In this week’s miscellaneous updates, HMRC has published a new Spotlight on using managed service company (MSC) products and the Government has published a new article which aims to provide more information on the controversial changes announced in the Budget to agricultural property relief (APR) for inheritance tax which will commence from April 2026. A new ‘side hustle’ tool has recently been published which aims to help individuals decide if income from online platforms needs to be declared to HMRC. The latest schedule of HMRC Talking Points live and recorded webinars for tax agents are available also for booking. Spaces are limited, so take a look now and save your place. And finally, check HMRC’s online services availability page for details of planned downtime and the online services affected.
Spotlight on using managed service companies
In this Spotlight, HMRC is warning individuals against using MSC products. The Spotlight also explain the difference between MSC providers and traditional accountants.
By way of reminder, the MSC rules aim to prevent an individual securing a tax advantage by providing their services to end clients through an intermediary, for example a company. A number of conditions must be met for a company to be treated as an MSC, including that an MSC provider is involved with the company.
The Spotlight also provides guidance on the meaning of ‘MSC’ and ‘MSC provider,’ contains an example and sets out the following features of a common MSC product:
- advertisements, for example, internet ‘pop-ups,’ which promise to maximise the person’s take-home pay,
- marketing which encourages the person to work using a company by becoming a shareholder, taking a small salary and receiving dividends,
- services are standardised and are not tailored to the person’s circumstances,
- fees are variable, going up when the person is working and down when they are not, and
- software, which usually includes ‘suggestive navigation,’ directs the person to the most tax advantageous result.
Budget change to APR
The Government has published an article intended to explain the changes to APR announced at the Autumn Budget 2024. The article sets out how the changes are expected to work and includes examples. It also contains the government’s latest figures for how many estates will be affected.
Last week the Institute released a Press Release with comments from the NI Tax Committee Chair Janette Burns that sets out the disproportionate and damaging impact that the Budget’s employment and capital taxes changes will have for businesses in Northern Ireland.
New HMRC online ‘side hustle’ guidance and tool
Ahead of the 2023/24 online self-assessment filing deadline, a new range of resources has recently been published by HMRC to assist taxpayers with income from what is often referred to as a ‘side-hustle’ in deciding if this income needs to be reported to HMRC. Firstly, HMRC has published a new online tool which individuals can use to check if they need to declare income from using an online marketplace or social media to:
- sell personal possessions, goods or services,
- create online content, or
- rent out property.
This includes step-by-step questions to help individuals work out if they need to tell HMRC about this type of income. A new guidance page is also available which discusses a number of common examples.
HMRC is keen to stress that the rules about what is taxable income are unchanged. From 1 January 2024, digital platform operators are required to collect and report to HMRC certain details about sellers on their platforms. The first reports are due by 31 January 2025.
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