TAX-BACK

 

ALERT 1    2014/2015 Tax Returns deadline

The deadline for paper returns is 31 October 2015.  For online submission, it is 31 January 2016.  For Tax Returns received after these dates the Inland Revenue imposes an automatic £100 penalty.  However, if you did not receive your Tax Return on time you may have additional time to complete and send it in.  Check with your local Tax Office.

Three months late and you will be charged an automatic daily penalty of £10 per day upto a maximum of £900.

Six months late and you will be charged further penalties which are the greater of 5% of the tax due or £300.

Twelve months late and you will be charged yet more penalties.  These penalties are now due even if you have no tax to pay, or have already paid any tax due.

As regards payment of tax due for 2014/15 any outstanding amount after 31 January 2016 will incur interest charges, and also an automatic 5% surcharge after 28 February and a further 5% surcharge after 31 July, and a further 5% after the following 31 January.

If you have difficulty calculating your tax liability remember we can assist, based on your completed Tax Return.

ALERT 2  Tax deducted from Building Society/Bank Interest

If you are on a low income, have tax deducted from Building Society/Bank interest and have not sent in a Tax Return for the tax year 2014/2015 you may be entitled to a tax refund for 2014/2015.  

Similarly, you may be entitled to a tax refund for  2015/16.  You can go back further according to the general rule that a claim must be made within four years of the end of the relevant tax year.  In some cases refunds may amount to hundreds of pounds over the relevant tax years.   Many Pensioners are in this position but fail to make a claim, believing that their tax situation is correct. 

ALERT 3   'Rent a Room' Relief

This relief applies to owner occupiers and tenants who let furnished rooms in their home. Although the relief has been with us since 1992 it is worth a reminder as it affords a rare opportunity to enjoy exempt income. Gross rents received up to £4,250 per household in the tax year are exempt from tax. This means this income does not affect your personal allowance which remains intact to set against other income such as a part-time job. Thus, for the  tax year 2015/16 a working wife/partner under age 65 who claims 'Rent a Room' relief could have an income up to £14,850 per annum (equal to £285.57 per week) free of Income Tax.  It has recently been announced that the figure of £4,250 will be increase to £7,500 from 6 April 2016.

Please note: We can only inform you of the taxation position. Obviously, there are other matters to be considered when taking a person or persons into your home.

ALERT 4   2015/16 Tax Year End

This tax year ends on 5 April 2016.  Most reliefs not used by this date are lost for ever.   Some matters to consider are listed below:-

Capital Gains Tax  - The Capital Gains Tax exemption limit is £11,100 for 2015/16.  Gains on shares sold before 5 April 2016 are thus exempt up to this limit.  Review your portfolio!

This limit applies to individuals.  Transfers between husband and wife and between civil partners are exempt.  Hence, the effective exemption limit for these pairings is £22,200.

Gains and losses in the same tax year are set off against each other, so if some have done well but you have a loss on a bad one you can reduce the chargeable gain by selling the bad one at the same time.

Capital Gains Tax is charged at 18% when your capital gains plus your income do not exceed the basic 20% tax band.  Gains over this limit are now charged at a flat 28%.  However, for business assets an Entrepreneur's Relief of 10% will apply up to a gain of £10M. 

Income Tax  - For self employed persons it pays to get annual accounts prepared soon after your business year end.  If you have had a good year and are well into the 40% tax band you should consider putting more into your personal pension before 5 April 2016.  In this circumstance an extra £600 net contribution becomes £1,000 in your personal pension fund.

  1. If you can afford to, take full advantage of the ISA Allowances.  From 1 July 2014 all ISAs become NISAs (New ISAs).  It is possible to invest up to £15,240 annually, which may be either cash or stocks and shares, or a combination of both. These limits apply to individuals once again so that for a couple the maximum investment is doubled.  ISA Allowances are lost for a tax year after the end of that tax year. 
  2. New pension freedoms have been introduced from 6 April 2015.  You are now allowed, provided you are over age 55 to take the whole of your pension fund as a lump sum.  25% of this will be tax free but the remaining amount will be added to your income for the year so that you may be pushed into the 40% rate.

Inheritance Tax  - Now affecting more and more people, so therefore advantage should be taken of any reliefs available.

  • Annual transfers not exceeding £3,000 in total are exempt per individual donor.
  • Any unused portion of the above can be carried forward for one year only so that if no transfer in the previous year £6,000 may be transferred.
  • Gifts to individuals are potentially exempt and fall out of charge after 7 years.

 

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