NEWSLETTER FOR WINTER 2011  [Website hits: 6,804 – last 12 months]

Will writing – if you haven’t yet made your will(s), please give this some priority, as anyone with assets in excess of £325,000 (yes there may be some of you), can face an Inheritance Tax liability (at 40%).  Transfers between spouses (and civil partners) enable this to be doubled.  However, unmarried couples are not able to do this for tax planning.  Taking advantage of the planning opportunities can make a huge difference to the value of your estate which eventually passes down to your children. We would be happy to talk with you about how these opportunities might be used in your situation.

One of the downsides of tax planning, means that if “wealth” or “capital” is accumulated, and tax minimised, Care Home Fees can be landed on clients with amounts in savings and assets in excess of  the upper capital limit is £23,250 (as from April 2011). Savings of less than £14,250 are ignored. A person who is in between the capital limits will have to make a contribution to their care costs on a tariff rate depending on how much they exceed the minimum.

Your savings include any money in bank and building society accounts, stocks and shares, and property (land and buildings). Any joint ownership is counted according to that person’s share.

Tax collection -

HMRC are adopting a new, targeted approach to the collection of overdue taxes.  Letters will be stronger in tone if taxpayers (why do they continue to use the misnomer “customer” when they are a monopoly?) have a history of non payment and are ignoring their attempts to contact them.

The moral of all of this is contact HMRC before debts arise to explain if there are potential issues regarding future payment.

If businesses do not contact HMRC before payment is due, HMRC’s strategy is to segment taxpayers   according to their previous behaviour, payment history and risk.

The best way of avoiding a visit or court appearance is for businesses to respond to HMRC letters.

All remaining VAT registered businesses will be required to file VAT returns online and pay any VAT due electronically from 1 April 2012.

Small business – it is, (at last?), recognised that there are three million unincorporated businesses in the UK that have a turnover of £70,000 or less, including approximately two million with a turnover of £20,000 or less, it is not surprising that a review of small business tax is on the agenda for debate.  This is being undertaken by the Office of Tax Simplification – surely an oxymoron if ever there was one?  People carrying out trading (and not declaring it) such as “E-Bay” (on the Internet), regular Car Boot Sales, Local Paper adverts, etc, have been included in a “target” for undeclared tax.

Tax Rates 2012-13 were announced in the “Autumn Statement” of 29 Nov 2011.  As ever, it was a “Parson’s Nose” whereby Personal Allowances were raised, but the Higher Rate Tax Band (40%) was reached quicker, plus the “Bankers’ Tax Rate” of 50% for “earners” in excess of around £160,000.  As ever, in order to “balance” its “books” there are losers, Pensioners, those with dependant children, etc.  Such is the price we pay for so called “democracy”.  But that’s a subject for politics.

Interest Rates the 2010 Newsletter highlighted that, where possible, pay off debt before the interest rate increases.  The News Media focussed on the huge amount actually repaid.  This Practice has always advised: “don’t put yourself in debt that you cannot afford to repay”.

Student Loans - If the sum of all your relevant income is over the annual threshold of £21,000 (previously £15,000), Student Loan repayments will be due at a rate at 9%. 

Media Appearances in 2011, I was on London Broadcasting Co (LBC), three times, talking about “tax”.  As ever, as a “High Street Accountant” I have tried to keep my “ear to the ground” – for YOUR benefit.