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We are often asked leading questions by our clients, the answers to which would be relevant to many people.
This page is designed to give outline of some of these questions and some general answers, if you would like clarification on any points please get in contact with us. |
I understand I can set Gift Aid payments back a year and thus save paying higher rate tax in the previous year. Does this work in the same way as pension premiums used to?
It is not quite as straightforward as that. You can only claim when submitting the next year's return and as this has to be done by 31 January only payments up to then can be allowed for set back. For instance if one paid higher rate tax in 2007/08, Gift Aid payments up to when the 2008/09 Tax Return is submitted can be set back to that year. Thus if the 2008/09 Tax Return was submitted online on 16 January 2010 (15 days before the deadline) then Gift Aid up to 16 January can be set back a year. If a large Gift Aid payment was made on 25 January one is not even allowed to resubmit the 2008/09 return even though still in time. The message is to plan ahead.
I invested £100,000 in shares but the company went bust. I know I can carry the Capital Loss forward indefinitely but I may never make a Capital Gain in the future to set it against. What can be done?
If the shares were subscribed for from the company, the company is not quoted, the company is a trading company and the shares have become of 'negligible value' then the loss can be claimed against earnings. This can be a very useful allowance. Check with us all the details to ensure the allowance can be claimed and which year to claim it in as there is a small choice and we are heading for 50% tax next year.
VAT after 1 January 2010
As everybody knows VAT is due to rise to at least 17.5% on 1 January 2010. We were approached by a client supplying services and equipment to non registered organisations. In this instance the customers were charities. Our client wanted to know if they could invoice before 31 December 2009 for work to be carried out and goods to be supplied after 1 January 2010. The answer, surprisingly, is - yes! The conditions to be met are not too onerous. The customer and supplier must not be connected parties, the supplier must not lend the customer the money, the invoice must be below £100,000 before VAT and the invoice must be payable in no more than six months. This could be most useful in the coming weeks.
Moving a year end to reduce tax?
A client with earnings in excess of £300,000 approached us recently because the year-end of his business had always been 30 April. Somebody suggested to him that if he ran his accounting period through to 31 March 2010, the last 11 months would only be taxed at 40% and not the new rate of 50%.
We researched the matter and looked at actual figures of his income over the period and established that he would, indeed, pay his tax on 11 months profit @ 40% rather than 50%. However, for the rest of the life of his business, or at least the next 5 years, he would pay his tax 11 months earlier than he had done previously. It would not take many years of lost interest to make up for the 10% saving in tax.
It must be emphasised that each case needs to be looked at on its own merits, as it is very relevant whether the profits are increasing each year or decreasing. We have already contacted all clients that we can think of in this category and carried out the sums on their behalf. If you think you are affected and have not heard from us, please do contact Tony or Heather.
Furnished Holiday Letting's - changes in legislation
Following the Budget in April, we looked at the changes in Legislation regarding furnished holiday letting's for all of our clients whom we were aware had properties abroad that they let out. It is a fact that the rules are changing on furnished holiday letting's, particularly with regard to overseas properties. However, in all cases we found that the client’s property did not actually qualify as a furnished holiday let according to the Legislation.
For a property to qualify, it must be let on a commercial basis. In other words, the object of the exercise must be to make a profit in most years. It must be available to let to the general public for 20 weeks per year and needs to be actually let on a commercial basis for 10 weeks per year. We found that most of our clients only allowed friends and relatives to use their furnished properties when they were not there themselves.
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