The obvious thing to write about at this point in time would be the General Election, Brexit and all things political. However, both are being done to death in the media and, in all honesty, even educated speculation around the exact nature of potential, future tax legislation is of limited value. So, instead, here is more of a Christmas themed article.
Christmas is a time for giving and, for tax purposes, giving can have some potential tax benefits.
- Gifts to a UK registered charity will attract additional tax relief (if made by a higher-rate UK taxpayer under Gift Aid).
- Gifts of up to £3,000 per year, in total, may be made free of Inheritance Tax.
But remember, gifts of assets (as opposed to cash) can give rise to Capital Gains Tax.
Christmas is also a time for receiving. Unfortunately, at this time of year, not everything we receive is as exciting as a Christmas present.
You may receive a reminder to file your tax return. The deadline for paper returns has already passed, but for electronic returns the deadline is 31 January 2020. Automatic penalties apply if you fail to file your return on time. You may also receive a reminder to pay your tax. Under self-assessment, it is up to the taxpayer to pay the tax that they owe – it is not HMRC’s responsibility to request the payment. Therefore, if you know you have tax to pay, you need to arrange to do so by 31 January 2020. Again, interest automatically applies to late payments.
But remember, HMRC do not text taxpayers to ask for bank details or to notify individuals of tax demands or refunds – it is a scam. Even if it looks genuine, it is a scam. If you cannot pay on time, speak to HMRC – they will generally allow you to set up a payment plan to help you manage your outstanding tax.
And then there’s New Year – a time for resolutions and new beginnings. If you are stuck for things to include in your resolutions, here’s a few suggestions:
Resolve to be sceptical:
- if it sounds too good to be true, it probably is;
- yes, even if ‘everyone’ is doing it!
Resolve to plan:
- it can be very difficult to arrange your affairs tax efficiently at short notice;
- and impossible to do so after-the-fact!
- if you do it in advance, you have more time to plan for, and deal with, the tax payments;
- especially with the introduction of a 30-day tax payment deadline (from 6 April 2020) when residential property is sold.
Resolve to keep:
- your Will and your tax plans up-to-date, dying without a Will can cause significant issues for those you leave behind.
- tax legislation changes frequently and therefore even the best of tax plans can be significantly disrupted by changes in legislation.
- Inheritance Tax and Capital Gains Tax typically require long-term planning.
And remember, sometimes there really are only limited opportunities to save tax (sorry!). Tax compliance is incredibly important – we now operate in an environment where tax errors, even inadvertent ones, generally give rise to penalties.
Take advice from a tax professional, they are best placed to give you appropriate, value-for-money advice, help you avoid errors and hopefully also save you some tax. It is important that you seek advice before acting on any of the above. We are always happy to discuss, in outline, tax opportunities and planning on a no obligation basis.
Have a Happy Christmas and a prosperous New Year.
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