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

Australian DPT Legislation Passes Senate
27/3/2017
The Australian Senate has passed legislation to introduce a diverted profits tax from July 1, 2017.

Guernsey Funds Sector Grew In 2016
27/3/2017
The total value of funds business in Guernsey grew by more than GBP28bn (USD32.5bn) last year.

New Zealand Explains Foreign Trust Disclosure Changes
27/3/2017
New Zealand has published guidance on the increased disclosure requirements for foreign trusts with New Zealand-resident trustees.

Canadian Budget Focuses On 'Tax Fairness'
23/3/2017
The tax measures contained Canadian Finance Minister Bill Morneau's second Budget are focused on closing loopholes, cracking down on tax evasion, and improving tax reliefs for the "middle class."

Jersey Regulator Issues AML/CTF Funds Guidance
16/3/2017
Jersey's financial services regulator, the Jersey Financial Services Commission, has issued new anti-money laundering and countering the financing of terrorism guidance for Funds and Fund Operators.

More Tax Hikes For UK Taxpayers In 2017 Budget
9/3/2017
The UK Budget, released on March 9, 2017, featured tax measures to, among other things, hike taxes on self-employed workers, further close avenues for legal avoidance, and defer mandatory digital tax reporting until April 2019.

ACOSS Submits Recommendations For Australian Budget
2/3/2017
The Australian Council of Social Services has urged that the Government abolish ineffective tax concessions, introduce a sugary drinks tax, and scrap its company tax proposals.

MEPs Call For Wider Access To Beneficial Ownership Data
1/3/2017
EU citizens would be able to view information in registers of beneficial ownership without having to demonstrate a "legitimate interest," under proposed amendments the Anti-Money Laundering Directive.

New Zealand Tax Changes Enter Into Force
28/2/2017
A Bill including provisions to simplify New Zealand's tax processes, reduce compliance costs for smaller businesses, and tighten foreign trust disclosure rules received Royal Assent on February 21.

Guernsey Introduces Client Asset Handling Rules
22/2/2017
Guernsey's financial services regulator, the Guernsey Financial Services Commission, said it intends to introduce rules governing the holding and administration of client assets in 2017.

Australian Accountants Urge Tax Burden Shift
14/2/2017
Australia desperately needs large scale tax reform and should aim to rebalance its tax mix, the Institute of Public Accountants has argued.

IRS Issues Final Regulations On REIT Spin-Offs
24/1/2017
On January 18, the US Internal Revenue Service issued its final regulations regarding the measures included in the Protecting Americans from Tax Hikes Act to restrict the tax-free spin-offs involving publicly traded real estate investment trusts (REITs).

Bermuda, EU To Collaborate On Insurance, Pensions Oversight
17/1/2017
The European Insurance and Occupational Pensions Authority and the Bermuda Monetary Authority have newly signed a memorandum of understanding.

Hong Kong Consults On Beneficial Ownership Plans
13/1/2017
Hong Kong's Financial Services and the Treasury Bureau has launched public consultations on legislative proposals to increase the transparency of corporate beneficial ownership in the city, and to enhance its regulatory regime for combating money laundering and terrorist financing.

Hong Kong Reports On Incorporations In 2016
12/1/2017
There was an increase in local company incorporations in Hong Kong in 2016, although incorporations by foreign companies experienced a dip, according to the territory's Companies Registry.