Tax Rates Archives - Page 2 of 2 - Financial Planning in Wimbledon

Grace Extended for Confessing to HMRC

1937: True Confession – Ruggles

Financial Planners are duty bound to help clients make wise decisions when it comes to how money is handled. We are also duty bound to report any fraud or tax evasion to the relevant authorities, which is not something that I have ever had to do to date. HMRC are in a precarious position at the moment, on the one hand they need to raise money (tax) properly so that our ailing economy can still pay its way and so must appear tough on those that pay late or evade their taxes. At the same time, this is set against initiatives to encourage honest reporting of income with sweeteners to help the decision to “come clean” rather easier. Hence the decision today to extend the LDF Leichtenstein Disclosure Facility. The LDF is such a sweetener that enables taxpayers to declare previously undeclared or unremitted income and associated tax. The sweetener is that the penalties are reduced dramatically by 80%. To date over 2000 people have taken the opportunity to confess all and this tactic has worked rather better than probably HMRC imagined. As a result the sweetener has today been extended by a further year until 5th April 2016. This follows double taxation agreements with Liechtenstein. There is a real sense that HMRC will now be able to accurately trace such funds and therefore common sense would suggest, coming clean is the least punitive option.

This has nothing to do with the Spurs Manager, Harry Redknapp case, which came to an end today. This is an entirely different matter where Mr Redknapp didn’t pretend that money had not changed hands, but the purpose behind the transaction was rather vital for taxation purposes – was it connected to employment or not? which has taxation implications. Mr Redknapp won his case today. Given Mr Redknapp’s profile, it is surprising that this went to a Criminal Court rather than a taxation tribunal, but presumably HMRC were attempting to convey a message to the wider population.

If you are in any doubt about tax matters, I can put you in touch with a variety of Accountancy firms with relevant expertise. Most importantly please understand that tax evasion is illegal and can carry a custodial sentence.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Grace Extended for Confessing to HMRCDominic2017-01-06T14:40:09+00:00

Taxing the House

1957: House of Numbers – Rouse

Sophisticated financial planning, often involves making the best of the tax system. Independent Financial Advisers are not Accountants, but there is some degree of overlap. To generalise, an Accountant tends to work with historic tax, whereas an IFA or holistic financial planner will attempt to use tax allowances in the current tax year and be planning for tax in the future. A good financial plan will consider tax advantages where appropriate. Often we work with Accountants. That in mind, here are a couple of pointers about tax items currently in the media.

Firstly the Liberal Democrats are fairly keen to introduce a Mansion Tax. That is, a tax on residential properties worth £2m or more. This would be an annual tax of 1% of the value of the property (thus a minimum £20,000). So those with large homes need to consider the possibility of this being implemented by the Coalition Government. On a similar theme, the Chancellor, George Osbourne, is reviewing those people that are avoiding (not evading) the Stamp Duty on property purchases in the UK when the property is bought through an offshore company. This is something that seems to have become commonplace in London and the Home Counties over the last 10 years. The sums involved are significant as Stamp Duty on property valued at more than £1m is 5% (so a minimum of £50,000).

The 31st January 2012 is rapidly approaching for people to submit their tax returns online. There is a penalty of £100 for not doing so on time. However due to a planned strike by HMRC staff, the taxman has decided to provide an extra two days grace due to the strike which may have resulted in rather more people being fined. The taxman also warned people about paying tradesmen in cash as invariably this is not declared as income by the tradesman. As a consequence this is lost revenue to HMRC and therefore the rest of the UKplc. It is essentially a tax-dodge if someone does not declare their income correctly, this is illegal and known as tax evasion. The Spurs Manager, Harry Redknapp has been in court this week attempting to explain his own actions and I am sure that this is an experience the rest of us would wish to avoid. Mind you, it seems that some politicians do not appreciate that tax avoidance is legal and tax evasion is not.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Taxing the HouseDominic2023-12-01T12:48:03+00:00

Tax Deadline Looming – Check P800 Forms

1954: An Inspector Calls – Hamilton

It is important that you check tax documentation. A key date in the tax diary is nearly upon us (31st January) and it is hard to avoid the HMRC advertising in London. However, just because you have a document from HMRC that says this is what you owe, it is worthwhile checking as often the tax inspector estimates tax. This is particularly so for a P800 form. The form is the HMRC view about whether you have underpaid or overpaid your taxes. Remember that under self-assessment rules you are personally responsible for the accurate reporting of your tax to HMRC.

Time is running out, but in order to prepare for each tax year you should obtain your P60 and ideally all payslips for the relevant tax year. Certificates or statements from your bank showing any interest paid and probably taxed on interest. You will also need dividend information, these form part of your income. You should also have details of any pension contributions that you made and any charitable donations. There are many other elements too – but this will depend on the nature of your investments.

I do not submit tax returns, but clearly all financial advisers have a pretty good understanding of the tax system (and have usually have qualifications for this). We ask for this sort of information so that we can get our records as accurate as possible for clients and remember that your tax position may significantly effect how your financial planning is put together and the order in which tasks are performed. Getting accurate from you information is vital.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Tax Deadline Looming – Check P800 FormsDominic2023-12-01T12:48:06+00:00

Child Benefit and the Parent Trap

1998: The Parent Trap – Nancy Meyers

I’m never really sure why the media suddenly latch onto a story in a rather herd-like mentality. The Government planned and announced changes to child benefit some months ago, in October 2010, yet today the media is awash with this information and the basic gripe that it is possible that a couple both earning just under the higher rate tax threshold will continue to receive the benefit, whereas a family with one earner, perhaps just breaching the higher rate tax threshold will see their child benefit stopped.

One would like to think that this was an easy process, after all, in order to claim child benefit claimants need to record their details accurately, including information about their partner and need to provide national insurance numbers – which are unique to each person and directly link to HMRC data about income. However, the new rules, do seem to be somewhat unfair on families that have lower combined income, but where one partner earns enough to pay higher rate tax – even if this is a very small element of actual income.

The Treasury spend £12bn a year on child benefit and these proposals are expected to save £1bn. The changes were scheduled to come into effect by 2013 however the anomaly of a couple earning £80,000 and being able to claim child benefit against a couple earning £45,000 and not being able to do so has made the possibility of an easy solution less workable. The Chancellor has a Budget on 21st March, so now has a few weeks to get his think-tank working on a solution.

As mentioned before, it is possible for some people to reduce their taxable income below the higher rate level by making charitable gifts or pension contributions.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Child Benefit and the Parent TrapDominic2023-12-01T12:48:13+00:00

Radical Idea – Tax Everyone?

1955: Rebel without a Cause – Ray

Yesterday I blogged that the “Taxman Cometh” who prosecuted a man for unpaid taxes (and undeclared income). Today there is news that HMRC make deals with some big businesses regarding the payment of taxes – with MPs fairly cross that the taxman is not cometh enough! and rather too cosy with some of the big businesses in the UK to the tune of £25bn – one notable company being Goldman Sachs. Certainly it is very tempting to believe that HMRC are not being tough enough on large companies, however the story has two sides. Personally I doubt very much that HMRC are lenient, the real issue is the UK and global corporate tax system that enables both individuals and companies to create and register companies around the world, in more “favourable” tax regimes. The rules of corporate taxation are complex and frankly this is the realm of the big Accountancy firms that exist to reduce taxes for big business. There is an obvious correlation between the two. The existence of different tax regimes and rules that permit their use make such tax avoidance legal, yet clearly morally questionable. HMRC are unable to collect taxes that are legitimately avoided.

So whilst MPs and the media might wish to wag a finger at HMRC, I suspect that this has something to do with there being a need to apportion blame to someone for the lack of tax revenues and consequential spending cuts across the country. One might say a story of convenience.

Any Government wanting to reform our welfare system and improve the transparency of the tax system could make very radical reforms. None have the desire or courage to do this believing that providing a genuinely transparent tax system would result in many large business, supposedly providing both employment and taxation would leave the UK and therefore leave us worse off. They believe that the gamble would not be worthwhile. I have a very radical approach to this, which most will find surprising given that I spend most of my time advising relatively wealthy individuals and helping them make the most of their income and investments by making use of the available allowances. Here’s my radical suggestion – have one rate of tax payable by all on all income or capital gains for individuals and organisations. This would mean that everyone pays tax and therefore “contributes” to the State upkeep (provided that they have income/gains). There would be no need for the very wealthy to hide income or gains if the rate of tax was the rate as everyone else. All income/gains earned or paid to or generated from the UK would be subject to tax. Those that have more pay more, but proportionally the same.

The consequences are of course unknown, but I suspect that there would be little need for HMRC beyond purely collection, or Accountants beyond accounting or financial advisers beyond planning. The State should then live within its means and perhaps we would actually achieve a genuinely creative culture that improves itself.

I warned you it would be radical! Perhaps not as radical as some of the suggestions from UK Uncut, who are, whatever you think of them, at least providing alternative ideas for a system that seems largely bereft of them. If this is our country, then surely we should all be taking an active interest in the society that we want it to become. As I hope is obvious, I believe in enabling people to prosper, creating wealth and independence. We need the rich to help create wealth. I’m not convinced by arguments to cap incomes, I am convinced by the notion that ones own security also lies in the prosperity of neighbours, a society that is full of envy can surely only generate greater insecurity.

DT

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
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Radical Idea – Tax Everyone?Dominic2023-12-01T12:48:20+00:00

Squeezing The Middle – Tax is the Clue

1941: Ladies in Retirement – Vidor

We have heard discussion about the squeeze on middle-Britain, with politicians being typically vague at defining what they mean by middle-Britain. My guess is that it is anyone that has an income between £30,000 and £250,000 – yes quite a range I know, but in the big scheme of things, probably representative of who is actually paying the most taxes to HMRC. Anyone with declared earnings under £30,000 is paying 20% unless they are over 65 and caught out by the age allowance trap (which is where the additional, age-related personal allowance is gradually reduced back down at a rate of 50% for every £1 of income over £24,000 in 2011/12).

So by way of a “heads up” from April, the scheduled changes to the tax system that will most likely effect you are as follows:

1. The standard personal allowance rises from £7,475 to £8,105

2. The age related allowance 65-74 rises from £9,940 to £10,500

3. The age related allowance 75+ rises from £10,090 to £10,660

4. The age related reduction trigger rises from £24,000 to £25,400

So if you are retired and you can adjust your income to £25,400 you will be better off. You can only “adjust” your income if you have assets that produce income that you can turn on and off, which probably means that you have had some very good financial planning advice. This would involve use of ISAs and using capital gains as income and so on.

Sadly, whilst the standard personal allowance rises, the band on which basic rate tax is levied is reduced from £35,000 to £34,370. Also don’t forget that if your declared income is £100,000 or more you begin to lose your personal allowance anyway. The good news? well the 50% tax rate will remain unchanged on any income over £150,000 – if indeed this is good news.

If you would like to have a look at a little more detail, here is the link to the HMRC tables for 2012/13.

DT

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Squeezing The Middle – Tax is the ClueDominic2023-12-01T12:48:30+00:00