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September Question & Answer Corner

Newsletter issue - September 08.

Q. I run a restaurant and employ a lot of part time staff. I've heard I've got to exclude their tips from their wages when calculating whether I am paying the National Minimum Wage (NMW). Is this true?

A. No immediate action is required on this. Yes, the government has announced that NMW legislation will be changed so that tips will not be able to be counted under any circumstances as part of an employee's NMW entitlement. However, this isn't expected to take effect until sometime in 2009.

Q.My sister and I are about to inherit our late mother's house - a 50:50 share each. The property is valued at around £220,000. If I was to buy my sister out of the property, would I have to pay stamp duty?

A. Stamp Duty Land Tax (SDLT) is charged, at varying rates, on the consideration given for a land transaction. The Chancellor has just announced an increase in the Stamp Duty threshold for 12 months from on or after 3/9/08 and as a general rule, no tax is payable on transactions in residential property if the consideration does not exceed £175,000 (previously £125,000). Tax is payable at: 1% between £125,001 and £250,000; 3% between £250,001 and £500,000; and 4% above £500,000.

So no, you will not pay SDLT as the market value of the share you are buying is under the 1% threshold of £125,000. If you were at one of the SDLT thresholds you should consider identifying any fixtures and fittings you might want to pay your sister separately for. These are then excluded from the SDLT calculation.

Q. If I and my business partners meet at a local hotel to discuss future business plans, having a meal whilst there, will the cost of this be tax deductible?

A. Providing you definitely hold a meeting and could produce minutes to prove this, it is not for HMRC to challenge the scale of your "meetings" budget. For the avoidance of doubt add to those minutes that you have chosen to eat in the restaurant to avoid the cost of hiring a room or to enable you to meet in the evening and so not waste the working day. Of course if you meet in a hotel and refreshments are part of the package involving room hire, then the total cost plus travel costs would be allowable.


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