Tax Plus Blog -

Watching the Heads of Tax of the Big 4 accountancy firms in front of the Public Accounts Committee (PAC) – the debate is interesting.  There seems to be a desire on the member’s part to differentiate on a line between sensible tax planning at one end and evasion at the other, with tax avoidance occupying an (apparently large) grey area in the middle. The view seems to be that the profession have more staff who are brighter and better paid than their counterparts at HMRC and so they can expect to be successful in planning.  I have...

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The pension Annual Allowance (AA) reduction announced in the Autumn Statement has given rise to some important considerations for people making contributions this calendar year.  Strange as it seems, the year in which you receive tax relief and the year in which you are tested against the AA are not always the same, which can occasionally cause issues. Anyone contributing to pensions would no doubt be under the impression that a contribution paid to their personal pension on 2 May 2013 would count against the 2013/14 AA of £50,000.  However for many individuals, this is not the case.  This is...

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There is sometimes a need to surrender an Insurance company ‘Capital Investment Bond’, or Offshore Bond.  Perhaps the capital is required for a specific purchase, or sometimes there is just the need to change the investment provider.  It quite frequently occurs as people approach retirement and seek to recalibrate their investments to suit their retirement plans. Where this happens and a chargeable gain arises, there can be a tax bill for the investor.  Using Pension Contributions in conjunction with an insurance bond surrender, can significantly reduce this tax bill. This is because pension contributions are...

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A new tax charge came into effect on 7th January 2013 for individuals with parental responsibility for a child who have income in excess of £50,000.  The charge is designed to claw back Child Benefit on a sliding scale, with a charge equal to 1% of receivable child benefit applied for each £100 a person earns over £50,000.  Those with income over £60,000 will have a charge applied equal to the full Child Benefit they receive. It is important to note that two parents each with income of £49,000 will be unaffected, whereas a family with only one person receiving...

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The Autumn Statement delivered today stated that the Lifetime Allowance will be reduced from £1.5million to £1.25millon and the Annual Allowance from £50,000 to £40,000.  Both changes will come into effect from the 2014/15 tax year. The other key change was that the limit on Capped Drawdown extractions from pensions in retirement is set to increase.  These will move from 100% of the Government Actuaries Department (GAD) rate (i.e. the rate broadly equivalent to a single life annuity) to 120% of that value. Whist in particular, the reductions to Annual Allowance and Lifetime Allowance are unwelcome, they do...

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It was snowing this morning when I left home and, appropriately, there was a flurry of announcements in the Autumn statement but the question is – to stretch the metaphor - how many of these will stick?  The main noise was surrounding the on-going campaign to tackle evasion and aggressive avoidance. There is a continuing conflation of these terms which makes it very hard to distinguish the correct path. HMRC has not had its budget cut and there is a promise of 2,500 specialist Inspectors in an offshore evasion unit and an expansion of the “Affluence unit” dealing...

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No new tax on homes.  A victory for the Chancellor on this point! There is no news yet on the proposed annual charge on high value residential properties in ‘envelopes’ and  we are waiting to see what is in the detail next week.  I am leading many enquires on this matter. Have you got a Swiss bank account? If so, do HMRC know about it? If not, well, time is running out. The government expects to receive £6bn over the next 5 years from previously undisclosed Swiss accounts. It will not be possible to hide...

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The leaked reduction in tax relief has been announced but not until April 2014.  From that date the lifetime allowance will reduce to £1.25 million and the annual allowance to £40,000. It looks as if next year may see a top up on contributions. ...

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Before we can all get too excited about Christmas we have the Autumn statement to look forward to. The Chancellor will present his speech on 5 December and the big question is what will he say? Commentators appear to vary between thinking that he will not say very much and that there will be hugely significant changes. In my view the answer will be that he won't say much about tax but what he does say will need attention. I think with the recent furore around tax avoidance it is inevitable that there will be announcements relating to the prevention...

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Reports have emerged in recent days concerning a further potential change to the Annual Allowance provision for contributions to pension arrangements in the Chancellor’s Autumn Statement The current allowance is £50,000, but this could be curbed to £40,000 or less. With the reduction in the marginal tax rate for those with income in excess of £150,000 to 45% scheduled to take effect in April 2013, this is a key time for people to consider funding pension to the maximum extent possible. It is conceivable, subject to having sufficient earned income against which to claim tax relief, that some clients could...

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