When selling assets on which capital allowances were claimed, you may need to adjust your taxable profits with a balancing charge or allowance. Understanding these rules ensures you don’t face unexpected tax liabilities. Learn how to handle asset disposals correctly.

Typically, the value of the asset sold is considered to be the amount for which it was sold. However, if the asset was given away, no longer used, or sold for less than its market value, then the market value should be used.

If you initially claimed 100% tax relief on the asset, the business is required to add back the difference between the sale price and the original value to their taxable profits. This adjustment is known as a balancing charge. A balancing charge ensures that a business does not receive more tax relief than it was entitled to on the purchase of the asset. Essentially, the balancing charge operates in the opposite manner to a capital allowance, increasing the amount of profit on which tax is due.

If writing down allowances were used initially, you may face either a balancing charge or a balancing allowance.

There are specific rules that apply when calculating a balancing charge, particularly in the following cases:

• If you originally claimed a super-deduction or special rate first-year allowances.
• If you claimed full expensing or 50% first-year allowances.

In the year your business closes, instead of claiming capital allowances, you must enter a balancing charge or balancing allowance on your tax return.

If you are self-employed as a sole trader or a partner in a business partnership, you are required to maintain suitable business records as well as separate personal income records for tax purposes.

For tax compliance, these business records must be kept for at least five years from the 31 January submission deadline of the relevant tax year. For instance, for the 2023-24 tax year, where online filing was due by 31 January 2025, you must retain your records until at least the end of January 2030. In some situations, such as when a return is filed late, you may be required to keep the records for a longer period.

As a self-employed individual, you should keep a record of the following:

• All sales and income
• All business expenses
• VAT records if you're VAT registered
• PAYE records if you employ anyone
• Records of your personal income
• Details of any grants received if you claimed using the Self-Employment Income Support Scheme (SEISS) due to coronavirus

You don't necessarily need to keep the original physical records. Most records can be stored in an alternative format, such as scanned copies, as long as they can be retrieved in a readable and uncorrupted format.

If any of your records are lost or unavailable, you must attempt to reconstruct them. If the figures are estimated or provisional, you must inform HMRC accordingly. Failing to keep proper or accurate records can result in penalties.

When selling a business, the Transfer of a Business as a Going Concern (TOGC) rules can allow the transaction to be VAT-free if key conditions are met. This prevents unnecessary VAT charges and ensures compliance with HMRC. Learn how TOGC applies to your sale.

A TOGC is defined as "neither a supply of goods nor a supply of services” meaning it falls outside the scope of VAT and no VAT would be charged on the sale.

For the TOGC rules to apply, all of the following conditions must be satisfied:

• The assets must be sold as part of a business that is operating as a "going concern." This means the business must be actively running, not just an 'inert aggregation of assets'.
• The purchaser must intend to use the assets to carry on the same type of business as the seller.
• If the seller is a taxable person, the purchaser must either already be a taxable person or become one as a result of the transfer.
• If only part of the business is sold, it must be capable of operating independently.
• There must not be a series of immediately consecutive transfers.
• Additional conditions apply to transactions involving land.

The TOGC rules can be complex, and both the seller and buyer need to ensure they comply with all the conditions. These rules are mandatory, so it's crucial to establish whether a sale qualifies as a TOGC from the outset. For example, if VAT is charged incorrectly, the buyer cannot recover it from HMRC and would need to seek reimbursement from the seller.

Since April 2020, landlords can no longer deduct mortgage interest as an expense. Instead, tax relief is capped at 20%. This change affects UK and non-UK resident landlords, trustees, and partnerships but excludes companies. Learn how this impacts your tax bill.

In April 2017, new rules were introduced that limited the tax relief on mortgage costs for residential landlords to the basic rate of tax. This restriction on finance costs was phased in over several years and was fully implemented by 6 April 2020. As a result, all finance costs, including mortgage interest on rented properties, are no longer allowed as expenses. Any available tax relief is now capped at the basic tax rate of 20%.

Finance costs includes interest on mortgages, loans (including those for furnishings), overdrafts, alternative finance returns, mortgage fees, and other related costs, such as discounts, premiums, and disguised interest. However, no relief is granted for capital repayments of a mortgage or loan.

You will be affected by this restriction if you are:

• A UK resident individual letting residential properties in the UK or abroad.
• A non-UK resident individual letting residential properties in the UK.
• An individual letting residential properties in a partnership.
• A trustee or beneficiary of trusts liable for Income Tax on residential property profits.

The finance cost restriction does not apply if you are a:

• UK resident company
• Non-UK resident company

These entities will continue to receive relief for interest and other finance costs in the usual manner.

Did you know you may be eligible for tax relief on professional fees and subscriptions? If your membership is required for your job and the organisation is HMRC-approved, you could claim back tax for up to four years. Find out if you qualify and how to apply.

You may be eligible to claim tax relief on certain professional fees and subscriptions, provided they meet specific criteria:

• Professional Membership Fees: Tax relief can be claimed on membership fees that you are required to pay in order to perform your job. These fees must be necessary for the fulfilment of your professional responsibilities.
• Annual Subscriptions: You can also claim tax relief on annual subscriptions to approved professional bodies or learned societies, provided that your membership with these organisations is relevant to your profession.

Tax relief cannot be claimed, in the following cases:

• Life Membership Subscriptions: Tax relief is not available for life membership fees, even if they are for professional bodies or societies.
• Fees Not Paid by You: You cannot claim tax relief on professional membership fees or annual subscriptions if they have been paid by someone else, such as your employer.
• Non-approved Organisations: Tax relief is not available on fees paid to professional bodies or organisations that are not officially recognised by HMRC.

You can claim tax relief for the current tax year as well as for the four preceding years, allowing you to potentially recover tax paid in previous years if you have not yet done so.

When making a claim, you must provide evidence of payment for each professional fee or subscription, such as receipts or other supporting documentation that clearly indicates the amounts paid. A claim can be made from the following link https://www.tax.service.gov.uk/claim-tax-relief-expenses/what-claiming-for

If you are registered for self-assessment you must submit your claim through your tax return rather than using the separate claims service.