Key tax guides
The changes revealed in the 2014 Budget were described by some retirement planning experts as a pensions revolution. The radical proposals came as a surprise and were designed to change the retirement landscape by breaking the link between pensions and annuities.
Automatic enrolment has ‘changed the UK workplace forever,’ according to the Pensions and Lifetime Savings Association. Over seven million people working for over 340,000 employers have started to save via a workplace pension as a result of automatic enrolment, with more to come between now and February 2018. No employer – however small – can afford to ignore these changes.
The taxation of investments has never been a simple matter. In recent years it has become more complex as successive governments have chosen to tax different sources of investment income in different ways, mostly with the aim of adding to the Exchequer’s coffers.
You cannot deduct capital expenditure or depreciation when calculating your taxable profits. Instead, many types of capital expenditure qualify for capital allowances, which in effect provide you with a standard measure of depreciation for the assets that you use in earning your income.
A fringe benefit is essentially any type of non-monetary compensation provided to an employee or director, and can be anything from pension provision, to medical cover, a company car or the use of a company yacht. As a director, there might be a tax advantage to taking a benefit rather than the additional income needed to purchase the benefit yourself.
Just because you have not yet even started your new business does not mean it is too early to be thinking about an eventual sale. Maybe you are aiming to develop a business idea, then quickly cash in before starting the whole process again – the typical serial entrepreneur. Or maybe you just see this as a smart career move with the successful sale of a self-started business looking very good on your resume. And even if in for the long haul, good planning at an early stage will ensure that you do not pay more tax than necessary when it comes to selling.
When you draw profits from an owner-managed company most people are keen to ensure that they do it in a way that minimises the tax and national insurance contributions (NICs) cost.
The personal service company tax avoidance rules prevent you from saving income tax and National Insurance Contributions by interposing a limited company between you and your ‘employer’ (or client).
For many people, estate planning is pushed to the bottom of the ‘do later’ list, like tax returns. Estate planning is also a subject that requires you to contemplate your own demise and none of us expect to pass away tomorrow, so deferral easily sets in.
While the thought of going abroad to work or retire may be exciting, the months before departure may be stressful. Finding somewhere to live in your chosen country, arranging the necessary visas and booking a suitable removal firm are just some of the issues you are likely to have to deal with.
Personal tax levels in the UK have been rising for some years in response to the surge in government borrowing stemming from the 2007/08 financial crisis. While the Chancellor’s austerity mix has been heavily weighted towards spending cuts rather than tax rises, the Treasury has been much more successful so far in implementing tax increases than reining in government spending.
If you find more and more of your income is taxed at over the basic rate, you are not alone. The point at which you start to pay 40% income tax is £43,000 for 2016/17, which is lower than six years ago – it was £43,875 in 2010/11. Even after rising to £45,000 in April 2017 (except in Scotland) it will still have increased at a lower rate than inflation over the period.