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Tax Planning / 8 posts found

Capital Gains Tax liabilities

by mike tombs
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Capital Gains Tax (CGT) is defined by the Government as: "Capital Gains Tax is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive." So, you will pay CGT on an item such as a painting, but not on your house, provided that it is your primary residence. You are liable to pay CGT at certain times of the year. If you personally disposed of an asset that is subject to a CGT charge, at any time during [...]

Tax-free property and trading allowances

by mike tombs
in Tax
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Since April 2017, you can earn £1,000 from a trading activity and £1,000 of property related income, without being liable to income tax. These tax-free allowances on property and trading income are useful as families can generate an extra £2,000 a year of income without increasing their tax bills. Obviously, these small amounts will not be a replacement for your day-job, but they do contribute to financing your monthly bills.   What property income could this cover? You could rent out: your drive as a parking space if you live in an area where parking spaces are at a premium, [...]

What will HMRC avoid telling you?

by mike tombs
in Tax
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There are three things that you can count on that HMRC will do:   Calculate the amount of tax you owe based on the information they have gathered. Chase you for payment of this tax if not recovered by PAYE. Pursue you if they believe you have under-declared your taxable income or made excessive claims to reduce your tax.   What they will not do is advise you to maximise the benefit of reliefs and allowances to which you are entitled to claim.   HMRC rely to some extent on the age-old principal that ignorance of the law is not, [...]

Why does the UK tax year end 5th April?

by mike tombs
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A bit of history this week but with a practical outcome for 2019.   Up to 1582, Europe used the Julian calendar introduced by the Romans in 45BC. Unfortunately, the Julian calendar differed from the solar calendar by 11 ½ minutes; after 500 years this small difference meant that the Julian calendar was 10 days off the solar calendar.   To remedy this error, Pope Gregory introduced the Gregorian calendar in most of Europe under his influence, 1582. There was a notable exception, you guessed right, the British Empire. Sound familiar?   The Brits stoically maintained their use of the [...]

Taxing dividends

by mike tombs
in Tax
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To reduce National Insurance costs, shareholders of small privately owned companies, who are also working directors of the company, can presently restructure their remuneration package to reduce their salary and make up the difference as dividend payments. Unless this strategy is affected by the Budget at the end of this month, this remains one of the most useful ways for owner directors of small companies to reduce their overall tax and NIC costs. Dividends are not considered to be a business cost. They don’t reduce the amount of profit assessable to corporation tax. Rather, dividends are a distribution of profits [...]

Unmarried couples to qualify for spousal tax breaks?

by mike tombs
in Tax
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In a landmark decision, the Supreme Court has ruled that discriminating on the basis of sexual orientation, or a decision to live together rather than marry, is a breach of human rights.   Presently, couples need to be in a formal civil partnership or married to be able to claim the raft of tax benefits available. These advantages include:   Transfers of chargeable assets between civil partners and married couples is free of capital gains tax and inheritance tax. In appropriate circumstances spare personal allowances can be transferred from one partner to the other.   In the case taken to [...]

Tax Planning

by miketombs
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I don't expect Jimmy Carr saw the funny side when Prime Minister David Cameron denounced as immoral his use of a tax avoidance scheme that reportedly cut his tax bill to just 1%. He wasn't breaking the law and his use of the "K2" scheme had been fully disclosed to HMRC. But the tide of moral indignation swamped the cheeky chappy and forced him to admit a "terrible error of judgement." The scheme had been recommended by his financial advisor and that got me thinking about our role in advising clients on the best ways to manage their tax affairs. [...]