Iain Wallis

Proven Tax Strategies for High Net Worth Individuals

0191 603 0270

Pot Holes! Does Fiscal Phil build our Wonderland?

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Fiscal PhilIntroduction

Fiscal Phil in his 2018 Budget provides a few nasty surprises. The Budget yesterday had all the potential to be a fairy tale, but no!

The annual forecasts are set to rise with more people forecast to be in jobs by 2022. As a result the tax receipt projections are up, making more spending possible!

Fiscal Phil For Business

Fiscal Phil  put the focus on building business in the 2018 Budget.  There’s a generous extra allowances for spending on Plant and Machinery. It’s up from £200,000 to a massive £1 million for one year from 1st January 2019 to 31st December 2019. Takecare when planning capital expenditure. This is very important  especially when a business year end straggles those 2 dates. Unless your year end is December the allowance will be apportioned.

The same timing considerations should be given when building or improving a commercial property.  The new Structures and Buildings Allowance (SBA) will be a great help.Those of you constructing or renovating a commercial building take note.

There’s also a welcome reduction of one third in the business rates for the small shops, bars, cafes and restaurants. Who could his toilet humour with a  complete waiver of business rates on public loos. It’s now cheaper to do  business on the High Street!

Fiscal Phil For Individuals

This Budget has hit business and property owners big time!  The rules have changed for those wishing to dispose of their shares in their own company at a reduced rate of tax.  The criteria for claiming Entrepreneurs Relief (ER) has also tightened. It’s also exceedingly gloomy on the house front. If you  rent out a former home there’s no good news at all. The final period for the private residence relief has been reduced.  In addition to the Letting Relief has all but disappeared.

But on the positive side all individual basic rate taxpayers will be £130 per annum better off as the increase in personal allowances is brought forward by one year.

Action

Are you interested in receiving further information or would you like to book a strategic consultation with Iain. Please contact Jacqueline on telephone 0191 603 0270 or email admin@iainwallis.com Let him show you where he can help you legally avoid tax.

What’s George up to?

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Budget 2015George Osborne delivered a headline grabbing budget and unusually for all the landlords and property investors out there, there is much to consider.

The biggest impact will be the restriction on relief for finance costs on property to the basic rate of income tax. These costs include:

• mortgage interest
• interest on loans to buy furnishings
• fees incurred when refinancing your properties

For higher rate taxpayers that could become very expensive and increase your tax bill by 25%.

This will be introduced gradually from 6 April 2017, so there is still time to organise your affairs to make your portfolio more tax efficient, but you will need to take action now to get everything in place.

So maybe now is time to consider incorporation though as you’ve heard me say many times “it depends” Incorporation may trigger capital gains tax, stamp duty land tax and possibly moving away from a very nice interest rate. Short term pain may help the long term gains and it’s always much easier to shelter wealth within a limited company.

Those of you who let your properties furnished will from April 2016 no longer be able to claim the wear and tear allowance which will be replaced by allowing residential landlords to deduct the actual cost of replacing furnishings.

There is however some good news with the increase in rent a room relief so it’s not all bad!

Despite the bold newspaper headlines announcing an increase to the nil-rate band for IHT to £1m, this will be gradually phased over the next four/five years and will only apply if your estate is passed to direct descendants. So, if you’re planning on leaving your hard earned wealth to someone other than your kids or you’ve assets exposed to Inheritance tax it’s as important as ever to get everything organised. So now may be the time to undertake our Inheritance Tax Risk Assessment Audit to identify where any liability could be reduced and to ensure that your affairs are in order.

Most of our compliance clients have taken out our Fee Protection Insurance, protecting themselves in case of an HMRC enquiry. For those who haven’t, please be aware that George also announced that he’ll be spending around £300 million over the next 5 years to tackle non-compliance by small and mid-sized businesses, public bodies and affluent individuals. This measure will result in additional tax receipts of over £2 billion by 2020-21 – so you have been warned!

Finally, if you’re one of the estimated million buy-to-let and other private landlords hoping to keep beneath HMRC’s radar, then please don’t think that anymore! HMRC will be employing more investigators and giving them the power to acquire data from online and electronic payment providers to help find you. It’s far better to come clean and disclose to HMRC before they find you and to help you do this, HMRC are providing a digital disclosure channel to make it easier to disclose any undeclared liabilities. Find HMRC before they find you!

If you are interested in receiving further information or booking a strategic consultation with Iain to see where he can help you legally avoid tax, please contact Jacqueline on telephone 0191 603 0270 or email admin@iainwallis.com.

Why are HMRC so inefficient?

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HMRCThese days HMRC call us customers but alas they’ve yet to discover the concept of customer service and the ability to deliver a great customer experience.

As agents we get a dedicated number to phone them and whilst they take an age to answer that, if you have to call them arm yourself with a large cup of coffee and prepare yourself for a long wait

But even that’s not enough! A recent survey found that nearly 50% of calls to HMRC went unanswered! Do you think you could survive as a business if you behaved like that? Their incompetence knows no bounds and how much time do you waste waiting listening to that dreadful music.

So here’s four things that you can do to avoid losing the will to live when calling HMRC
1. Start early: yes they do take calls from 8 am so call then before the lines get too busy and while they are alert
2. Don’t call just before lines close as they all want to rush home so your call will not be answered
3. Be prepared like any good scout and have key information to hand, know why you are calling them and what you want to achieve
4. Dial on speaker phone and do other work while waiting for them to answer.

Good luck and remember you’re a customer not a taxpayer!

Landlord & Letting Show Coventry 26-27 November

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Finalist Logo GeneralWe will be exhibiting at the Landlord & Letting Show taking place at Hall 2, Stoneleigh Park, Coventry, on Wednesday 26th & Thursday 27th November 2014, and we hope you can join us! Maybe on day two help us celebrate as we are finalists in the prestigious Landlord & Letting Show Awards with the winners to be announced during the show.
It’s free to attend and the event aims to educate and inform property professionals by offering access to:
• A comprehensive product and services exhibition

• Free seminars covering a wide range of topics delivered by leading industry experts.

• There are two presentations from me entitled “5 Top Tax Tips to Legally Avoid Property Taxes” one on Wednesday at 11.30 and one on Thursday at 14.00. These are always full so be sure to be there in plenty of time

• Associations and Government Bodies
• Fantastic networking opportunities
• Information on the latest legislation
Visit the website at http:www.warwickshire.landlordshow.info to find out more and book free show tickets, then come along and visit us on stand 38.

Always happy to chat legal tax avoidance and share the love.

Happy Valentines Day

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valentinesCongratulations to anyone who may be intending to ‘pop the question’ over a romantic candle lit meal this evening.

To those of you who consider yourself ‘unromantic’ or think it all to be ‘a bit of stuff and nonsense’ or ‘created by florists to make more money’, and yes I have some sympathy for that view, bear in mind there could be costly implications – and that’s not just the ring!!

Unmarried couples are not recognised as a legal entity and this becomes even more of an issue where children are involved. Legally, you become stuck in no-man’s land somewhere between land and complex trust law and in the event the relationship breaks down, you could find yourself in all sorts of problems and not just of the emotional type. Who gets the CD collection will be the least of your worries!

It’s far better to try and get things in order at the outset, to provide both of you with some degree of reassurance before it gets to the stage of arguing over what’s what:

 • The first, a Cohabitation Agreement deals with the ownership of assets and the distribution of these.

 • Second, a Declaration of Trust reflects the contribution of each individual to any assets such as property.

 • For those in business together, a Partnership Deed, which deals with each party’s interest in the business.

 • Finally a Will. Cohabitees are not entitled to automatically inherit from their partner’s estate. If you wish your partner to inherit, particularly any assets jointly owned, you need to have a Will in place.

 For further information or to book a strategic session with Iain, please contact Jacqueline on 0191 206 4080 or email admin@iainwallis.com.

 

2013/14 Tax Return Deadline …… “Use the White Space”

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So, you were too busy and missed the self-assessment deadline of 31 October 2013 and are now you are frantically trying to complete and submit online by 31 January to avoid the £100 penalty, interest and potential penalties.

Yep that deadline is approaching far faster than you appreciate but equally with every passing day goes the need to be stuck in some detox vortex where you are forced to have a green smoothie for breakfast and eat more greens than a rabbit does in an average year.

However, what to do when you and/or your accountant , (though hopefully not your accountant but you’d be surprised ) can’t decide what or how to declare a complex transaction or one which may be open to a different interpretation by HMRC?

The law states “you must provide any additional information you think HMRC will need to check your tax bill” and this is where the ‘white space’ comes into its own. That said there is a degree of crystal ball gazing as who knows what HMRC think some days

Here are a few situations where I’d suggest you use the white space:

1. To back up a complicated entry on a tax return, for example, a capital gains tax calculation on the sale of your home where you have used part of it for business.

2. Where you’re claiming Principal Private Residence Relief on a property that’s been let out but used to be your main home.

3. Where you aren’t sure of a figure for example, where the tax rules require you to make a judgement, say, on the amount of a business expense to claim

In the majority of cases, not using the white space to explain a questionable tax return won’t cause you any trouble, but should HMRC question your tax return and thinks you haven’t declared information you ought to have, the result may be a penalty charge or a greater penalty if it turns out you made a mistake. Remember that the law does not require perfection, more that you take reasonable care when preparing the return.

As a reminder, you are responsible for the entries on your tax return, even where your accountant completes it for you. So, please don’t just check the figures; make sure the white space entry is completed if appropriate.

If you are struggling with the deadline approaching or are interested in receiving further information or booking a strategic session with Iain, please contact Jacqueline on 0191 206 4080 or email admin@iainwallis.com.

 

Nigella’s Late Christmas Gift from HMRC!

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Gift Box

You may be aware or at least your accountant should be that tax relief is allowed by HMRC for the cost of capital equipment used in your business.

 Rather surprisingly however, tax deductions are also allowed in the form of capital allowances (CAs) on items such as computers, tablets and other equipment purchased as gifts by others, but used in the course of your business.

For CA purposes you must value the gift when you first use it for business (& you were all back at work straight after Boxing Day weren’t you) and reduce this figure to take account of any non-business use.  You can then claim this on the Employment pages of your 2013/14 tax return.

 A simple example:

  • Nigella receives a PC as a gift for Christmas
  • Like all electrical equipment it fell in value as soon as it left the shop, so a value of 90-95% of its purchase price would be reasonable i.e. market value of £3,000
  • Nigella estimates personal use of 15% i.e. £450
  • Nigella can therefore claim CAs of £2,550, which since she is a 45% taxpayer will reduce her 2013/14 tax bill by £1,147.50

Tip 1:
If employed then Nigella can speed any tax relief by asking her tax office to include the £2,550 CAs in her 2013/14 code number. That way £1,147.50 will be given to her by April 2014 as a reduction in the PAYE tax she pays on her salary.

Tip 2:
Even better more tax and NI can be saved if Nigella sells the computer to her business at market value. The company pays the market value to Nigella on which no tax or NI is payable and Nigella reduces her salary by the same amount, so there’s no net cost to the company. This results in a saving to Nigella of £1,350 in tax and £60 NI and the company also saves £414 on the employers’ NI it would have paid on the £3,000 salary sacrifice. A little bit for the geeks but hey it’s worth being a geek to save some tax.

So what gifts did Santa leave you that you can claim tax relief on?

If you are interested in receiving further information or booking a strategic session with Iain to see where you can legally avoid tax, please contact Jacqueline Campbell on telephone 0191 206 4080 or email admin@iainwallis.com.

 

Why Tax Avoidance is still legal

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“No man in this country is under the smallest obligation, moral or other, so as to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores. The Inland Revenue is not slow – and quite rightly – to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket. And the taxpayer is, in like manner, entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue.”

This delicious quote from the judgment of Lord Clyde (Ayrshire Pullman v CIR (1929) 14TC 754)  has always been the foundation on which accountants like me, who help their clients with legal tax avoidance have built their arguments.

 

Parliament has rejected this judgement by enacting the general anti-abuse rule or GAAR. Taxation it is argued is not to be treated as a game where taxpayers can indulge in any ingenious scheme in order to eliminate or reduce their tax liability.

So watch out Jimmy Carr!

 

But what does it mean for those of us who do arrange their affairs to avoid tax but not in such an aggressive way?

Well the good news is that those who feared that it would be a charter for HMRC to crush and penalise anything it didn’t like have not materialised. Instead we have a reasoned argument that making the most of the rules is just fine but taking steps which are artificial, abnormal or simply to escape tax will be caught by GAAR. The downside is that what you consider to be fair and reasonable may not be quite the same as that of your local Tax Inspector!

So what does that mean in the property world:

  •   Giving assets to your spouse or children to reduce tax while it may avoid tax isn’t abusing the rules
  •  Switching the capital gains tax relief between main residences is allowed; that will no doubt keep a few MP’s happy

That said few of us are engaged in the aggressive tax planning used by the likes of Jimmy Carr so in the real world nothing really changes.

Or as the neighbours might say plus ca change J

 If you would like a strategic session to review your affairs please email Iain@iainwallis.com

 

Taxability 2013/14: Over 65 proven legal ways to save tax

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Do you really want to give the taxman £521,700?

 

It’s a lot of money, isn’t it? But, even before the current economic crisis, that’s how much someone earning £30,000 a year would have paid in taxes over their lifetime. While if you are lucky enough to earn more than £30,000, your lifetime tax bills will probably have been even higher.

However, because of the economic crisis, as the country starts to pay the billions to balance the Government books, your tax bills will almost certainly soar even higher still.

As a result, there is a tax bombshell about to explode.

 Of course we all have to pay our fair share of taxes. But there’s no reason why you should pay more than your fair share of that tax burden, is there?

Unfortunately, paying more than their fair share is precisely what many people do… often without even realising it.

So, because we don’t want you to be one of them, here’s our up to date easy-to-use tax-busting checklist.

In just a few pages it reveals 70 powerful ideas to shave many pounds – perhaps even many thousands of pounds – off your tax bills.

Just think, even if you can only shave 5% off your tax bills, if you earn £30,000 a year that tiny 5% saving adds up to an extra £26,085 in cash to spend and enjoy during your lifetime.

And if your earnings are much more than £30,000 per annum then your savings could well be disproportionately higher – quite possibly as much as a 50% reduction in the tax you have to pay.

 What could you do with that sort of money?

The TaxAbility checklist has been specifically designed to help you start to identify where and how to make these sorts of savings.

And it has been designed to take less than 25 minutes to complete. It could be the most profitable 25 minutes you’ll spend this year.

Once you’ve filled it in we strongly recommend that you discuss all of your “no” answers with your Chartered Accountant.

Of course, if you don’t have a Chartered Accountant, or you would simply like someone to give you a fresh perspective on your options, we would be delighted to help you.

Iain Wallis signature

 

 

Iain Wallis – Proven Tax Strategies For High Net Worth Individuals

So what about the 2013 Budget?

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 Headline grabbing announcements in the Budget do little to hide the three brutal truths and the billion bombshell that will mean excruciating pain for many in the UK

 
The anorak wearers amongst you in reading about the budget have spotted in Table B.5 on page 104 of the Treasury’s full “Budget 2013” document (which you can download here http://www.hm-treasury.gov.uk/budget2013_documents.htm) National Debt is going to rise in the next 5 years from £1,189bn to £1,637bn

That’s a staggering increase of £448bn. Given that there are 63.2 million people in the UK, that equates to £7,088 per person. try obtaining that on an interest free credit card!

So today I’ve  launched a free “2013 Tax Minimisation Review” initiative to help local taxpayers and businesses get to grips with the pain behind the Budget.

There are some very welcome headline grabbing announcements in this Budget. But we shouldn’t get carried away, since the underlying message is one of three brutal truths.

The first brutal truth is that public finances are still in a terrible mess.

In fact, the bombshell is that the people and businesses in the UK  will be forced find an extra £448 Billion just to pay back our share of the extra money the government is now going to borrow over the next 5 years. So for some local people the pain is going to be excruciating as the country balances the books with even higher tax bills, even lower wage increases and even fewer public services and benefits.

And even if they work hard and manage to avoid all of that, high earners could find the government taking up to 60p from every extra pound they earn: 60% – is the effective tax rate on income just above £100,000 due to the withdrawal of the personal allowance.

Middle earners could have as much as 65p taken from them  http://www.independent.co.uk/news/uk/politics/middle-classes-face-65-tax-rate-after-child-benefit-squeeze-8439162.html

While low earners can lose a staggering 73p once the claw-back of benefits is also taken into account http://www.thisismoney.co.uk/money/news/article-2242158/The-families-hammered-73-tax–income-tax-National-Insurance-combine-loss-benefits.html

The second brutal truth is that it is businesses and not Budgets that offer us the best hope of putting things right by replacing the jobs and wealth lost, and generating the extra taxes needed to pay for everything.  So the region’s job and wealth creating businesses need to stand up and be counted by taking urgent action to make it happen.

The third brutal truth is that the 2013 tax regime is hideously complicated and contains a huge number of pitfalls for the unwary.

The good news, though, is that it now also allows the really well advised to make some very big tax savings. And that’s why we’ve launched our free 2013 Tax Minimisation Review service for businesses and individuals – to make sure that no-one suffers by paying a single penny more than their fair share of tax.” 

 Readers who do not want to pay a single penny more tax than they need to can claim a free 2013 Tax Minimisation Review by calling Iain] on 0191 206 4080.

Further information on this topic can be obtained from Iain@iainwallis.com

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