Why use a tax adviser or an accountant to prepare your personal tax return?
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(This is a sticky post, please find current news items below) By andrew cazalet in tax |
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Rather an odd question for a tax adviser to ask you might think? I was asked recently by someone why they should instruct me specifically to do their tax return which set me thinking...
There are many reasons of course but mainly clients tell me they want to be sure they are doing it right and have not missed anything they can claim ie for peace of mind.
Others are just busy people and want to park the hassle with someone else.
Even for pure advisory clients I find the process of completing the return helps identify areas in which a client had not realised there might be savings.
Some clients want a second opinion on personal and business financial matters. Many clients are in the financial area themselves and they could talk about it with friends and family but some people prefer a more confidential different voice.
There is a good article here albeit from a US perspective which explains why you can do better than just using google and online software. But then I would say that wouldn't I?
Capital Gains Tax (CGT) set to rise - Budget set for 22 June
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Tuesday, 18 May 10 - 01:09 PM (GMT) By andrew cazalet in tax tips |
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The new Conservative Liberal government have announced in their coalition document that CGT is very likely to rise in the first budget of the new government. The current historic low rate is 18%.
http://news.bbc.co.uk/1/hi/uk_politics/8686345.stm
" The new government has already said it will seek to raise capital gains tax on non-business investments to 40%..."
What seems less widely known is that there are strategies that can be put in place now to effectively “bank” the benefit of the lower tax rate under the current more generous regime.
If you have investments with inherent capital gains then please do get in touch if you want any help to implement this planning.
End of Year Tax Planning
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Thursday, 25 March 10 - 10:17 AM (GMT) By andrew cazalet in tax tips |
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We are fast approaching the end of the current tax year (5 April 2010) and now is an ideal time to review your financial affairs to ensure that they are as tax efficient as possible. This is particularly important as the new tax year (2010/11) will see already announced tax and NIC increases and possibly a change in Government, which could bring in yet more changes.
Below, I have set out some planning points to consider and I am happy to provide further details by telephone. Any action you do take needs, as always, to take into account the wider effects of the planning as well as any tax advantage gained.
Tax increases and restricted allowances
As you are probably aware, the top rate of income tax will rise to 50% from 6 April 2010. This only applies to individuals with taxable income in excess of £150,000 and the new high charge only affects income over that level. Therefore for many the relevant highest tax rate will remain at 40%.
The tax-free personal allowance stays at £6,475 for 2010/11 and so, unusually, is not going to be increased for the new tax year. Furthermore, for those with income over £100,000 the personal allowance will taper away and an individual with an income above £112,950 will receive no personal allowance at all. Due to the interaction of the thresholds and tax rates, the marginal rate of tax will be as high as 60% for those affected. Therefore, it is important to consider how you currently receive income and whether there are any better methods that would work for you. You may also want to consider accelerating income into this tax year before the tax rises occur. We can discuss this further if that would be of help to you.
Married couples and civil partners
Married couples and civil partners have a few additional planning opportunities. Where possible, you should ensure that you both utilise your personal allowances and tax bands. With the advent of the 50% tax charge and the restricted personal allowance it is worth reviewing the balance of your joint income to see if any tax savings are possible.
Where you have made capital disposals in the current tax year you should also try to ensure that both of your capital gains tax annual exemptions are used effectively (£10,100 each for 2009/10).
If you intend to make capital disposals in the near future it is worth considering whether to spread these over two tax years to make sure that your capital gains tax annual exemption is fully used up against any gains.
The current rate of capital gains tax is 18% (or even 10% if specific reliefs are available). Even though it did not happen as predicted in the recent Budget there has been talk that the rate of capital gains tax may increase to lessen the gap between it and the top rate of income tax. However, there are currently no firm plans being proposed for this to happen. If you are likely to make a significant capital gain in the near future do let me know so I can provide further details on various options that could help reduce your tax bill.
Gift aid donations should be made by the spouse or civil partner who is the highest rate taxpayer as they are able to obtain higher rate tax relief for the payments. Basic rate taxpayers just receive basic rate relief.
Pension contributions
It is possible to make contributions to a personal pension and contribute up to £3,600 per year (gross), without any evidence of earnings. This could therefore be useful for a non-working spouse, children or for someone with only unearned income.
There are also important pension contribution changes coming in from April 2011, which will restrict higher rate relief for some, but are also already taking some effect. Now is an ideal time to review your overall pension strategy.
Tax-favoured investments
Investments in venture capital trusts (VCTs) or the enterprise investment scheme (EIS) can be useful tax planning tools where they are appropriate for your investment strategy. Where qualifying investments are made, you can obtain generous tax relief. However, these are high-risk investments and, as with any form of investment, financial planning advice should be sought from a qualified individual before making any decisions.
Inheritance tax
The inheritance tax (IHT) annual exemption is £3,000 and can be carried forward for one year. Therefore, if you have not made any gifts in the past two tax years you will have an exempt amount of £6,000.
In addition, there are some other useful IHT exemptions to remember, such as the small gifts exemption of £250 to each individual and gifts out of surplus income, which, if they qualify as such, are free from IHT. Where outright gifts are made and the donor survives seven years, the gift would not be subject to IHT in any event.
Tax Refunds on Holidays Lets within Europe
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Wednesday, 10 June 09 - 02:26 PM (GMT) By andrew cazalet in tax tips |
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Do you own property in Europe....Has it made a loss in any tax year since 2006/07?
Did you know that under new HMRC guidelines you may be able to claim these losses against other income often leading to substantial tax refunds?
The conditions are:
• The property must be situated in the European Economic Area
• It must be let furnished not empty
• Available for Letting at least for 140 days a year
• Must be actually let for at least 60 days in the year
• Not normally occupied by any one tenant for more than 31 days at a time.
Further benefits of the relief are as follows:-
• Losses can offset against general income eg salary, self employed profits
• Entrepreneur’s Relief is usually available on the sale of such properties meaning an effective rate of capital gains tax of 10% not 18%
• Roll- over or Hold Over available to defer gain on sale
• Capital Allowances available on equipment used in the property
• Pension contributions can be paid if the property is profit making
• Possibly qualify for Business Property Relief thus exempting the property from IHT on death or gift to others
Deadline
HMRC have said that the cut off date to claim back these losses for 2006/07 is 31 July 2009.
Please get in touch if you need any help.
Budget 2009
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Thursday, 23 April 09 - 09:37 AM (GMT) By andrew cazalet in tax |
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Some thoughts and information re the Budget 2009
New Higher Rates of Tax
The new marginal rate of income tax of 50% applies to income over £150,000 starting from April 2010. This is above the planned increase of 45% and a year earlier! What has been less publicised is the progressive withdrawal of the tax free personal allowances by £1 for every £2 income exceeds £100,000. This means those earning between £100,000 and £112950 suffer a marginal rate of income tax of 60%.
Where possible it would seem sensible to advance income and pay tax now before 5 April 2010 at only (!) 40%. Or consider using a company to control the extraction of profit or maybe share options possibly taxed as capital gains at only 10-18%?
Further Extension of Carry Back of Trading Losses
The ability to carry back losses of up to £50,000 up to three years (instead of just one under the old rules) has been extended for unincorporated businesses to 23 November 2010 ie tax years 2008/09 to 2009/10. For limited companies the extension applies to those with accounting periods ending between 24 November 2008 and 23 November 2010.
Help with Time to Pay Taxes
The Business Payment Support Service http://www.hmrc.gov.uk/pbr2008/business-payment.htm has been instructed to accept “time to pay” arrangements in a wider range of circumstances. The advisers have been asked to take account of reasonable estimates of current year losses in pressing for previous years taxes.
Relief for Pension Contributions restricted at Higher Rates
From 6 April 2011 the relief for pension contributions for higher rate taxpayers earning above £150,000 will be restricted gradually so that those individuals with an annual income of £180,000 or more will effectively receive only a 20% tax deduction, the same as a basic rate tax payer. This may mean that some individuals will only receive relief at 20% but will later be taxed on their pension income at 50%.
Furnished Holiday Letting Relief to be abolished
The relief for loss making short term letting businesses will be abolished from 6 April 2010. These rules currently allow the offset of losses often made on holiday letting income against other taxable income subject to certain conditions.
However in the meantime HMRC does accept that it cannot discriminate as it did previously against individuals owning property in the EU – as opposed to in the UK. This means properties within the EEA area now qualify for relief until it’s general abolition in April 2010.
Budget Funny!
Some tweets below captured live on Wednesday from inside the Treasury (allegedly)
“ BUDGET CONSULTATION: Please tweet us your ideas for the Budget as Alistair has not got a clue. The final TwitBudget will be published here.
BUDGET2009. Treasury msg to HMRC: Sh+tting ourselves here, we haven't finished writing the Budget yet and Alistair has gone AWOL
Budget2009 update: Alistair has locked himself in the toilet and won't come out. Gordon has called in MetPolice to break down the door.
Budget2009: Back of fag packets currently being assembled into final document
#budget09 Alistair forgot to say "minus" before the growth forecast figures for 2010 and 2011. Next government's problem anyway “
Hat tip for that to http://twitter.com/HMRevenue
You can follow me on Twitter http://twitter.com/andrewcazalet
There is a good summary of the main general Budget provisions here
Please do get in touch if you have any questions or clarification. Feel free to pass this on if you know anyone who might be interested.
Would like to help your artiste reduce their tax bill whilst on tour or competing in the UK?
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Tuesday, 17 February 09 - 07:04 PM (GMT) By andrew cazalet in tax tips |
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Under the terms of most UK double tax treaties there is a clause excluding the services of entertainers and sportspeople from the “independent services” provision. This means they are taxable here even if they are not tax resident in the UK and do not have a permanent establishment or place of business here.
The artiste will usually obtain tax credit for the FEU UK deducted through his or her overseas tax return. However under many countries’ domestic tax legislation the tax payer is required to mitigate his or her liability as far as possible otherwise they will only get credit for the tax that was due in the UK not just the possibly higher amount they actually did pay on gross turnover. It is not enough therefore just to pay the tax and expect to get credit for it back in the home country. Relief may be restricted.
I have over ten years experience in this area with major and upcoming artistes and would pleased to help any clients legitimately reduce their UK tax liabilities.
Seasons Greetings
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Thursday, 25 December 08 - 04:02 PM (GMT) By andrew cazalet in humour |
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Season’s Greetings
A little light Christmas Cheer below..
I spotted this in the readers queries section of the leading magazine for tax advisers – a message from a seasonal character seeking help with his tax affairs.
On a visit to the UK last year I picked up a copy of your magazine and wonder if readers can advise me. I am non-domiciled and non-resident (I think) in the UK – no permanent home here – but each year I work temporarily in the UK for a short period.
The work is unpaid, but I do receive benefits in kind; glasses of port, mince pies and the like. I am rather concerned that I have not declared these to HMRC in the past. Should I have done so and is there an annual tax liability to be paid on these gifts or benefits? And if there is, how is the tax calculated under self assessment? “
Best Wishes for a Merry Christmas and Happy New Year
ps if you need any help with your tax returns whilst you have some time off over the Festive Season please do get in touch. I am of course happy to help with your tax returns, give tax advice, offer help as a tax consultant/ advisor, give tax advisory services as a tax advisor / accountant covering London and all points west - West End, Ealing, Mayfair, Knightsbridge, Chiswick, Fulham, Chelsea, Notting Hill, Belgravia, Bayswater, Kensington, Ladbroke Grove, Kingston, Marylebone, Barnes, Putney, Richmond, Wandsworth, Kew, Putney.
New Service – A Free Tax Health Check
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Tuesday, 04 November 08 - 09:59 AM (GMT) By andrew cazalet in tax |
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As a firm of specialist Chartered Tax Advisers with over twenty years of experience we are confident we can save most businesses and families money. We will review your accounts and financial affairs at no charge and make suggestions to save you tax. All this usually involves is rearranging your tax and business circumstances to take advantage of legally available reliefs for those in different circumstances. We will then give you a fixed fee quote to implement the strategy.
If you want to continue with your existing accountant for compliance services – tax returns, accounts etc we are happy to work alongside him or her. If you want a quote for a full comprehensive service we can of course provide this.
For this service qualified tax advisers would normally charge at least hundreds of pounds. We offer this service for free for a limited period until 31 December 2008.
We are based in West London but provide tax advice and tax consulting services for all areas of Central and West London – West End, Ealing, Mayfair, Knightsbridge, Chiswick, Fulham, Chelsea, Notting Hill, Belgravia, Bayswater, Kensington, Ladbroke Grove, Kingston, Marylebone, Barnes, Putney, Richmond, Wandsworth, Kew, Putney and beyond.
Tax Advice services in West London
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Friday, 17 October 08 - 06:21 PM (GMT) By andrew cazalet in General |
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I have had a few kind remarks on the postcard I created to promote my presence in Ealing Studios.
The picture is below for those who have not seen it.
The drawing of Ealing Studios is by a very talented friend of ours Stella Swain. She does lots of lovely pictures – mainly sort of like this one. She does business or private commissions and is very reasonable. She can be contacted on 01962 854 275 stella.swain@ntlworld.com www.stellaswain.com
How to obtain tax relief for childcare?
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Tuesday, 14 October 08 - 12:40 PM (GMT) By andrew cazalet in tax tips |
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Childcare Vouchers are popular with those who work with large employers. They provide a tax & National Insurance free way to provide up £2860 per child to each employee. However largely because of the administration and hassle they are less common with smaller owner managed businesses. If you have children, run a business and pay for childcare (not schooling) please read on…
Under these arrangements an employer can establish a Childcare Voucher scheme which allows you to take up to £55.00 per week or £243.00 per month in the form of a Tax & National Insurance free voucher from their employer. This voucher can then be presented to a childcare provider who may apply to the employer for the voucher to be redeemed for cash.
The potential maximum saving for a higher rate taxpayer is £1,195 per year. For an individual who is liable at the basic rate of tax the maximum saving would be £904 per year. There is an additional saving for the employer of up to £373 being the employer’s national insurance that would otherwise be payable if cash were offered instead.
The main conditions of the scheme are as follows:
- The child for whom the voucher is provided must be under 16 and be a child of yours who lives with you and for whom you have parental responsibility.
- The childcare provider has to be registered/ approved with the appropriate authorities. Informal arrangements with relatives are therefore usually excluded unless they can arrange to register. Nannies or au pairs are usually allowed provided they are able to register.
Please be aware that if you are entitled to children's tax credits you are required to notify HM Revenue and Customs that your childcare costs have reduced. This may reduce your entitlement to tax credits.
We have developed a toolkit of documents that enable you to implement the scheme for a fixed sum rather than the % of the voucher usually charged. One flat sum means you only pay once rather than a % each time.
If you have any questions or want to consider implementing a scheme please do get in touch.
... More items are available in our News Archive
