Posts Tagged ‘UK Tax’

Three months to go

Wednesday, January 4th, 2017

All UK taxpayers may benefit from pausing, taking a deep breath, and considering their planning options as we approach the run-up to yet another tax year end.


The prime areas for consideration are where income levels are threatening to break through into the higher rates of income tax. For 2016-17, these are:

  • If your taxable income exceeds £32,000 (after deducting your £11,000 personal allowance) you will pay income tax on any excess at 40%.
  • If your taxable income exceeds £150,000 you will pay income tax on any excess at 45%.
  • And if your income is between £100,000 and £122,000 you will pay income tax at a marginal rate of up to 60%. This is due to the gradual loss of your personal allowance in this income band.

These tax rates are for general income – for dividends see Businesses below.

You could, for instance, consider:

  • Increasing pension contributions
  • Salary sacrifice opportunities before the rules change from April 2017
  • Gift Aid donations
  • Transferring income producing assets into joint ownership with your spouse
  • Deferring bonus payments until after 5 April 2017, especially if your income for 2017-18 is planned to drop as compared to 2016-17.

Apart from these strategies, there are other legitimate planning opportunities you may be able to employ in order to minimise your exposure to the higher rates. The key is to take a hard look at the numbers before 5 April 2017.


For businesses with March 2017 year ends, it’s all about timing and an in-depth look at trading results for the first three quarters BEFORE the end of the tax year.

Items that could be considered are:

  • The timing of capital acquisitions to maximise use and impact of tax allowances. For example, would it be more beneficial to delay the purchase of new plant until after March 2017, and claim against profits for 2017-18, when planned profitability is expected to increase, as compared to 2016-17? Or advance the purchase and thus tax relief?
  • Deferring or bringing forward expenditure – this could include tax allowable refurbishments, maintenance to equipment and similar costs.
  • If your business is a company, consider retaining profits within it rather than extracting them as dividends in excess of the annual tax free allowance of £5,000. In this way you could retain cash in your business after paying 20% corporation tax, rather than creating an additional dividend tax charge (for dividends drawn in excess of £5,000) of between 7.5% (basic rate), 32.5% (higher rate), and 38.1% (additional rate).

UK tax to be simplified

Tuesday, May 17th, 2016

The UK has one of the most detailed tax codes in the developed economies. Readers might be amused, bemused, that the so-called Office of Tax Simplification (OTS) has launched a high level strategy consultation that aims to move its tax simplification agenda forwards.

The aim is to make our tax system easier to understand and therefore simpler to use.

Here’s what Angela Knight, chair of the OTS said:

“Some areas of tax will always be complex but the OTS aims to make using the system as easy as possible. Just as a mobile phone is a complicated piece of engineering but is pretty straightforward to make a call or send a text, so we intend for taxpayers to be able to manage their tax affairs with less hassle.

The world of work though is changing rapidly, whether it is what is often called the sharing economy or whether it is just that the Internet and e-commerce agenda has changed so much of what we do. The three strands of the OTS strategy are to consider the tax issues that are arising as the world of work changes; to address specific complex areas; and to play a greater role in the digital agenda. To support this, we also will be taking an active role in the public debate on tax.”

To deliver its strategy the OTS plans to:

  • set out how new trends and changes in business and employment (such as the sharing economy) will impact on tax
  • consider how to make tax simpler given these changes to how we work
  • reviews areas integral to these trends and identify difficult issues where an informed discussion is required
  • take the issues and options out for wide discussion and evidence gathering
  • encourage simplification to be built into tax policy making and implementation early on in the process
  • engage closely with HMRC on its important digital agenda

The OTS will shortly become a statutory body, with a new and broader remit. This high level strategy sets out the purpose and aims of the OTS; the work it does; how and with whom it will undertake its work; and its impact and influence.

The consultation aims to ensure tax becomes simpler, with the UK remaining attractive to business, and reflects the OTS new broader remit as a statutory body. The document is also intended to prepare the ground for the OTS stakeholder conference, which is planned for 18 July 2016.

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