CHANGES FOR TRUSTEES

TODAY’S BLOG

CHANGES FOR TRUSTEES

A series of government moves over the past few decades have reduced their tax advantages and made trusts much less attractive to wealthy families. They are likely to become less popular still from March, when a new requirement will force thousands more trustees to list on a government register that is partially open to the public, or risk penalties.

Since 2017, certain types of trusts have had to report information to a government online register called the Trusts Registration Service (TRS). This came into being as result of an EU-wide directive to tackle money laundering. Far be it from me to imply or suggest that motivation for Brexit had anything to do with circumventing new EU Anti-money laundering rules!

To comply with the rules, all UK trusts that have to pay a tax liability such as capital gains tax (CGT), income tax, inheritance tax or stamp duty must report information to the register.

Trusts that are outside the UK but trigger UK tax must also do so, as must all trusts that are required to fill out a self-assessment tax return anyway. Currently the register is not publicly available, with access limited to law enforcement authorities. But from March 2020, the next phase of the EU directive (the fifth Anti Money-Laundering Directive) is set to increase the number of trusts that must submit reports.

It will also partially open up the register to the public, including journalists, leading some to worry about an erosion of privacy. Despite the UK’s imminent departure from the EU, the government is committed to implementing the directive and passing it into domestic law. Tax experts warn that hundreds of thousands of trustees and beneficiaries could be affected and need to understand better the possible impact of the changes.

TRUSTS & MONEY LAUNDERING

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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CHANGES FOR TRUSTEES2020-01-28T14:32:38+00:00

PPI – ANOTHER PAYOUT?

TODAY’S BLOG

PPI – ANOTHER PAYOUT?

Just when you thought you had seen the last of PPI, I am here to tell you that it’s not over until the tax taken is repaid… If you’re one of the millions of people who’ve shared in the £34billion of PPI repaid (so far), you may have paid tax unnecessarily. If so, and your payout happened in the last four tax years, you are due money back. The money you get paid back for PPI can have up to three main elements:

  • A refund of the PPI you paid.
  • If the bank (outrageously) added an extra loan to your original loan just to pay for the PPI you get back any interest you were charged on this extra loan.
  • You get Statutory Interest (at eight per cent a year) on the total of both those sums, for each year since you got the PPI.

Only the third element is taxable. Any tax taken is usually shown on your payout statement. Tax is due because this Statutory Interest is designed to return you to the position you’d have been in if you hadn’t had PPI. If tax is due on PPI payouts, most firms deduct it automatically, at 20 per cent, before you get the money. That has always been an issue for non-taxpayers. However, since April 6, 2016, far more people have been owed tax back, as that’s when the personal savings allowance launched. It allows most taxpayers to earn £1,000 a year of savings interest, tax-free. Since then, while most savings interest has been paid without any tax taken off, PPI still has 20 per cent automatically deducted. Therefore, oversimplifying somewhat, it counts as savings interest, as if you’d earned it on that saved cash.

PPI AGAIN

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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PPI – ANOTHER PAYOUT?2020-01-23T19:23:58+00:00

THE TAXMAN COMETH… AGAIN

TODAY’S BLOG

THE TAXMAN COMETH… AGAIN

A week today is deadline pay to send in your self-assessment tax return and payment to HMRC. The 31st January brings an end to arguably the worst month of the year with a tax deadline. Most people will be very familiar with 31/01 by now, but invariably a lot of people file their returns late.

In February 2019, HMRC confirmed that 93.68% of people filed their returns on time, which was a new record. There were 11.56 million taxpayers that had to file a return, 731,186 didn’t do so on time. Fines for not filing a return on time are £100, even if no tax is due. So that comes in at a neat £73,118,600 in immediate fines. After 3 months (30 April) additional penalties are applied at £10 a day.

Taxing Time

Left until the last minute.com…

A thumping 735,258 filed on the final day itself (6% of those that had to). Remember this is sending a return for the tax year that ended 5th April in the previous year!

Some 60,000 people tried to file their return between 4pm and 5pm on the 31st January 2019. That is really leaving it to the last minute (which is midnight of that day).

IMPORTANT – Pension Tax Tips Pre-Return:

These tips help taxpayers get all the pension tax relief to which they are entitled or to avoid an unexpected tax bill in years to come.

 A) Claim higher rate relief on personal pension contributions:

Many pension savers who pay income tax at the higher (or additional) rate, may be unaware that they need to claim higher rate relief through their tax return on contributions into a personal pension. Employee contributions into a personal pension or group personal pension automatically attract pension tax relief at the basic rate through the ‘relief at source’ method. This tax relief is claimed by the pension provider on behalf of the member. But those who pay tax at the 40% or 45% rate only get their extra tax relief if they claim it through their tax return. For example, someone who pays £80 into a personal pension automatically gets an extra £20 in basic rate relief added to their pension. But if they pay tax at 40% they are entitled to another £20 in tax relief which they will only get if they enter this information on their tax return.

B) Report contributions in excess of your annual allowance

Individuals are expected to report on their tax return any pension contributions (from themselves or their employer) into a Defined Contribution pension and/or any growth in Defined Benefit pension rights in excess of the Annual Allowance, so that additional tax can be paid.

C) Report contributions made on your behalf under ‘scheme pays’

HMRC recently admitted that some taxpayers were failing to report on their tax return that a pension tax charge had been paid on their behalf by their occupational pension scheme. A new FOI obtained by Royal London shows that in 2016/17 just over 1,000 people failed to report this information. As the number of people affected by ‘scheme pays’ has grown rapidly since 2016/17, it is likely that thousands of people are now failing to report this information. The FOI from HMRC says that this is a case of ‘under-reporting, not under-payment’, but taxpayers are expected to give complete information on their tax return.

And finally…

There were some strange excuses too… here is a video HMRC put together about them.

Here are some things that didn’t pass the valid expense claims.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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THE TAXMAN COMETH… AGAIN2020-01-23T19:13:46+00:00

TAX AND POLITICS

TODAY’S BLOG

TAX AND POLITICS

The General election is a few weeks away, the over-egged promises are being spouted by all sides. We really must seem like a very dim bunch to those that are so wrapped up in their political ideology. Anyway, I am not here to share my political views, simply to remind you of some basic truths.

I heard one item on the news as I travelled to the office the other morning. This was another politician using the word “free” to describe what the electorate would receive. This is an interesting choice of words. I was also somewhat interested in the bashing of the uber rich. I am not in that bracket (!) and frankly there is no possibility that I ever would be. However I was surprised that some people seem to believe that those with vast wealth actually have it all in bank account that can be easily raided. Like them or not the uber rich hold assets and some cash, but mainly assets.

This in mind, I thought that perhaps a little bit of education on the tax system may be of help. There are lots of numbers involved, but stick with it if you can (I know your time is precious).

INCOME TAX

Income tax accounts for about a third of all taxes received by HMRC. When combined with National Insurance, Capital Gains Tax and Bank Payroll Tax, these make up about 55% of all UK taxes. The amount of total tax paid to HMRC rises almost every year. In 2000/01 the total stood at £315,642m in the last tax year 2018/19 it had nearly doubled to £619,367 over 18 years.

THE UNION AND TAXES

In the tax year 2016/17 for those of you interested the total tax raised was £568,603m of which 87.2% was raised in England, 3.3% was raised in Wales, 7.4% raised in Scotland and 2.1% raised in Northern Ireland.

WHO PAYS INCOME TAX

In 2017 the UK population was about 66million. Not everyone pays income tax (children, sick, unemployed, not employed and choosing to not “work”). In practice about 40% of the population pay income tax (they may well pay other taxes, but so do the 40%). In the 2016/17 tax year, there were 26.3m income tax payers in the whole of the UK. Of these 15.1m were male and 11.2m were female. 20.9m were under 65 and 5.39m were 65+.

HOW MUCH INCOME TAX DID THEY PAY?

In the 2016/17 tax year (the most recent with the data analysis). There was £174,000million paid in income tax by 26.3m individuals. So thats about 30% of all the taxes paid were from these income tax payers.  In the tax year concerned we basically have 4 categories of income taxpayer, those that simply pay the savings rate, those that pay basic rate (20%), higher rate (40%) and additional rate (45%).

As a reminder, in 2016/17 the personal allowance was £11,000 (the amount you can earn without paying income tax). This is reduced once your income is £100,000 at the rate of £1 for every £2 of income over £100,000. So anyone with an income of £122,000 has no personal allowance – all their income is taxable.

In terms of taxable income, the first £32,000 was taxed at 20%, from £32,001 – £150,000 tax is 40% and anything above £150,000 is taxed at 45%. Here is what happened.

As you can see from the table above, 81.75% of basic rate (20%) income taxpayers paid £57,300million in tax. You will remember Pareto’s law 80/20? Well its not far off, just over 80% of income taxpayers (83.78%) pay about 33% of the income tax bill. The next, smaller group, nearly 15% of the income taxpayer population of 40% taxpayers pay rather more between them – 37.3% of the total income tax bill. The smallest group (1.25% of taxpayers) those paying 45% income tax rates pay 29.6% of the total bill.

So whilst it is only part of the story – higher rate and additional rate taxpayers pay 66.9% of the income tax bill. Yet they only make up 16% of the income taxpayer population.

DO YOU WANT TO TAKE A POP AT THE 1%?

I am not supporting any political position here. I am simply making the statement that factually, if you pay income tax of 45% you are the 1%. As such you contribute a huge proportion of the total income tax bill. In exchange you have no personal allowance and probably a reduced pension allowance of £10,000 – less than an ISA. Let me also remind you that an income of £150,000 does not make you a millionaire…

If you fancy having a pop at the “millionaires”, taking the same data but just considering Additional Rate Taxpayers. There are 16,000 people with incomes of £1m+ (0.06% of income taxpayers) pay 8.79% of total income tax collected. So I will leave this here for you to mull over.

I have taken all this data from published HMRC and ONS documents that you can easily search and check yourself.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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TAX AND POLITICS2019-12-02T12:06:55+00:00

ESHER AND SURREY TOP TAX PAYERS

TODAY’S BLOG

ESHER AND SURREY TOP THE TAX PAYERS

Don’t worry, I’m not going to get into my opinions about politics and the upcoming general election. I am merely going to draw your attention to some data that makes the point that taxation probably determines your politics.

579 TOWNS RANKED IN THE UK

A new study by UHY Hacker Young Accountants found did some sums on average incomes and average amounts of income tax paid across 579 towns of the UK. I might take issue with the idea of an average income; I would much prefer “median” which is the actual mid-point of income. I’m sure you know this, but let’s just make the point.

THE THING ABOUT AVERAGES

10 people, 9 have an income of £10,000 and one has an income of £100,000. The average income is £19,000 (total income divided by 10). The median income (the mid-point in the total range is £10,000). The average is distorted by incomes at either end of the scale.

ESHER AND WALTON

Given the above, it would therefore probably not surprise you that the stockbroker belt has a much higher average income tax. The most expensive area being Esher and Walton, where the average income per person is £68,600 and the average income tax paid is £18,900. London has an average income of £46,900 with income tax of £10,400. Compare this to Nottingham North which came 579th (last) with an average income of £21,700 and tax paid of £2,080. By way of note the national average income tax paid is £4,617 with an average income of £30,780.

WHAT ABOUT HOUSE PRICES?

So just doing a quick check of house prices in Bulwell, NG6 – the average value of property is £139,792 whilst in Esher it is £1,039,615 (according to Zoopla). Again, be warned about averages! Let’s pretend that to buy a property in either you can do so with a multiple of your income. In Bulwell you would still need 6.44x the average income for the area, in Esher you would need 15.15x the average income for Esher. House prices and incomes are related. High incomes are needed to buy higher priced homes.

LIFE IN ESHER COSTS IN TRIPLICATE

The average person in Esher pays income tax of triple the national average. I regularly drive through Esher, it is a pretty little “town” with a flourishing high street, which includes a stockbroker and lots of kitchen companies. Its the home of many celebrities and football stars (its is very close to the Chelsea FC training ground). It has one of my favourite cinemas – the Everyman, (which isn’t obviously more expensive than most others). The give away is the large houses with equally large gates, in fact there are communities of them.

Despite what some might say, the higher earners have had many tax rises. The personal allowance tapered from £100,000 (abolished by £125,000). Inheritances tax nil rate band frozen at £325,000 for a decade. Yes this might be increased to possiblly £500,000 with the additional Main Residence Nil Rate Band, but in practice, if the estate is worth more than £2m, it is lost. Child benefit withdrawn for those earning £50,000. Annual pension allowance cut hugely to an annual allowance of £40,000 but probably £10,000 for anyone with income or relevant earnings of £210,000.

You can draw your own conclusions from why people with more money might vote for tax cuts and why those with less want more tax from those that seem to have more. The regional bias for work and pay does not help with solutions. There are some suggestions here from the ONS.

For the record, according to the ONS, the average pay for employees in September this year (2019) was £26,416.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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ESHER AND SURREY TOP TAX PAYERS2019-12-02T12:11:45+00:00

THE TAX YEAR

TODAY’S BLOG

THE TAX YEAR

The new Tax Year is now well under way. Those of you that are employed will be receiving your first payslip of the new tax year and will also shortly have a P60. For those that are self-employed, many will now be starting to collate information for the tax year that has now ended, ready for submission of your self assessment accounts to HMRC.

I’m often, ok, sometimes… asked why does that tax year begin on 6th April rather than 1st January. This is a good example of “recency bias” in assuming that things have always been as they are now. In practice it wasn’t until 1751 that England adopted 1st January as the opening day of the new year. The Scottish were considerably ahead adopting 1st January from about 1600. It would not surprise most Scottish that they have been out-partying the English on new years eve.

Why? well as is often the case, our calendar and practices stem from religious beliefs and events. England, being Protestant didn’t adopt the Gregorian calendar when it was introduced in 1582 by the Pope. You may recall that the 16th century had somewhat sanguine relationships with Rome and the Catholic Church, so following the lead from Vatican City about when to set the date wasn’t likely to hold a great sense of importance. The Scottish naturally took a rather different approach.

A New Dawn

The Solstice or Spring Equinox really marks the new year, which in England dates back as far as Stonehenge, which I am told is about 2500BC and recent DNA discoveries suggest that those that built Stonehenge were from Anatolia (modern Turkey). March 25th was the equivalent of January 1st.  As Christianity spread and Easter took the place of Spring Equinox, the minor problems of the calendar drift began to materialise over centuries. By 1584 the then Pope Gregory decreed the changes required, making the adjustments. It wasn’t until the Calendar Act in 1750 that the calendar correction was applied to England (and the Empire) in 1751.

In Time with Europe

The English calendar needed to add 11 days to catch up with the Gregorian Calendar. So September 2nd was followed by September 14th. This made for a short year (25 March to 31 December) and tax collectors basically didnt like it, so simply shifed 25 March by adding 11 days and allowing for the Leap Year of 1800, so the new tax year began on 6th April. Not even time can truly bend the two great certainties of life… death and taxes.

Here is a short video we made about this.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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THE TAX YEAR2019-04-29T18:07:11+01:00

NOW WE’RE TALKING

TODAY’S BLOG

NOW WE’RE TALKING

The end of the tax year is only a few weeks away, the latest online edition of Talking Money is available for you to read and we think you should download our app. Its a really useful bit of kit to hold on your smartphone or tablet. You can access it for free from your usual app shop (apple or android) simply search for “My IFA” and when you locate a rather dull grey icon of  of a fella that looks like he may be an outline from the mafia, download and use the password SOLOMONS.

We have created a short video which explains a few of the many features, one I use quite a lot is the mileage tracker which helps me accurately record business miles, but there are loads of features and calculators.

Here is the video of our app

Have a quick look at this video, let me know what you think.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk 
Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

Email – info@solomonsifa.co.uk    Call – 020 8542 8084

WHAT WE’RE ALL ABOUT

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NOW WE’RE TALKING2019-01-22T11:13:34+00:00

OUR APP – MILEAGE TRACKER

OUR APP MILEAGE TRACKER

The mileage tracker within our app has now been updated and improved. This mainly means that it is now even easier to accurately record your business mileage. You need to make a few adjustments such as turning on the GPS tracker and ensuring your personal details are accurate (an email is sent to you with the trips that you do).

The app is loaded with useful tools, many are aimed at those working and needing to report expenses, but also includes all the details about personal income tax and allowances that are relevant to everyone. There are also some great calculators too. All this is free for you to download and use. It costs us quite a bit to provide this, so please do make use of the app and let others know.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

Email me to get in touch
OUR APP – MILEAGE TRACKER2018-10-09T17:40:50+01:00

Conference Season

Conference Season

It is conference season and I my diary is suitably full of my selection of those that I believe merit attention. I’m not attending any of the political conferences and have recently returned from what might be best described as the Premier League of Financial Planners Conference – the annual CISI conference at Celtic Manor.

Yes Minister

Whilst being a non-political conference, clearly insight from the occasional politician or a former one can be valuable. Step forward Steve Webb, who was a LibDem MP and the Minister for Pensions in the Coalition Government, back in the day when politics offered some semblance of common sense.

The Autumn Budget – 22 November 2017

Whilst understandably providing various caveats to his talk, Mr Webb made clear that given the Queen’s Speech, the current Government have essentially given themselves a 2-year timeframe.

 

Not Enough Hours in the Day

He explained that due to the workings of Parliament, this means about 40 weeks in the year that is given over to Parliamentary work. However, 1 day a week is set aside for the Opposition to make their case and another is for MPs to actually work with their own constituents. Given the amount of time that Brexit will consume, there is precious little likelihood that anything significant will change, unless it is populist, garnering all-party support within the available 120 days a year.

Why Tax Rules Are Daft

Aas tax legislation does not have to go via the House of Lords, unlike other acts (for approval or sense check) much can be altered quickly, even with a tiny majority. He made the point that it is precisely because tax legislation bypasses the House of Lords, that so much of it is so complex and poorly thought through. So that in mind, what could the Government possibly muck around with?

What you can pay in

The Annual Allowance – could be reduced further from the current £40,000, despite acknowledging the complexity of the Tapered Annual Allowance, he thought it more likely that this would be extended rather than abolished, perhaps bringing it in for those earning £100,000 rather than £150,000.

What you can get out

Whilst the Lifetime Allowance has already been thrashed to £1m and is meant to now be linked to inflationary increases, he said that cutting it further is an option as “it passes the Daily Mail test – where people think a £1m pension fund is a lot”. He made the point that the Treasury appears to hate pensions (see all recent changes over the last 15 years) but love ISAs, for which they attempt to invent a new one almost each year now.

Employer’s beware

Whilst he thought it unlikely, he also proposed that the Government could apply employers National Insurance contributions to their pension contributions, which would effectively end salary sacrifice arrangements. He also felt it improbable that the tax-free cash lump sum from pensions would end or be reduced, due to the complexity it would create for those that have had, are having or due to have it and rules are difficult to apply retrospectively.

No F-Bombs

Without a single interruption from anyone handing in a P45 or the stage falling apart, the room of delegates was impressed with his delivery and rationale, but sanguine about the prospect of further pension meddling. Everyone I spoke with conceded that ISAs certainly seem to be the favoured investment vehicle for the Treasury as they only give up future tax revenue, rather than current tax revenues. However, reliance on any future Government to maintain promises about ISAs seems probably unwise.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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Conference Season2017-10-05T15:52:58+01:00

Warning to Landlords (and others)

Warning to Landlords (and others)

The Government has made it very clear that tax evasion (not paying due taxes) is illegal and will be prosecuted. Whilst we may all have an opinion about the fairness of the law, failing to pay taxes invariably carries with it the real prospect of prison.

Richard Fuller found this to the cost of his liberty. As a landlord with various properties he failed to properly declare and pay the capital gains tax that was due on those he sold between 2006 and 2013. As a result, he evaded £157,725 of capital gains tax. As of last Friday, he has now begun a 27-month prison sentence and of course assets are being taken to pay the correct tax.

Hidden costs but not hidden taxes

Whilst there will always be people that do well from property investments, the reality is that property is not very liquid. There are also many forgotten or hidden costs – such as purchase and sale costs, insurance, lost rent, improvements, accountancy costs and of course tax on the gains.

It is never worth evading tax. It is illegal and anyone doing so will still find plenty of room at her Majesty’s prison service, despite reports of overcrowding. Mr Fuller was found guilty of cheating the public revenue and fraud by false representation by a jury at Winchester Crown Court.

What the Taxman said..

Richard Wilkinson, Assistant Director, Fraud Investigation Service, HMRC, said:

“Fuller thought he was above the law and decided not to declare or pay the tax due from the sale of some of his property portfolio. It is simply not acceptable to steal from UK taxpayers.

“HMRC will continue to pursue those who attempt to hide their gains on assets, their income, and investigate those who attack the tax system. We ask anyone with information about suspected tax fraud to contact our Fraud Hotline on 0800 788 887.”

Evasion is not Avoidance

In short, don’t mess with HMRC. It is never worth it. Tax evasion is illegal, tax avoidance (which is using legitimate arrangements within the tax laws – such as ISAs, pensions etc) is something that the Government encourage to help reduce reliance upon the State and invest in the UK economy.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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Warning to Landlords (and others)2017-08-14T13:41:17+01:00
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