Category Archives: tax

Inheritance Tax – Could there be a better alternative?

Inheritance tax is enormously unpopular to say the least. A YouGov poll found that 59% of the public deemed it unfair, making it the least popular of Britain’s 11 major taxes. What’s more, the tax has a limited revenue raising ability, with the ‘well advised’ often using gifts, trusts, business property relief and agricultural relief to avoid paying so much.

 

As it stands, the tax affects just 4% of British estates and contributes only 77p of every £100 of total taxation. This puts the tax in the awkward position of being both highly unpopular and raising very little revenue. At the moment, the inheritance tax threshold stands at £325,000 per person. If you own your own home and are leaving it to a direct descendant in your will, this lifts the threshold by an additional £125,000 in the 2018-19 tax year (the nil-rate band), to £450,000. Anything above this is subject to a 40% tax.

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November Market Commentary

October was, to put it mildly, an eventful month. It was a month which saw the majority of markets on which we report down steeply, as fears of higher interest rates in the US combined with worries about the US/China trade war. There was, however, one market that went up sharply: Brazil elected a new president – a man who, I suspect, will feature prominently in future commentaries.

In the UK, the Prime Minister survived the latest round of calls for her head, and the Chancellor delivered his Budget a month earlier than everyone had expected. Continue reading

Could your business be claiming more tax relief?

Whatever your business, you might be eligible to claim more tax incentives than you currently do. Sometimes tax incentives are available on things you might consider to be mundane in your business, so it would be wrong to assume that your business won’t qualify.

Here is a list of the most common incentives you could be missing out on:

Research and Development

You might think this would only apply to companies with multi-million pound research operations, but this is often not the case. As long as your business researches or develops new processes, products or services in science or technology, you might be eligible.

SMEs with less than 500 staff and a turnover of under €100m or a balance sheet total under €86m can be eligible for R&D tax relief. If you qualify, you can deduct an extra 130% of your qualifying costs from your yearly profit, as well as the normal 100% deduction, to make an overall 230% deduction. As well as this, you can claim a tax credit if your company is loss making. This is worth up to 14.5% of surrenderable loss.

Annual Investment Allowance

You can get tax relief on the plant and machinery you purchase in the year before you purchase them. If you’re eligible, relief will be on 100% of the cost. You can also claim on the demolition cost and alterations to plant and machinery. It’s important to note that this tax relief doesn’t apply to repairs.

In his recent Budget, Philip Hammond announced the annual investment allowance has increased from £200,000 to £1 million. This comes into effect on January 1 2019 and is aimed at preventing investments in British businesses stagnating because of Brexit.

Tax relief on green equipment

In order to encourage businesses to be greener, the government’s Energy Technology List (ETL) and Enhanced Capital Allowances (ECA) offer relief on high-performance energy efficient equipment. Products on the ETL deliver a high standard of efficiency, defined as performing within the top 25% of all similar equipment available in the UK market. ECA lets you claim 100% capital allowance on products on the ETL.

Employment Allowance

Employers can get up to £3,000 a year off their National Insurance bill. The allowance will reduce your (secondary) Class 1 National Insurance payments each time you run your payroll until the £3,000 has gone or April, when the tax year ends (whichever is sooner).

Speaking to a qualified accountant will give you your best bet of finding what relief applies to you. Often the processes for claiming aren’t very transparent, so getting some expert help is recommended.

Funding care home costs with a care home ISA

If you’re under 60, funding your future care might not be top of your agenda. Garden improvements, good restaurants and holidays probably rank slightly higher, as well as saving for your pension if you’ve not yet retired.

However, the government could be proposing a new ISA in order to encourage people to start saving for their later life care. Recent leaked government documents suggest that the government is considering a Care ISA as part of its forthcoming green paper on social care. Continue reading

What is Making Tax Digital (MTD)?

HMRC is striving to revolutionise the UK tax system and plans to do that through the Making Tax Digital (MTD) initiative. HMRC wants to be the most efficient tax authority in the world, and embracing the use of digital data appears to be the path towards that. The current system can be scrutinised for not being effective enough, efficient enough or straightforward enough for taxpayers. By bringing in a completely digitalised tax system by 2020, HMRC aims to make those problems a thing of the past whilst also bringing down the overheads involved in managing UK tax affairs. Continue reading

What is the tapered annual allowance and how could it affect you?

One of the key advantages of saving for your retirement through a pension scheme is the tax relief you receive on the money you contribute, usually available at your usual rate of tax. The ‘Annual Allowance’ limits the amount of contributions both you and your employer can make to your pension in a year which benefit from tax relief, and is currently set at £40,000. Continue reading

Talking about your will – don’t be one of the 93%

A national saving and investment survey has shown only 7% of people have spoken to their parents about inheritance. One of the most important parts of planning to leave an inheritance is to talk about it. This is obviously not an easy topic and it may be a good idea to set aside some specific family time to have this discussion. This could help avoid any family disputes before and after you are gone. Continue reading

4 tips for keeping your books in order in 2018

Whether you’re someone who prides themselves on having their accounts in order every year, or you’ve just had yet another last-minute scramble to submit your tax return before the deadline at the end of January, the start of a new calendar year is a great time to review your books and ensure they’re all in order for the twelve months ahead. Here are our top four tips for 2018 in terms of your accounts, ensuring your bottom line is secure and most likely giving it a bit of a boost too. Continue reading

How can you tell if your accountant is embracing the future

When choosing an accountant, there are obvious factors that you’ll take into consideration. Of course you’ll want someone who is completely trustworthy and highly competent, but one area you may not think of straight away is whether your accountant is someone whose methods are stuck in the past. A good accountancy firm will be open to adapting their practices in order to keep up with modern business practices. Here’s a rundown of five things to look out in an accountant who is ready for the world of tomorrow. Continue reading