HM Revenue & Customs (HMRC) has warned taxpayers to declare any foreign income or profits on offshore assets before 30 September to avoid unwanted penalties.Continue reading
More than 320,000 taxpayers had their tax credits stopped or altered after they failed to inform HM Revenue & Customs (HMRC) of changes in circumstances, a new report has revealed.Continue reading
Over recent years the UK tax system has become incredibly complex and this has been recognised by the vast majority of UK businesses, according to research from the British Chamber of Commerce (BCC) Avalara.Continue reading
HM Revenue & Customs (HMRC) is expecting to raise some £3.2 billion in taxes as part of its crackdown on “disguised” remuneration schemes.Continue reading
Almost half (41 per cent) of small business decision-makers are ‘unaware’ of Making Tax Digital (MTD), new research reveals.Continue reading
Recent research suggests that more and more British families are finding themselves liable to pay Inheritance Tax (IHT) – meaning that IHT planning is becoming increasingly important across the UK.
According to up-to-date figures from HM Revenue & Customs (HMRC), the Treasury collected a record £5.3 billion in IHT last year – up 13 per cent on the amount of IHT brought in the previous year.
This is largely due to the fact that, despite ever-increasing wealth and property prices, the UK’s IHT threshold or ‘nil rate band’ has remained frozen at £325,000 for several years.
Any estates valued at more than this amount will incur IHT at a hefty rate of 40 per cent of their total value – which is why IHT planning is becoming crucial.
Ways of mitigating IHT
There are a number of ways families and individuals can mitigate their IHT liability, but it pays to seek specialist advice, as circumstances will always differ from person to person.
One option worth exploring might be the additional residence nil rate band (RNRB). First introduced in April 2017, this is an additional tax-free threshold families can tap into if they plan on leaving a residential property to their direct lineal descendants in their Wills.
As of 6 April 2018, individuals can pass on an additional £125,000 in property value to children, grandchildren, step children and foster children completely tax-free if they seek appropriate RNRB advice. Due to the fact that married couples or those in a civil partnership can combine their allowances, couples benefit from the new rules even more, as they can effectively pass on £900,000 worth of property IHT-free.
However, there are plenty of other options available. For example, individuals can reduce the rate at which they will incur IHT on the total value of their estate by passing a portion of it to a charity when they die. By leaving 10 per cent of their estate to a charity, for example, individuals will pay IHT at a rate of just 36 per cent as opposed to 40 per cent.
How Rotherham Taylor can help
Rotherham Taylor can assist with all aspects of IHT planning, but we are also one of a small number of accountancy practices in the UK to be licensed to provide probate services by the Institute of Chartered Accountants in England and Wales (ICAEW).
This means that our team can offer a wide range of probate services to clients, from obtaining a grant of probate, to identifying and distributing assets according to the terms of a Will.
Furthermore, our existing detailed knowledge of a client’s financial affairs means that we can act quickly and effectively on probate matters with consequent cost benefits.
In a press release issued over the weekend, HM Revenue & Customs (HMRC) has revealed that it has saved taxpayers some £2.4 million by cracking down on ‘call forwarding’ scams.Continue reading
MP and Treasury Minister Mel Stride has warned taxpayers to be on the lookout for increasingly elaborate phishing emails, text messages and phone calls purporting to be from HM Revenue & Customs (HMRC).Continue reading
HM Revenue & Customs (HMRC) has proposed a number of important changes to the ways in which it collects Capital Gains Tax (CGT) following the sale of residential properties.Continue reading
Individuals and business owners in the UK need to be aware of the complex rules governing Capital Gains Tax (CGT), as this tax can apply to the sale of almost anything deemed an ‘appreciating asset’ in the eyes of HM Revenue & Customs (HMRC).
Simply put, CGT is a tax paid on the gain made when an asset is sold, gifted or ‘disposed of’. Anything which HMRC deems to be a ‘chargeable asset’ can potentially incur CGT, which is why it is important to seek specialist tax planning advice when considering a disposal.
CGT for individuals
Typically, an individual will incur CGT when disposing of:
- Any property that is not their main residence.
- Shares that are not considered to be an ISA or PEP.
- Any personal possessions worth £6,000 or more (excluding motor vehicles).
It is worth noting that, in most cases, individuals will not incur CGT when disposing of their main residential property, due to a tax allowance known as ‘private residence relief’.
However, if they have previously let out the property or used it for ‘business purposes’, it may still be liable for CGT.
The same applies if the property is large – as homes, including their grounds, of more than 5,000 square metres (one acre) in total may not be entitled to full private residence relief.
CGT for business owners
Business owners will often incur CGT on the disposal of business assets such as:
- Land and buildings.
- Plant and machinery.
- Fixtures and fittings.
- Registered trade marks.
- The business’ reputation.
Fortunately, business owners can benefit from Entrepreneur’s Relief – a tax relief which enables sole traders, business partners or those who hold shares in a ‘personal company’ to pay just 10 per cent CGT on qualifying profits if they sell all or part of their business. This is just one of the many tax reliefs available.
Business owners should also keep in mind that they will not need to pay any tax on assets that are ‘gifted’ to a wife, husband or civil partner.
Seeking specialist advice
Regardless of the circumstances, individuals and business owners alike need to think very carefully when they are considering disposing of any assets. It is important to seek specialist tax advice in order to determine whether a disposal will qualify for CGT – and if CGT liability can be mitigated in any way.
To find out how Rotherham Taylor can help, get in touch with our expert team today.