Frequently Asked Questions

There are restrictions on claiming capital allowances and for this reason seeking advice is always recommended.
Some examples of where capital allowances may not be available include:

• Residential property will not qualify
• Assets not legally owned by the business (e.g., under deposit or lease) are typically excluded

It is possible to backdate claims for previous years if you have note utilised the most of your capital allowances. It is crucial you understand what assets you can claim capital allowances on and what allowances can be carried forward.

Capital allowances reduce your taxable profits, which in turn lowers the amount of tax you need to pay. When filing your tax return, you will include the capital allowances in your calculation to ensure you are taxed only on your profits after allowances have been applied.

We can support you with the self-assessment tax return process, for more information on this visit self-assessment tax return.

Capital allowances should be claimed on the tax return.

At Stratos we have dealt with a number of clients who either want to retain shares in their company or want to retain personal ownership of a property owned by the company. We work with and support our clients in formulating a plan, based on their specific needs and wants to determine the most tax efficient and economic way of achieving their goals.

Certain clients wish to gift their business, often to family members, for no consideration and want to understand the tax implications of doing so. Stratos have worked with a number of clients in these circumstances and advised on whether Gift Hold-over relief under section 165 Taxation of Chargeable Gains Act 1992 could be available to reduce any taxes immediately due to nil and instead defer the gain until a final disposal event.

Properties must be revalued every 5 years under ATED legislation. Use the following as your valuation date:

• If acquired before 1 April 2022: Use the property’s value as of 1 April 2022.
• If acquired after 1 April 2022: Use the purchase date.

The next revaluation date is 1 April 2027.

From the 1st of April 2025, if your property is valued between £500,000 and £1 million, you will owe an annual charge of £4,450. This increases to £9,150 when the property is valued between £1 million and £2 million. Visit the HMRC website here for the full list of the rates of ATED. Annual Tax on Enveloped Dwellings – GOV.UK.

The ATED return must be filed by 30 April each year for the upcoming tax year. This includes either paying the tax or claiming any applicable reliefs. Even if you qualify for full relief and owe no tax, you must still submit a return. Failing to do so can result in penalties and interest.

Deciding whether to operate as a sole trader or establish a limited company depends on your profit levels, long-term ambitions, and how you intend to extract income. Sole traders benefit from simplicity and direct access to earnings, with profits taxed as personal income—making this route potentially more tax-efficient when all income is being drawn for personal use. However, as profits increase, this structure can become less efficient.

A limited company offers more flexibility for tax planning, allowing you to extract income through a mix of salary, dividends, and pension contributions, which can result in overall tax savings. It also provides limited liability protection and is often better suited to those planning to grow their business, retain profits for reinvestment, or ultimately sell the company.

As always it is recommended that you take advise before taking advice and at Stratos, we help you assess your goals and financial needs to choose the most efficient and strategic structure for your business.

There is a tool on the HMRC website to help you determine whether you fall under the IR35 rules. It is important to determine whether the rules apply to you as they will determine the tax needed to be paid by the deemed employer. If you are deemed to be an employee under the IR35 rules, your deemed employer must deduct Income Tax and National Insurance Contributions from the fees paid to the workers intermediary.

To register as a contractor, a business must either:

• Pay subcontractors for construction work, or
• Have spent in excess of £3 million on construction in the 12-month period preceding first payment.

To qualify as a subcontractor, you must:

• Undertake construction work for a contractor.

Contractors are required to file monthly returns regarding the payments made to subcontractors that month via HMRCs online service by the 19th of every month. It must be specified that subcontractors listed are not employees. Penalties for missing these filing deadlines start at £100 and go on to include a percentage of the deductions that should have been on the return. However, note that if a return is not required to be filed and penalties for missing these months can be rescinded upon appeal, but HMRC should be notified.

Income Tax rates depend on the salary of the individual. Every taxpayer has a personal allowance of £12,750 which they can earn before they are subject to any Income Tax, unless you earn over £125,140. The different rates of Income Tax are as follows:

• 0% income Tax up to £12,750
• 20% Income Tax from £12,571 to £50,270 (Basic rate)
• 40% Income Tax from £50,271 to £125,1402 (Higher rate)
• 45% Income Tax over £125,140 (Additional rate)

Note that there is a separate rate being introduced for property and savings income.

Failure to submit an ERS return on time will result in an automatic £100 penalty, and the longer the report is yet to be submitted, additional penalties will arise.

If you do not submit your return by:

• 3 months after the original deadline, HMRC will apply a further, automatic penalty of £300
• 6 months after the original deadline, HMRC will apply a further automatic penalty of £300 in addition to the 3 month penalty
• 9 months after the original deadline, HMRC may apply further penalties of £10 a day

If you require any assistance with completing the ERS return or to see if penalties could be appealed, please contact us.

The deadline is 6th July each year, following the end of the tax year in which the share or security was issued.

If your business has a VAT turnover of £150,000 (ex VAT) or less, you can opt to use the flat rate scheme.

Essentially, you pay a fixed rate of VAT to HMRC – usually the difference between the VAT charged by your business to customers and the VAT your business pays on its own purchasers.

However, note that you cannot reclaim VAT on purchasers when on the flat rate scheme, except for certain capital assets over £2,000.

If you are building a new home, converting a property into a home, building a non-profit communal residence, or building a property for a charity, you may be eligible for the VAT self-build scheme (also known as the DIY housebuilders scheme).

If you completed work on or after 5 December 2023, you must apply no more than 6 months after finishing.

The purpose of the scheme is to ensure fairness when individuals undertake projects without using VAT-registered contractors. Essentially a claim can be made to recover the VAT costs incurred during the project.

The CGS applies to land or buildings that cost more than £250,000 excluding VAT. Essentially, the CGS is a method by which the amount of input tax reclaimed on purchase is in line with its taxable use. The number of adjustment periods for land or buildings is 10 years.

If the land or property is used solely to make taxable supplies, all the input tax on purchase will be deductible. However, if, in subsequent years, the land or property is used for some exempt purposes, adjustments will be made which will result in some input tax being repaid to HMRC.

Note that the CGS does also apply to computers, aircraft, ships, and boats with a value exceeding £50,000 in much the same way as above.

There are additional record keeping requirements if you are with the CGS on top of what is ordinarily required. Moreover, while VAT records are only required to be kept for 6 years, in this case, 10 years is recommended given the adjustment periods.

The effect of an OTT is to turn VAT exempt supplies of an interest in land or buildings into standard-rated VAT-able supplies. Moreover, it allows you to recover any VAT incurred in making those supplies.

Generally, an OTT is best applied where there is an input tax advantage to be had. Note that an OTT can only be revoked in the first 6 months (where no tax has become chargeable on a supply of the land or building as a result of the OTT) or after 20 years – so it is a decision to be considered carefully.

Note that an OTT is not inherited by a purchaser of the land or building, and a new OTT should be made if the purchaser wishes to opt the land or property to tax.

Notification of an Option to Tax is often under consideration and discussion with HMRC.

The basic tax point for goods is the date the goods are delivered, made available, or collected and the basic tax point for services is the date the services are performed.

However, if there is a payment or invoice which precedes the basic tax point, this becomes the new tax point.

If there is no earlier point, and if there is an invoice issued with 14 days of the basic tax point, this becomes the new tax point.

Note that, where deposits are involved, the deposit and the payment of the balance each have their own tax points calculated as above.

If you submit your VAT return late, you will incur penalty points. Once you reach a threshold (which varies depending on the length of your VAT accounting periods), you will receive a £200 penalty (and further £200 penalties for each further offense).

Note that records should be kept for at least 6 years.

A VAT return is essentially a form you fill in and send to HMRC to explain how much VAT you’ve charged and how much you’ve paid to other businesses and can claim under the rules.

VAT returns need to be submitted every 3 months and are due to be submitted and tax paid 1 month and 7 days from the end of this 3-month period (unless you are within the payments on account regime).

All VAT registered businesses are required to submit VAT returns electronically barring a few exceptions. Businesses should sign up for HMRC’s VAT online service. Note also that payments should be made electronically also.

If you are VAT registered, you can reclaim VAT on items you buy for use in your business via your VAT return. There are exceptions to this, such as client entertaining or goods or services used to make VAT exempt supplies.

Note that you cannot claim VAT back on items for personal use and, if the item is used partly in the business and partly for personal use, you can only claim the proportion of business use.

If you purchase goods or pay for services prior to VAT registration, it is possible to claim VAT back on them. For goods, you can go back 4 years providing you still have them, and, for services, you can go back 6 months.

However, if you use the flat rate scheme, you can only claim VAT back on purchases of certain capital assets which exceed £2,000 in value.

There are 5 conditions which determine where a supply merits a charge to VAT:

• There must be a supply of goods or services.
• The supply must be made by a taxable person (someone who should be VAT registered).
• The supply must be made in the UK.
• The supply must be in the course or furtherance of business.
• The supply must be taxable by definition (zero-rated, reduced rate, or standard rated).

Note that, generally, there should be consideration of one form or another.

In a Management Buyout (MBO), you as the seller typically do not pay Stamp Duty. However, if the transaction involves the sale of shares, the buyers (usually a new company) will usually be liable for Stamp Duty at 0.5% on the consideration paid, if it exceeds £1,000.

Yes, it is possible to transition your business to family members or employees without requiring them to personally fund the transaction upfront. Common approaches include a Management Buyout (MBO) funded through vendor loans where the outgoing owner receives part of the payment upfront and the balance over time from the company’s future profits, and the use of an Employee Ownership Trust (EOT), where the business is sold to a trust on behalf of the employees, with the consideration similarly paid out of profits over time. Both options can provide a tax-efficient exit for the owner while allowing for a smooth succession and business continuity, without placing financial pressure on the next generation of owners.

Where a sale to an EOT qualifies, 50% of the gain is treated as chargeable. This is a change from the previous tax treatment, prior to November 2025, when sales to an EOT resulted in 0% capital gains tax. This means that for most sales to an EOT, the effective tax rate will now be 12%.

If however there is still need to make a claim, it should be made under s. 236H, TCGA 1992 (which includes):

• Information to identify the settlement.
• The company name and registered office address.
• The date of disposal and number of shares disposed of.
• Sale proceeds.
• The number of company employees.

A claim should be made on the tax return.

• Trustees (as a body) ceasing to be UK resident (except via death of a trustee and the issue is rectified within 6months).
• The settlement ceases to meet the trustee independence requirement (except via death of a trustee and the issue is rectified within 6months).
• The company ceases trading.
• The EOT ceases to meet the all employee benefit requirement.
• The EOT ceases to own more than 50%.
• The participation fraction exceeds 2/5, i.e. shareholders and employees plus employees and people connected with the above holding more than 5% in relation to the total employees (except where this occurred for 6 months or less or via something outside the trustees’ reasonable control).

If a disqualifying event occurs in any of the first four tax years following the tax year of disposal, the vendor’s CGT relief claim is not allowed or re-clawed. After this, the trustees are deemed to have immediately disposed for market value and immediately reacquired the shares in the EOT and are taxed accordingly to CGT.

As such, it is important to ensure that EOT’s continue to meet the qualifying criteria as detailed above, and just as important that these criteria are reviewed on a regular basis.

EOTs must be registered with HMRC within 90 days of creation, and failure to do so can result in financial penalties for non-compliance. The EOT can be registered via the HMRC Trust Registration Service, see here for more information.

Moreover, an EOT with a tax liability should register as a taxable trust by 5 October following the end of the tax year in which the liability arose.

Any updates to the details of trustees, settlors, beneficiaries etc should be made within 90 days on the trust registration service.

• The vendor will generally be paid out of the future income generated by the company which can lead to the earnout period being extended as opposed to the quicker cashout with a sale to a third party.
• Trustees must adhere to strict legal duties, including a statutory duty of care and the obligation to seek professional advice before making investment decisions. They must act in the best interests of all employees, which can require careful management of the trust’s powers and limitations.
• Conflicts of interest are a significant concern in the operation of an EOT. Trustee directors who are also employees of the company may face temptations to favour certain groups of employees over others.
• Previous shareholders who become trustee directors might struggle to separate their roles as trustees from their interests as former majority owners. This is particularly problematic if the EOT holds just a slight majority of shares. This could create tensions and power struggles between the EOT and original shareholders.

If you’re planning to insert a holding company to acquire shares in an already incorporated limited company, it is recommended that you contact HMRC for clearance before proceeding to confirm that the tax implications are as expected (i.e. there should not be any!).

While this process is generally tax-efficient, HMRC must be satisfied that it is being carried out for genuine commercial reasons, not for tax avoidance. At Stratos, we have years of experience successfully securing clearance from HMRC, allowing your business to move forward with confidence and without the risk of complications.

Setting up a holding company is a relatively straightforward process, using the tax reliefs provided by HMRC at TCGA 1992 s135 and offers an effective way to protect your business’s fixed capital and assets. Stratos can walk you through the entire process, detailing the necessary steps and advising on the most efficient way to protect your business and reduce potential risks.

Once registered, it is important to note that employers of an EMI scheme are required to submit an Employment Related Securities (ERS) annually until the EMI scheme terminates. This must be submitted by the 6th July following the end of the tax year, with financial penalties and interest for late submissions. If you decide to dissolve your EMI scheme, you must notify HMRC of the date of cessation via the HMRC Online Services for Employers.

HMRC must be notified within 92 days of the grant of an EMI and HMRC will allocate a scheme reference number within 7 day following registration. The scheme is to be registered via the HMRC Online Service for employers, see here for more information.

As long as a pre-grant election is made on the pending patent in the company’s tax return, a retrospective claim can be made once the patent is granted (up to a maximum of six years).

Yes, unfortunately if you do not meet the deadline, relief will be denied. Therefore, thinking about this in a timely manner will be critical in making sure tax relief is not missed.

See our blog for the answer to this question.

The rates for Residential SDLT changed in April 2025, along with the threshold for First-Time Buyer Relief. As these rates are subject to change, it’s important to stay up to date with the latest information. You can find the current rates and reliefs for residential SDLT on the official GOV.UK website.

The rates of ATED are ever changing and can be found of the HMRC website. It can be complicated to work out how much ATED you may owe, so Stratos can aid with this calculation and identify any relevant reliefs that may lower your tax liability. For more information about ATED, visit our dedicated Annual Tax on Enveloped Dwellings (“ATED”) page.

A discovery assessment is similar to an enquiry in that it involves an investigation into your tax affairs by HMRC. However, unlike an enquiry, HMRC must meet specific conditions to open a discovery assessment. They can only initiate a discovery assessment if they can prove that there has been careless or deliberate conduct on the part of the taxpayer. This means that HMRC needs to establish that the error was not accidental and was either the result of negligence or intentional misrepresentation.

Generally, HMRC have up to 12 months to open an enquiry from the date of filing the tax return or amended tax return. Once this 12 months has passed, the tax return will be treated as final.

However, there are a few important exceptions:

• Amended Returns:
  If you amend your return, HMRC gets an additional window, typically up to 12 months from the amendment date, to enquire into the part that’s been changed. Depending on when the amendment is made, the enquiry period could be slightly longer under specific rules.
• Discovery Assessments:
  If HMRC suspects that there has been carelessness, deliberate misstatement, or fraud, they can issue what’s known as a discovery assessment, allowing them to look back up to:
  • 4 years for careless errors
  • 6 years for more serious issues
  • 20 years for deliberate behaviour

If you’ve received a notice of enquiry, the first thing we recommend is to check whether HMRC is still within the time limits to open one. This is a key step in deciding how to respond.

Yes. A share scheme can help key employees participate in the future value of the business and may support a gradual transition of ownership or leadership, depending on the shareholders’ objectives.

Usually, yes. Valuation is often central to the tax treatment and commercial fairness of the arrangement, especially where shares or options are being granted to employees.

Many share and option arrangements fall within employment-related securities reporting rules. EMI schemes and other ERS events may need to be reported by the relevant deadlines, even where there has been no activity in the year.

Potentially, yes. A share scheme can provide a valuable incentive without relying entirely on salary increases or cash bonuses, although the design must still be commercially appropriate and properly documented.

An Enterprise Management Incentive scheme is a tax-advantaged share option scheme for qualifying companies. It is often used by growth companies and owner-managed businesses to reward selected employees.

An employee share scheme gives employees a direct or future interest in company shares or company value. It can be used to reward, retain and motivate key staff, or support succession planning.

Yes. A debt write-off can create unexpected tax consequences if it is completed before the position has been reviewed.

Not always. The treatment depends on the relationship between the parties. Care should be taken to determine the accounting treatment, the purpose of the loan and how loan relationship rules apply.

They can matter when companies lend/borrow money from/to a connected or unconnected party, account for interest, restructure intercompany balances, release debts or write off loans.

Corporate loan relationships are the rules that determine how companies are taxed on money debts arising from borrowing and lending. They can affect interest, impairments, releases and debt write-offs.

Potentially. They can transfer future growth to family members while existing shareholders retain current value, but inheritance tax, capital gains tax and family governance issues need advice.

Yes. A robust valuation is important because the initial value of the growth shares affects the tax position and should be justifiable if challenged.

Yes, they can be an alternative where EMI is not available, not sufficient or not commercially suitable, but the tax and valuation position must be reviewed.

Growth shares usually only participate in value above a hurdle, so they can reward future growth without transferring existing company value.

Yes. The tax position should be reviewed before implementation so the liquidation aligns with the shareholders’ wider objectives.

Potentially, where the relevant conditions are met. The conditions should be reviewed before the company ceases trading or enters liquidation.

In many cases, liquidation distributions may be taxed as capital rather than dividends, but the position depends on the facts and anti-avoidance rules must be carefully considered.

No. An MVL is used for solvent companies. It is a planned wind-down process and is not the same as an insolvent liquidation, MVL’s are commonly seen as a negative action due to the wrongful association with an insolvent liquidation but they are actually a positive transaction.

The standard time limit for HMRC to issue a discovery assessment is 4 years from the end of the tax year in question. However, this time frame can be extended depending on the nature of the error:

• 6 years if the error is deemed to be careless.
• 20 years if the error is found to be deliberate.

It’s crucial to address any tax discrepancies promptly, as longer time frames allow HMRC to investigate more thoroughly, potentially leading to higher penalties.

A discovery assessment is similar to an enquiry in that it involves an investigation into your tax affairs by HMRC. However, unlike an enquiry, HMRC must meet specific conditions to open a discovery assessment. They can only initiate a discovery assessment if they can prove that there has been careless or deliberate conduct on the part of the taxpayer. This means that HMRC needs to establish that the error was not accidental and was either the result of negligence or intentional misrepresentation.

Generally, HMRC have up to 12 months to open an enquiry from the date of filing the tax return or amended tax return. Once this 12 months has passed, the tax return will be treated as final. However, although there is a 12 month time limit to open an enquiry, if HMRC have reason to believe that there has been fraud or misrepresentation in your previous tax affairs, they can raise a discovery assessment investigate up to 20 years in the past.

Transferring to trusts can reduce IHT liability and can be a efficient way to plan. However, it can be a complicated and confusing process, and there are multiple different trust types you can transfer to. We recommend contacting a member of the team for tailored advice about this process.

Taper Relief occurs when someone dies before 7 years have passed since they gifted a taxable asset. This relief reduces the rate of taxation for gifts between 3 and 7 years before death, meaning less tax is owed the more time has passed since the gift.

For taxable gifts (gifts to those who are not your spouse or civil partner), you have a £3,000 annual exemption. This means that gifts over this threshold will be taxable. If you do not use your full annual exemption for the year, you can carry forward it one year only. Gifts are only considered for IHT purposes if you live 7 years after giving them, and if you die before the 7 years has passed, your beneficiary may be required to pay tax on these gifts.

An alternative option are gifts out of income. These are a valuable IHT exemption that allows individuals to make regular gifts from their surplus income without triggering a tax charge. To qualify, the gifts must be part of a consistent pattern, leave the donor with sufficient income to maintain their usual standard of living, and be properly documented.

Yes, it would be sensible for each shareholder to sign up to an agreement with fairly normal restrictions such as pre-emption rights. Pre-nup agreements should be considered by those who marry whilst owning equity in a FIC. Any such agreements should be drawn up with advice from a lawyer.

It is up to you how you decide to allocate the shares within a FIC, but they are generally incorporated with subscriber shares that are issued to the senior members of the family. Senior family members would often also receive the majority voting rights, as they are providing the company with direction. Younger family members generally receive capital rights, as they will be the most to benefit from the equity of the company.

Rights to dividends may be shared between generations.

There are no specific requirements in order to qualify as a FIC. However, it is generally accepted that the shareholders be primarily family members and the business be used for investment purposes solely, as opposed to the usual business purpose of trade.

The reporting requirements for a FIC are no different from any other limited company. They must be registered on Companies house, and therefore complete annual accounts, confirmation statement and tax returns.

• For UK limited companies: Corporation Tax is applied to profits earned overseas.
• For foreign businesses operating in the UK: Income generated within the UK is subject to Corporation Tax.
• For UK residents working abroad: You are still subject to UK income tax on any income earned overseas.
• Capital Gains Tax (CGT): If you sell or dispose of overseas property, you’ll be liable for UK CGT at the prevailing rates.

A tax haven is a country or jurisdiction that offers very low or no corporate taxes, making it an attractive destination for foreign investors and businesses. These regions encourage foreign investment by minimising tax burdens. Commonly recognised tax havens include the British Virgin Islands, Cayman Islands, and Isle Of Man. Wealthy individuals and corporations often use these areas to reduce their tax liabilities.

SDRT is paid via the CREST system or outside of CREST (off market).

CREST automatically deducts SDRT from chargeable trade and pays HMRC, so no manual payment or notice is required.

However, if the transaction is off market, you will need to send HMRC a written notice including:

• The buyer and seller details.
• What and how many securities have been transferred.
• Any relief or exemption, or both, claimed.
• Details of the payment or other exchange, including monetary value, made.
• A reference number, chosen by you, so HMRC can identify the payment.

The deadline is the seventh day of the month after the month in which the agreement took place or became unconditional.

See Pay Stamp Duty Reserve Tax – GOV.UK for more information.

If this is the case, you should only be charged once.

Essentially, if SD is paid or a SD relief or exemption applies then the SDRT charge will be cancelled. See the above section of SD reliefs.

As with Stamp Duty (SD), no Stamp Duty Reserve Tax (SDRT) is payable where shares are transferred for no consideration, whether in money or money’s worth.

Transfers between spouses or civil partners are also exempt from SDRT, regardless of whether consideration is given. In addition, SDRT does not usually apply to the transfer of loan capital or to sales involving intermediaries. There are also specific exemptions for share repurchases and stock lending arrangements, provided certain conditions are met.

Where a transaction falls within the scope of both SD and SDRT, and a Stamp Duty relief applies, any associated SDRT charge will normally be cancelled.

This list is not exhaustive, and the availability of reliefs will depend on the specific circumstances. Professional advice should always be sought to ensure SDLT exposure is correctly identified and to explore opportunities to reduce any SDRT liability.

The deadline for paying SD if no later than 30 days after the stock transfer documents have been dated and signed.

The payment will need to include a payment reference and be made to the HMRC Birmingham Stamp Office, and you will need to email your SD notification to HMRC also.

Please see Pay Stamp Duty on shares – GOV.UK for more information.

Note that, usually, your lawyer or broker will handle the SD payments.

If there is no consideration (or less than £1,000) given for the gift, then there is no SD.

Note that transfers between spouses/civil partners (regardless of consideration) are exempt from SD.

There are various reliefs from SD. The most common is simply that no SD is payable if the shares were given for consideration of £1,000 or less.

SD is not charged on unlisted shares and securities sold on recognised growth markets such as AIM. It is also not payable on an issue of new shares.

In addition, if the shares are transferred between companies in a group, it is likely that group relief under s. 42, FA 1930 will apply to reduce the SD bill to nil.

Moreover, if a share for share exchange occurs where a part or the whole of a company’s share capital is acquired and there are mirror shareholdings before and after, it is likely that relief under s. 75 or s, 77, FA 1986 (respectively) will apply to reduce the SD bill to nil.

The above list is not exhaustive and only covers the more commonly seen exemptions. Professional advice should be sought if you wish to understand your options in mitigating your SD bill.

Quite simply, mixed-use property is property which includes both residential and non-residential property. It can benefit you as, if property is mixed-use, it is subject to the more beneficial non-residential SDLT rates.

There is no rulebook which determines whether a property is mixed-use and, therefore, this can be a grey area of tax legislation, and so we recommend that advice is sought to determine the SDLT status of the property prior to completion.

Common cases involve:

• Country houses with large paddocks or grazing land included in the sale,
• Offices with residential flats connected, or
• Agricultural properties/land.

The surcharges are all to do with residential property only.

The key surcharges are:

1) 5% – if you own another residential property at the time of purchase.
2) 2% – purchase of UK property as a non-UK resident.
3) 17% – purchase of a property worth in excess of £500k by a non-natural person (company etc).
4) 5% – purchase by a company (if the 17% surcharge does not apply).

Note that relief from the 5% surcharge for owning more than one residential property can be obtained if you are buying this property to replace your main residence. There are various conditions for this to apply and also a 3-year window to sell your old home which can only be extended in exceptional circumstances.

Moreover, relief from the 17% surcharge is available in various situations – most commonly when the property is used in a property rental business. However, there are many exemptions from the 17% surcharge each with their own conditions and even exceptions to some of the exemptions. As such, specialist advice should be sought.

When you purchase the initial portion of the house you will be required to submit a SDLT return and pay SDLT on the portion.

Until you “staircase” over 80% ownership, you will not be required to submit another return or pay further SDLT.

However, careful consideration should be given in these matters as the SDLT calculations can be complicated.

One consideration that should always be taken when entering into a shared ownership scheme is whether a market value election is worthwhile. The election allows you to pay SDLT based on the full market value of the property at the time of purchase of the initial portion.

The most common relief is known as First-Time Buyers’ Relief. Essentially, if the property is your first property purchase and is worth £500k or less, the first £300k is exempt from SDLT and the balance up to £500k is taxed at 5%.

Another beneficial relief (especially now multiple dwellings relief has been abolished) is that HMRC treat the purchase of 6 or more residential properties in one transaction as having a commercial flavour and, for SDLT purposes, the properties are taxed via the more beneficial non-residential rates.

For corporates, if transferring property within a group, group relief in Sch. 7, FA 2003 may be available to reduce the SDLT bill to nil.

Note that there is a myriad of reliefs, and the reliefs listed above are not exhaustive, they are merely the more common reliefs that will be seen in practice. As such, it is important to seek professional advice when purchasing property in order to see if you can mitigate your SDLT bill.

The UK does not levy an explicit exit tax on individuals leaving the UK. However, individuals will loose multiple valuable tax reliefs such as the personal allowance and private residence relief on your home. The position is different for companies where exit charges will be applied if it ceases to be UK resident. Furthermore if the sole director of a company moves abroad, there can be significant unintended consequences for the business as a result of this.

From April 2025, the UK changed how it assesses when an individual is subject to IHT. Historically, it was based on a system of domicile but from April 2025 it is instead assessed on long term residence.

Very broadly, an individual will be as a long-term UK resident if they have been UK tax resident for at least 10 out of the previous 20 tax years. Residence will be determined using the statutory residence test. The rules are complex and include transitional provisions such that tax advice is strongly recommended, but in principle if you have been non UK resident for more than 10 years then you could be outside the scope of UK IHT.

If you return to the UK within five full tax years of becoming non-resident, the temporary non-residence rules may apply. This means that certain income or capital gains realised while you were abroad, such as gains from asset disposals or certain pension withdrawals, could become taxable in the UK when you return.

For many business owners, combining a salary with dividends is the most tax-efficient way to extract profits. This strategy makes use of the £12,570 personal allowance (for salary) and the £1,000 dividend allowance, helping individuals stay within the basic rate tax band and benefit from lower tax rates overall.

However, this strategy doesn’t suit everyone. We recommend speaking with one of our advisors for tailored guidance based on your situation.

Dividends are subject to their own tax, which is charged at different rates depending on your total income. The current rates are:

• 0% within your personal allowance up to £12,570
• 8.75% for basic-rate taxpayers
• 33.75% for higher-rate taxpayers
• 39.35% for additional-rate taxpayers

Note that the rates are increasing by 2% from April 2026.

There are various allowances and reliefs available to reduce CGT liability, which can be applied based on your specific circumstances. By consulting with Stratos, we can help you take full advantage of these allowances to minimize your CGT.

Yes. Transfers between spouses and civil partners are typically exempt from CGT. This can be an effective strategy to maximise both partners’ AEA. However, CGT may apply when the recipient eventually sells the asset, based on the original purchase price.

UK residents are liable for CGT on the disposal of worldwide assets. Non-residents may still be liable for CGT on UK-based assets. If you’re unsure about your residency status or are thinking about becoming non-UK resident, we can provide tailored advice for your situation.

Rates vary depending on your income tax band and the type of asset. If you’re unsure which rate applies to your situation, we’re here to help you understand your position and explore ways to reduce your liability.

Capital Gains Tax: what you pay it on, rates and allowances

Tax relief on your pension, depends on how you contribute to your pension and what type of pension scheme you’re using.

• Tax Relief at Source
  • If you’re contributing to a personal pension (like a SIPP or stakeholder pension through your company), your provider will usually claim basic rate (20%) tax relief on your behalf and add it to your pension pot automatically.
  • If you’re a higher or additional rate taxpayer, tax relief on your pension contributions is only automatic if you’re paying into a net pay pension – this is where your employer takes the full amount of your pension contribution before any tax is deducted.

• Claiming Tax Relief Yourself
  • In some situations, you’ll need to claim tax relief on your pension contributions manually, particularly if you’re entitled to more than the basic rate of relief.
    • You’re a higher-rate or additional-rate taxpayer and your pension provider only claims the basic 20% relief (known as relief at source). This is often a relief that is missed by taxpayers.
    • Your pension scheme isn’t set up to apply tax relief automatically (for example, some occupational or older schemes).
    • Someone else contributes to your pension on your behalf (such as a spouse or family member).
    • You’re contributing more than £10,000 in a tax year and need to check whether you’re within your allowance or eligible for carry forward.

If you need to make a claim for relief then this is usually done via your self-assessment tax return, or if you do not file a tax return then it may be possible to request an adjustment to your tax code.

The carry forward allowance lets you carry unused pension contributions from the past three years, giving lower-rate taxpayers an opportunity to contribute more to a future year. This can be particularly useful if you have not maxed out your tax-free contributions in previous years.

Pension contribution allowances have changed in the past few years and can vary based on your tax bracket. A pension allowance is the maximum you can contribute to your pension each tax year without incurring additional tax charges.

For 2024-25, the standard Annual Allowance is £60,000. However, this amount can vary depending on your income and whether you have started drawing your pension.

Key point to consider whether thinking about pension contributions include:

• You can receive tax relief on personal contributions up to 100% of your annual earnings (or £3,600 if you have no earnings). The rules for directors are slightly different and are not restricted to salary levels, but there are other considerations.
• If you are a high earner, your allowance may be tapered down to a minimum of £10,000. There are specific calculations to determine if you fall within these rules, but broadly those with income over £200,000 should consider this point.
• You may also be able to carry forward unused allowance from the previous three tax years, if eligible.

At Stratos, we’ll help you determine your current contribution allowance and ensure you’re maximising your tax-free contributions whilst also ensuring the company is benefiting from the tax relief available on any contributions it makes to a pension scheme.

If you purchase a second property and later sell your main residence within three years, you may be eligible for a refund of the Stamp Duty Land Tax (SDLT) surcharge that you paid on the second property.

The SDLT surcharge is an additional tax charged when purchasing a second residential property, typically at a rate of 3% above the standard SDLT rates. However, if you sell your main residence within the specified period, you may be able to reclaim this surcharge.

This relief can help reduce the financial burden of purchasing a second property, especially if you no longer own your main residence. However, the process for claiming this refund can be complex, and it’s important to follow the correct steps to ensure you qualify.

The rates for Residential SDLT changed in April 2025, along with the threshold for First-Time Buyer Relief. As these rates are subject to change, it’s important to stay up to date with the latest information. You can find the current rates and reliefs for residential SDLT on the official GOV.UK website.

Historically, IHT has been assessed on individuals depending on where they are domiciled for tax purposes. From April 2025, the rules changed to a resident based IHT test.

Broadly, if you have been UK resident for 10 out of the last 20 years prior to death, you are treated as long term resident and therefore subject to IHT on your worldwide assets.

There are transitional rules for certain individuals and those aged under 20, but the new rules do present an opportunity to mitigate exposure to UK IHT if individuals are prepared to leave the UK and live abroad.

Clearly, consideration should be given to the IHT rules of the jurisdiction to which you move.

If you sell or dispose of a UK residential property and make a chargeable gain, you may need to report and pay Capital Gains Tax (CGT) within 60 days of the completion date.

Failing to report and pay CGT within 60 days can result in penalties and interest on the unpaid tax. The 60-day rule applies in addition to your normal Self-Assessment tax return obligations.

Yes. Even if you are not considered a UK tax resident, you will still be liable to pay UK tax on income and gains arising from UK sources. This income must be reported to HMRC, typically through the Self-Assessment tax return process.

However, many individuals who are non-resident for UK tax purposes may also be subject to tax in the country where they actually live. In such cases, it’s important to understand how double taxation agreements (DTAs) apply and claim the appropriate double tax relief to avoid being taxed twice on the same income or gains

Proper planning and accurate reporting help ensure you don’t pay more tax than necessary across jurisdictions.

The Temporary Non-Residence Rules apply if you leave the UK and return within five full tax years. Under these rules, certain income and capital gains realised while you were non-resident may still be taxable when you return.

These rules typically affect:

• Individuals who dispose of assets while abroad
• UK residents who move overseas temporarily and return within five years
• Entrepreneurs receiving dividends or distributions from close companies
• Those accessing pension benefits or offshore trust distributions

The rules may apply to Capital gains on asset disposals made while non-resident, income from pensions, close companies, or certain offshore funds and distributions from trusts or other foreign structures

These rules are designed to prevent individuals from leaving the UK temporarily to avoid tax, only to return shortly after. They aim to ensure that gains made while abroad are taxed if the period of non-residence is short-term. With careful planning before leaving the UK , it may be possible to reduce or defer exposure.

Not always. Different scenarios (e.g., tax vs. commercial sale) may require different assumptions or methodologies. We’ll advise you on what’s appropriate.

We prepare valuations in line with HMRC guidelines and support all assumptions with evidence. Where appropriate, we liaise directly with HMRC to agree valuations where possible (e.g. for EMI).

Yes. If you’re granting EMI share options, we would recommend agreeing a valuation with HMRC before options are issued. This provides certainty on the tax treatment for employees.

Typically 2–3 weeks, depending on the complexity of your business and purpose of the valuation. We can offer expedited services for time-sensitive transactions.