Posts Tagged ‘Expert accountancy Manchester’

Planning for the end of the tax year

Tuesday, January 23rd, 2018

The run up to the end of the tax year fills many with a sense of dread.  But when you join forces with an expert accountancy practice, it can be a tremendous opportunity to review tax opportunities and make smart adjustments to your financial plans. 

The old adage of ‘use it or lose it’ definitely applies to many of today’s tax allowances, and the right advice is key to helping you secure your financial future and pay less tax on the inheritance you leave loved ones.

The best way to achieve your financial goals is to focus on what you can control.

You can control how much money you invest.  And where you invest it, the size of your retirement fund and how much of your estate passes to your family free of IHT (Inheritance tax).  You can even control how much tax you pay.

Nik Hynes, managing director of Manchester-based Tree Accountancy said: “Effective financial planning should be a year-round activity.  But we’re only human.  So, the months of January, February and March provide an ideal opportunity to use tax reliefs and allowances which would otherwise be lost. These valuable tax breaks can help to create long term financial security for ourselves and our families.”

So, if you’re not already taking advantage of the basics, start today.

ISAs

ISAs have become one of the most popular ways to save because they are simple to understand and readily accessible.

The substantial increase in the ISA allowance to £20,000 this tax year was very welcome. However, with UK interest rates remaining at record lows, the money held in ISAs is failing to achieve the very basic task of keeping pace with inflation.

But those who are investing their ISA allowance for the long term – in assets offering scope for attractive levels of income and capital growth, such as property – are giving themselves a better chance of maximising the tax-saving opportunities on offer.

Pensions

Saving into a pension scheme is very attractive now.  For every 80p you contribute to a pension, the government automatically adds 20p in tax relief.  High earners can claim extra tax relief through their annual tax return, meaning that a £1 pension contribution can effectively cost you just 60p.  Unused tax allowances can be carried forward.  But only from the three previous tax years.  This year is the final chance for pension savers to use the allowance that was in place in 2014/15.  If you don’t use it by the 5th April 2018, it will be lost forever.

Inheritance Tax

There are few more confusing or unpopular taxes than IHT.  But (usually) inertia means that over the next five years, HMRC can expect to see a 25% increase in their IHT revenues.  So, don’t waste your gifting opportunities – £3,000 this year, tax free, and if you haven’t already used last year’s, you can add another £3,000 and perhaps top up a child’s Junior ISA or start a pension for them.

“All this usually requires the help of an expert tax advisor,” said Nik Hynes, “and reflecting on your financial goals for the tax year end is one of the best times to sit down with your accountancy practice and discuss where you would like your finances to be in 5 years.”

For an informal chat, please email kate@treeaccountancy.co.uk or complete the Contact Us form here on our website. Don’t get left behind.  Maximise your tax allowances before it’s too late.

Tree are a Manchester-based accountancy practice specialising in tax, business growth, auditing, self-assessments, and strategic and corporate finance.  Once you have accumulated your wealth, we work to ensure you keep it.

Did you know? Contact lenses are tax deductible

Monday, January 22nd, 2018

Did you know that the provision of contact lenses is not taxable if your employer has to provide them for monitor or screen work.  The NIC legislation states that where an eye test result finds a general need for glasses, as well as a special prescription for VDU use, the employer should pay or reimburse the employee for the whole liability, including Class 1 NIC’s which arises on the amount which exceeds the VDU-related prescription.

If you regularly use a computer in your line of work, then you are able to claim the cost of the eye test as an allowable business expenses.

See links below for further information, or contact Rob@treeaccountancy.co.uk for expert tax help in Manchester:

https://www.gov.uk/expenses-and-benefits-medical-treatment/whats-exempt

https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim02145

A guide to Inheritance Tax

Thursday, January 18th, 2018

The ‘residence nil rate band’ can result in an Inheritance Tax saving even if, due to the size of your estate, the prospects for meeting its conditions appear unpromising at first glance. 

Families are paying more in Inheritance Tax (IHT) than ever before. Official figures show that the amount collected last year exceeded £5 billion for the first time.

But if you enlist the advice of an expert accountancy practice like Manchester-based Tree Accountancy, you can start to secure your family’s financial future.

On the whole, property, asset and investment values have continued to rise.  It follows that so too have IHT liabilities.

“That’s not surprising,” said Nik Hynes, managing director of Tree Accountancy, “when you consider that the IHT nil rate band has remained at £325,000 per person since 2009 and will be fixed at this level until at least 2021.”

“Had the nil rate band been linked to the consumer prices index, it would be £385,000 today,” he says, “which would be a much better reflection of market forces.”

IHT revenues are expected to keep rising despite the new ‘residence nil rate band’ (RNRB) being introduced, initially at the level of £100,000 per person, increasing over the next three years to £175,000. This works on top of the standard £325,000 nil rate band and is an allowance for people who pass on a property to their children, grandchildren or other lineal descendants. But while the RNRB can ease an IHT burden, it is only useful to those who can satisfy its conditions.

Aside from having to leave the interest in the qualifying residence to a lineal descendant, it is also important to note that the RNRB is cut back by £1 for every £2 by which an individual’s overall estate exceeds £2 million. Thus, currently there is no RNRB at all if the deceased holds assets of more than £2.2 million – and remember that business and agricultural assets count towards that threshold even if they qualify for 100% tax relief.

However, with some thoughtful tax planning, there are potential opportunities for estates to benefit from the full RNRB.

First things first?

Many couples choose not to make use of the standard nil rate band on first death, on the basis that, if unused, it can be transferred to their surviving spouse or registered civil partner and claimed on second death. However, leaving assets worth £325,000 to someone other than the surviving spouse on the first death can be beneficial if it keeps the survivor’s estate below the £2 million trigger point for reducing the RNRB on second.

“If you’ve left everything to your spouse,” said Nik Hynes, “and this causes their estate to exceed £2 million, it may be worth using the £325,000 nil rate band on the first death to leave assets in a trust, so that they don’t consolidate with the estate of the surviving spouse, but remain accessible to them,” says Nik Hynes.

“It’s also worth noting that in determining the value of a deceased’s estate for the purpose of the £2 million trigger point, it’s not necessary to add back gifts made within seven years of death, as you do when calculating the Inheritance Tax liability on the deceased’s estate. This means that making a gift in excess of the £3,000 annual exemption could produce a substantial IHT saving even if the donor fails to survive for seven years, as recently applied to one of our Manchester-based clients.”

In circumstances where the IHT liability cannot be eliminated, it can be worth giving thought to tax efficiently providing for it through appropriate life assurance held in trust. In addition, it’s important to remember that Wills should be reviewed regularly to ensure that they meet your current needs.”

The tax plan you end up with should be one that is aligned with your objectives in relation to who should benefit on your death and when; and, subject to this, for it all to be done as tax efficiently as possible. In seeking the best result for your family, it’s vital to obtain professional tax advice.

For an informal chat or to set up an appointment, please contact kate@treeaccountancy.co.uk

Tree are a Manchester-based accountancy practice specialising in tax, business growth, auditing, self-assessments, and strategic and corporate finance.  Once you have accumulated your wealth, we work to ensure you keep it