Those shares you have…

Tax may be due on those shares that you have

As you know, shares are an asset (well they should be) and many provide income in the form of a dividend. This is taxable. Dividends are generally taxed at source at 10% but sadly the tax does not stop there. You have to declare the income so that any additional tax, based upon your other UK income is paid across to HMRC which could be 32.5% or 42.5% depending whether you are a higher rate taxpayer or additional rate (50%) taxpayer. You submit this information via your self assessment return. Anyhow, you may have a few shares that you bought or were “given” many years ago. It is entirely possible that the share is in a company that no longer has the same name. You may have found some old certificates in a dusty old box and assumed that they were worthless.

Checking if “old shares” still exist

It is entirely possible that they are worthless. However it is definitely worth checking first. Despite the advent of technology, tracing shares is a little tricky. Shares listed on the London Stock Exchange are invariably held by one of three registrars. These are Equiniti, Capita and Computershare. If you click on their name it will take you to their website. You can then find out if they look after the company you hold shares in. Alternatively do a search for the original company or check with the LSE, who may be able to provide some assistance (depending on the age of the shares).

Think carefully – CGT may apply

If you decide that the few shares you hold are more hassle than they are worth, please remember that as an asset, they are subject to capital gains tax. In essence you need to know the price you paid for them and the price you sell them for, the difference (the gain or loss) may be taxable. You have a personal capital gains allowance (CGT) which in 2012/13 is £10,600 and would need to be used by 5th April 2013. This allowance means that you can realise gains of £10,600 and pay no tax. The vast majority of people in Britain rarely use their CGT allowance, yet it is highly valuable. The maths is complicated if you have used dividend income to buy more shares automatically, as you will have a series of purchase prices and different “chunks” of shares. You are now in Accountancy dreamland.

There are other options for your shares besides simply selling them, but you should seek personal advice about this as it will depend on the sums involved, your appetite for risk and your requirements for income and capital.

Those shares you have…Dominic2023-12-01T12:23:27+00:00

PPI is taxing

Taxing interest in PPI refunds

As you will have gathered, I’m not a fan of Payment Protection Insurance and never have been. However if you come across someone with this and they have had a successful refund with interest, be warned. Leading accountants are suggesting that the interest is liable to taxation and will need to be declared as income as part of your self-assessment returns. Now, given that 31st January is the deadline for tax payment without a penalty this doesn’t leave much time. However, acting honestly with HMRC is frankly the only approach worth taking. Honesty is clearly not a word associated with the Banks and insurers that sold millions of these policies and as we all know, the PPI claims companies are largely just as dishonest, it is hard to work out who really wins in these situations – even good advisers that didn’t sell this (myself included) have all had numerous calls and queries from people double checking and reassuring them that Income Protection is very different from PPI. Here’s a short video from Which? explaining the nuts and bolts.

PPI is taxingDominic2023-12-01T12:23:26+00:00

The art of investing in Lichtenstein or is that Liechtenstein?

There are lots of ways to invest and you may know that Liechtenstein (with a population of less than 40,000) is one of those countries that provides the opportunity for “offshore investing”. Offshore investment is essentially a decision to defer paying tax until it suits the investor to do so, often when their income or assets or both mean that they do not pay tax at the highest possible rate. You may have read reports that some well-known French have decided to leave their country due to a 75% rate of tax. Be warned though, HMRC have become increasingly concerned about tax evasion and the distinction between tax avoidance and tax evasion seems to be deliberately blurred by Government making advice to use “tax avoiding schemes” considerably more prone to investigation by HMRC.

Liechtenstein has entered into an agreement with HMRC called LDF -or Liechtenstein Disclosure Facility, essentially an initiative to report income to HMRC if it is believed that UK tax is thought to be payable. In short, this is a window of opportunity for those with assets held in Liechtenstein to report their upaid tax to HMRC. In other words, people that know tax is due but have not declared income or assets to HMRC can do so and not suffer the usual penalties for tax evasion (which can include a spell in prison). The window of opportunity closes on 5th April 2016 – so plenty of time for the moment, but I would advise anyone in this position to get on with the process.

This should not be confused with an entirely different opening for a different Lichtenstein, the American pop artist Roy Lichtenstein. The Tate Modern are showing a new exhibition from 21st February and you can now book tickets. Lichtenstein would have been 90 this year. As an investment, Roy Lichtenstein is very collectable, in May last year a piece called “Sleeping Girl” sold for nearly $45m at Sotheby’s in New York. So making sure that you don’t muddle your Lichtenstein with Liechtenstein will make a significant difference to your wealth. If you fancy a look at Sotheby’s in action, there is a significant evening auction in London on 12th February with works by Basquiat, Richter and Bacon.

The art of investing in Lichtenstein or is that Liechtenstein?Dominic2023-12-01T12:23:26+00:00

UK Residency Tax Test

UK residency for tax purposes?

I went along to the London Boat Show at the weekend. Some amazing boats – many the size of a house. For those looking for a floating home you will need to take care about where you are deemed resident for tax payments. You are deemed a resident of the UK if you spend 183 days in the UK during a tax year. One of the automatic residency tests is if you have a home in the UK for more than 90 days, you are present in the UK on at least 30 separate days. If you have more than one home in the UK, you should consider each of those homes separately to see if you meet the test. You only need meet the test in relation to one of your homes.

The London Boat Show is on for the rest of the week. There are some amazing boats on display including the Pearl 75 which has a hefty £3m price tag. Here is a short video of this high end boat that first appeared at the Southampton Boat Show in 2012.

UK Residency Tax TestDominic2023-12-01T12:23:21+00:00

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