Vale & West Chartered Accountants Blog

Category Archives:Richard Ziemba

The tax breaks available to you

As the deadline to file an income tax return has past, now is a good time to look into the legitimate tax breaks sanctioned by HM Revenue & Customs (HMRC) that could help savers to plan their finances. Read More

‘My mother-in-law is a witch’ and other tax return excuses

Presumably to inject a note of levity into the tax return season, HM Revenue & Customs (HMRC) has published the best excuses for not getting a tax return in on time it has received over the past decade. Read More

Capital Gains Tax changes to take effect in April

As of April 6 2020, all UK-resident taxpayers will be obliged to make a return and payment of Capital Gains Tax (CGT) within 30 days of selling a residential property anywhere in the world.

Under the current rules, CGT returns and tax payments for other assets are not due until 31 January of the year after the disposal.

As a result, the new tight time limit could lead to serious consequences for taxpayers, particularly as a disposal of property for the purposes of CGT takes place on the date on which contracts are exchanged, not on completion, which many people incorrectly believe to be the case.

UK-resident taxpayers selling a property also need to be careful about the difference between the original acquisition cost of the property and the sale price and must ensure that HM Revenue & Customs (HMRC) have agreed on the value.

Not submitting a tax return on time or giving an inaccurate declaration based on an inaccurate valuation could leave the taxpayer exposed to penalties and/or interest being charged for late payment of tax. In fact, when the scheme was introduced for non-UK residents in 2015, many penalty notices were issued because of returns being submitted late.

However, the new requirements will not apply where the gain on disposal is not chargeable to CGT. For example, where the gains are covered by private residence relief or are in connection with a business sale in exchange for shares where the entire capital gain is rolled over in incorporation relief.

A season of gifts

Before Christmas, we discussed how to avoid paying too much tax when giving gifts, and now we are looking at other examples of giving family members more while ensuring that your tax liabilities remain minimal.

Grandparents who have made wise investments or saved sufficiently often find they have more income than they need to maintain their desired standard of living, so one way to give grandchildren gifts of money is to use this to avoid future inheritance tax (IHT).

There are some caveats, with gifts required to be regular, but if the grandparent keeps clear records to can prove that this is excess income, the gifts are immediately free of IHT.

Another way to make gifts to grandchildren is to gift investment bond segments. Investment bonds are life assurance policies, usually made up of multiple segments, which can be assigned to grandchildren aged 18 or over.

The tax treatment of an investment bond means that when segments are gifted from one person to another, any taxable gain attached to the segment passes with the gift, so will not cause a tax charge for the grandparent.

As ever, there is a caveat regarding the tax-free angle, in that the grandparent must live for another seven years after giving it but the sums can be useful for things such as topping up university fees.

It is also tax effective for the adult children, as they can make gains of up to £18,500 tax-free using their £12,500 personal allowance plus the £5,000 starting rate for savings allowance, and the £1,000 personal savings allowance permitted on top of that. 

HMRC warning taxpayers to be vigilant ahead of self-assessment deadline

HM Revenue & Customs (HMRC) is warning taxpayers to be vigilant ahead of the self-assessment deadline on 31 January 2020, with a surge in fraudulent activity expected. Read More

IHT refunds possible

According to a recent Freedom of Information (FOI) request, the number of people who succeeded in getting an inheritance tax (IHT) refund has more than doubled in the past two years. Read More

Income tax base eroded by self-employed

New research has suggested that the UK’s income tax take is declining as more taxpayers become self-employed and pay less tax, although the authorities believe that a large percentage of this group are actually disguised employees. Read More

Tax system ‘too complicated’ for landlords and self-employed

According to the Office of Tax Simplification (OTS), the UK tax system is too complicated for landlords and the self-employed and should be made easier using digital technology. Read More

Fall in freelance IT contractors

New figures from the Office for National Statistics (ONS) show that the number of freelance IT contractors working in the UK fell by 2.4 per cent last year compared with 2017, which was the first fall in five years. Read More

The unfairness of the High Income Child Benefit Charge

Last week we looked at the High Income Child Benefit Tax Charge (HICBC), which applies if a parent receives child benefit and there is an adult in the same household who has a taxable adjusted income of more than £50,000. Read More

Address: 26 Queen Victoria Street, Reading, Berkshire RG1 1TG
Telephone: 0118 957 3238
Fax: 0118 956 7282