This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  
 

Deloitte UK Offers Year-End Tax Tips

Thursday, March 11, 2010

Tax advisory firm, Deloitte has urged UK taxpayers to avail of all outstanding available tax reliefs, from income tax, capital gains and inheritance tax, to reduce their individual tax liability, before the start of the next fiscal year.

Patricia Mock, a director in the private clients practice at Deloitte says:

“The current tax year is fast coming to a close, now is the last chance to review your position to uncover any un-used allowances or other possible benefits, before April 5. It is also a good time to consider possible actions to mitigate the 50% tax rate which will apply from April 6, 2010.”

Experts in Deloitte’s private clients practice have provided a few tips to help taxpayers get started but have urged the use of expert advice.

With regards to personal allowances, Deloitte has advised:

  • Maximising income tax rate bands – make a gift to a spouse to make use of his or her personal allowance (GBP6,475) and basic/lower rate band (GBP37,400) for 2009/10. Taxpayers with an income over GBP150,000 will soon pay tax at 50%, a gift to a spouse whose top rate of tax is 40% may also be effective.
  • Capital gains tax (CGT) – make use of the annual exemption (AE) for 2009/10. This is GBP10,100 for each individual, including children. If already used, you can consider delaying the disposal until 2010/11.
  • Inheritance tax – make use of the AE for 2009/10 of GBP3,000 each for husband and wife, plus any unused balance from 2008/09, and the small exemption of GBP250 in relation to individuals. Also, make use of this tax year’s GBP325,000 nil rate band.
  • Individual Savings Accounts (ISAs) – make use of the yearly ISA allowance: GBP3,600 for a cash ISA (rising to GBP5,100 from April 6, 2010) and GBP7,200 for a stocks & shares ISA (rising to GBP10,200 from April 6, 2010). The increased limits already apply for those over 50.

With regards to investing in pensions, Deloitte has advised:

  • Pension contributions - consider making a pension contribution. However, with the many changes to pension tax legislation over the last few years, great care should be taken, as higher rate relief may not be available.
  • Lifetime allowance – for the 2009/10 tax year, the limit on the value of retirement benefits that you can accumulate in a UK registered pension scheme before tax penalties apply is GBP1.75m.
  • Higher rate tax relief restrictions – from April 6, 2011, higher rate tax relief on pension contributions will be gradually phased out for individuals with gross incomes of at least GBP150,000, so that for those with gross incomes of more than GBP180,000 tax relief will be restricted to the basic rate only.
  • Anti-forestalling measures were introduced with immediate effect from April 22, 2009, imposing a special annual allowance charge in 2009/10 and 2010/11 on certain contributions in excess of an individual’s normal ongoing savings pattern. From December 9, 2009, the level of relevant income was dropped to take effect from GBP130,000.
  • For those making contributions less frequently than quarterly, the special annual allowance may be up to a maximum of GBP30,000. For example, an individual who made a relevant single one-off contribution in 2006/7 of GBP75,000 will have a special annual allowance for 2009/10 and 2010/11 of GBP25,000 (i.e. GBP75,000/3).
  • Those who have income of less than GBP130,000 are not affected by the new rules and continue to get higher rate relief on pension contributions. People with income of between GBP100,000 and approximately GBP113,000 who will suffer a marginal rate of 60% as their personal allowances are withdrawn would find pension contributions particularly tax efficient.

On mitigating the effects of the introduction of the 50% tax rate, Deloitte has advised:

  • Accelerating income to the 2009/10 tax year will mean that it is taxed at 40% rather than 50%, albeit with a cash flow disadvantage of having to pay tax one year earlier.
  • Closing a bank account in 2009/10 will mean that interest becomes payable in that year.
  • Exercising unapproved share options will trigger an income tax charge in 2009/10.
  • Deferring deductions to 2010/11 will have the same effect. However, this may present difficulties for those affected by the anti-forestalling provisions. For example, an individual with an income in 2010/11 between GBP100,000 and approximately GBP113,000 will have a marginal rate of 60% due to the tapered withdrawal of the personal allowance, so deductions of this nature are particularly beneficial.
  • The use of wrappers, such as investment bonds, as they allow 5% withdrawals made annually without triggering a charge to tax, and the bond can be cashed at a later date when the individual is no longer a 50% taxpayer.”

Mailing List

Click here to manage your mailing list preferences, or view our privacy statement.


The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




Latest News

Jersey Proposes Infrastructure Levy
23/6/2017
Jersey is consulting on the introduction of a land development charge, to be called the Jersey Infrastructure Levy.

ADGM Establishes REIT Regime
20/6/2017
Abu Dhabi Global Market, the low-tax international financial center, has introduced a private real estate investment trusts regime.

Jersey Research Highlights China HNW Succession Issues
15/6/2017
Jersey's financial services promotion agency, Jersey Finance, has published new research on the key challenges facing wealth management practitioners working with China's wealthiest individuals.

NZ Foreign Trust Numbers Expected To Fall
27/6/2017
Fewer than 70 out of 11,645 New Zealand foreign trusts have reregistered following the introduction of tougher disclosure and eligibility requirements, with only three weeks left to go before the final deadline.

Abu Dhabi Tax-Free Zone To Launch Foundations
2/6/2017
Abu Dhabi Global Market, the low-tax international financial center, is seeking feedback on its proposal to allow the formation of "foundations," a trust-like entity widely used in civil law jurisdictions.

IoM Consults On Funds Sector Rules
22/5/2017
The Isle of Man Financial Services Authority, which supervises the island's financial services sector, is seeking feedback on draft guidance dealing with the governance of collective investment schemes.

Dubai Tax-Free Zone Seeing New Business From India
19/5/2017
The Dubai International Financial Centre, the leading financial hub in the United Arab Emirates, has become an increasingly popular destination for Indian banks, financial institutions, and fund managers, the zone has said.

Guernsey Issues Warning On 'Sark Company Registry'
18/5/2017
The Guernsey Financial Services Commission has issued a warning concerning an entity named "Sark Company Registry," while investigations are ongoing.

Abu Dhabi Free Zone Hopes To Attract Venture Capital Firms
15/5/2017
Abu Dhabi Global Market, the low-tax international financial center, has unveiled a regulatory framework for managers of venture capital funds.

Australian Budget Targets Housing, Tax Compliance
10/5/2017
Australian Treasurer Scott Morrison's 2017 Budget focused on measures to cool the housing market and crack down on tax avoidance.

Australia Delays Action On Stapled Structures
2/5/2017
The Australian Government has decided to extend a review into the taxation of stapled structures. It will not tackle the issue at the upcoming Budget.

BVI Financial Firms Need To Develop New Niches
13/4/2017
BVI Finance, the financial services industry promotional agency, has said the industry must actively adapt to target new opportunities and promote new offerings internationally.

ADGM Revises Pooled Fund Capital Req's
11/4/2017
Abu Dhabi Global Market, the low-tax international financial center, has revised the capital requirements applicable to managers of collective investment funds, with effect from April 10, 2017.

ADGM Consults On Allowing REITs
6/4/2017
Abu Dhabi Global Market, the low-tax international financial center, is consulting stakeholders on plans to allow the establishment of private real estate investment trusts.

Gibraltar To Offer Foundations
4/4/2017
Gibraltar's Parliament recently passed a bill permitting the establishment of Private Foundations.