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'The end is nigh' - by Paul Aplin, of A. C. Mole & Sons
8:00pm Wednesday 20th March 2013 in Business
DON’T worry, it’s the end of the tax year I have in mind, but time is short to take advantage of any last minute tax saving opportunities.
Have you made use of your annual capital gains tax allowance, your annual inheritance tax (IHT) allowance and your Individual Savings Account (ISA) allowance?
If you are fortunate enough to have income in excess of £100,000 you may think yourself less fortunate when you find that income between £100,000 and £116,210 is taxed at 60%.
If you are thinking, “But isn’t the top rate of tax 50%?” you would be right – except that once income reaches £100,000 the personal tax allowance is lost at the rate of £1 for every £2 of income. Between £116,210 and £150,000 the tax rate drops to 40% before rising again to 50%. What can you do if you are exposed to the 60% or the 50% rate?
You might consider a gift to charity under the Gift Aid scheme or a pension payment. Either could potentially save tax at those high rates.
There is still time to act, but a pension payment must be in the pension company’s bank account on or before April 5.
A Gift Aid payment made in the next tax year can be backdated to this tax year but it must be made before the 2012/13 tax return is filed and the claim must be made in that return.
If you are in business and your accounts year end is March 31 or April 5 and you are contemplating incurring some expenditure shortly, it may be worth incurring it in this accounts year, accelerating the relief by 12 months.
There are many ways to minimise your tax bill, but you should always take advice tailored to your particular circumstances.
By the time you read this HMRC will have announced a change to the new Real Time Information process for PAYE.
The change addresses a concern I have written about in the County Gazette and which I have been lobbying government on for months: small employers (those with fewer than 50 employees) will not now have to report “on or before” or within seven days of making a payment unless they want to.
Until October they will be able to report monthly while HMRC looks for a permanent solution which recognises the realities employers face. That is good news for small businesses across the UK. Ministers listened.
Paul Aplin OBE is a tax partner with A C Mole & Sons and chairman of the Technical Committee of the Institute of Chartered Accountants in England & Wales Tax Faculty; you can follow him on Twitter @PaulAplinOnTax. He and fellow tax partners Amanda Gunter and Paul Kingdom can be contacted on 01823-624450.