Money: Investment / Tax: Weaving through tax jungle on one-off settlement, letting and inheritance.
A No. Provided that this is a non-contractual payment made as compensation for loss of employment on grounds of ill health, the money you receive will be exempt from tax and NIC.
QI own a number of properties in the UK which I rent out through agents. However, due to work commitments I shall be moving abroad for around five years and do not expect to visit the UK very often during that period but would like to continue to let out my UK properties. What is the tax position?
A You will fall within the Inland Revenue's ``non-resident landlord'' scheme. Broadly, your letting agent will be required to deduct basic rate tax (currently 22pc) from your gross rental income (after agent's fees) and pay it over to the Inland Revenue. You will then submit a self-assessment tax return at the end of the year in order to calculate the exact tax liability and get credit for any tax which you have paid at source. It is possible to apply to the Inland Revenue to receive the income without deduction of tax and this will depend on your tax compliance history and whether they are satisfied that you will keep to your undertaking to comply with all your tax obligations. The Inland Revenue's leaflet IR140 provides further guidance.
Q My father died a year ago and some inheritance tax was paid on his estate. Since then, his executors have sold all of the shares which he owned, and with the fall in the stock market, the total sale price was quite a lot less than the amount that Inheritance Tax was charged on. Is there any way of getting some of the tax back?
A Yes. There is a specific relief for this kind of problem, which has been a common one of late. You need to add up the sale proceeds from all of your father's shares, which were sold within 12 months of his death and compare this with the total value of those shares which was included in the Inheritance Tax return. If the sale proceeds are lower, you can ask the Inland Revenue to repay 40pc of the difference.