ISA (Individual Savings Account ) made up from scrabble tiles

New improved ISA

Good news. The new ISA limits announced in the last budget are now available.

With effect from 1 July 2014 the previous ISA limit (£11,520) has been significantly increased to £15,000.  Furthermore the 50% cash ISA limit of £5,760 has been abolished so that any combination of cash and stocks and shares can be held within the ISA wrapper up to the overall £15,000 limit. These products will be termed “New ISAs” or NISAs.

The Junior ISA limit has increased to £4,000.

 

Secondary incomes

Do you receive income from a secondary or part-time activity that isn’t declared?

As part of HMRC’s drive to encourage voluntary disclosures, the Secondary Incomes Campaign (SIC) has been launched to assist individuals in disclosing undeclared income (and/or capital gains). The campaign offers people the chance to pay lower penalties on the tax paid late.

The SIC campaign covers earnings from occupations such as taxi driving, hairdressing, consultancy, events / party planning, crafts or buying & selling goods. Broadly speaking, it covers any income which is not directly sourced from primary employment or business.

In order to make a disclosure through the SIC, you (or your accountant) must complete a notification form to register for the campaign. You then have four months to calculate and pay the tax due.

The SIC allows people with secondary sources of income to bring their tax affairs up to date, without the need for a full-blown enquiry and the inevitable cost and inconvenience that brings.

Further details can be found on the HMRC website: https://www.gov.uk/secondincomes

For specific advice or help with this or any tax matter, please contact MyTax.

Two glasses of Champagne and streamers

Happy New (Tax) Year!

The new tax year brings with it new opportunities to save tax.

ISAs: avoid the last minute rush. This year the allowance is £11,880 (rising to £15,000 in July, of which all can be in cash). Don’t forget that’s each, so married couples can invest double. And the junior allowance is £3,840 (rising to £4,000 in July). ISAs could save you tax when compared to other investments or savings accounts.

Pensions: the earlier the better – get those savings working for your retirement. With the proposed relaxation of rules mooted in the recent budget, pensions are looking more attractive. Contributions you make attract tax relief, effectively redirecting money away from HMRC and towards your future. Everyone can make pension contributions of £3,600 regardless of earnings.

Contact MyTax for all your tax planning needs.

Bundle of £20 notes wrapped with red ribbon

Make gifts to save tax before April 5th

If you are a higher rate taxpayer consider making charitable payments under Gift Aid so that you obtain additional tax relief. The charity will also be able to reclaim the basic rate tax from HMRC. Note also that Gift Aid can be carried back for relief in the previous tax year (so useful if you were a higher tax payer in 2012-13).

Have you made use of your annual Inheritance Tax exemptions? The general annual exemption is £3,000 per donor (plus last year’s £3,000 exemption if you did not use it). Also consider making regular gifts out of your income to minimise the growth of your estate that will be liable to IHT.

Arrange a free consultation to discuss this and other tax saving ideas.

Money box with key labelled Pension Fund

Maximise your Pension contributions before 5th April

Making pension contributions before the end of this tax year can help mitigate your tax liability. Such contributions attract tax relief at your highest marginal rate, be that 20%, 40% or 50%.

This form of tax planning has become even more appealing with the announcement in this weeks budget of plans to make it easier to take benefits in retirement. It may no longer be necessary to purchase an annuity, or suffer punitive tax for income drawdown.

Take advantage of the pension carry forward rules in order to benefit from any unused allowances from the previous three tax years. This is generally the difference between the annual contribution limit (currently £50,000) and the pension input each year and can be added to your relief for 2013/14. Note that the annual pension allowance reduces to £40,000 from 6 April 2014.

Contact us if you require guidance on end of tax year planning.

High Income Child Benefit charge

You may be liable to the High Income Child Benefit charge if you, or your partner, have an individual income of more than £50,000 and one of you gets Child Benefit. It may also apply if someone else receives Child Benefit for a child who lives with you.

The new rules came into effect 7th January 2013, unusually part-way through the tax year. The option facing affected households was either to stop claiming the benefit from that date, otherwise to make a repayment of it based on a sliding scale.

An estimated 120,000 middle-class parents could be facing fines of £100 because they have so far failed to register for self-assessment and repay the benefit. Penalties can rise to £1600 for those who file more than a year late.

Find out if you’re liable, what this means and what you need to do go to https://www.hmrc.gov.uk/childbenefitcharge/

Contact us if you require help with your tax return.