Renting out your former home? You need to be aware of forthcoming tax changes.

All UK taxpayers have an annual exempt amount below which there is no liability to Capital Gains Tax (‘CGT’).

Any capital gain arising on the disposal of a residential property is currently subject to CGT at the rate of either 28% (higher rate taxpayers) or 18% (basic rate taxpayers).  

However, any gain made on disposal of an individual’s main residence which they have occupied as their main home throughout the entire period of ownership is wholly exempt from CGT through the use of Private Residence Relief (‘PRR’).  Reliefs are also currently available to those who have not occupied the property for the entire period of ownership.

On 29 October 2018 the Rt Hon Philip Hammond presented his 2018 Budget to Parliament and proposed changes to PRR, aiming to ensure it is more focused towards owner-occupiers.

It is proposed that the rules on two of the main ancillary reliefs currently available will change in April 2020 as follows:

Lettings relief

This relief is available to those individuals who let out a property that is, or has historically been, their main residence.  Relief of up £40,000 (£80,000 for couples) against the capital gain is currently available on the property, even if the owners have not occupied it for a long time.

However, this relief is to all extents and purposes disappearing, as from April 2020 it will only be available to those owners who occupy the property in shared occupancy with a tenant.  Thus, homeowners who move and let out their former home will be affected and may now wish to consider selling the property sooner rather than later to avoid an increased CGT bill.

The changes to this relief will not affect landlords who have never lived in the property they are renting out.

Final period exemption

This relief means that at present, the final 18 months of ownership is covered by PRR, even if the property is not the individual’s only or main residence during that period.  In other words, an individual currently has 18 months from the date of moving out before any gain begins to accrue.

From April 2020, this relief will be reduced to only 9 months, a period which HM Treasury considers to be twice the length of an average property transaction.  For disabled owners or those who live in residential care, the existing 36 month exemption period will remain in place.

Summary

Whether realistic or not, HM Treasury believes that delaying implementation of the above changes until April 2020 will give people sufficient time to rearrange their affairs (e.g. by selling their property) under the current rules should they chose to do so.

However, for those currently involved in divorce and finance proceedings, it is important that consideration is given to:

Possible CGT exposure, particularly where one party has moved out of a property (or intends to do so) and where it is also possible that the property will be sold.

Where appropriate, the impact of any property transfers which could take place during the course of proceedings, in order to mitigate any potential CGT liability.

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Author: Suzanne Grant

Non-Newtonian Fluids

A non-Newtonian fluid

When liquids behave like solids

Like many people, I’ve tried hard to forget my days in junior high school. That was an unpleasant time in my life for all the usual reasons, and thankfully most of it is now a dim blur. But a few pleasant moments do stand out in my memory. One of those was a report I did for my ninth-grade science class. For reasons I no longer recall, the topic I chose was Pascal’s Law, and I must have prepared well for that 10-minute presentation, because I could probably stand up and give pretty much the same talk today, even though I never went on to study any more about it.

Pascal’s Law describes the behavior of fluids in a closed system, and says, to oversimplify somewhat, that the pressure the fluids exert is always the same throughout the system. This is the principle that enables hydraulic presses to work—a small amount of force applied to a piston pushing down on fluid can exert much more force on a larger connected piston, making it sort of like a liquid lever. The same effect has applications in everything from scuba diving to ventilation systems and dam construction.

Pascal, Meet Fisher

Although that little snippet of knowledge has stayed with me all this time, that marked the extent of what I knew about fluid mechanics until I wrote an article here about Space Pens. These pens, legendary for being able to write underwater, in zero gravity, in a vacuum, or in just about any other situation, use a special thixotropic ink, a substance that’s normally in a gel state but which turns into a liquid when it’s agitated—that is, when the ball rolls against it. It’s liquid just long enough to flow onto the paper, and then it turns semisolid again. (As spiffy as that is, some Space Pen ink turns out to have surprising problems, which you can read about in Space Pens vs. Purple Ink on my blog.)

Back in 2006, some very cool videos started making the rounds: people doing stunts with something called “non-Newtonian fluids.” If you’re not an engineer, that may not sound very intriguing, until you look at guys running across the surface of a vat filled with a solution of cornstarch and water, but sinking into it when they stand still. That’s a real eye-opener. (Mythbusters also did a segment on this phenomenon.) Or some other guys taking a handful of the same liquid goop and slapping it into solid balls, which then turn back into liquid as soon as the agitation stops. These are just a couple of the many wacky properties exhibited by non-Newtonian fluids—substances that change their viscosity in reaction to stress. (See YouTube for a long list of videos featuring non-Newtonian fluid experiments.) And sure enough, the ink from my Space Pen is in the same category.

Non-Newtonian fluids range from the exotic to the mundane. You’ve probably made a cornstarch-and-water mixture lots of times in your own kitchen, and if you made enough of it, you too could walk across its surface. Assuming the proportion of starch to water is right, the solution gets suddenly thick and firm when force is applied to it, as you may have noticed when trying to stir it when preparing a sauce. Stir more slowly, and it flows more easily.

Going with the Flow

But not all non-Newtonian fluids behave this way. Some of them get runnier when under stress, such as Space Pen ink and paints that adhere to a brush when at rest but glide on easily when the brush is applied to a surface. Also in the thixotropic category as well as in your kitchen: ketchup and honey.

There are still other varieties, too, which have different patterns of changing viscosity. Such varied substances as quicksand, Silly Putty, blood, dough, and gelatin fall under the broad non-Newtonian heading. By contrast, Newtonian fluids, or what most people think of as normal fluids, are those (like water) whose viscosity is determined only by temperature and pressure. Sure, water will get plenty firm if the temperature is reduced enough, but no amount of force can make liquid water behave like a solid.

The moral of the story? If you’re stuck in a non-Newtonian fluid—or junior high school—the trick is to remain calm. The more you struggle, the harder it gets.

Note: This is an updated version of an article that originally appeared on Interesting Thing of the Day on February 28, 2007.

Image credit: Rory MacLeod [CC BY 2.0], via Flickr


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Author: Joe Kissell

National Cereal Day

Cap'n Crunch cereal

Well, it’s National Cereal Day, where by “cereal” of course the implication is that you should go buy and eat some commercial, boxed breakfast cereal, probably sweetened and with a stupid cartoon character on the box. And, OK, I do enjoy a nice serving of Cap’n Crunch once every two or three years, but today, I think I’m going to rebel with some granola (still “cereal”) or, more likely, a hearty bowl of steel cut oats (also “cereal”). Maybe with some extra oat bran for good measure, because cereal.

Image credit: BrokenSphere [CC BY-SA 3.0], via Wikimedia Commons


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Author: Joe Kissell

Tableware Taboos

A place setting at a table

Civilizing Mealtime

When I was growing up in a large family, my parents instilled in us certain table etiquette—if not for decorum’s sake, then at least to keep complete anarchy from breaking out while we broke bread. Commandments regarding posture (don’t slouch), arm position (no elbows on the table), and eating style (chew with your mouth closed) were familiar refrains around the supper table. I am thankful to my parents for these lessons, and now I teach my own children in a similar way. But after I left home, I found myself in certain dining situations where I did not know the rules, mostly because our family meals did not involve multi-course menus, where it was important to tell the oyster fork from the fish fork. (It was enough that we were not flinging forks across the table at each other.) In these situations, I could always tell myself that these were outdated conventions, and indeed these kinds of customs have mainly fallen by the wayside in our current low-tech food culture. But I always felt a lack, and a secret wish that I could conduct myself in the very highest echelons of society without embarrassment or awkwardness.

Pack The Knife

I therefore find it very interesting that Margaret Visser, in her book The Rituals of Dinner, asserts that it is precisely to forestall violence that such rules of etiquette came into being. She argues that “table manners are…a system of taboos designed to ensure that violence remains out of the question,” and that only later did they evolve into the complex, but mostly banal, rituals we know today. One of her primary examples of how the shared table can be a dangerous place, and why table manners are necessary, is the presence of sharp eating utensils at most meals. When everyone at the table is armed with knives, the most common eating implement in the West until recent times, there was always a possibility that mealtime fights would erupt into bloodshed. In fact, a few hundred years ago, it was the custom for each man to bring his own knife to a host’s table—the same knife he used for countless other purposes.

It may have been in response to the danger these knives posed that the French king banned pointed knives from the table in 1699, replacing them instead with the rounded knives still in common use. Even with such a precaution, it is now still correct etiquette for knives to be placed on the table with the blade facing the plate, and to be replaced in the same position after the meal. And even those of us who do not have a delicate grasp of the nuances of cutlery placement know that it is bad manners to point a knife at someone else or at oneself while sharing a meal.

The Knives Are Out

In contrast to the knife-centered history of the West, chopsticks have been the preferred eating utensils in Japan and China for thousands of years, possibly influenced by the teachings of Confucius, who believed that “The honorable and upright man…allows no knives on his table.” Knives are a symbol of violence or aggression, and therefore were contrary to Confucius’s nonviolent teachings. But even though chopsticks do not have the implied violence of knives, there are still certain taboos about how chopsticks may be used. In Japan there is an aversion to passing food via chopsticks from one person to another while eating together. This action recalls part of the Buddhist funeral ritual, in which family members use chopsticks to pick up bones from the crematory ashes, and pass them from person to person before they are placed in an urn. Also, it is not correct to leave chopsticks sticking upright in a bowl of rice, as this is reminiscent of a tribute to the dead (the deceased’s chopsticks stuck in a bowl of uncooked rice on the family altar).

I guess I always knew that more was at steak (sorry!) than politeness during our family dinner hour. We were keeping our violent tendencies at bay by keeping our knives to ourselves and resisting the temptation to leap out of our chairs at each other. We were, in fact, learning how to peacefully co-exist in a stressful situation (worrying about getting our fair share)—and were following the original intent of table etiquette, if not all of its arcane proscriptions.

Note: This is an updated version of an article that originally appeared on Interesting Thing of the Day on May 20, 2005.

Image credit: Pixabay


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Author: Morgen Jahnke

National Dentist’s Day

Woman patient at dentist

Today is National Dentist’s Day. Or possibly National Dentists Day, or maybe even National Dentists’ Day. It’s unclear. In any case, it’s a day honoring dentists, and you can celebrate it, I suppose, by making an appointment for your twice-yearly checkup.

It can hardly be a coincidence that today is also National Oreo Cookie Day. I assume dentists love cookies and other sweets because, you know, more business. So chow down on your favorite chocolate sandwich cookie (namely, Newman-O’s) but be sure to brush and floss afterward!

Image credit: PxHere


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Author: Joe Kissell

Procedure where permission required to make children application

I have often mentioned here orders made under section 91(14) of the Children Act, which prohibit a party from making a further application in relation to their children, without the permission of the court. Such orders are normally made when that party has made multiple applications, and the court considers that it would be best (for the children in particular) to restrict any further applications, usually for a set period of time.

To go into a little more detail, if the party against whom such an order has been made wishes to apply to the court for an order, for example a child arrangements order, they must first apply to the court for leave (or permission) to make the application. Permission will only be granted if the court considers that there is a need for the case to be looked at again.

But strangely there is no set procedure that the court should follow if the party against whom a s.91(14) order has been made applies for permission to make an application. In particular, should the other party have a say in whether permission should be granted? This was one of the issues to be determined in the recent case P & N (Section 91(14): Application for Permission To Apply: Appeal).

The relevant facts in the case were that proceedings in relation to the parties’ two children, now aged 8 and 6, had been ongoing pretty well since 2013, shortly after the parties separated. I won’t go into details, but we are told that in the course of the litigation “dozens of court orders, multiple evidential hearings, and ultimately hundreds of pages of evidential material” were generated.

In January 2015 the court, unusually, made an order that the father should have no contact, direct or indirect, with the children. Within months the father made a second application for a child arrangements order. That application was dismissed in July 2016, when the court made the s.91(14) order, prohibiting the father from making a further application for an order in respect of the children, without obtaining the prior permission of the court. The order was expressed to last for a period of 3 years. The order recited that the father had acted “inappropriately throughout the court hearing to include using foul and extremely abusive language towards counsel for the mother and towards the judge”, that the father did not desist from using foul language when warned of the risk of contempt, and “that he had to be removed from the court by security staff”. The judge making the order recorded that “unless and until the father engages the services of a medical/therapeutic or child care professional in dealing with the issues” then any application made by the father for leave to issue a child arrangements application was likely to be unsuccessful.

After July 2016 the father made several further applications, and his second application for permission was allowed in July 2018. The judge had dealt with the application without notice to the mother. The mother was then notified of the outcome, and she sought to appeal, on the grounds that the judge was wrong to grant the father’s application without hearing from her, or receiving her representations. Her appeal went before Mr Justice Cobb in the High Court.

Mr Justice Cobb allowed the appeal. I will only deal with the procedural aspect.

Mr Justice Cobb considered that the judge had used the wrong procedure. Having decided on the papers that the father’s application was not hopeless, and that he had established a prima face case, he should have afforded the mother the opportunity to make representations on that application. Even if, strictly speaking, the procedure that the judge had followed was not irregular, on the facts of the case, it was wrong not to have given the mother the opportunity to respond to the application. Amongst those facts were that the proceedings had a long and ‘toxic’ history, and “very considerable caution should therefore have been exercised” before re-igniting that litigation; and that there was no evidence (other than the word of the father) that the father had addressed the issues recorded by the judge when the s.91(14) order was made.

In the circumstances the case was remitted for re-hearing of the father’s permission application, on notice to the mother.

You can read Mr Justice Cobb’s full judgment here.

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Author: John Bolch