Hello everyone, this month we are covering tax investigations, tax return completion, child benefit and inheritance tax – is it relevant to you? As always, if there are any questions please let me know.
The thought of a tax investigation or visit from HMRC can be worrying for many. Some HMRC enquiries are “routine”, others can be challenging particularly if HMRC have concerns over aspects of returns or completeness of accounts. It is essential therefore to deal with enquiries promptly and take professional advice as necessary.
The starting point for preparing for a tax investigation is before you even have one! Keeping accurate and up to date records will ensure that you are well prepared should an enquiry arise. A careful review of returns and accounts to ensure that there are no errors or other anomalies to explain will help reduce the likelihood of enquiry.
For further details on preparing for a tax investigation please see our article . To prepare for the cost of tax investigations, clients may wish to take up our tax investigations service if they do not already subscribe – please contact us for further details if interested.
Firstly, a big thank you for all those who have already sent in their tax return details. Our prize draw for those sending in their tax returns papers by the end of July has been drawn and a gift voucher is on its way to the lucky winner.
If you have not already sent in your tax return papers, please do so as soon as possible and preferably no later than 30 September. Reasons for filing returns early include:
- Know your liabilities earlier to enable you to plan for their payment;
- Getting a refund sooner if you are due one;
- Peace of mind – do not be worrying about your tax return at Christmas, submit earlier and relax knowing the job is done.
If you are not sure as to what is required for your return, please get in touch.
Parents of 16-year-olds should note that if their child is remaining in education or training and they wish to continue receiving child benefit, that this has to be claimed and this needs to be done by 31 August. Parents should have received a letter with the details of how to apply or else these can be found on the government website here .
There has been comment in the press that the amount collected by inheritance tax and the number of estates subject to inheritance tax (IHT) has risen considerably in recent years. This is not surprising as the IHT threshold has been frozen since 2009 and is intended to remain at the current level of £325,000 until 2028. In addition in certain situations there will be a residence nil rate band of £175,000 so that potentially an individual can own assets at death worth up to £500,000 and pay no IHT. As nil rate bands can be transferred from a deceased spouse or civil partner to the surviving spouse or civil partner, couples can potentially have assets worth up to £1m and pay no tax.
Some may say £1m is a big number, no need to be concerned, but do you know what you are worth? To understand whether you have an inheritance tax issue and the likely scale of it, the starting point is to know what you are worth. Have you worked out what your personal balance sheet (list of assets) looks like with up-to-date values recently? For many their house will be their main asset and this has to be revalued on death to market value. All assets need to be considered so will typically include bank accounts, investments (shares, ISAs), household goods, jewellery, cars and may also include holiday homes, rental properties, businesses and any other assets.
Once you have an idea of what your assets are and their value, you can decide what action (if any) you wish to take to reduce the impact of IHT. In the next newsletter we will consider further the reliefs available and further factors to consider in determining exposure to IHT.
Annual Cycle Ride for Building Better Futures International
BBFI works in Tamil Nadu, Southern India to help marginalised women living in rural villages by providing training and education to enable them to support themselves and their children. Training is provided for tailoring, hand loom weaving and animal husbandry as well as providing tuition centres for local children.
We are planning our annual cycle ride in September to raise money for maintaining the training programs. For more information on the work of this charity see Building Better Futures International.
For more information or to discuss any issues raised above please contact Simon Bell by phone on 01376 571358 or email [email protected] .Please feel free to forward this newsletter to any colleagues or friends who may be interested in it.
This newsletter is written in general terms and therefore cannot be relied on to cover specific situations; applications of the principles set out will depend on the particular circumstances involved and it is recommended that you take professional advice before acting or refraining from acting on any material in the newsletter.