NEWSLETTER FOR WINTER 2010  [Website hits: 8,329 – last 12 months]

Another year, of living through a recession for most of us has been completed.  With Interest rates at an historic all-time low, it is considered that those who can take advantage of paying down (ore even paying-off) debt, do so at the earliest opportunity.  The golden rule for decades for mortgages was always: “borrow as much as you can over as long as you can”. While this might have been great in times of inflation, when next year’s income was likely to be higher, this is not always so in recessionary times when we are struggling to keep our heads above water, and remain “in business”.  Therefore, where possible, pay off debt before the interest rate increases. If one is faced with increased repayments after being fully (or even over-) committed, solvency could be a problem.  This Practice has always advised: “don’t put yourself in debt that you cannot afford to repay”.

The Coalition Government after the General Election of May 2010 appears to have been in internal turmoil with several “trade-offs”, and left businesses and self-employed facing difficulties.  The tax legislation has not assisted the small business.  Indeed with no increase in Personal Allowances, and Tax Bands, more self-employed are likely to be faced with an increase in their next tax bills falling due after 6 April 2011.  Payments on Account are only arbitrary, and have no real accuracy on a person’s profits.  They are based upon the previous year’s tax and are designed to keep Her Majesty’s Revenue & Customs in funds on a regular cash-flow basis.  The real crunch comes when the final payment falls due the following 31 January 2012.  Those clients whose Financial Accounts are prepared swiftly after their Financial Year ends (the majority of our clients) and who provide all relevant detail after 6 April annually to prepare their Personal Tax Returns well before 31 July annually, are aware of their payments due – and so they should be in control. 

Inheritance Tax changes mean that we still need to be aware that any attempts to keep our clients’ Income Taxes down, so that they can keep more of their Capital, could mean problems with Inheritance Tax as well as Long Term Care Home fees.  Careful tax planning is needed.  Please feel free to contact us on this.

Student Loans for clients whose offspring are seeking a university course, need to bear in mind that with the Parliamentary Vote in December 2010 to allow increases in tuition fees, could mean that a prospective graduate could face a huge loan.  Consideration should be given to not taking the “gap-year” as this could create a further year of debt.  Also, an alternative to university courses that do not readily lead to a career (“Mickey Mouse Degrees”) in favour of an apprenticeship in a recognised trade, might be a more financially rewarding career opportunity.

Royal Mail problems continue –  Please do continue to write your names (and addresses) on the back of correspondence.  Beware of under-stamping post as “red cads” mean that post is not collected from the Sorting Office as the time factor is uneconomical. 

Filing of tax returns  – the date for paper returns passed on October 31.  Our practice has filed “on-line” for the past four years, but if yours has not been filed, please look up the information requested of you in April, and let us have the information, in full, immediately.  The filing date is 31 January 2011.  There might always be a difficulty in December and January to complete clients’ tax return papers sent in those months, correctly and in full by the filing date, but we will always try to complete the tasks.  Our fee structure might have to be re-considered to accommodate this, and so promptness is paramount.  A huge thanks to the majority for whom this is never a problem.