Capital gains tax (CGT) is a levy imposed on the profit made from the sale of assets. Whether you’re selling shares, property, or other investments, it’s crucial to understand how CGT works to ensure compliance.

How CGT works…

In the UK, individuals are subject to capital gains tax on the disposal of assets that have increased in value since they were acquired. The rate of CGT depends on various factors such as the individual’s income tax bracket and the type of asset being sold.

CGT Tax Rates for 2023/24

For the tax year 2023/24, the current capital gains tax rates for individuals are as follows:

• Basic rate taxpayers: 10%
• Higher rate and additional rate taxpayers: 20%

However, gains on the sale of residential property that are not eligible for private residence relief are taxed at 18% for basic rate taxpayers. But, they are taxed 28% for higher and additional rate taxpayers.

Annual Exempt Amounts

It’s important to note that each individual has an annual tax-free allowance. This is known as the Annual Exempt Amount. For the tax year 2023/24, this amount stands at £6,000. Pleae note that it was reduced from £12,300 from 6 April 2023. It is also due to be reduced further to £3,000 from 6 April 2024. Total gains up to the Annual Exempt Amount are not subject to capital gains tax.

Are there any Reliefs?

There are various reliefs and exemptions available that can help minimise CGT liabilities. These include:

• Annual Exemption: As mentioned earlier, individuals can utilise the annual tax-free allowance to offset gains below the threshold.
• Principal Private Residence Relief: Provides relief from CGT on the sale of a property used as your main residence.
• Business Asset Disposal Relief: This relief applies to qualifying business assets and reduces the rate of CGT to 10% on gains up to a lifetime limit of £1 million.
• Gift Holdover Relief: Allows individuals to defer CGT when assets are gifted, rather than sold, under certain conditions.
• ISA and Pension Accounts: Investments held within Individual Savings Accounts (ISAs) and Pensions are typically exempt from CGT.

It’s essential for individuals to keep detailed records of their asset acquisitions. The same is similarly true of their disposals. Only then can they accurately calculate their CGT liabilities. Seeking professional advice from a tax adviser can also be beneficial in understanding complex tax rules and optimising tax planning strategies.

In Conclusion…

Capital Gains Tax is an important aspect of the UK tax system. So, individuals should be aware of it when buying, selling, or gifting assets. The reduction of the Annual Exempt Amount in recent years will likely result in more individuals being required to pay a Capital Gains Tax. Please do get in touch if you’d like our assistance with any CGT related matters.

If you’d like to speak to one of our experts about, please call 01243 782 423, or email from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel.

The UK tax year ends on 5th April each year. However, you currently have until the January of the following year to file your self-assessment tax return. That’s why, at this time of year, all tax accountants are incredibly busy! They will likely be chasing you up for those last pieces of information to ensure your tax affairs are plain sailing. And yes – we know how everyone likes to leave it to the last minute, especially when it comes to tax! It’s also true that at Christmas time, preparing for tax season in the UK probably isn’t particularly appealing! But, nonetheless, now is a critical period for individuals and businesses alike!

Preparing for tax season in the UK

Preparing for Tax Season in the UK requires a clear understanding of deadlines, necessary documents, and potential tax liabilities. This period is not just about meeting compliance requirements but also about optimising tax efficiency. This is what can ultimately make it an exciting time! While no one likes paying tax, it is an art form knowing how best to legitimately minimise what you owe. That’s where savvy tax brains like ours come into their own!

Organising Financial Records

Effective preparation begins with thorough record-keeping. If you have an accountant looking after your affairs, they will likely be training you up throughout the year. They will want to ensure all financial documents, including invoices, receipts, and bank statements, are up-to-date and organised. This meticulous approach simplifies the process of declaring income and expenses, crucial for accurate tax filings. It gives you greater transparency, greater peace of mind and less pestering from your accountant at precisely the time of year you’d probably rather not hear from them! 🙂

Utilising Allowances and Reliefs

The UK tax system offers various allowances and reliefs that can significantly reduce tax liabilities. From personal allowances to savings and investment reliefs, understanding what you are entitled to is key in Preparing for Tax Season in the UK. This is where professional tax experts (like ours!) really come into their own. After all, they deal with this day in, day out. So, they are best places to quickly know where your advantages lie. So, if you haven’t already enlisted the help of a seasoned tax professional, this might be something you want to consider. It’s always advisable to seek professional guidance to maximise your benefits.

Estimating Tax Liability

Estimating your tax liability before the end of the fiscal year allows for better financial planning all round. There are a number of tools available to help you with this; but again, consulting with a tax professional to get an accurate estimate is always wise. This proactive step can help in managing cash flow and avoiding surprises. It’s another step in planning ahead that can really pay off in the long run. So, if managing your tax liability has been difficult this year, that’s a tell-tale sign that some planning ahead next year could really alleviate some of the stress at year end.

Seeking Professional Advice

Tax laws and regulations can be complex and ever-changing. The jargon associated with finance can often be a challenge in its own right. So, you should never be worried about seeking advice from a qualified accountant to ensure compliance and optimal tax planning. They really are best placed to talk you through and can tailor their approach to suit your needs. So, if you are someone who wants to handle your own affairs but need to learn how, they can coach you. If you would rather hand over the entire management of those affairs and rest assured they are in the safest hands, they can easily do this for you too.

In short…

Preparing for Tax Season in the UK is an essential process for financial health and compliance. It’s not something that can (or should!) be avoided! So, starting early, staying organised, understanding allowances, and seeking professional advice are the cornerstones of effective tax preparation. We would love to help you there!

Our team of Tax Experts are always on hand to provide the guidance and expertise you need to navigate the complexities of the UK tax system. We understand that each individual and business has unique circumstances and goals, and our approach is tailored to meet these specific needs. Whether it’s strategising to optimise your tax position, organising your financial records, or helping you make the most of allowances and reliefs, our professionals are equipped with the knowledge and experience to ensure your tax affairs are not just in order, but also working in your favour.

So, as the end of the fiscal year approaches, remember that proactive planning and informed decision-making are your best allies. With our support, you can turn what is often seen as a daunting task into an opportunity for financial growth and peace of mind. So, why not allow our team to take the helm, guiding you through the tax season with ease and confidence; helping you make this tax season not just a routine compliance exercise, but a stepping stone to greater financial success. We always look forward to helping partner in your success – so why not give us a call so we can get you on your way?!

If you’d like to speak to one of our experts about your accounts, please call 01243 782 423, or email from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel.

Inheritance Tax (IHT) in the UK has often been dubbed as a ‘voluntary tax.’ It’s an odd concept, isn’t it? Who would voluntarily pay any tax given the choice? In reality, it’s simply a colloquial reference due to the perception that, with careful planning and taking advantage of the available reliefs and exemptions, individuals can significantly reduce (or even eliminate) the amount of IHT payable on their estates. Yes – that’s where expert advice comes in! As the intricacies of IHT are manyfold, it’s essential to be acquainted with the specifics. And, even more so if you hope to navigate its complexities successfully. That’s where Inheritance Tax specialists (like ours) really come into their own.

So, what do you need to know? Let’s take a quick look…

Lifetime Planning Strategies – what are they?

‘Lifetime planning strategies’ are essential tools in ensuring that hard-earned wealth is preserved for future generations. These strategies centre around making provisions today to minimise the future impact of IHT on your estate. By taking action now, you can strategically reduce the potential IHT burden on your beneficiaries once you have gone. It’s definitely not a cheery topic, we know! But, surely five minutes thinking about the unthinkable is a fair trade for the future peace of mind and prosperity of those you leave behind.

The good news is that there are many ways you can ensure your wealth is dispersed while limiting IHT. So, we’ve covered a few of the more popular methods below:

Gifting and Potentially Exempt Transfers (PETs)

One of the most effective lifetime planning strategies is gifting. By gifting assets to loved ones during your lifetime, you can reduce the value of your estate, hence potentially lowering IHT liability. But there’s a catch: for the gift to be entirely exempt from IHT, you need to survive for seven years after making it. These gifts are known as Potentially Exempt Transfers (PETs). If you don’t survive the seven years, the gift might still be subject to IHT, albeit potentially at a reduced rate.

You also need to be mindful whether a gift might trigger other implications. For example, gifting assets such as property or shares will likely trigger capital gains tax liabilities. This is because gifts are still assessed to capital gains tax based upon the market value of the asset. If the gift is of a business asset or to a trust it might though be possible to claim holdover relief.

Given none of us know what the future holds a key aspect of this is to identify assets to gift that are definitely surplus to your requirements. A true gift cannot be undone and you may well have many years left in you yet!

You also need to have a suitable person to gift an asset to. It could be a blessing or a curse, but with lifetime gifting you are likely to see how your beneficiary spends your hard earned money.

Setting Up Trusts

Trusts are another avenue that fall within our category of lifetime planning strategies. They allow for assets to be held on behalf of beneficiaries. Depending on the type of trust chosen, there are different tax implications. For instance, Discretionary Trusts offer flexibility in terms of who, when, and how beneficiaries receive assets. However, they come with periodic and exit tax charges. On the other hand, Interest in Possession Trusts gives beneficiaries a right to income from the trust. Remember thought, the underlying assets might still be subject to IHT.

Trusts certainly have their place for anyone who wants to retain some control over how and when funds are made available to beneficiaries. They can also be useful should a child be in a potentially volatile marriage. This is because assets held in trust are usually outside the scope of matrimonial action. Beneficial tax status is also given to trusts that are set up to look after the interests of a vulnerable beneficiary.

You can’t take it with you – so why not spend it?

An obvious way to reduce the value of your estate is to spend it. Why not enjoy your retirement, you have earned it! Of course, as mentioned before, do also ensure you keep enough by to cover all eventualities.

Consider being charitable

Gifts to registered charities are exempt from Inheritance tax. So, you can divert money from the taxman to a good cause instead! It is also worth mentioning that should 10% of a person’s net estate be left to charity, the rate of IHT is reduced from 40% to 36%. Often this tax saving will more or less cover the cost of the charitable legacy.

Investing in Exempt Assets

Certain assets are exempt from IHT. Investing in these can be an astute strategy to mitigate IHT exposure. For example, shares in unlisted companies and some AIM-listed companies might qualify for Business Property Relief (BPR) and can be completely exempt from IHT if held for at least two years. On a cautionary note these investments usually come with more risk than standard investment opportunities. As such, it would always be sensible to seek expert financial advice before making any significant commitments.

Maximise the benefits of pensions

Recent regulatory changes mean unused pension funds (which usually are not included within a persons taxable estate) can be passed on to any nominated beneficiary. A sensible strategy can therefore be to leave pension funds untouched for as long as possible into retirement. That’s even if it means living off savings! After all, this helps to reduce the taxable value of your estate. The pension fund could be kept in reserve, in case it is needed later in life.

Making regular gifts out of surplus income

The nil rate band has been frozen for 14 years now. This means that as estates have naturally grown in value, so too has their exposure to tax. If your annual income exceeds your requirements, this surplus can be gifted without tax consequence as long as it is done on a regular basis. It would be helpful to keep a record of regular annual expenditure in order to prove what income is surplus to your requirement.

Do you qualify for the Residential Nil Rate Band?

Extra relief is available for individuals who leave an interest in their home (or the proceeds from the sale of their home) to lineal descendants. However, relief is restricted should the persons estate exceed £2m, and no relief can be claimed by anyone with an estate worth more than £2.7m.

Aggregation can cause a problem here should everything be left to a surviving spouse. A potential solution for married couples is to consider using your Wills to transfer assets to children/grandchildren following the first death. Also try and take steps to keep within the £2m threshold.

The Role of Our Trained IHT Specialists

Inheritance Tax can be labyrinthine, with numerous reliefs, exemptions, and strategies available. And, that’s before we even think about the anti avoidance rules to be wary of. Our trained inheritance tax specialists are adept at navigating this maze. Providing a tailored approach, they ensure that your lifetime planning strategies are both efficient and in line with your objectives. Whether you’re considering gifting, establishing a trust, or exploring other means of safeguarding your assets, our specialists are on hand to offer the guidance and expertise you need.

Protecting Your Legacy

Lifetime planning strategies are about more than just tax efficiency; they’re about ensuring your wishes are adhered to and that your loved ones are taken care of. Engaging in these strategies today can pave the way for a brighter, more secure future for your beneficiaries. So, don’t leave it to chance; take control of your legacy today!

As always, we offer a free introductory meeting so that you can find out what we do and how we do it! So, please do call us on 01243 782 423 to book your no-obligation meeting – there’s nothing to lose and potentially everything to gain!

If you’d like to speak to one of our experts about your accounts, please call 01243 782 423. Alternatively, you can email us from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content. Please see here: Lewis Brownlee YouTube channel.

The tax world is certainly an interesting one! Indeed, navigating through the multifaceted layers of estate planning often needs a high degree of expertise and precision. When it comes to securing proficient tax services for complex estates, understanding the nuances is even more crucial. That’s why we’ve decided to delve into the intricacies of complex estates. So, here’s how seeking professional advice can shield you from potential pitfalls and ensure a seamless transition of assets.

Identifying a Complex Estate

First things first! What is a Complex Estate and why does it matter?

A Complex Estate as defined by HMRC is one which is either is valued at in excess of £2.5 million. Or, one that during the period of administration incurs tax liabilities in excess of £10,000. Or, one that receives sale proceeds in any tax year of in excess of £500,000.

The two main aspects of significance are that HMRC require such an estate to be officially registered on their Trust Registration Service.  The estate is also then required to file self assessment tax returns for any year in which it incurs a tax liability.

The Challenges Posed

These extra reporting requirements mean that it might take a while to fully administer an estate. Ordinarily HMRC have a year from the date of a submission of a return to raise any queries. This means the Personal Representatives might need to retain assets until a year has passed from the submission of the last return or they have received confirmation from HMRC that they are happy with the information provided and will not be raising any queries.

In addition to regular tax returns, Personal Representatives often overlook the fact that if selling on residential property, it may be necessary to also submit a CGT return within 60 days of the date of conveyance.

Another matter for consideration is the protocols for distributing estate income. Although the estate will pay tax on the income it receives, which typically would be interest, dividends and rents, this income belongs to the beneficiaries of the estate. After this income is paid on to the beneficiaries, the Personal Representatives are required to prepare and pass on to the beneficiaries tax certificates (R185s).

How Accountants Can Assist

Where complex estates are involved, the assistance of skilled accountants is invaluable. Professionals (like us) facilitate smooth navigation through the bureaucratic intricacies, ensuring compliance with tax obligations while maximising the estate’s value. From strategic planning to asset valuation and distribution, professional expertise can play a vital role in safeguarding the interests of all stakeholders.

Moreover, seasoned accountants can foresee potential issues. So, they are best placed to pre-emptively address them, thereby averting costly legal disputes. Their in-depth understanding of tax legislations can also help in legally mitigating tax liabilities. Preserving the estate’s value for the beneficiaries can only ever be a good thing!

The Importance of Seeking Professional Advice

Seeking professional advice is not just recommended, but nearly essential when it comes to handling complex estates. Expert advisers are equipped with the tools and knowledge to unravel the complexities that these estates bring forth. They serve as allies, steering you clear from potential legal ramifications and ensuring adherence to the requisite tax obligations.

The presence of expert advice can also alleviate the emotional burden on the families. During what is often an emotionally charged time, having a professional on board can provide them with the assurance that the estate is managed judiciously and professionally. Thus, investing in tax services for complex estates becomes a prudent decision, shielding you from avoidable stresses and potential financial losses.

In short then, in the face of complexity and potential challenges, the support and guidance of experts in the field stand as a beacon of reassurance. Entrusting the management of complex estates to professionals ensures not just compliance with the legal framework but also the peace of mind that comes with knowing that the legacy left behind is in safe hands. So, if you are dealing with a complex estate, please do consider speaking to reputable professionals (like ours). It’s amazing how much easier life can be with the right tools and knowledge behind you!

If you’d like to speak to one of our experts about your accounts, please call 01243 782 423. Alternatively, you can email us from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content. Please see here: Lewis Brownlee YouTube channel.

The vast world of taxation is currently undergoing a significant shift. Recent data suggests there’s an eye-watering deficit of £5.2 billion between what HMRC should have collected in taxes and what they’ve actually received. Naturally, this discrepancy is propelling HMRC to intensify its efforts. What does this mean for you and us? In short, HMRC is amplifying its investigations, leading to an unprecedented surge in tax enquiries.

Why The Increase in Enquiries?

The aforementioned £5.2 billion deficit is a principal driving factor. With such a gaping hole in expected versus actual revenues, HMRC is left with little choice but to ramp up its investigation activity. It’s essential to understand that these enquiries are not solely reserved for those who might have suspicious tax activities. Even the most diligent taxpayers, who have committed no wrongdoing, can find themselves under the microscope.

What Does an Enquiry Entail?

Should you find yourself at the centre of an HMRC enquiry, irrespective of any wrong-doing, compliance is required by law. This means:

Submission of Records: Offering up any financial records or other information HMRC requests.

Attendance: Partaking in any meetings mandated by HMRC.

The process can be undeniably stressful, time-consuming and costly. What’s more, many of these investigations conclude with HMRC finding no evidence of wrong-doing. However, if discrepancies are found, taxpayers face not only additional costs but potential penalties.

Defending Against Enquiries: The Value of Early Expertise

From our extensive experience at Lewis Brownlee, we’ve observed that having us in your corner from the very outset is the most effective shield against these investigations. By enlisting our expertise as your accountants early on, you can ensure your tax affairs are exactly as they should be. Furthermore, our clients are able to sign up to our Tax Protection Service, which means they will have us by their side in the event of an enquiry.

Benefits of our Tax Protection Service:

Expert Representation: Our Tax Protection Service sees our seasoned team, well versed in the nuances of UK tax laws, navigate the intricate paths of enquiries for you.

Cost Coverage: It safeguards you against the potentially high accountancy fees associated with lengthy investigations up to £100,000. Yes – the costs can really go that high, particularly if agreement on a technical point cannot be reached, and a case ends up going to a tribunal!

Peace of Mind: It allows you to sleep easy, knowing that our team is managing the complexities, ensuring you meet all compliance demands and substantially reducing the stress of the process.

In short, as the tax landscape evolves and the intensity of HMRC investigations grows. So, equipping yourself with a Tax Protection Service becomes more crucial than ever. At Lewis Brownlee, we’re here to stand by your side. As such, we’ll ensure you’re not just compliant but protected against the uncertainties of the tax world. So, what are you waiting for? Become a client today and sign up to benefit from our Tax Protection Service. It really is all round peace of mind.

If you’d like to speak to one of our experts about your accounts, please call 01243 782 423, or email from our contact page and we will be in touch!

We also update our YouTube Channel regularly with new content, see here: Lewis Brownlee YouTube channel.