When looking at the Lifetime Allowance things are not as simple as they seem. The case study below looks at some of the things to consider. Mr Bloggs is a 57-year-old consultant surgeon with the NHS. His wife is 52 years old and works for a pharmaceutical company, although she also worked within the NHS.
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Using pension drawdown in retirement offers lots of flexibility and the potential to keep your pension growing. However, the tax on pension drawdown can get very messy. In many cases, HMRC tax the first pension drawdown payment incorrectly. Having to sort this out can kick start months of toing and froing with HM Revenue and
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Business owners need to make sure their company does not fall foul of Business Property Relief (BPR) rules. Business Property Relief (BPR) is a valuable relief as shares in companies benefiting from it are not subject to Inheritance Tax. Where companies hold substantial amounts of cash, there is a risk of losing this relief. This
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We have updated our guide to actions that could be taken to minimise taxes here. For our clients, some of the key ones are making full use of the ISA and Pension allowances. The only thing we would advise against doing now is disturbing invested assets to make use of these allowances. An example of
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Events have conspired against the lowkey nature of the Chancellor’s Spring Statement. The Ukraine invasion, steep increases in the cost of living and lower than forecast borrowing led to many hoping for major announcements. Highlighting the need for domestic economic stability in a volatile geopolitical landscape, Rishi Sunak laid out the facts: Higher global energy,
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If you are a higher or additional rate taxpayer, there is a simple way to avoid HMRC “taking” as much tax from you. This is claiming the tax relief you are eligible for on your pension contributions. Despite this being free money, research published in Pensions Age revealed thousands of people do not claim their extra
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Those in control of how to extract money from their business broadly have three main options. These are to take out the money either as salary, dividends or by making employer pension contributions. The Health and Social Care Levy and the increase in dividend tax rates both make the extraction of profits via pension contributions
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We have written previously about how employees exchanging part of their salary and/or bonus for increased pension contributions has become common. We explained how this can be far more attractive than the employee making a direct pension contribution on his/her own behalf. Attractions of salary sacrifice Contributions paid out of an employee’s after-tax pay are
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The social care announcement on 7 September 2021 increased both national insurance (NICs) and dividend tax from 2022/23. In addition, the March Budget revised corporation tax rates from 2023/24. The combined effect of these announcements might shift the decision of whether to take a dividend or not from your business. We have looked at some examples to see where these shifts might have taken
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To begin with, it is worth a quick reminder of the current social care position in England: (Wales, N. Ireland and, in particular Scotland, have their own variations on the theme): There is a £23,250 capital means test ceiling, above which all care costs must be met by the individual: the self-funding route. For those with wealth between
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Since 6 April 2010, the personal allowance is reduced by £1 for every £2 of income above £100,000. Since then, the personal allowance has almost doubled. It was £6,475 in 2010/11 and now stands at £12,570 in the tax year 2021/22. Income at this level is formally taxed at 40%. However, the fact that anyone
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It has become common practice for employees to exchange part of their salary and/or bonus in return for their increasing the pension contribution they pay by the same amount. This can be far more attractive than the employee making a direct pension contribution on his/her own behalf, particularly if the employer is prepared to increase
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We have updated our guide to actions that could be taken to minimise taxes here. For our clients, some of the key ones are making full use of the ISA and Pension allowances. The only thing we would advise against doing now is disturbing invested assets to make use of these allowances. An example of
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You can save as much as you want into your pension subject to certain limits. One of these is the Lifetime Allowance (LTA) and exceeding it can cause tax charges. What is the lifetime allowance? If the value of your pension exceeds the LTA, you will pay a tax charge, known as the Lifetime Allowance
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If a trust might generate taxable income or gains, HMRC required the trustees to register it with them. They did this using paper Form 41G (Trust). This was not the case where the trust would not generate any taxable income or gains. An example of this is where a trust holds an investment bond. What
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The Budget announced corporation tax rates will increase from 1 April 2023. The current understanding of the change, as set out in HMRC’s policy paper, is that: The existing 19% rate will continue to apply to companies with profits of up to £50,000, subject to associated companies’ rules (This will not apply to close investment-holding
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The budget has come and gone with no major changes to taxation. However, there have been some minor changes or clarifications which can have a long-term impact. Below we have listed some considerations there may be before the end of the tax year. To be clear none of this represents advice and you should get
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Last year, Autumn arrived without an Autumn Budget. In fairness, the Chancellor, Rishi Sunak, had already presented one 2020 Budget. This took place last March, and the pandemic made forecasting for 2021/22 all but impossible. The result was that, for the second year running, the Budget was deferred to the Spring. Whether Mr Sunak’s job
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The British Medical Association (BMA) has written to doctors reminding them of the 2019/20 Annual Allowance Charge Compensation Scheme. What is the compensation scheme? The compensation scheme aims to cover annual allowance charges arising in the NHS pension scheme incurred in the tax year 2019/20. The scheme covers NHS England and NHS Wales, but not
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When business owners choose how to take their profits, there is a compelling argument in favour of pension contributions. Dividends may still be the preferred route for most. However, changes in how they are taxed may drive more directors who do not need the income to use employer pension contributions instead. Remember, since April 2018,
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In July 2020, the Chancellor asked the Office of Tax Simplification (OTS) to review Capital Gains Tax (CGT). The aim was to ‘identify opportunities relating to administrative and technical issues as well as areas where the present rules can distort behaviour or do not meet their policy intent’. The review has attracted strong engagement from
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Employers can pay employees up to a maximum of £6 per week tax-free, to cover additional costs they may have incurred because of working from home. Where employers have not paid their employees the home expenses payment, individuals can claim this tax relief through a new online portal. More than 54,800 claims have been made
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NHS Pensions Savings Statements are prompting enquiries on annual allowance charges. Here is a reminder of the special provisions that apply to annual allowance charges of NHS clinicians in England and Wales for the 2019/20 tax year. Many will have recently received Pensions Savings Statements for tax year 2019/20 and may have questions about their annual
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A few significant tax changes have been introduced affecting how residential property is taxed from 6 April 2020. Mortgage interest relief Since 2017/18, higher rate tax relief on mortgage interest has gradually been phased out. It has been replaced by a basic rate tax credit reduction from the taxpayer’s tax bill. With effect from 6
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As well as reviewing the operation of capital gains tax (CGT), the Chancellor asked the Office of Tax Simplification to consider “opportunities to simplify the tax”. What changes could emerge and what could this mean for financial planning strategies for our clients? Charging capital gains made by individuals to income tax If you are taxed
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It is no secret the Government debt has reached epic levels. With interest rates being as low as they are, it is accepted that servicing the debt may not be as challenging as the size of the debt would (superficially at least) indicate. Low to negative yield Government Bonds (Gilts) are being bought by the
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We have updated our guide to actions which could be taken to minimise taxes here. For our clients, some of the key ones are making full use of the ISA and Pension allowances. The only thing we would advise against doing now is disturbing invested assets to make use of these allowances. An example of
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It is an unbelievable 500 days since the last Budget in October 2018. The Chancellor, Rishi Sunak, has only been in the job a few weeks and to say the Budget will have represented a challenge for him is a massive understatement. Even more so given current world events. Budget Day started with an announcement
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On Friday 7th February, the House of Commons Library (HoCL) issued a briefing paper entitled ‘Reform of Pension Tax Relief’. The following day the front page of the Financial Times (FT) ran a headline “Javid eyes tax raid on high earners”. The article suggested restricting tax relief on contributions to 20% could “raise more than
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The start of the new year is the time when tax planning comes to the fore in the financial planning calendar. It gives enough time to put anything in place before the end of the tax year on April 5th. But does the General Election on 12th December mean tax planning should take place early?
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