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End Of Year Tax Planning - It's Time

YEAR END PLANNING NOW

Here's What We Need To Know From You

We are moving closer to the end of the current tax year – 2017-18 – and as we have mentioned in previous posts on this blog, the opportunity to take advantage of perfectly legal tax planning opportunities expires once the year end date passes: 5 April 2018.
 
To capitalise on these opportunities, we need to know if your circumstances have changed since our last conversation on these matters. The sort of information we need to know includes:
 
If you are in business
 
  • Are your profits increasing or decreasing as compared to the previous trading period?
  • Have you recently committed to, or undertaken a significant investment in new or second-hand plant of other equipment?
  • Have you disposed of existing plant or other equipment?
  • If you run a property business have you purchased or sold property this year?
  • If your property business is intended to benefit from the tax advantages of a Furnished Holiday Lets business, have you checked that your occupancy is on track to qualify for this tax year?
  • Have you, or will you be, acquiring or selling a business during 2017-18?
 
If you are a higher rate tax payer
 
  • Is your income approaching £100,000 for the first time?
  • What pension arrangements have you committed to this year?
  • Have you made, or will you be making significant charitable contributions?
  • Has your marital status changed?
  • Have you bought or sold a property in addition to your main residence?
  • Have you bought or sold any other assets that are subject to capital gains tax?
 
Estate planning:
 
  • Has the taxable value of your estate increased this year?
  • Do you need to reconsider your Will due to family changes?
  • Do you need to reconsider any existing trust arrangements?
  • Have you made any significant gifts? Should you provide for the possible IHT consequences?
  • Have you taken advantage of the various IHT reliefs available for 2017-18?
 
Essentially, we need to know what has changed, or is likely to change before 5 April 2018, so that we can assess your options to mitigate any tax consequences. Occasionally, we can also advise on a change in your future intentions to give you a more effective tax result. The purpose of this post is to invite you to keep in touch; if we know what your intentions are, we can advise accordingly.

Talk to us now. We're here to help.
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Check that your bank deposits are protected

PROTECTION ON BANK DEPOSITS

Here's The Details

The Financial Services Compensation Scheme (FSCS) is the place to go if your bank or other regulated organisation is unable to pay claims against it.
 
For most of us this will mean that our deposits with banks authorised to hold deposits by the Financial Conduct Authority (FCA and the Prudential Regulation Authority (PRA) will be able to recover funds up to certain limits.
 
What are the current limits?
 
From the 30 January 2017, deposits with approved institutions are covered up to £85,000 per person.
 
Please note the following:
 
1.      All your eligible deposits at the same bank are added together and the total is subject to the £85,000 limit.
2.      The limit of £85,000 applies to each person. In the case of joint deposits, the £85,000 limit applies to both depositors.
3.      Deposits held in the name of business partnerships or similar groupings are treated as if made by a single depositor.
 
Additionally, from 3 July 2015, the FSCS will provide up to a £1 million protection limit for temporary high balances held with your bank. For example, funds held after:
 
·         The sale of a main residence.
·         A death.
·         The depositor’s marriage or civil partnership, divorce, retirement, dismissal, redundancy or invalidity.
·         The receipt of insurance benefits, or compensation for criminal injuries or wrongful conviction.
 
How long before I get my money back?
 
Reimbursement will be made in line with the following published time limits:
 
·         Up to 31 December 2018 – within 20 working days
·         From 1 January 2019 to 31 December 2020 – within 15 working days
·         From 1 January 2021 to 31 December 2023 – within 10 working days
·         From 1 January 2024 – within 7 working days
.
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If you're paying tax in Jan 2018, read this

JAN 2018 TAX ADVICE

In Jan individuals & businesses are required to pay tax

If your business is a limited company, and your tax year ends 31 March 2017, any corporation tax due for that year is payable 1 January 2018. Unlike your self-employed counterparts – see below - no payments on account are required for 2017-18.
 
If you are a self-employed business person, sole trader or in partnership, any underpayment of self-assessment tax, Class 2 and 4 NIC (for 2016-17) will be due for payment 31 January 2018. On the same date, tax payers in this category will need to make a possible payment on account for the tax year 2017-18. This is based, initially, as 50% of your actual liability for the previous year, 2016-17.
 
Which is why it’s worth taking a moment to consider what your financial results may be for 2017-18. If you consider that your self-employed profits, or other taxable earnings will be lower during 2017-18 (as compared to 2016-17) then you can elect to recalculate the payments on account for 2017-18.
 
We should always be on the lookout for ways to protect our hard-earned cash resources, which is why undertaking this simple review may help to take the sting out of the January tax payment.
 
You will also be glad to know, that if the results of this exercise show that your profits or taxable income have increased during 2017-18 (compared to 2016-17) it is not necessary to increase your payments on account for 2017-18. However, self-assessment taxpayers in this position should be aware that any shortfall between payments on account made and the actual liability for 2017-18 will still be payable, albeit later, on 31 January 2019.
 
If you feel that your earnings will be lower for 2017-18 we can help you crunch the numbers to see if a valid election to reduce your tax payments next year is a viable option. Every little helps.
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Beware the child benefit tax trap

CHILD BENEFIT TAX TRAP

Here's what you need to know

A family claiming the weekly Child Benefit (currently, £20.70 a week for eldest or only child and £13.70 a week for additional children) may get an unwelcome tax bill if either parents’ income exceeds £50,000 during a tax year.
 
A tax charge was introduced a number of years ago, known as the ‘High Income Child Benefit Charge’ (HICBC), if either parent had income over £50,000 and:
 
  • either partner received Child Benefit, or
  • someone else received Child Benefit for a child living with you and they contribute at least an equal amount towards the child’s upkeep.
 
It doesn’t matter if the child living with you is not your own child. The charge was introduced to recover Child Benefits from higher income earners.
 
You may not have considered the HICBC before if your incomes were below the £50,000 cap, but if your income for 2017-18 is likely to exceed this amount you should be aware of the following.
 
  • Before 6 October 2018, the parent with the higher income for 2017-18 (more than £50,000) will need to register to submit a self-assessment tax return and pay and HICBC due – unless they are already registered in which case they will need to enter the amount of Child Benefit received on the return and pay any tax due.
  • The parent with the higher income, even if they were not the person claiming the Child Benefit, will need to make this declaration.
 
1% of the Child Benefit received will be recovered by HMRC’s HICBC for every £100 the highest earner’s income exceeds £50,000. Accordingly, once the highest income exceeds £60,000 all the Child Benefits received will be reclaimed.
 
To avoid the charge, it is possible to decline Child Benefits in the first place. To summarise:
 
  • Parents where the highest income is below £50,000 will not be affected and can continue to claim Child Benefit with no tax claw back.
  • Parents where the highest income is above £50,000 but below £60,000 will be affected and will need to pay the appropriate HICBC.
  • Parents where the highest income is over £60,000 may be advised to decline future Child Benefit claims as all benefits received will be clawed back by the HICBC.
 
There are strategies that you could use to reduce your taxable income below the £50,000 or £60,000 thresholds as these are calculated net of any allowable deductions. Please call if you would like more advice regarding these deductions.
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