Tax Talk: Priority tasks for the New Year
No doubt the festive season feels like a distant memory. But after another challenging year have you managed to meet all your goals so far? We hope you’ve submitted your Self Assessment tax return and that you can now focus on our Tax Team’s New Year’s resolutions and tips.
Think about the future, today. Consider inheritance planning, especially if the value of your estate exceeds the Inheritance Tax (IHT) allowances. These start at £325,000 for the basic allowance and £175,000 for the main residence allowance. Have you written a will? If not, don’t put it off. Dying intestate may mean your estate passes to individuals outside your control. If you have already written a will, make sure you update and review it regularly.
If you run a business which is now adopting a more flexible working policy, make sure you know where your employees are, particularly if they are outside the UK. When employees are residing in another jurisdiction, the duration of time they spend there and the nature of the activities they undertake can have tax consequences, both for the individual and the company. If you are planning to send an employee to work abroad, seek appropriate tax and legal advice.
Tax on transactions
Ensure that you plan ahead for any forthcoming transactions. For example, selling a business, buying a property, or inheriting assets. Make certain that your tax team are the first people to know, rather than the last. If there are issues that need to be resolved, it is nearly always easier and more cost effective to do so in advance, rather than in the heat of a transaction.
Check out allowances
Supported by your independent financial advisor, maximise your tax-free allowances. The personal savings allowance permits £1,000 or £500 of interest to be earned tax free for basic and higher rate taxpayers respectively. The dividend allowance is £2,000 and the ISA allowance is £20,000. Consider, too, the level of your pension contributions. The pension annual allowance is £40,000.
What else should I consider?
Our annual year end tax planning guide is now available. This considers the above points, and many more.