|MARTIN LEVIN & CO|
|Taxation Practitioners Accountants & Auditors||
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NEWSLETTER FOR SUMMER 2005
Filing of self-assessment tax returns
What an excellent month May 2005 was for filing Returns. Those who sent in their data were found to have provided precisely the information that has always been requested. As a result, a special discount was given, and all of those Returns were filed – without panic. Thanks for that, as the Revenue took around 2 months to issue its own calculations. So if anyone was dependant upon “tax” credits, family credits, pension credits, university/educational grant forms, all the information was available – and at no extra charge.
Government problems: yet again, the problems highlighted in these Newsletters re-surfaced, with the fact that many persons had been overpaid on their Tax Credits (actually welfare payments). The information needed for this is based upon a past tax return, so unless your tax affairs are up to date, you cannot complete the claim form to receive any extra money that the government publicly announces “is yours”. It was discovered that the cost of setting up the system was around £2billion – a staggering amount for a system that has proved to be inefficient.
Estate Accounts – in July it was announced that even small Estates (under £5,000) needed to have a Return prepared. The previous limit was way above this (around £250,000) as there might have been Inheritance Tax to be paid. Now it seems that the Revenue wanted to look at all forms of savings – to reconcile the Tax Returns – to see if there was adequate “scope” to put money in saving accounts, perhaps?
Stamp Duty Land Tax became more complicated. Once a property was bought, the solicitor had to fill in around 70 questions (instead of 12 as previously). The Revenue computers were “reading” the comma separator (to show thousands), as a Zero, and so rejecting a huge proportion. If you experienced this, make sure that your solicitor did not charge you for it. You should not pay for that time. Complain – and not to the Law Society as they seem to run a cartel of protecting their own – but to the Newspapers.
Tax Freedom Day – is the day, that the Adam Smith Institute has decided, after which we have paid our taxes to the government and are allowed to keep our earnings. This year (2005) has shifted eerily to be May 31. I see, eerily as looking back at other Tax Freedom Days, I see that these were in early May only 10 years ago. It shifted a further 3 days since the previous year. “Nothing is certain but death and taxes”, so we, as accountants have to work harder to serve you to ensure that the government take is not so huge on your efforts.
Pensions are never far out of the picture. On 6 April 2006, we are faced with yet more rules. The day has been termed “A Day”. Limits on the amounts that “fat cats” can put into their pension schemes come into play. Much marketing from Insurance Companies and Independent Advisers exists. No doubt these will be stepped up in February 2006. We do have a link (no commission) with an Independent Firm should you seek more on this topic. The tax on pension funds continue to be taken unashamedly by the government, thus ensuring that the UK stock market lags behind the continental ones, and our contributions into our funds are not worth as much as we first thought. That is another reason why we have not be promoting top-up figures in March, and another reason why our Tax return Worksheet comes out after 6 April rather than beforehand.
Inheritance Tax bites at a modest £275,000, and the number of estates paying this once voluntary tax has more than doubled since 1997. Care needs to be taken for tax-planning here, as it can come into conflict with long-term care fees. In our opinion, this is going to be huge bone of contention in the near future, as more elderly persons need to go into care homes, and the cost of nursing them is placed on the individual’s family rather than the “state”. Ask us for details on the plans currently available.
The Web Site continues to attract nearly 8,000 “hits” a year. The busiest month was April (surprise?) with nearly 2,000.