Last year over 30,000 people filed their tax returns between christmas eve and boxing day12/19/2021  Tax Affinity Accountants have branches local to you Did you know last year more than 30,000 people in the UK did their tax return between Christmas Eve and Boxing Day?
As of writing this, there are only 20 working days left until HMRC's self assessment deadline of 31st Jan 2022. Each year millions of people leave their tax return (self assessment) to the last minute and then stress out if they declared the info correctly and if the tax due is correct. Statistically the number one worry tends to be if their submission may trigger an HMRC investigation into their tax affairs... death and taxes being the fear we suppose. Plus in the last tax year due to Covid 19 and lockdown's there were many other sources of income e.g. council support grants, SEISS (self employed grants), furlough, bounce back loans, universal credit, tax credits etc. Making tax returns more complicated and resulting with higher taxes due for most tax payers. If your worried we recommend you get in touch with one of our tax experts. Because we have seen a lot more investigations this year than previous years as HMRC starts it claw back to try to shore up the UK government income and focuses even more on tax avoidance and incorrect information. So if you have not had your 2020/21 (6.4.20 to 5.4.21) tax return (self assessment) completed then you urgently need to get in touch today as the number of working days are fast decreasing and before you know it the time will be gone and you may end up facing badly caclulated tax return paying more tax than you need to or worse a fine by HMRC for missing the deadline. Contact us today by clicking this link or calling us on the number above. And share this page with your friends and family. By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.
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 Only 20 working days left until HMRC self assessment deadline.
Did you know this year over 2700 people did their tax return on Christmas day this year according to HMRC. Those that did know that they have to get it done before the deadline of 31/01/2021 and that there is only 20 working days left (as of today 31/12/20). So if you have not had your 2019/20 (6.4.19 to 5.4.20) tax return completed then you urgently get in touch today as the number of working days are fast decreasing and before you know it the time will be gone and you may end up facing a fine by HMRC for missing the deadline. By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends./  The UK Government and the Chancellor have set out a package of temporary measures to support public services, people and businesses through this period of disruption caused by COVID-19.
This includes actions to support businesses including:
If you need help with your applications for government grants, loans and allowances as described above then as authorised HMRC agents and expert tax accountants Tax Affinity Accountants are available to support your business at this critical time. Urgently contact us by clicking here and we will use our expertise to support your business through this difficult time. Support for businesses through the Coronavirus Job Retention Scheme Under the Coronavirus Job Retention Scheme, all UK employers are able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. Eligibility All UK businesses are eligible. How to access the scheme You will need to:
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan. Support for businesses through deferring VAT and Income Tax payments Government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021. VATFor VAT, the deferral will apply from 20 March 2020 until 30 June 2020. Eligibility All UK businesses are eligible. How to access the scheme This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal. Income Tax For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. Eligibility If you are self-employed you are eligible. How to access the scheme This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period. HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities. Support for businesses who are paying sick pay to employees Goverment will bring forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
You are eligible for the scheme if:
A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed. Government websites will contain more details. Support for businesses that pay business ratesBusiness rates holiday for retail, hospitality and leisure businesses Goverment will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible. Eligibility You are eligible for the business rates holiday if:
There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible. You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator. Further guidance for local authorities is available in the expanded retail discount guidance. Cash grants for retail, hospitality and leisure businessesThe Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000. Eligibility You are eligible for the grant if:
You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority. Find your local authority on Google. Support for businesses that pay little or no business ratesThe government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered releif. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. Eligibility You are eligible if:
Guidance for local authorities on the scheme will be provided shortly. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority. Find your local authority on Google. Support for businesses through the Coronavirus Business Interruption Loan SchemeA new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments. Eligibility You are eligible for the scheme if:
You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow. The scheme will be available from early next week commencing 23 March. Support for larger firms through the COVID-19 Corporate Financing Facility Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies. This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. Eligibility All UK businesses are eligible. How to access the schemeThe scheme will be available early in week beginning 23 March 2020. The Government will provide information on how to access the scheme soon - keep an eye on their website updates. More information is available from the Bank of England website. Support for businesses paying tax: Time to Pay serviceAll businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. Eligibility You are eligible if your business:
If you’re worried about a future payment, call HMRC nearer the time. Insurance Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met. Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics. If you need help with your applications for government grants, loans and allowances as described above then as authorised HMRC agents and expert tax accountants Tax Affinity Accountants are available to support your business at this critical time. Urgently contact us by clicking here and we will use our expertise to support your business through this difficult time. By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames and Epsom they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.  Branch in Worcester Park Changes to UK Income tax rates changes for 19/20 from 5th April 2019:
Personal allowance: Up to £12,500, Tax 0% Basic rate £12,501 to £50,000, Tax 20% Higher rate £50,001 to £150,000, Tax 40% Additional rate Over £150,000, Tax 45% Allowances: There are many other changes with tax allowances such as Annual Investment Allowance claimable rising to £200,000 per annum. Dividend tax rates: The tax-free dividend allowance is £2,000 Basic-rate taxpayers pay 7.5% on dividends Higher-rate taxpayers pay 32.5% on dividends Additional-rate taxpayers pay 38.1% on dividends. Corporation Tax: Rate remains at 19% Directors Loans: If loaned amount exceeds £10,000 at any point during the year then 2.5% nominal interest on the whole amount plus Class 1A National Insurance contributions (13.8%), and may need to be reported on your P11D As market leaders and experts in Tax and accounting for business, there are of course many other changes as well and these we regularly advise and update our clients as and when the tax rules change. If you would like to become a client and receive this support and updates - contact us today. By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames and Espom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting contractors and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.  It's April and this means the end of the previous tax year and start of the next. HMRC's personal tax year runs from 6th April to 5th April each year.
The start of the new UK tax year from 6.4.18 means there are new opportunities and new rules and allowances that now apply. So, it is a good time to take a moment and work through what is best for you and your personal circumstances to make them more tax efficient and plan and budget for the coming year. The UK government and HMRC are ramping up their collection system and enforcement to try to get as much money in to pay for Brexit and other services etc so it’s up to each individual to become more vigilant to how they may end up with less in their pocket than previously. Checking your income tax code regularly is now a necessity. Call HMRC immediately if something looks incorrect or out of the norm. Tax codes can often be incorrectly produced if there is a slight mix up in info and recent news reports have highlighted more changed tax codes than usual. Complete your personal tax return for 17/18 early. It’s not worth waiting till 31st January 2019 when its actually the payment deadline day to work out how much tax is due if your self-employed because if you are owed a tax refund this means waiting till Feb / March 2019. Also, if you do owe tax then you have 9 months to plan and budget to pay for the sooner you know how much is due. The personal tax-free allowance goes up to £11,850 from £11,500 and dividend tax allowance falls to £2000 from £5000, similar movements with other allowances means it helps to plan ahead to decide which year to receive and declare income. A good tax accountant can help with this - note an average bean counter (accountant) does not normally keep up to date with rapidly changing tax rules and regulations so may not be able to help. We always recommend you speak to an expert tax accountant - they should save you far more in tax than they ever charge plus their fees are tax deductible - so it’s a win, win situation if your serious about planning ahead and paying less tax the correct way. By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.  With none of the politics and huff that goes along with a budget just before a major election. The media maybe filled with information about the colour of the chancellor's tie and the opposition's facial expressions.
So at Tax Affinity Accountants we know and understand that businesswomen and men simply just want to just know what the effect will be on their business. That's why we have compiled a simple at a glance list to help you. 1. The Income tax personal allowance will be raised to £10,800 starting from 6th April 2015 (from £10,600) and to £11,000 the following year. 2. The higher rate of tax threshold is also raised to £43,300. 3. Plans to abolish annual tax return and move to a more automated digital accounts system. 4. Plans to abolish Class 2 national insurance contributions for the self employed in next Parliament. 5. Growth of the economy forecast to be up to 2.5% this year. Then 2.3% next year before reaching 2.4% in 2019. 6. Inflation is forecast to be at 0.2% for this year and the same for the next three years. 7. Fuel duty to remain the same as before as September's planned increase is cancelled. 8. Plans to sell get money back when banks were bailed out. £13bn of mortgage loans still owned by the government from Northern Rock and Bradford & Bingley will be sold. Plus £9bn of Lloyds Banking Group shares to be sold this year. 9. Alcohol duty changes see 1p off a pint of beer and a 2% cut in cider and whiskey duty. While wine duty is to same as before. 10. Changes in ISA's. Total annual savings limit for ISAs has been increased to £15,240. With some types of ISA which will allow savers to draw money and put it back in the same year without losing any part of their tax free allowance. And a new help to buy ISA for first-time buyers will allow government to top up by £50 every £200 saved for a deposit. (speak to your bank for more details). 11. Changes so that pensioners will now be able to trade in their annuities for cash, with the 55% tax abolished and tax being applied at a marginal rate. 12. Plans to review inheritance tax avoidance through "deeds of variation". 13. A new personal saving allowance where the first £1,000 interest on savings income will be tax free for 20% basic rate taxpayers and £500 for higher 40% tax rate payers. 14. New tax on diverted profit to come into effect next month. This is aimed at companies moving profits artificially off shore. 15. There are plans to review of business rates to help businesses. 16. And for charitable donations the gift aid limit for charities to be extended up to £8,000. By Omar Tahir Khan at Tax Affinity Accountants. Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they provide a bespoke service to clients right across the UK and are considered in the industry to be experts in business advice. They mentor and support members of the public to make their businesses grow and reach their full potential. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.  Q. Why is he dressed like a police officer? A. Shhhh act normal... HMRC can open an investigation into your tax affairs at anytime, and can request to go back up to 20 years (although it is normally no later than 6 years). When you receive a letter stating HMRC are pending an investigation, it can be a very tense and stressful time even if you have done nothing wrong. Investigations can occur for a variety of reasons. The most frequent is an obvious mistake that HMRC can see whilst looking through the information you have submitted to them. The mistake can be on any scale of seriousness so should not be taken lightly. If you spot a mistake and tell HMRC about it, they will still have to open an investigation still but it will be less severe and strict. Sometimes, a business selected for an investigation is totally random, HMRC will pick a few businesses in an area, maybe that are tax-fraud hotspots, just to make sure there is no tax evasion going on. HMRC are also the epitome of suspicious. If your sales figure has gone drastically up or down from one year to the next or are hugely different to the industry average, they will look into why this is. The letter from HMRC will normally have clues on it as to why you are being investigated. It will also detail what direction the investigation will be taking. When you receive this letter, the emphasis is to act fast as if you do not have all the required information ready and at hand when the investigation starts, you will be seen as unorganised. HMRC have the ability to request information from third-parties such as banks and other businesses. This is the extreme as normally they will look for co-operation, from the person being investigated, which will not only speed the whole process, but reduce any fines or penalties incurred. This can be just allowing them access to your files or it could be letting them interview you for a day. If you have made clear and obvious mistakes but do not allow HMRC access to your documents, the fine can be doubled, making it much worse for you. The effect of not co-operating on your business is as follows:
The general trend is that it is at this stage people will go and ask for professional help. The best people to see are tax accountants such as Tax Affinity Accountants who can help in various ways with the investigation. Some are below:
Even when the investigation has finished, there is no guarantee that you will not be investigated again. If you were randomly investigated one year and then the next year your profit figure increased dramatically, you could well actually be at risk of being investigated again. HMRC will not take to kindly either if you have already been found to be responsible in a previous investigation and then continue to make mistakes in subsequent years. This blog might seem all doom and gloom but regulations are in place for the amount of tax that should be paid by either businesses or individuals. HMRC just apply this regulation as it would be unfair for some people to get away with not paying enough tax. If you have done nothing wrong, or even make an innocent mistake, HMRC will not be aggressive or disruptive. If you co-operative with them, they will ensure the investigation is as pain free for you as possible. A Tax Accountant’s expertise and experience will help you greatly both financially and emotionally. As the fees that you may have to pay will be far outweighed by the amount of tax saved in direct negotiations with HMRC. They know what the situation is and what the next move by HMRC will probably be. This means that anything unusual going on by HMRC will be noticed and prevents you from submitting too much information or making the investigation drag on longer than it should. The key is to co-operate with both your Tax Accountant and HMRC so the investigation is over quickly and as By Owen Cain at Tax Affinity Accountants CIS: Sub-contractor Tax in the construction industry The Construction Industry Scheme, CIS, details payments for sub-contractors from contractors. As the name suggests, it is only applicable in the construction industry. When a contractors needs work from a different skills set (like an electrician, plasterer or plumber), the person(s) they ask to complete the work will be a sub-contractor. The rules as to what qualifies as construction are complex and it worth seeking professional advice to ensure you are not over paying tax. If you are a sub-contractor in construction, you need register under CIS and be registered as self-employed. As the contractor gets a sum of money for the work as an entirety, it is the contractor who is responsible for paying the sub-contractor. As it is a service based position, income tax and NI contribution are taken off the wage of the sub-contractor by the contractor and paid to HMRC at a rate of 20% of the total pay. The tax year for any sub-contractor or self-employed persons is 6th April until 5th April the following year. During this time, all gross pay and deductions will be added together to work out a total pay. Then the profit for the sub-contractor will be worked out after deducting cost of materials and then any other business expenses such as training, travel or phone bills from the income. If, at the end of the year, the contractor is below the personal allowance threshold (£9,440 for the year ending 2014, going up to £10,000 for the year ending 2015) they will not have to pay any tax. Therefore any tax paid by contractors to HMRC out of the sub-contractors pay will be refundable. See below example for Mr J Bloggs, a plasterer:
As we can see, the profit for the year is below the personal allowance for the year ending 2014 (£9,440). Therefore, Mr J Bloggs should not have paid any CIS deductions so he is able to reclaim the £2,400 from HMRC at the end of the year. See below example for Mrs J Smith, an electrician, when the profit for the year is above the personal allowance:
In the above example, the profit for the year is above the personal allowance by £5,360. Therefore tax paid should equal 20% of £5,360, which is £1,072. However, we have paid £4,400 from CIS Tax deductions. This means that Mrs J Smith is eligible for a Tax refund of £3,328. The same tax rules apply for sub-contractors and self-employed persons as those in employment meaning when you hit the upper threshold (£41,450 in the year ended 2014 rising to £41,865 for the year ending 2015) you will have to pay 40% tax on that amount. The summary is below, using the 2015 figures:
To try to make the above simpler, we will look at how much tax should be paid by Mrs O McKenzie who had an income (profit) for the year of £55,000:
If all of her income came from sub-contracting, the amount of CIS Tax already paid would be 20% of £55,000 which is £11,000. She is due to pay £11,627 so she would have to pay HMRC an extra £627 to avoid a potential fine in the future for Tax Evasion. This profit figure is very high so most sub-contractors who register under the CIS as self-employed will get a tax refund. It is advisable that if you qualify for this scheme, you do so as it will more often than not result in you getting money back from HMRC at the end of the tax year. There are also National Insurance (NI) contributions that need to be paid. These are more complicated as the amount you pay will vary with the amount of profit you have at the end of the year. There are different classes and different personal allowances depending upon what type status of employment you have and what your level of income is. It is worth seeking a professionals help at this point to ensure you do not make a mistake and pay the wrong amount. If you are still confused, or think that you should get a refund, and want to know what the next step is, get in contact with us here at Tax Affinity. Use any of the contact details on the website and we will gladly assist you on the next stage. By Owen Cain at Tax Affinity Accountants 
How to save Money on Capital Gains Tax
How do you save money on Capital Gains Tax? For an Accountant this is a question which is asked regularly. But as you can always find a way to save money. Below I give you a basic insight into how CGT (Capital Gains Tax) works, some tips, exceptions and how to avoid it completely:
How does it work? CGT is run through the tax year (6th April one year to 5th of April the following year). It is worked out on the total of your taxable profit from any capital assets that you hold. For instance, property, bonds and shares on the stock exchange. Furthermore, it is when the amount exceeds the purchase price of a property, bond and shares/stock. The amount that is exempt (tax free) annually is £10,900 for 2013 to 2014 (which increases to £11,000 for 2014 to 2015). At present there are two different types of CGT. The basic rate taxpayers pay is 18%, although the higher rate tax payers pay is 28% and if the capital gains goes over your threshold you will pay the higher tax. Tips to save money Below are some tips to keep the CGT Low as possible:
Exceptions Any profit made on selling your home is tax exempt, unless you did one of the options below:
You can also get away with not paying tax if you make a profit on selling a car, ISA’s, Peps, UK government gifts, savings certificate, premium bonds, personal belongings that are worth £6,000 or less when you come around to selling them. Furthermore there is a 10% tax rate with the entrepreneur’s allowance, which is aimed to help people that are selling their businesses they have built up. It has a lifetime limit of £5m. Avoid it completely If you want to avoid paying the higher threshold of 28% there are some suggestions below:
You can defer your CGT by reinvesting it into the Enterprise Investment Scheme (EIS). You would have a limit of £200,000. Furthermore, any profit made will be exempt if you meet the qualifying standards. Finally, while tax avoidance is legal, tax evasion is illegal. So do not be tempted to sell assets without declaring any profit to HMRC. Defrauding the tax man can land you with a large fine or even a prison sentence. But the advice and support of an experienced tax accountant and some sound forward tax planning can save you thousands of pounds. By Tahir Malik at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they are considered in the Finance Industry to be the experts in all types of Tax including Capital Gains Tax. Helping and supporting businesses and individuals throughout the UK, they regularly help people with their CGT tax issues. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends. 
Plan Plan Plan ahead to save Inheritance Tax
Saving Inheritance tax
Inheritance tax can be a tricky issue to deal with for most people but it is generally considered a “voluntary tax” as good tax planning can greatly reduce your inheritance tax liability or erase it completely. Assets exceeding the current inheritance tax threshold of £325,000 (for tax year 13/14) are taxed at 40%. That’s basically half of your excess assets going straight to the government and not to your loved ones. This is why inheritance tax can be extremely costly for those who have not done sufficient planning. Fortunately, there are many exemptions and allowances to utilise which would significantly reduce the amount of inheritance tax you have to pay. Here are a few things to consider that can help you save some inheritance tax:- Make a Will Making a will allows you to know that your estate is divided exactly as you want it to be when you die. In the absence of a will, people that you wish to benefit from your estate such as an unmarried partner may not be entitled to any share in the event of intestacy. What is a gift? A gift is something of value given unconditionally to someone without any reservations. The biggest asset that most people are in possession of is their house. However, giving away your house yet trying to live in it may allow HMRC to invalidate the gift as genuine and apply tax on it. Give away sooner Majority of gifts you make are classified as “potentially exempt transfers”. If you survive more than seven years after making the gift, no inheritance tax is due on that gift. The amount of tax can be reduced depending on how long you lived after making the gift due to taper relief. Gifts made less than three years before death have no reduction in tax. If the gift was made three to four years before death then tax is reduced by 20%. This increases by 20% for every extra year the donor lives up to seven years where the whole amount is exempt. Therefore it can help relief some financial burden on your death estate if you make gifts sooner rather than later. Allowances to take advantage of You can give away gifts worth up to £3,000 in total per person every tax year and these gifts will be exempt from inheritance tax when you pass away. Any unused part of this annual allowance can be carried forward to the following year, but if you don’t use it in that year, the carried-over exemption expires. You can also give up to £5,000 to your children when they marry as a wedding gift. Grandparents can give up to £2,500 and others up to £1,000. Regular Gifting Regular gifting can dramatically reduce your inheritance tax bill as long as they meet the following criteria: they must be from your income, they must be regular and they must not decrease the standard of living of the donor. Be generous on birthdays Gifts under £250 to any recipient per tax year are exempt from inheritance tax. This means that it might be worth giving your boy a big birthday present even if he’s been naughty as it helps reduce the tax bill. Gifts to charities and political parties are tax-free It’s good to know that any donations you make to charities or political parties are inheritance tax free at least. Getting Tax Advice While it is generally more economical for you to do things by yourself, if you have sizeable assets then seeking professional tax advice is well worth your money. You may end up paying a few hundred pounds to potentially save over hundreds of thousands of pounds. I’m no bargain hunter but that sounds like a good deal to me. By Wilson Law at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they are considered in the Finance Industry to be the experts in all types of Tax including Inhertance Tax. Helping and supporting business and individual throughout the UK, they regularly help people with their Inhertance tax issues. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends. |
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