Happy New Year 2015
This month’s newsletter provides you with four tax ideas to add to your resolutions for 2015: planning before your business year end; reasons for tackling your Self Assessment return sooner rather than later; tax planning ideas if your income is approaching £100,000; and a new initiative to top up your State Pension.
Planning your business year end
Most of the tax planning that can be employed to reduce your business tax liabilities need to be considered and implemented prior to your year end date.
If you are in business, you should consider at least one planning meeting with your professional advisor before the end of the tax year. This should be a priority.
For many of our business clients this pre-year end planning is the norm – an essential part of our service. If you would like to organise your planning session please call and make an appointment; once your trading year end, or the tax year end passes, opportunities to save tax may be lost.
Work out your tax position sooner rather than later
If you are required to file a Self Assessment tax return there are compelling arguments to support the notion that you should calculate your tax position as soon as you can after the 5 April. Don’t forget, it is possible to work out your tax position for 2014-15 and consider your planning options before you file the return. Certainly, we can undertake this for you.
By the end of May or early June 2015 you should be able to draw together most of the information you need to complete your return for 2014-15.
Here are three reasons why you should seriously consider this early-bird approach, and there are many more:
Is your income approaching £100,000?
If you estimate that your taxable income for 2014-15 will marginally exceed £100,000, perhaps for the first time, you should consider your options.
If your income does exceed £100,000 then for every £2 that your income exceeds this amount your personal tax allowance will be reduced by £1.
As the basic personal allowance is £10,000 for 2014-15 this means that when your income is £120,000 or greater, you will no longer qualify for a basic personal allowance. Any steps that you can take to keep your income below £100,000 will potentially save you Income Tax at the marginal rate of 60%.
For example you could consider negotiating a salary sacrifice arrangement with your employer or additional pension contributions. Maybe, trading salary for non-taxable benefits such as increased holiday entitlement? Further, pension premiums and gift aid payments count as deductions in arriving at your taxable income.
Topping up your State Pension
The Government has indicated that it wants to offer more to existing pensioners and people who reach State Pension age before 6 April 2016 when the single-tier pension is introduced.
To achieve this a new Class 3A voluntary contribution will be available from October 2015 to April 2017.
The Class 3A contribution will allow people to top up their additional State Pension.
The rate of contribution, which will be a lump sum payment, will be set at an actuarially fair rate that ensures that both individual contributors and the tax payer get a fair deal.
The scheme will be only be open for a limited period as it is expected that most people who want to take-up Class 3A entitlement will do so in the first few months.
Tax Diary January/February 2015
1 January 2015 – Due date for Corporation Tax due for the year ended 31 March 2014.
19 January 2015 – PAYE and NIC deductions due for month ended 5 January 2015. (If you pay your tax electronically the due date is 22 January 2015.)
19 January 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2015.
19 January 2015 – CIS tax deducted for the month ended 5 January 2015 is payable by today.
31 January 2015 – Last day to file 2013-14 Self Assessment tax returns online.
31 January 2015 – Balance of Self Assessment tax owing for 2013-14 due to be settled today. Also first payment on account for 2014-15 due today.
1 February 2015 – Due date for Corporation Tax payable for the year ended 30 April 2014.
19 February 2015 – PAYE and NIC deductions due for month ended 5 February 2015. (If you pay your tax electronically the due date is 22 February 2015.)
19 February 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2015.
19 February 2015 – CIS tax deducted for the month ended 5 February 2015 is payable by today.
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