HM Revenue and Customs (HMRC) have issued three new ‘toolkit’ guides to help taxpayers reduce the risk of submitting an incorrect tax return. Although primarily aimed at tax advisers and agents, the toolkits are a useful reference guide for any person who takes an active interest in their tax affairs.
The three guides are:
Capital v Revenue Expenditure – for use with 2009/10 self-assessment and company tax returns. This guide assists taxpayers in understanding which expenditures are income in nature and which are capital. The former are normally allowable as deductions in calculating taxable profits. The latter are not, but may be eligible for capital allowances;
Property Rental – for use with 2009/10 self-assessment tax returns. This guide assists taxpayers in understanding the tax treatment of different types of property rental (which is very complex in the UK) and the allowable expenses for tax purposes of each; and
Directors’ Loan Accounts – for use with 2009/10 company tax returns. Directors’ loan accounts are something of a tax minefield, and understanding the effects of being ‘overdrawn’ in a directors’ account is important if unpleasant surprises are not to result.