Key tax guides
Tax does not disappear once you start the retirement process. While your income is likely to fall when you cease work completely, you will still have an income tax liability if your pension and other incomes exceed your available allowances. As the personal allowance is £11,500 (£11,850 in 2018/19) – there are no longer any age-related personal allowances – it does not take much income over and above the state pension (currently a maximum of £8,270 in its single-tier state pension guise, rising to £8,546 in 2018/19 to bring you into the tax net.
You may have been lucky enough to inherit rental property or be in the position to purchase property outright. However, buying-to-let is the usual way of becoming a landlord, and it is an attractive proposition for anyone who can raise a deposit. Given a prolonged period of low borrowing costs and generally rising property values, this is not surprising. There has also been a perceived lack of good alternatives, with low savings rates and restrictions on the amount that can be saved into a pension.
Making Tax Digital (MTD) is the HM Revenue & Customs (HMRC) project to get businesses to keep digital tax records for direct reporting to HMRC. HMRC has described it as the biggest change to the UK tax system since the introduction of self assessment. However, 2017 saw the government backing down on the scope and pace of the reforms, and under the revised plan businesses will not be mandated to use MTD until April 2019 and then initially only to meet their VAT obligations.
The changes announced 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 alter 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.
Capital expenditure, be it on property, equipment or vehicles, will represent a major investment which you make to set up, maintain or expand your business. It is therefore important that you benefit from any available tax relief. You cannot deduct capital expenditure or depreciation when calculating your taxable profits. Instead, many types of capital expenditure qualify for capital allowances. But make sure you plan ahead because the rules are often updated, with, for example, new limits applying to capital allowances on cars from this April.
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. The tax rules for fringe benefits change frequently, so it is important to use up-to-date information and plan ahead. Just because a benefit is, or is not, tax efficient this tax year, the situation may change in the future.
Business confidence is being affected by mounting concerns about the impact of Brexit, making it more important than ever to carefully plan out any new business venture. When it comes to selling a business, you may be surprised at how early you need to start thinking about this – maybe before the business has even started. It doesn’t matter whether you are developing a business idea to quickly cash in before starting all over again (the typical serial entrepreneur), planning a smart career move (with the successful sale of a self-started business looking very good on your resumé) or are in for the long haul, planning your exit strategy at an early stage will ensure you don’t pay more tax than necessary.
When business owner-managers take profits from their business, it isn’t surprising that they want to do so in the most efficient manner. There are various ways you can minimise both tax and National Insurance Contributions (NIC).
Last year the IR35 rules applying to public sector engagements were reformed. Following an announcement in the November 2017 Budget, these extremely unpopular reforms could soon be extended to the private sector.
Of all aspects of financial planning, estate planning is usually the one most people put off. It requires you to consider what will happen when your life is over, hardly something most of us rush to contemplate. Consequently, estate planning often becomes, and all too often remains, a do-it-tomorrow task. When it could suddenly become all-important… it might be too late. After all, accidents and illness and do happen.
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 after the 2007/08 financial crisis. While the previous Chancellor’s austerity mix was heavily weighted towards spending cuts rather than tax rises, the Treasury now faces serious headwinds in trying to rein in government spending any further. This is nothing new; tax increases deliver results more quickly than expenditure cuts, and are much easier to implement.
If you feel you’re paying more and more tax, you are not alone. More than one in seven of income tax payers are taxed at the higher or additional rate, but they pay about two thirds of all income tax. This rising tax burden for higher earners has been a deliberate policy of successive governments, witness the fact that the thresholds for phasing out of the personal allowance and the start of the additional rate tax threshold have both been unchanged since they came into force in April 2010.