Any disposal of an investment in a Reporting Fund will be treated as a Capital Gain Tax transaction.

Non-Reporting Funds – UK income Tax is only due on distributions made from a fund to an investor. Any gain arising from the disposal of an investment in a Non-Reporting Fund is treated as an income and taxed as Offshore Income Gain.

It is important to check that you have reported the correct interest, dividend and gains arising from Offshore Investment Funds on your previous year’s Tax Return. If you need to amend any Tax Return more than 12 months past the filing deadline, we can assist you with using the Digital Disclosure Service to HMRC in bringing your tax affairs up to date.

In England and Northern Ireland, you are subject to an additional amount of SDLT of 3% of the purchase price when you purchase a second home. Where you are simply replacing your main home but there is a delay in selling the original home, providing you sell the original home within 3 years, you can claim a refund of the additional 3% SDLT paid.

HMRC have recently updated their guidance to extend the 3-year time limit for selling the original home where the sale could not take place in time due to exceptional circumstances. This is to assist those who have been unable to sell their original homes within the time limit due to Covid-19 lockdown restrictions. In order to still qualify for the refund outside the 3 year time limit the original home must be sold as soon as reasonably possible and a refund claim must be made which should include an explanation as to why the original home could not be sold within the 3 years. Decisions will be made by HMRC on a case-by-case basis.

In Scotland, the time limit to sell the original home of 18 months has been extended to 3 years where the replacement home was purchased between 24th September 2018 and 24th March 2020.

HMRC have announced changes to the 2019/2020 UK Tax Deadline amid the Coronavirus (COVID-19) crisis. HMRC have introduced a relief whereby individuals can defer income tax payments. Self-Assessment payments on account due on 31 July 2020 can now be deferred until 31 January 2021. This is automatic and does not require any applications. Additionally, no penalties or interest for late payment will be charged in the deferral period. However, HMRC are encouraging those taxpayers who are able to make the payment outside of the deferral period to do so. HMRC are committing 2,000 experienced call handlers to support taxpayers. This includes a dedicated COVID-19 helpline to help those in need. The helpline number is +44 (0) 800 024 1222. Opening hours are Monday to Friday 8am to 8pm, and Saturday 8am to 4pm. Please do not hesitate to contact us if you feel the need to defer the payment on account or if you have any questions with regards to COVID-19 support.