This article will delve into the tax advantages and obligations of couples legally classified as “Married” and “Civil Partnerships”. 

 For tax purposes in the UK, a civil partnership is now treated the same in law, as a marriage.

 There are a number of tax reliefs civil partners and married couples can benefit from, we have summarised the main points below.

For tailored advice to your situation book a consultation book one of our specialist accountants or contact us via email of phone

Benefits for both Civil Partnership and Marriage 

Marriage Allowance

 Marriage Allowance allows a tax paying partner to transfer the tax year's personal allowance amount to a spouse who has not made over the personal allowance.

 Transfer of the blind person’s allowance

 The Blind Persons Allowance is available to those registered as blind, or whose eyesight hinders performance at work or in day-to-day life. This allowance can sometimes be transferred to a spouse tax free.

Transferring Assets with no Capital Gains 

 Certain assets can be transferred between spouses tax free. This can enable more efficient tax planning. 

 Child benefit 

Couples are entitled to transfer 10% of unused personal allowance from the lower to the higher income spouse (provided they are not a higher rate taxpayer).

Principle of private residence (PPR)

A Principal Private Residence (PPR) is a house or apartment which you own and occupy as your only, or main, residence. PPRs are exempt from CGT upon sale for the entire period of ownership, you: lived in it as your main residence. used all the property as your home. Married couples and Civil Partnerships are only allowed to have one PPR between them. 

If both individuals within the relationship own a property, an election will be required as to which property will be treated as the couple's main home for PPR purposes.

You can nominate one property as your main home by writing to HM Revenue and Customs (HMRC). Include the address of the home you want to nominate. All the owners of the property must sign the letter.

For overseas properties, you can nominate the property as long as you have lived in the property for at least 90 days during the tax year.

Need more advice?

No problem, contact our team of chartered accountants are always at hand to help you with any and all of your tax needs.

Donations to charity are tax-free, and you can claim tax relief if you donate through Gift Aid or donate straight from your wages and/or pension – by using Gift Aid, or Payroll Giving, or a few other ways. In this article, we will be explaining the following:

 Gift Aid:

1. How to claim donations using Gift Aid

2. Keynotes about Gift Aid

3. High Taxpayers and Gift Aid

4. What if you want to get tax relief sooner?

5. Can a donor sign up for Gift Aid?

Payroll Giving and Other Ways of Donating:

1. Payroll Giving

2. How much is the tax relief with PG?

3. Donating land, property, or shares

4. In your will 

How Do you Claim donations with gift aid?

You first need to make a Gift Aid Declaration for the charity, which you do by filling in a form. This is because you need to make a declaration to each and every charity that you will be donating to, by using Gift Aid. 

Some key notes about Gift Aid:

· A charity can claim Gift Aid when you made a donation from your own funds and have paid Capital Gains Tax (CGT) or UK Income Tax.

· The amount of tax paid needs to be equal to the value of either the Charity or Gift Aid 

· By donating to GA, it means charities can claim an extra 25p for every £1 donated to them (this does not cost you any extra)

· Charities can claim GA on most donations, but you will need to check as not all payments qualify. 

Higher Rate taxpayers

 If you pay above the basic tax rate, you will be able to claim the difference between the rate that you pay, and the basic rate on your donation(s).

 

What if I want to get tax relief sooner?

How it works with Gift Aid, is you can also claim tax relief on donations you make in the current tax year – IF you either:

1. Want tax relief sooner

2. Won’t pay higher rate tax in the current year, but you did in the previous year

You cannot do this if:

1. Your donations do not qualify for Gift Aid. Click here to see the qualifications needed. 

If you’re also found to be claiming Gift Aid without notifying HMRC about no longer paying enough tax – you will need to pay back any difference.

Can a donor sign up for ga?

A donor is eligible for signing a single GA declaration – once a charity is set up to benefit from the GA scheme.

 If they’ve made any donations in the past to a specific charity, they can still claim GA by filling out multiple donation declaration forms.

Other ways of claiming Donations?

Payroll Giving

 If your employer, company, or pension provider runs a Payroll Giving (PR) Scheme – you can donate automatically from your wages and/or pension.

 It will transfer before your tax is deducted from your income.

 One thing to note about the Payroll Giving scheme is that you cannot donate to amateur sports clubs through Payroll Giving.

Donating land, property, or shares

You do not have to pay tax on land, property, or any shares that you want to donate to charity, even if you’re selling them for less than their market value. You also claim tax relief on both Income Tax and Capital Gains Tax.

If you would like any further advice regarding all areas of UK Tax do not hesitate to contact us

What is Entrepreneurs Relief?

Entrepreneurs relief reduces the amount of Capital Gains Tax (CGT) on a disposal of qualifying business assets as long as you have met specific conditions throughout the one year qualifying period either up to the date of disposal or the date the business ceased trading.

Qualifying Capital Gains for each individual are subject to a lifetime limit as follows, for disposals on or after:

• 6th April 2008 to 5th April 2010 - £1million

• 6th April 2010 to 22nd June 2010 - £2million

• 23rd June 2010 to 5th April 2011 - £5million

• 6th April 2011 - £10million

Who is Entrepreneurs Relief Available too?

• A sole trader or partner selling part or all of your business or its assets

• Control at least 5% of the company’s net assets of which you are selling and are entitled to 5% of its distributable profits

• Sell Assets from the above businesses within three years of closing down

How to Claim

Individuals - If you can do so, you should claim Business Asset Disposal Relief in your 2020 to 2021 tax return. If you cannot make your claim in your 2020 to 2021 tax return then a claim may be made to HMRC either in writing or by filling in Section A of the Claim for Business Asset Disposal Relief form.

Trustees of a settlement - A claim by the trustees of a settlement must be made jointly with the qualifying beneficiary for a trustees’ disposal. Joint claims may be made to HMRC in writing or by filling in the Claim for Business Asset Disposal Relief form. Section A should be completed by the qualifying beneficiary and the trustees should complete Section B.

Limitations of Entrepreneurs Relief

Selling to a larger company – If the company is much larger, your shares may comprise under 5 per cent of the total capital and voting rights. This would mean that you no longer meet the qualifying criteria for entrepreneurs’ relief when you come to cash in the shares.

Holding a small share in the company - If your share in your company is very close to the 5 per cent lower limit, you will want to ensure it does not fall before this threshold at a time when you want to sell up. Other share allocations may dilute your holding, so monitor your situation carefully and regularly.

Need Help Claiming?

If you are still confused whilst trying to claim Entrepreneurs Relief, do not hesitate to contact us. Our team of friendly chartered accountants are always at hand to help you with any of your tax and accountancy needs.

What You Will Need to Make Your Claim

The fifth Self-Employed Income Support Scheme grant works slightly different to prior iterations. You will need to provide two years of annual turnover figures to generate the amount of support that you are entitled too.

You do not need turnover figures if you started trading in 2019/2020 and did not trade in the three tax years prior to this:

• 2018/2019

• 2017/2018

• 2016/2017

When you claim you will also need your:

• Your Self Employed Unique Taxpayer Reference (UTR)

• National Insurance Number

• Government Gateway Credentials (ID and Password)

• UK Account details (Account Number, Sort Code, etc.)

Only provide bank details that accept BACS payments. Other information and documentation you may be asked to provide include your driving licence, passport or documentation relevant to your identification.

If you do not have any of these details

How to get your Unique Tax Reference and your National Insurance Number

If you cannot remember your Government Gateway ID or password, you can attempt to recover them. You can do this when making your claim. You may need to answer questions about your passport, driving license or information held on your credit file.

If you do not have a Government Gateway ID or password, you can create one when making your claim.

How to Claim

Visit the government website to start your claim

• You should make your claim on or after the personal claim date HMRC has given you

• You must make the claim yourself, any claim by made by anyone other than the benefactor could be deemed as fraudulent.

• You must not claim if you know you are not eligible else you may be liable to pay a penalty.

Return to your claim

If you need to return to your claim, you can:  

• Check your payment status 

• Update your bank details

• Check previous grant payments

• Check to see whether the grant received is correct

After you’ve claimed

Your claim will be checked by the HMRC and you should receive payment of the grant within 6 working days.  If you fail to receive payment or notification of payment within this time we suggest that you contact the HMRC directly and they should be able to help you.

Records you need to keep

You must keep a copy of all records in line with normal self-employment record keeping requirements, including the:  

• Amount claimed  

• Grant claim reference

If you’re currently trading but have reduced demand 

You must keep any evidence that your business has had reduced activity, capacity or demand due to COVID-19.

If your business is temporarily unable to trade 

• You must keep evidence if your business has been unable to trade due to COVID-19, such as:  a record of dates where you had to close due to government restrictions  

• NHS testing and tracing communications

• a letter or email from the NHS asking you to shield  

• test results if you’ve been diagnosed with COVID-19 

• letters or emails from your child’s school with information on closures or reduced hours

For any further enquires do not hesitate to contact us

SEISS Grant 5 | Survey

Find out if you qualify for the SEISS grant 5 by taking this quick survey. Estimated time taken to complete this survey is less than 1 minute

Click To Start

!Important The survey above only offers a general overview of your eligibility for the SEISS 5 grant. There are more factors that may be taken into account when the HMRC dertermine your eligibility.

SEISS 5 Calculator

How much will you recieve from the Self Employed Income Support Scheme grant in its fith iteration

Average Profit Prior to the Pandemic

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Please enter your average profits from years of trade. To qualify for the SEISS grant you must have submitted your 2019/20 tax return alongside the other pre-requisites listed above

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Profit from the Basis Period

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Please enter your profit from your designated "affected turnover". For the SEISS 5 Grant this represents the average profit anytime between May 2021 to 30th September 2021

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Important! This is only a reference point. Your total grant owed is variable depending on the information you submit. The HMRC offer further guidence on their website.

This article will cover some of the common questions we get asked about marriage allowance in the UK. If you have further questions just reach out via our contact us page 

Below are the questions we cover:

1. What is Marriage Allowance

2. What are the conditions for qualifying for Marriage Allowance

3. How does Marriage Allowance work

4. How to claim Marriage Allowance

5. How to claim marriage allowance for backdated years

6. How to claim marriage allowance if your partner has died

7. Can marriage allowance be transferred to a foreign expatriate living in the UK

What is Marriage Allowance?

Marriage allowance is a government scheme that is designed to give married couples an income tax-relief. This means that once recognised by the HMRC as married or in a civil partnership , you are entitled to either paying less tax, getting tax back or having it repaid to you in another way, such as into your pension account.

Although marriage allowance can be a good way for married couples and civil partners to save their money, there are a few conditions that qualify whether you are eligible or not for the allowance.

What are the conditions for Marriage Allowance?

There are a few conditions that need to be met in order to apply for marriage allowance in the UK.

1. One partner must be earning below the personal allowance – to find out the amount for this tax year visit our personal allowance threshold chart.

2. The other partner must be earning between a set amount – to find out the amount for this tax year visit our marriage allowance threshold chart.

3. You must be recognised by the HMRC as married or in a civil partnership

How does Marriage Allowance Work?

The scheme works by allowing one partner to transfer £1,260 of their personal allowance (£12,570) to the other partner which will be known as their “tax credit”.

For example, if you have an income of £25,000 and your partner's income is less than their personal allowance, you pay income tax on £12,430. However, if you claim marriage allowance, your partner who is earning less than you, can transfer £1,260 of their personal allowance to you, giving you a personal allowance of £13,830 (12,570 + £1,260).

You now have an extra £1,260 that you would’ve paid tax on at 20%, but is now tax-free, so you are now £252 up (20% of £1,260). Now that you have a higher personal allowance that has been increased, you know that you will pay less on your taxes. 

How to claim marriage allowance

If you and your partner qualify for Marriage Allowance, you can claim for it by applying online through the gov.uk website . Once registered, the amount of marriage allowances you’re eligible for will automatically transfer to your account.

How to claim Marriage Allowance for backdated years

You can backdate your claim for any year that you were eligible for since the 5th of April, 2017.

How to claim marriage allowance if your partner has died?

If your partner passed away after the 5th of April in 2017, you can still claim Marriage Allowance for any backdated years - if you meet the other requirements for claiming Marriage Allowance.

Can marriage allowance be transferred to a foreign expatriate living in the UK?

You can claim Marriage Allowance even if you or your partner are an expatriate, as long as you are residing in the UK. 

If you have further questions regarding marriage allowance or would like support claiming the allowance contact us

Tax affects us all differently depending on how much earn annually, where we live, and of course our marital status. How exactly does our marital status affect tax and accounting though? Whether you’re newly married, you’re going through a divorce, or even recently lost your spouse, different tax regulations apply.

Single status

For those of single marital status, the way tax and accounting works can be pretty straightforward. Standard Personal Allowance for everyone is £12,500. Personal Allowance is available to everyone who resides in the UK, it is known as a tax-free allowance. For example, if you earn £20,000 per annum, your subsequent taxable income will be £7,500 due to the subtraction of your personal allowance.

This differs with income above £100,000. Your personal allowance gets reduced by £2 for every £1 you earn over this threshold. This means high earners who cross the £125,000 threshold do not receive the personal allowance.

Newly Married

For newly married couples, the first thing you should know is that to benefit as a couple, the lesser earning partner should in most circumstances have an income below your personal allowance. There is a way you can calculate the amount of tax you can save together, bear in mind that although you can save together when you transfer a portion of your personal allowance to your spouse, you could end up paying more tax yourself. So how can you apply for a marriage allowance? (also known as a transferrable allowance) There are three things you need before you can do so:

1. You Need to Be Married

2. You don’t Pay Income Tax

3. Your Spouse Pays Income Tax at a “Basic Rate“ (between £12,501 and £50,000)

You should contact HMRC if all three of these apply to you. You could argue that marriage allowances are a tax perk that makes paying taxes easier for both partners. There are other perks that come with a marriage allowance such as being able to file for one when going on maternity or paternity leave, if you or your spouse are not working, if you or your spouse are unemployed or if recently have lost your job.

Divorced couples

For divorcees or those who have filed for a divorce, the effect of tax and accounting can be a little different, as complications could arise. When it comes to divorce, your partner, that transfers between you both could result in unexpected Capital Tax Gain charges. Although the last thing anyone worries about when going through a divorce is tax, it’s important to seek financial advice about how to keep yourself from said tax charges that can occur along the way.

Death of a spouse

Lastly, for those who are have lost their spouse, it could affect your state pension. Up until their death you would’ve transferred allowanced between one another, which means that the last year of the claim would have been the year of death. Claims can be made when this happens, in most cases, you are able to claim more state pension than originally entitled too. Certain claims can be backdated for up to four years if all other conditions for the allowance have been met. If your deceased spouse was the lesser earner, then you should contact HMRC.

It’s always best to have HMRC advise you on the steps to take, and to inform them as soon as possible when your marital status has changed. This allows them to help you with any queries and claims before complications start to arise. When left to the last minute, you could find yourself in a sticky situation that you’re not sure how to handle, especially in situations such as divorce, and although tax may not always be the first thing you want to think about, it is worth considering to prevent undue stress.

Contact Us For All of Your Accounting and Tax Needs

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A £5,000 fine will be issued for those who decide to travel abroad without any valid reasons. From next week, the ban on leaving England will become a law, which all UK residents will need to follow. Currently, the earliest that UK residents will be able to travel outside of the UK is after the 17th of May, and those who do not have a valid reason to travel will have to face a fine or may not be permitted to return to the UK until after the 17th of May. The ban does not include journeys to the Channel Islands, Isle of Man, or Ireland.

Reasons that will allow people who reside in the UK to travel outside of England within these dates include:

• If you need to attend a wedding or funeral

• Educational purposes

• Medical needs.

Unsure about holiday planning

If you’re unsure about the steps you need to take due to the new law, there are different things you can choose to do if you have been planning a trip outside of the UK. Postponements can be offered for those who have already booked flights within the dates you can’t travel.

The rules are subject to change, meaning that the government could still postpone the date we’re supposedly allowed to travel again.

You don’t necessarily need to postpone, but can request a cash refund instead. Due to the aforementioned uncertain nature of these dates this would be a recommended course of action.

If you face difficulties receiving your refund, there are policies that can help you in this situation, such as claiming the money from your credit or debit card company. You would also have needed to have spent between £100 to £30,000 to do that. This is known as ‘Section 75’, it’s a consumer’s protection rights which means that in case anything goes wrong – your credit provider holds the responsibility for you.

Why Summer Holidays Aboard are ‘Unlikely’

Transport secretary Grant Shapps claims that it’s “too early” to tell whether or not Summer holidays abroad can be permitted. There is an underlying concern due to the risk that UK residents could encounter the virus abroad, and subsequently play a role in increasing the virus’ spread upon return to the UK.

Of course, UK residents were hoping for the best and that they would be able to safely travel again by the time Summer comes around, as over half of the people in England having received the vaccination already, it looked likely that travel abroad would resume very soon. Unfortunately, the news about this new ban on travelling has made put the UK back a few steps because we’ve now been told that it is unlikely that we will be allowed to travel for holidays.

Which countries can we travel to?

Many countries are still allowing entry to those who have been vaccinated, via the use of a vaccination passport. Some of these countries include Portugal, Greece, Cyprus, Seychelles and Iceland.

Many of those who are travelling due to the legally-permitted reasons will be allowed to enter these countries; despite, the Government trying to restrict all types of travel.

Is there a possible third Covid wave around the corner?

Prime minister Boris Johnson warns that a third wave of the virus could be on the horizon, and that the new measures could play a significant role in combating the virus, and the reopening of society.

The easing of lockdown can only happen with a significant reduction of the virus spread, alongside precautionary measures to stop a third lockdown. The new ruling seems to signal the latter of the two.

As the country moves towards the relaxation of restrictions we aim to keep you updated on the latest news. We recently covered Rishi Sunaks budget and the role it will play in the post-lockdown world.

For all tax enquires - Contact Us

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A Guide for authors on handling their finances

1 ) Organising Your Paperwork

It seems self explanatory but finding a filing system that works for you is vital. If you don’t you will risk the chaos of sifting through all your incomings and receipts when it comes time to file your tax return.

Some steps you could take to keep organised include:

• Keep your books up to date - Note down your incomings and their associated outgoings

• Note down your expenses and organise their relevant receipts (there are mobile apps that can help you with this now)

• Keep a folder of relevant documents such as claim forms if you are claiming benefits

This will not only save you time and energy but also a great deal of stress when it comes time to file your tax return!

If you have an accountant (or looking to hire one) organising your paperwork will also make the process more seamless enabling them to spend more time on finding ways to reduce your tax liability.

2) Keeping a Record of Your Expenses

We referred to this above but it is worth reiterating - organise your expenses!

The scene is set, you are the majority of the way through the filing process, the end is nigh! But wait, the HMRC are asking you to calculate and enter your expenses. You plant the palm of your hand firmly on your forehead; you have realised that the contents of that dust ridden bin bag positioned in a forgotten corner of the room contains all of your relevant receipts! Now you have to pour all of these receipts out of the bin bag and trawl through them, hoping you can make sense of when they were from and what they were for.

You may laugh (hopefully you have as it signals you are at least more organised than this), but believe me, as deadline day approaches situations like this are occurring throughout the country.

Whether or not writing is your main source of income or not – it is a great edition either way to create a record sheet or document for your expenses. It would help you to see how much you’re spending whether it’s weekly, monthly, or even annually. 

By being self-employed, you would arguably have to be careful with your expenses. A good way to do so would be by signing up to an accounting tool such as Quickbooks Online or Xero, this will help ensure that you’ve kept a record of all items purchased as well as how to run your self-employed job as a corporate would with their business. 

3) Separating Your Bank Accounts

It might seem like an obvious one – or maybe not, either way it’s a good idea to keep separate accounts, with one allocated account with a sole purpose of saving for your tax payment. This will allow you the peace of mind that you have a calculated amount set aside for your taxes, it’ll keep everything nice and clear for you. A bonus tip involves saving for your taxes from your first yearly payment, this will most likely make you over save for your taxes thus allowing you to give yourself a well deserved bonus once your tax return is done. All from your own pocket!

4) Learn About The Deductible Expenses You May Be Missing

Being aware of what you can and cannot claim on your expenses as a self-employed individual is vital when it comes time to file your tax return. Common claimable expenses include:

• Stationery

• Theatre and Cinema Tickets if for the purpose of research and are within the authors relevant genre

• Courses and Conferences

• Repairs and Maintenance relevant to the tools that a writer may use

• Accountancy and Professional Fees

• Reference books, CDs, journals and Newspapers if relevant

These are just a few of the expenses you may be able to claim.

It is worth noting that all expenses must be relevant to your profession. If you are unsure about a particular expense you are going to claim, our advice would be do not claim it. Instead seek the help of a professional tax advisor. You can receive very hefty fines if the HMRC find that you have claimed expenses that they deem as unacceptable.

5) Hiring an Accountant

As a self-employed individual taxes can be complex, and overwhelming. The easiest and most efficient way to file your taxes is to hire a tax professional. Not only will you save yourself a great deal of time and stress but a professional tax advisor will know every area that could be saving on your tax liability thus saving you money.

We offer affordable fees for authors, do not hesitate to Contact Us

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The 2021 budget has announced a lot of ways they plan to help people all across the UK, introducing different schemes and budgets for different industries, but what does this year’s budget mean for corporates? There are some new schemes that have been introduced, that could possibly become a problem for larger companies, and not affect smaller companies at all. On the other hand, there could be advantages for both large and small companies. All in all, there are a lot of ways corporates could benefit from this year’s budgets.

In this article, we will cover a few of the different schemes and regulations provided by the Government, how they work, and how the Government aims to help corporates. Some of these include the Super Deduction Scheme, VAT reduction, a £3000 loan to taking on apprentices, a ‘Recovery Loan Scheme’ all across the UK, and a change in the annual corporate tax payments.

Super Deduction Scheme

Starting from April, a ‘Super Deduction’ scheme will start to take place for companies. For every pound, a company invests in new equipment, their tax bill will be cut by 25%. It’s expected to incite around £25 billion in business investments all across the UK – benefiting businesses such as manufacturers in particular. “These measures will be welcomed by businesses and will encourage an immediate acceleration of investment, instead of holding off. However, care will need to be taken in relation to certain assets, such as vehicles and leased plant and machinery, which may be subject to restrictions.”

This scheme aims to encourage firms to invest in “productivity-enhancing plant and machinery assets that will help them grow, and to make those investments now.” – which you can read more about in this article.

VAT cut to 5%

An extension to the Value Added Tax will cut to 5% for things such as hospitality, accommodations, and site attractions until the end of September, all across the UK, which will shortly be followed by a 12.5% rather for another six months that will end on the 31 st of March, in 2022.

The VAT was originally 20%, which is a good amount of reduction – making it all the easier for restaurants, cafes, hotels, amusement parks, concerts, etc to regain the money that wasn’t being made during most of the pandemic.

This will ensure the safety of supporting 150,000 businesses in the tourism and hospitality sectors and protect the 2.4 million jobs across the UK.

£3000 for taking on apprentices

An extension has been decided to the hiring incentive in England, to take on those looking to do apprenticeships which will go on until September.

This is a great advantage for those who are looking to do apprenticeships straight after finishing secondary, as an alternative to university. The more apprenticeships that are held, the easier it will be for young adults who are not keen on going to University. It’s beneficial to corporates too, as the more people they can get on board with their company, the better.

18-year-old Martha McKeown signed up to become an apprentice for 18 months at a charity that helps people with learning difficulties and have mental health problems. She talked about how the apprenticeship gave her the confidence that she needed. As well as having something where she can learn different skills, she can also earn the London Living wage which enables her to save up money to give her a head start of saving for her own place.

The government claims that the boost for apprenticeships will ultimately help the IFA sector. Evidence shows that more than 700,000 people have lost their jobs due to the Coronavirus. They believe that greater incentives for apprentices and employers will enable apprentices to continue to work in a certain profession. Therefore, it will attract fresh and diverse talent – including those from BAME backgrounds, LGBTQA+, and women.

UK-wide Recovery Loan Scheme

This scheme aims to make loans available starting from £25,001 to £10 million and account finance between £1,000 and £10 million. This is aimed to help both large and small corporates proceed to the next stage of recovery post-pandemic.

The scheme will be a boost to help a lot of companies to continue to take out loans, this would also give corporates confidence in continuing with their business – for example, if they’re a start-up on a small corporate, as they may have been badly affected during the pandemic.

Yearly Corporate Tax

As part of the yearly tax that corporates pay which was originally 19%, it was announced that it will be increased to 25%, but only for companies that are earning more than £250,000. This of course is a disadvantage to big corporates that earn that amount or more as they will now have to start paying quite a bit more tax than they originally were. For smaller companies who don’t earn anywhere near as much as £250,000, there is no disadvantage to them, but also no beneficial factor that they could gain from. Although this will not start straight away as the chancellor has announced that it will be increased starting from 2023.

Contact Us for any of your tax needs. We specialize in taxation for corporate enterprises.

How the 2021 Budget Will Help Equality and Diversity

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Written by Alistail Bambridge
Partner & Founder
About Alistair

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The economy has taken a huge hit as a result of the Coronavirus pandemic, with very few jobs being offered to those job hunting and others losing the jobs that they had. Nevertheless, the new 2021 budget that has recently been introduced by the government plans to pave people’s ways back into the working world. 

There’s still the question of how it might help minorities, such as people from BAME backgrounds, or anyone a part of the LGBTQA+ community, and women in general. They actually stated that they make recommendations for investments and policies to promote gender equality for women in all their diversity in the recovery from Covid-19. 

This article will cover some of the different government legislations that could benefit equality and diversity. We have also covered the following 2021 Budget topics:

What Self-Employed Professionals Need to Know About the Budget

Prospective Buyers Guide to the 2021 Budget 

How will the 2021 Buget affect High-Net Worth Individuals?

What the 2021 Budget means for Corporates 

How the 2021 Budget Will Affect Investments and the Stock Market  

What the 2021 Budget means for the creative industry

Although there is no substantial legislation for those with disabilities, BAME or LGBTQA+ communities, there are several budget changes that could improve equality and diversity. Most prominently, there are many ways that businesses may be able to employ Budget to work towards improved equality and diversity standards. For example, 35 of the UK's major environmental organisations collaborate on an employment scheme to diversify the sector further. The increased funding for apprenticeships announced could be used to support these efforts further.

 

Stamp duty holiday extended and 5% mortgages

Evidence has shown that Black families struggle more to get on the property market, this is due to a number of issues that extend far beyond getting a deposit together. However, the Stamp Duty Holiday and 5% mortgages could indeed assist those who already have savings or who are on income that will allow them to afford a 5% deposit before the end of June.

The extent to which this will really help can be disputed, the stamp duty holiday has sent property prices through the roof meaning that an above-average income and larger deposit is still required.

For more on the 2021 budget and what it means for those buying a property in our "Prospective Homeowners Guide to the 2021 Budget"

Helping BAME businesses recover from Covid-19

Evidence shows BAME businesses have been incredibly hard by the coronavirus pandemic. This is thought to be due to the higher sickness and mortality rates Covid-19 has had on the BAME communities. There is a demand for increased grants to help such businesses get back on their feet and grow. 

Again, although there is no legislation specific to BAME businesses there have been a number of grants and exemptions made available to businesses in the 2021 Budget.

Some of the opportunities include the Kickstart Scheme, which allows corporates to hire people that they would only have the pay minimum wage, but is a beneficial factor for both them and the employee, as they’re able to give those struggling to find a job because of the pandemic, a chance to put get the foot into the career path they’re looking to get into. BAME business will also be giving those from a BAME background more equal opportunities.

Chancellor Rishi Sunak also confirmed the Government’s decision to boost incentive payments for businesses to hire apprentices of any age. He also said the Government would invest £126 million “to triple the number of traineeships.” Meaning that BAME businesses will be able to hire more people.

 

Equal opportunities for employment in 16-24

There has also been a kick-starter scheme that has been introduced that aims to help those ages 16-24 to avoid long-term unemployment. It works by offering a person between the ages of 16-24 to work as an employee and be paid minimum wage, allowing them to work during the pandemic. This scheme is probably the one that has been a great advantage for people between that age gap across the UK as unemployment has been a huge problem for the country, especially for those trying to find their way into the working world. 

It creates an equal opportunity for those between 16-24 because when you're competing with new graduates, people with a few years' experience who lost their jobs during the pandemic and even people with 10+ years' experience, it can be extremely overwhelming and difficult to find a job. The scheme introduces a new way of giving people a chance to learn without needing a certain amount of experience but gives them a chance to land a permanent position at the end of the scheme. Many companies have hopped on board to open positions for those who are actively looking to be employed to avoid long-term unemployment. 

Although it’s an amazing opportunity for those between 16-24, training providers are concerned that the new scheme will replace apprenticeships for young people – stating that those who take part in the Kickstart Scheme will not be able to be apprentices, claiming that “those furthest from the jobs market, are at risk of never entering it”.

Equality for women and the 2021 budget

In a speech by the Minister for Women and Equalities, Liz Truss, set out the Government's latest approach to tackling the inequality between men and women across the UK, held on the 17th of December. The speech, which was called the 'New Fight for Fairness,' explained the current problem with the debates around equality in the UK. She went on to explain why "now is the time to root the equality debate in the real concerns people face."  For women, one of the briefings includes a budget for women and employment. Research shows that women are the majority of employees’ industries with some of the highest Covid-19 job losses, including retail, accommodation and food services. Therefore, women have outweighed men by being furloughed all across the UK; it's taken a huge impact on young females, especially, who are new graduates or even just finished secondary school. 

Rishi Sunak has extended the self-employment income support scheme (SEISS) to the end of September, benefiting self-employed females. As well the extension of the self-employment income, he announced the furlough scheme would also be extended until September.

 

Support for those with Disabilities

The Departments for Work and Pensions (DWP) confirmed that the State Pension will rise by 2.5% this year, and benefits by 0.5% starting from April. This includes Disability Living Allowance (DLA) – the highest being £89.60 (from £89.15) and the lowest being £23.70 (from £23.60).

As for work grants, people with disabilities are able to get a grant. A work grant helps to motivate and help a disabled person to stay at work, or to start working. They also have the option of talking to their employers about changes they must make in the workplace that could make it easier for them if they have a physical disability for example. They can then apply for a work grant via gov.uk

To apply for one, the person applying needs to be a resident in the UK, have a disability or long-term health condition, or mental health condition and are aged 16 and over.

Contact us for bespoke business, tax and accounting advice for self-employed professionals

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How the 2021 Budget Will Affect Investments and the Stock Market

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Written by Alistair Bambridge
Partner & Founder
About Alistair

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Chancellor Rishi Sunak’s new 2021 Budget’s main aim is to restart the UK’s economy after lockdown. The new Budget has a lot more detail relating to personal finance and investing than last year’s budget. This article outlines how some of the key measures will affect your investments and the stock market.

Other areas we are covering:

What Self-Employed Professionals Need to Know About the Budget

Prospective Buyers Guide to the 2021 Budget 

How will the 2021 Buget affect High-Net Worth Individuals?

What the 2021 Budget means for Corporates 

Areas of the 2021 Budget that are aimed at supporting minorities  

What the 2021 Budget means for the creative industry

Tax Changes For Investments

The chancellor has set out a plan to raise corporation tax to 25% from 1 April 2023, which will only apply to company profits above £250,000. Multiple reports suggest that the rate will be gradually lifted across the course of the parliamentary term, which is therefore somewhat higher than investors might have been expecting.

Companies who have profits below £50,000 will remain at the current 19% rate, with a taper introduced up to £250,000. According to the Chancellor, this means that 70% of companies will remain ‘completely unaffected.’

These tax increases will have clear consequences for investors in domestic UK stocks since corporate earnings are declared after the deduction of tax. Therefore, the rise in taxes will reduce profit expectations from 2023 onwards, reducing companies’ capacity for buybacks, dividends, and debt repayments.

The revision in tax forecasts can also hurt the net present value of assets as a higher discount is placed on the future value of cash flows. The Chancellor’s most interesting announcements, especially for corporate boards, is what he has called the ‘super deduction tax. This will enable finance officers to offset the total cost of capital investments plus an additional 30%, against their tax bills.

This tax which will be in place for the next two years is a huge incentive for companies to spend their way out of the crisis and it seems to be designed to cushion the blow for companies’ future spending plans and cash flow management, brought on by the corporation tax increase.

Furthermore, it is not immediately clear whether investments will extend to intangible or other hard-to-value assets. But overall, this can be a large incentive for growth-focused UK stocks, with the OBR suggesting that these measures can lead to a 10% boost in investments, which is equivalent to more than £20 billion a year.

ISAS and Pensions

As well as holding basic and higher tax thresholds until April 2026, the Capital Gains tax allowance was forecasted to be cut as a part of a wider wealth tax’ on investors, but like the other allowances, it has been frozen at £12,300 until April 2026. ISA allowances have also been frozen at £20,000 for adult ISAs and at £9,000 for junior ISAs.

The Pension Lifetime Allowance (LTA) will also be frozen at £1.07 million, for the same period. There is some criticism on the move being a ‘tax on good investment decisions’ and the head of pensions products at Fidelity International, James Carter, says there needs to be a full review on pensions and tax. According to Carter, there are already significant savings gap and uncertainty in the pension’s taxation regime can damage people’s engagement in planning for retirement.

According to the chief executive of Wealth Club, Alex Davies, the LTA freeze is a huge blow to more wealthy pension savers which means that people will need to look beyond pensions in order to build large retirement pots. He also states that this is likely to motivate more sophisticated investors towards Venture Capital Trusts and Enterprise Investment Schemes, which have not been affected by the latest Budget changes.

UK Stock and Green Bonds

The Budget also demonstrates how the UK government is hoping to cash in on the demand for sustainable savings with the launch of a green savings bond through NS&I. The green bonds offer a winning combination of helping investors support green projects and at the same time protecting them with the strength of the NS&I name.

The green bonds come with 100% government backing, which should help the UK hit the target of being net-zero for carbon emissions by 2050 and creating green jobs. Although at the current moment it is unknown what the green bonds will run for or what rate they will pay, there is hope that the NS&I will take this opportunity to offer something very lucrative to investors. The government expects to issue £15 billion in green bonds this financial year, further details to follow in June.

The Chancellor also mentioned a review on UK share listings that will have an impact on retail investors. This is known as the ‘Hill Review’ and the changes within it are designed “to make the UK the best place for high-growth, innovative businesses to publicly list”. It could make changes to how many shares in a company are available to the public and lead to smaller companies to list. The chief executive of Stanhope capital, Daniel Pinto, says that the current listing rules are stuck in the past and leave London on the back foot against other financial centres. He said the “City should no longer be synonymous with big banks and FTSE 100 companies. It should become the financial centre of choice for SMEs and fast-growing businesses”.

Contact Us For expert tax, accounting and business advice for Investors

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What Does the 2021 Budget Mean for High Net Worth Individual's: The 5 Year Freeze

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Written by Alistair Bambridge
Partner & Founder
About Alistair

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This article will cover some of the main areas of the 2021 Budget that may affect High-Net-Worth individuals, resident in the UK.

Other areas we are covering:

What Self-Employed Professionals Need to Know About the Budget

Prospective Buyers Guide to the 2021 Budget 

What the 2021 Budget means for Corporates 

Areas of the 2021 Budget that are aimed at supporting minorities  

How the Budget will affect mutual funds and the stock market

What the 2021 Budget means for the creative industry

In the Chancellor’s speech, Sunak confirmed that there will be freezes in income tax thresholds, as well as freezes in the pension lifetime allowance, capital gains tax (CGT) and inheritance tax (IHT), utilising the ‘fiscal drag’ method. This is a deflationary effect; as wages rise, a higher proportion of income is paid in tax.

While the majority of HNW individuals have a gross income in excess of £125,000, therefore unaffected by the five-year freeze in the personal allowance, the freeze in tax thresholds will see their income tax liability rise over the period. As HNW individual’s income rise with inflation, a higher proportion of their income will be taxed at the upper and additional rate band, increasing their tax burden on the 31st of January.

A simple way for HNW individuals to reduce their tax is through pension contributions (extending basic rate and upper rate tax thresholds). However, on Wednesday the Chancellor confirmed that the lifetime allowance for pensions would be frozen at £1,073,100 until April 2026 (reversing the original plan to increase the allowance with inflation). Where HNW’s have to pension savings above this, extra tax penalties are incurred, either 55% or 25%.

Although the majority of HNW individuals have their personal allowance reduced to zero, the freeze in the CGT allowance will have an impact on High-Net-Worth investors. As individuals are limited to £20,000 annual Individual Savings Account (ISA) allowance per year, many HNW’s have investments outside of tax shelters. As share and property prices rise in the next five years (with inflation), High-Net-Worth’s will therefore be exposed to a further 20% / 28% tax on their gains, increasing their tax liability in ‘real terms’.

Finally, the Inheritance tax threshold will also stay frozen at £325,000 per person. This has not changed since 2009. Each individual has a tax-free allowance – ‘nil-rate band’ – of £325,000. If they are giving away their private residence to a direct descendant, there is an additional allowance for ‘the residence nil-rate band’ of £175,000. However, for HNW individuals with an estate over £2m, this is tapered by £1 for every £2 over. With yet another 5-year freeze (taking us to 2026), HNW individuals estate’s will be subject to a further 40% tax, as house prices and wealth levels rise. Legal inheritance rax planning is one of the easiest and most beneficial ways to lessen the tax bill caused by the new stealth tax (taxation levied in a covert or indirect manner) which has been introduced.

Contact us for more expert tax, accounting and business advice for high net worth individuals. We are a chartered, personal tax accountants specialist in private wealth and HNW matters

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Prospective Homeowners Guide to the 2021 Budget

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Written by Alistair Bambridge
Partner & Founder
About Alistair

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The 2021 Budget is out, and we are covering all areas. This article will be covering the need-to-know facts for prospective homeowners and landlords.

Other areas we are covering:

What Self-Employed Professionals Need to Know About the Budget

How the 2021 Budget will affect High-Net worth individuals 

What the 2021 Budget means for Corporates 

Areas of the 2021 Budget that are aimed at supporting minorities  

How the Budget will affect mutual funds and the stock market

What the 2021 Budget means for the creative industry

WHAT THE 2021 BUDGET MEANS FOR THE PROPERTY MARKET

STAMP DUTY HOLIDAY EXTENDED.

The stamp duty holiday has been extended for housebuyers up until the end of June. The stamp duty holiday has saved homebuyers around £5billion collectively in stamp duty so far. This tax break helped drive a boom in property prices last year, and clients' comments lead us to believe the incentive will lead to continued interest.

One of our clients, a self-employed musician, commented:

"I wanted to buy last year, but I couldn't find the right property. Because I knew stamp duty holiday was coming to an end, I was going to renew my rental agreement- however, now I have more time, I will be getting back to looking for a property."

This will be welcomed by many who are currently on the hunt for a property.

The Stamp Duty crystallises- therefore, home sales must go through before the end of June to be eligible for the tax holiday.

Is it all good?

One of the key concerns with the Stamp Duty Holiday and corresponding stamp duty holiday extension is that although it has boosted the property market and the economy generally, it has also created an artificial bubble that has seen house prices rise 8.5%. This means that first time buyers have to save more to come up with the deposit.

There is also a risk that prices have been artificially inflated and will go down when the holiday ends. This means that those who brought during the stamp duty holiday period may find they have overpaid, potentially negating any savings made from not paying stamp duty.

GOVERNMENT-BACKED 5% DEPOSIT MORTGAGES

Government-backed mortgages with deposits of just 5% have been announced. This is a huge win for many first time buyers who previously have been required to save between 10- 25% of a properties value to acquire a mortgage.

This will help counteract the effect of increasing property prices.

The government is set to guarantee loans, enabling lenders to offer mortgages worth up to 95% of a properties value work up to £600,000. This means that 86% of properties currently listed on Rightmove should be eligible for the mortgages.

Is it all good?

One thing to look out for with these new mortgages is the interest-rates. We don't know yet what terms banks will be offering; however, higher interest rates than typical can be expected. Although the government is offering a shoulder to hold the majority of risk associated with low-deposit mortgages, banks will still be liable for some of it. Therefore banks are likely to offset the risk by making borrowers pay higher interest rates.

UNIVERSAL CREDIT UPLIFT

An extension to the temporary £20 per week increase to Universal Credit standard allowance for a further six months. This applies to all new and existing claimants and will maintain the higher surplus earnings threshold of £2,500 for Universal Credit Claimants for a further year until the end of the 2021-22 tax year (April 2022).

Landlords argue that this does not tackle the fundamental issues that make Universal Credit inadequate for both tenants and landlords in the Private Rental Sector (PRS). One of our landlord's clients has argued it would be better if tenants had a choice to elect whether the housing element of their Universal Credit is paid directly to their landlords.

Another argument is that all claimants should choose how regularly the Universal Credit is paid to help with budgeting.

Contact Us for expert property tax, accounting and business advice for landlords and prospective buyers.

FILE YOUR 2020-21 PERSONAL TAX RETURN WITH US IN EARLY APRIL TO RECEIVE OUR "EARLY UK TAX FILERS" DISCOUNT. WE SPECIALISE IN BOTH UK AND US TAX AND ACCOUNTING MATTERS.

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What does the 2021 Budget means for the creative industry?

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Written by Alistair Bambridge
Partner & Founder
About Alistair

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Following on from our article "what self-employed professionals should know about the 2021 budget", we will be delving into what the budget means for the Creative Industry and Creative Freelancers. As an accountant specialising in creatives, how the 2021 Budget will support creative industry professionals back to the full prosperity of pre-covid years was highly anticipated.

This article will cover some of the main areas of the 2021 Budget announcement that creative industry professionals and businesses should know about.

We are also covering several other areas of the budget in the articles below:

What Self-Employed Professionals Need to Know About the Budget

How the 2021 Budget will affect High-Net worth individuals 

What the 2021 Budget means for Corporates 

Areas of the 2021 Budget that are aimed at supporting minorities  

How the Budget will affect mutual funds and the stock market

The 2021 Budget and the Property Market

How is the Budget going to help the creative industry?

The creative industry was one of the worst-hit by covid-19, with around £74billion and 2.7 jobs in 2020. Therefore many have been waiting for the 2021 Budget to lay out how it will pave the creative industry back to health.

£300million to be injected into the Cultural Recovery Fund

£300million is to be added to the £1.7billion Cultural Recovery Fund.

The Cultural Recovery Fund will provide financial support for music venues, museums, independent cinemas, galleries, theatres and heritage sites throughout the UK.

The Culture Secretary, Oliver Dowden, said

"It's a relief we can look ahead now, so this funding is not just about survival, but planning and preparing for reopening theatres, galleries and gigs."

Although many are happy with the creative industry cash injection- there is a large call out from the community for the fund to be extended to freelancers.

£90million injected into National Museums

An additional £90million to be invested into national museums to support them until their reopening in mid-late May.

£18.8 million to be injected into community projects

£18.8million to be invested in cultural community projects.

These projects include £5million to transform part of Wakefield High Street into a community library, museum and gallery space.

Scotland, Wales and Northern Ireland will receive an additional £77million to provide cultural groups with similar support.

Film and TV Production Restart Scheme extended.

The Film and TV Production Restart Scheme have been extended until December 2021. With a £500million fund, it has accepted 160 qualifying productions to date, and according to the government, saved 20,000 jobs.

"Elite Point-Based Visa" and Reform of the Global Talent Visa

Research has shown that the Creative Industries' gaps are more likely to be in higher-level occupations' such as architects and graphic designers. Part of the reason being is thought to be due to inadequacies in the current immigration system.

The 2021 Budget announced an elite points-based visa and a reform of the Global Talent Visa. These policies aim to attract and retain "the most highly skilled globally mobile talent". Depending on how these reforms are designed, they may support the creative industries demand for change.

Creative industry listed in Levelling-Up Fund

Creative Industry included in Levelling-Up Fund.

Maintaining and expanding the UK's world-leading portfolio of cultural and heritage assets included as a priority.

Details of plans:

• Upgrading and creating new cultural and creative spaces such as sports or athletics facilities, museums, art venues, theatres, libraries, film facilities, prominent landmarks or historical buildings, parks or gardens.
• New, upgraded or protected community hubs, spaces and assets (and associated green spaces)
• Acquiring and refurbishing key cultural and heritage sites, including hotels and historic buildings

The Recovery loan scheme

The Recovery Loan Scheme will be available to creative industry businesses. The new loan scheme is designed to support UK business access to finance as they grow and recover from the disruption of Covid-19.

The Towns Fun extended to a further 45 Areas.

£1billion to be invested in 45 towns to help the country recover from Covid-19. The fund will be dedicated to cultural and infrastructure projects.

For further information on support available to freelancers, the 2021 Budget for Self Employed article

No Government-backed Insurance Scheme announced yet.

A Government-backed insurance scheme is yet to be announced.

Without which many creative companies will not be able to stage events due to the risk of losses from cancellations as a result of Covid-19

Contact Us for expert tax, accounting and business advice for creative industry businesses and professionals.

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What Self Employed Professionals Should Know About the 2021 Budget

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Written by Alistair Bambridge
Partner & Founder
About Alistair

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Chancellor Rishi Sunak has now announced the much-awaited 2021 Budget. Setting out the governments tax and spending plan for the year ahead.

This is without a doubt one of the most anticipated budgets yet due to the Covid-19 pandemic, resulting in higher demand than ever for government measures to help businesses and jobs recover.

This article will cover the main areas of the budget self-employed professionals need to be aware of. Below is a list of all the articles we have released to cover the 2021 Budget. Feel free to get in touch with any specific questions.

What the 2021 Budget means for the creative industry

How the 2021 Budget will affect High-Net worth individuals 

What the 2021 Budget means for Corporates 

Areas of the 2021 Budget that are aimed at supporting minorities  

How the Budget will affect mutual funds and the stock market

The 2021 Budget and the Property Market

Highlights of the 2021 Budget for self-employed professionals

As expected, the Chancellor's 2021 Budget's core focus is on continued support as the UK moves towards what hopefully will be the end of the Covid-19 Pandemic this year. The Self-Employed were and are one of the worst-hit by the pandemic. As a result, the budget outlines several measures that will be of particular benefit for self-employed professionals, contractors and freelancers.

The self-employed furlough scheme (SEISS) extended to the new freelancers.

The self-employed furlough scheme (SEISS) has been extended to new freelancers and contractors who filed their first tax return for the 2019/20 tax year. Therefore over 600,000 people can now claim a SEISS grant. This is the 4th self-employment grant announced and will be followed by a 5th SEISS 5.

Although many are relieved to hear they will be receiving support, there is a lot of concern around the date to which the grant will be released: "Late April". One of our clients, a self-employed Yoga Teacher, has stated that the "delayed date is a massive blow and shock. It will be a real struggle financially making it to the end of April- hopefully, something changes".

Minimum Income Floor Removed for Self-Employed on Universal Credit

The minimum income floor for Self-Employed individuals on universal credit has been removed. This will be in place until late August.

The minimum income floor is a controversial system used to calculate Universal Credit Payments for Self-Employed Professionals.

Many will welcome the continued removal of the minimum income floor, as those who are not entitled to the Governments financial support scheme can instead receive Universal Credit.

Income tax thresholds frozen

The Income Tax Thresholds will be frozen until 2026. Over raising income tax, Sunak has favoured the method of "fiscal drag". This is a deflationary effect; as wages rise, a higher proportion of income is paid in tax.

Below is a great explanation of fiscal drag for those wanting to understand the topic further

The UK 2020/21 tax filing period will begin in April. Contact Us to receive our April filing discount. We are chartered UK tax advisers and accountants for self-employed professionals.

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Mutual Funds and how they are taxed in the UK

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Written by Alistair Bambridge
Partner & Founder
About Alistair

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Mutual funds are a very popular choice for investors. There are around 12,000 mutuals funds in the UK alone, as a result making decisions as a prospective investor can be extremely overwhelming. This article will break down the basics of what a mutual fund is, how they work and the different types. At the end of the article, we will also be covering the UK tax implications of holding mutual funds.

What are mutual funds?

Mutual funds are pools of money collected from various investors, usually for the purpose of investing in stocks, bonds, and other securities. They are typically managed by professionals and owned by a group of investors. That is to say, a mutual fund is a collection of securities owned by a group of investors which are managed by a fund manager.

How they work

When you purchase a mutual fund, you are ultimately pooling your money with that of other investors. Therefore, the money that is pooled together by you and the other investors is managed by the fund manager who invests in different financial assets and manages it on a daily basis.

Different types

1. Equity Funds
   Equity funds invest in stocks and the different types specialise in different areas, such as, value stocks, growth stocks, small-cap stocks, mid-cap stocks, and large-cap stocks, or a combination of all these.
2. Money Market Funds Money market funds invest in short-term fixed-income securities. Such as, Treasury bills, government bonds, commercial paper, and certificates of deposits. These types of investment have lower risk, but also a lower potential return than other mutual funds.
3. Fixed Income Funds
   Fixed income funds buy investments which pay a fixed rate of return by focusing on getting returns coming into the fund primarily through interest.
4. Index Funds
   Index funds aim to track the performance of a specific index. For example, the S&P, or the FTSE 100 index. Therefore, the movements of index funds move as the index moves, when the index goes up the index funds go up and vice versa. These funds tend to be popular as they require lower management fees compared to some of the other funds, due to the managers not needing to do as much research.
5. Balanced Funds
   Balanced funds invest in a mix of equities and fixed-income securities- usually a 40% equity 60% fixed income ratio. These funds aim to generate higher returns while mitigating risk through fixed-income securities.

Benefits

Mutual funds are managed by a professional who is constantly monitoring the fund’s portfolio. As well as, the manager of the fund can devote more time to selecting investments than a retail investor would. They also allow for investment diversification by the funds investing in various asset classes and not just a single stock or bond. Furthermore, mutual funds possess high liquidity. In other words, you are able to sell your mutual funds within a short period of time if needed.

Disadvantages

Mutual funds usually charge high management fees and operating expenses (MER), which can lower your overall return. In other words, if the fund posted a 1-year return of 10%, the MER would lower this return. Due to mutual funds being managed by a manager, there can be said to be a loss of control. When you invest in a mutual fund you are ultimately giving someone else your money and they are managing it for you. Furthermore, mutual funds do not guarantee returns. In fact, a vast majority of mutual funds fail to beat major market indexes like the FTSE 100 or S&P 500. Lastly, mutual funds are not insured against losses.

Largest Mutual Funds – Globally

1. Black Rock Funds
2. Vanguard
3. Charles Schwab
4. Barclays
5. Fidelity Investments
6. State Street Global Advisors
7. JP Morgan
8. Capital Group
9. Amundi Asset Management
10. PIMCO

Source: Mutual Fund Directory

Mutual Funds and Tax in the UK?

Everyone, including children, have an annual capital gains tax (CGT) exemption, which amounts to £12,300 (in the 2020-2021 tax year. This means that any gains realized within this amount incur no tax. Gains over the annual exemption are charged at 10%-20%, depending on all your income.

You can offset any losses against gains. That is, losses and gains that are realized in the same tax year have to be offset with each other, and this will reduce the amount of gain that is subject to tax. Furthermore, if you incur more losses than gains, these can be carried forward to offset against gains in the future, provided you register those losses with HMRC.

Since your rate of CGT is dependent on your income tax band, reducing your income tax rate can have a knock-on benefit on your CGT. Some simple ways to reduce your taxable income are through pension contributions or charitable donations.

The current ISA yearly allowance is £20,000 and all those personal capital gains are tax-free on ISA investments. Using this as a form to relieve some of the tax on capital gains from your investments in a Mutual Fund.

When you invest your money in a multi-asset fund, you are not personally liable for any gains made when the fund itself sells holdings, since this is the fund trading rather than you. However, you may be liable to CGT on any gains when you sell your shares, after taking annual allowances into account.

Something else to think about is that it is possible that over time you to build up capital gains that are in excess of your annual CGT exemption. In order to reduce this risk, you may use your annual allowance to sell at least part of the holding at the end of the tax year and then buy it back. By doing so, you basically reset the cost of your holding at a higher level and therefore reduce the potential profit against which your future CGT liabilities will be calculated.

However, tax rules mean that you have to wait 30 days before you are able to buy the same holding back. Therefore, if you are not comfortable with this ‘out-of-market risk, you could also consider investing in an exchange-traded fund (ETF) that offers similar exposure in the interim.

Contact us for expert tax advice for Social Security Benefits

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We are proud to announce that two of our Partners Alistair Bambridge and Callie Marles have been named in the 2021 Spears 500.

Spears500 2020

The Spear’s 500 is a guide to the top private client advisers, wealth managers, lawyers and service providers for high net worth individuals and their families, is the first comprehensive guide across all these private client fields in the world.

It is now recommending the top 500 professionals (typically the top 25 or 50 in each sector, along with rising stars) across the spectrum of wealth management, tax advisory services and private client practice in the UK.

How do the Spears 500 decide who is listed?

The Spears 500 is chosen through Company Analytics, Client Feedback, Company Nominations and Market Nominations.

The companies and lists adviser is then subjected to comprehensive research and assessment.

Well done to our partners and lead accountants Callie Marles and Alistair Bambridge being listed in this years magazine and online directory!

Alistair Bambridge - Recommended for Tax & Trust

For the third year running, Spears has awarded Alistair Bambridge the "Recommended for Tax and Trusts Title".

Below is what Spears had to say about Alistair!

"Alistair Bambridge’s eponymous business has spilt into two locations since its launch 15 years ago. The London office focuses on providing US tax reporting for American citizens living overseas, as well as UK tax reporting for creatives and US expats in the UK. In New York, the focus is on creatives in America and their US reporting, and UK/US reporting for UK expats in the US.

‘Setting up the offices in London and New York were catalysts for developing the business and allowing us to grow and bring in additional staff,’ says Bambridge. Since 2018, the owner’s focus has been to grow the client base in the US, and the last 12 months have revealed that there is high demand for advice rather than just tax preparation services both in the US and UK. ‘That is becoming a significant part of the business,’ he continues. ‘Especially since March 2020, the majority of my time each day is calls with clients, providing advice.’

Bambridge’s efforts towards expansion have paid off; in 2020, his firm was listed in the Financial Times America’s Fastest-Growing Companies, ranking 83rd out of 500, and as the highest-ranking tax or accounting firm.

‘We have developed a niche where we are able to advise on both UK and US taxes and are able to provide reporting in both countries, especially with reporting that comes with living overseas and the additional forms that need to be filed each year,’ Bambridge continues. ‘Clients can have a holistic approach rather than having separate accounting firms.’

This integrated approach means that Bambridge Accountants is able to do everything from advising US expats on their US reporting, including foreign corporations and partnerships and passive foreign investment companies, to providing expertise in foreign bank and financial account reporting under the FATCA legislation.

‘The firm is set up so each client will have a dedicated manager who will build a relationship with the client and will have a thorough understanding of their personal situation and plans for the future,’ the owner elaborates. ‘US taxes are complex, and adding in UK reporting can be very technical. Our style is to explain the rules to clients so they understand the reporting requirements and feel in control and that they are compliant in the US and UK."

View the Spears page on Alistair Bambridge

Callie Marles - Recommended for Tax and Trusts

Callie Marles joined Alistair as Partner in 2020 after working for the firm for over 6 years. Spears have recommended Callie as one of the top 25 Tax and Trust Advisors in the UK.

Below is what Spears had to say about Callie!

Bambridge Accountants offer a skilled approach to complex international tax issues and cross-border matters.

Callie Marles, director of US Tax, manages Bambridge’s US expat clients and US tax team. The firm has a strong focus on international tax for US citizens and Green Card holders, providing expert advice on reporting worldwide income and unravelling tax treaties and foreign tax credits to stop double taxation.

Bambridge offers tax compliance and advisory services in a friendly and clear manner. The latter quality is key. Taxes – especially US taxes – are complex, and while you are living outside the US there are additional disclosures that are required to make each year.

‘For many of those disclosures, if you do not comply, the penalties start at $10,000. Clients who come to us will have read about the penalties online or have spoken to other parties, and are worried about the consequences,’ says Marles.

‘For those clients, our role is to ensure that they make the disclosure, but also apply for those penalties to be waived. There are a variety of routes that the IRS offers that we can make use of.’

Other clients approach Marles completely unaware that they still have a US filing requirement as they are living outside the US.

‘On a daily basis, we will speak to American citizens who are either behind on their US reporting or who were born outside the US and have never filed a US tax return,’ she says. In such cases, Marles will discuss the clients’ history, and is usually able to use the amnesty routes that the IRS has in place. ‘We’re able to help those clients become compliant with US taxes and have a clean start with no penalties – and, in the majority of cases, with no US tax either,’ she explains.

Marles trained with Bambridge, qualifying in US and UK taxes, and has worked her way up to head the US tax team. ‘I’m proud of how we have grown the US client base while being able to provide all our services in-house rather than outsourcing,’ she says.

View the Spears page on Callie Marles

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What is the green grant?

The Green Grant is a £2billion funding pot available to property owners looking to make energy-saving home improvements.

The Government-funded scheme allows homeowners and landlords in England to apply for vouchers worth up to two-thirds of the cost of upgrading the energy efficiency of their homes.

The value an individual can receive from the grant is capped at two-thirds of the expense, up to £5,000 generally. However, some households with low incomes will be eligible for 100% funding, up to a maximum of £10,000.

The grant is available up to 31st March 2022

Why was it introduced?

There are two major reasons for the introduction of the Green Grant. The Grant is intended to help households save money on their energy bills; while also protecting and creating ‘green jobs’ in the installation and supply chain.

What can you get under the green grant?

The grant can be used for a range of home improvements that will work to improve the households energy efficiency. Below are a few examples of claimable home improvements:

·     Floor, Wall and Roof Insulation

·     Low carbon heating

·     Heating controls

·     Draught Proofing

To find out exactly what you might be able to claim fill in the linked questionnaire.

How much can you get

Vouchers will cover two-thirds of the cost of eligible improvements, up to a maximum contribution of £5,000.

If the homeowner receives qualified benefits, they will be entitled to a voucher that covers 100% of the cost of improvements, up to a maximum of £10,000.

How can I apply

There are 4 steps that must be taken to receive the vouchers

1.    Check eligibility

2.    Check what energy efficiency or low carbon heat improvements may be suitable for your home

3.    Find certified installers

4.    Apply for vouchers

In order to apply for the grant, the homeowner must receive a quote from at least one Green Home Grant registered installer.

The paper quote will need to be shared when applying on the Gov site. If the quote seems too high, a scheme administrator will ask for a second quote.

A separate voucher will be issued for each approved installation.

Once the voucher is issued the installer can begin work.

Experiences with the Green Grant so far...

Many homeowners and landlords have reported struggling to access the grant, with waiting times of between three and six months. The primary issue seems to be a lack of registered installed to offer quotes and perform the service.

There have been talks unregisters subcontractors coming into assist, which considering the UK has a huge workforce of subcontractors would most likely save the issue. Failing to extend the scheme to unregistered subcontracts, there has been a massive rise in 'Green Installation' course applications. Therefore, we may have more qualified green installers working to perform all of the granted vouchers very soon.

Contact us for expert advice on different grants and reliefs you can receive

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The expansive world of tax expenses can be rather overwhelming. What can I claim? What can’t I claim? Today we will try to take you through the good the bad and the bizarre of tax expenses.

The Good

Phone and Internet Charges

You can claim a portion of your phone and Internet charges as a deductible expense. The rule of thumb is that it should equate to the percentage of usage that you use for exclusively work purposes.

Specialized Work Clothes

 Actors, musicians and other professions where a uniform purely for work purposes is required can claim the cost of the clothing that is exclusively for work against tax. 

Car Use

Any mileage/ petrol used for a business-related trip can be claimed as a deductible expense. As with all expenses, it is vital to keep an accurate log with receipts so that if the taxman does ask questions you have the evidence to prove that your expenses are justified.

Energy-Efficient Upgrades

Energy-efficient upgrades such as solar panels, more insulation can make you viable for a small tax credit. Never has there been a better time to be environmentally conscious.

Education- UK

Education programmes that are relevant to your career can also be claimed in the UK.

Lifetime Learning

The lifetime learning tax credit can provide up to $2000 a year toward education expenses after high school

Donations To Charities 

Donating to eligible charities can be claimed back against tax.

The Unexpected

Pregnancy Tests

Cost of a pregnancy test can be deducted whether referred by a doctor or not. 

Quitting Smoking

Nicotine patches and stop-smoking aids may be eligible for a write off if referred by a doctor.

Weight Loss Programs

If a doctor orders you to take a weight loss program you will be able to use this as a justified work expense.

Summer Sports Camp 

If both parents are working it can sometimes be possible to justify sending your child to a summer sports camp as an allowable expense.

Job Moving Expenses

 If you move for a job you are often eligible for a deduction on moving expenses.

Video Game Company Tax Relief 

The United Kingdom gives tax breaks to video game companies that create "culturally British" games. The criteria for being culturally British is not very clear; the game must score a minimum of 16 out of 31 points on a test that has been designed to measure the cultural content and contribution of the game.

The Bad

The following are taken from the top unacceptable expenses and excuses the HMRC received during the 2018/2019 tax season:

• Caravan rental for the Easter weekend

• I was up a mountain in Wales and couldn’t find a post box or get an internet signal

• My dog ate the post… again

• Claiming £4.50 for sausage and chips meal expenses for 250 days

• My hamster ate my post

• I’ve been cruising around the world in my yacht and only picking up post when I’m on dry land

• A music subscription so I can listen to music while I work

• Pet food for a Shih Tzu ‘guard dog’

• A DJ was too busy with a party lifestyle – spinning the deck… in a bowls club

• My mother-in-law is a witch and put a curse on me.

The Bizarre

Below is a list of the more bizarre expenses that have occurred throughout the years, some allowed and some not. Be sure to check with a chartered accountant or tax adviser before making any claims on your tax return.

Guard Dog

Yes, I know what your thinking, didn’t the HMRC just say that the guard dog is unacceptable? Well, the answer is, like with most expenses, it depends. The HMRC will take a few different variables into account when it notices a guard dog on your expenses. For instance, the guard dog necessary to your line of work? If you are a guard dog trainer, the answer would be yes.

Pest Control Cat

Hiring cats to get control of your unwanted mice problem? Then cat food could be considered a deductible expense.

Moving a pet

Relocating for any reason can be a traumatic experience for your pet, to soften the blow you can deduct pet moving costs from your tax bill

Carrier Pigeon

In America, a technophobe deemed it appropriate to feature a carrier pigeon on his expenses. This is because he did not use technology and the only way he could communicate with his business partner was to communicate via carrier pigeon. His accountant deemed this as a viable expense.

Private Airplane

After deciding that a 7-hour drive was too much hassle a couple with a rental apartment decided to invest in a private aeroplane to check up on their apartment. They were allowed to deduct all expenses on the plane relating to the apartment, including the fuel costs!

Lawn Care Expenses

A fast-thinking business owner claimed lawn care on his expenses after stating that he met his clients at his house so it was paramount for his lawn to be presentable

Contact us for expert tax and accounting advice.

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Sangram Majumdar

Our last article covered some of the potential financial risk a higher capital gains tax might bring to landlords. This wouldn’t be the first time that landlords have been faced with higher taxes and detrimental tax legislation.

 Sustained growth in the Private Rental Sector 

The Private Rental Sector (PRS) has demonstrated remarkable growth over the last 20-years. According to HMRC, the number of landlords has risen by 27% from 1.97million in 2010 to 2.5million in 2019. This growth has led to increased government interest in the PRS and in turn higher taxes and increased regulation.

Independent landlords’ income

The amount of profit a landlord makes depends on a number of variables. Primarily, how many properties the landlord has. But also, where the properties are located and to what standard the properties are maintained.

The average landlord in Britain makes £15,000 a year before tax and deductions. The amount of tax exemptions and deductions landlords are entitled to have somewhat decreased in the past 10 years, this, therefore, means the amount a landlord can now takehome after expenses are slightly less.

How do landlords make a profit?

There are many costs involved with becoming and being a landlord. The cost of a mortgage and the deposit that goes with it for one; alongside stamp duty surcharge.

Landlords, of course, make a profit through rent; assuming that the rent amount covers the related expenses of the property. The money can be used as immediate income. However, many landlords opt to reinvest a portion back into paying the property off or making alterations to the property to increase its value. This way the landlord eventually owns the property outright; which they can continue to let at increased immediate income or cash in for a lump sum.

Rental property appreciating in long-term value is a major route of landlord profit. On average house prices have gone up 4.5% every year since 1975. In 2020, property prices climbed 7.5% in value- the highest amount of growth seen in six years. This was also the first time property prices has increased substantially during a recession in modern history. Professional landlords will take into account investment, there are some locations that are expected to rise in property value faster than others. Landlords will nearly always consider this to increase the amount of profit they might generate in property appreciation.  

Declaring paper loss

This is an area that is increasing in limitations to profit from for landlords. Prior deductions such as the wear and tear allowance and mortgage interest tax relief; allowed landlords to claim large sums against tax on their income. Although these deductions have been discontinued, there are many that are still available for landlords to claim, which can, in turn, increase their money taken home after tax i.e. ACTUAL wear and tear costs, insurance, property taxes and much more. For expert tax advice on the different ways’ landlords can minimise their tax owed contact us.

What has lost landlords money in recent years

As accountants to the PRS sector, we work with landlords with all ranges of portfolio sizes. None of our clients have been left totally unaffected by the changes in regulations in recent years. We have seen a rise in costs for landlords of 7%, despite the wear and tear allowance being removed in 2016. Many of these expenses have been incurred due to the stricter regulations on property standards and increased agent fees.

An increasing amount of landlords have also been selling their properties in recent years. The reason for this is to release capital; but also due to a decreased level of profit made from letting due to the increasing costs and tax on the industry. Many have also reported that it has become much more time consuming due to increased regulations or because letting agents have become more expensive. What for many is a second source of income has become much more demanding than ever before.

2020 was an extremely hard year for landlords due to the coronavirus pandemic. The eviction ban led to half of landlords losing rental income during the pandemic. With coronavirus still very much present in 2021, we can expect landlords rental income to continue to be affected throughout the year.  

What outgoings does a landlord have?

From our personal experience with landlords- outgoings can fluctuate massively each tax-year, with some years requiring much higher maintenance and property improvement expense than others.

As a landlord you have to be extremely aware of the numbers, it is very easy for your rental arrangement to end up lacking profit if you overspend. However, with rent set at an all-time high in the UK, this is not a usual issue.

To find out all of the different expenses a landlord has read our ‘The cost of being a landlord’ article

Conclusion

Although there has been a lot of increased legislation and regulation, buy-to-let definitely still work out profitable when done right in the long run. All of our clients have had great successes as landlords over the years. However, it is important to consider the route in which you want to make your profit, whether that be through monthly income or through a one-off lump sum through increased property value, in accordance with current and suggested upcoming legislation. For instance, rises in capital gains tax may reduce the extent to which one can profit from the sale of a property.  Another example is the kind of mortgage the landlord takes on, as mortgage interest is no longer claimable it may be better to choose a lower interest mortgage.

For more expert tax and accounting advice for landlords contact us

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