Tag: private client

Private Client Briefing Summer 2023

Posted on by Katie Trower

The impact of the tax increases and reductions to exemptions and thresholds in the March 2023 Budget is now being felt by many, as are the positive changes to the Pension Annual and Lifetime Allowances.

As the tax rules for buy-to-let property have become less attractive over recent years, we explore how to structure your property investment, and the reporting requirements on sale, together with other key reminders.

Please do not hesitate to contact me or any of the Private Client team, if we can assist you in any way.

Download the Private Client Briefing below.

Rise in Capital Gains Tax receipts – FT Adviser

Posted on by Katie Trower

HMRC’s latest tax figures show that CGT receipts continue to grow, rising by 96 per cent over the past five years. This growth is three times higher than the increase in Inheritance Tax (IHT) receipts over the same period.

Inflation has been a key driver behind recent tax increases, moving taxpayers into new tax thresholds as asset values soar. However, the reduction of the annual exemption for CGT from £12,000 to £6,000, which came into play as of April 6 2023, is likely to increase CGT receipts further.

With more people being brought into new tax thresholds, it means hundreds of thousands of new taxpayers will now be liable to pay CGT. The concern however is that not everyone who is now liable to pay CGT will know that they need to. Katharine notes: “Many taxpayers may be unaware that gifts of a property or shares, for example, to family members can be subject to CGT.”

Katharine’s comments look at HMRC’s ability to manage the additional administrative burden of an increased number of tax returns. To read Katharine’s piece in full, you can read more on FT Adviser.

If you have any queries, please contact Katharine directly or a member of the Private Client team.

Get ready for the Capital Gains Tax exemption cut

Posted on by Katie Trower

A cut to the CGT exemption, from April 2023, is expected to make CGT payments even busier than usual in the first few months of the year. Currently, investors can make profits of £12,300 a year before being subject to CGT. However, that annual exemption will reduce to £6,000 on 6 April 2023. From April 2024 onwards, there will be a further reduction to the exemption to £3,000.

Katharine says: “The 18% spike in CGT over the past year is a clear sign of the times. With scores of investors having exited the buy-to-let sector over the past year, and inflation causing house prices and asset values to soar, HMRC is reaping the rewards from people’s capital gains, collecting £18 billion in the past year alone – a rise of 102% in the last five years.

Year CGT
Feb 2022-Jan 2023 £18 billion
Feb 2021-Jan 2022 £15.2 billion
Feb 2020-Jan 2021 £10.8 billion
Feb 2019-Jan 2020 £9.6 billion
Feb 2018-Jan 2019 £8.9 billion

If you are considering selling a valuable asset, you may want to consider doing so by 5 April. Katharine comments that “tax should not dictate any big financial decisions, but if you are going to sell in a few months’ time anyway, then doing it now instead will mean you keep more of your gains.”

You can read Katharine’s comments in full in The Sunday Times (subscription needed) and Accountancy Age.

If you would like to find out more about how we can help you to plan for CGT, please contact Katharine Arthur or a member of the Private Client & Trusts team.

Capital Gains Tax (CGT) receipts on the rise: ePrivateclient

Posted on by Katie Trower

The rise in CGT receipts is according to the latest monthly tax figures released by HMRC. Between February 2022 and January 2023, the tax regulator collected a record £18 billion. In January 2023, CGT receipts were £13.2 billion, up 23% over January 2022 when compared like-for-like.

Katharine notes that “with scores of investors having exited the buy-to-let sector over the past year, and inflation causing house prices and asset values to soar, HMRC is reaping the rewards from people’s capital gains.” However, we have yet to see the full impact of the changes to CGT from the Autumn Statement in 2022. In addition, and in advance of the reduction to the CGT annual exemption rate in April 2023, the mood across investors is to streamline their portfolios in anticipation. This could lead to further increases in CGT receipts in January 2024.

Read Katharine’s comments in full in ePrivateclient’s article here (subscription needed).

Tax planning assistance

With the reduction in CGT annual exemption expected to raise an additional £25 million in tax revenue in 2023/24 alone, it makes planning in this area even more important. Our Private Client & Trusts team is on hand to help you make best use of the annual exemption and to plan your tax affairs. Please get in touch with Katharine or a member of the private client team to discuss your needs further. You can also reference our Year End Tax Planning Guide 2023 to help you make the tax rules work to your advantage ahead of the tax year-end.

Year End Tax Planning Guide 2023

Posted on by Katie Trower

This year, such a review may be even more beneficial than usual. Major changes to tax bands and allowances have been announced over the course of 2022. This means some last-chance opportunities to make use of allowances at current rates and to access current tax bands. Similarly, there may be areas where you have discretion over the timing of income and it is worth establishing whether income is better taken this year or next. Here again, a review before 5 April 2023 could have a significant effect on your tax position. For Scottish taxpayers, for whom higher and top tax rates are set to increase as well, there is even more to think about.

As your accountants, we have the all-round vision of your circumstances that can really help make an impact. To make the tax rules work to your advantage, it’s best to start the discussion as soon as possible before 5 April 2023. We look forward to being of assistance.

Download our Year End Tax Planning Guide below.

Corporate and Private Client eNews

Posted on by Ellie Dykes

The latest edition of our Corporate and Private Client eNews is now available and covers the following topics:

  • City of London Chamber launched
  • IR35 cases: a tale of two (fly) halves
  • Michael Lynagh v HMRC: caught offside
  • S & L Barnes Limited v HMRC: stayed onside
  • The best or worst of times?
  • False accounting to be a criminal offence
  • London still the top spot
  • R&D reliefs under attack
  • Are Organix and Nakd bars confectionery for VAT purposes?
  • And finally… tax return record

Click the button below to download this week’s edition, or read our previous editions here.

HMRC compliance activity greatly increasing

Posted on by Katie Trower

We have seen a huge increase in enquiries issued by HMRC since the turn of the New Year.

Enquiries by HMRC can be stressful, intrusive and long running. In addition, enquiry settlements can be costly and present financial challenges.

We strongly recommend seeking professional advice upon receipt of an enquiry notice. The right professional advisor can guide you through the process and ensure HMRC are acting within their legal boundaries. In addition, an experienced professional advisor will mitigate and suspend penalties where possible.

If you, your company, trust or charity receives an enquiry notice, then please contact Danielle Ford, head of Tax Disputes or Riocard Hoye, Senior Manager for a confidential initial discussion. Our team has a proven track record in successfully representing our clients in disputes with HMRC, resulting in the best possible outcome for them.

For more on HMRC’s recent enquiries and our analysis, read on below:

Refurbishing your house just got easier (and cheaper)

Posted on by Sara McKenzie

Prior to April 2015, if you did not formally elect for your original house to continue to be treated as your ‘Main Residence’ for Capital Gains Tax (CGT) purposes for the period during which you lived in the rented accommodation, you would have lost a year’s worth of CGT relief when you finally did come to sell your property. While the extra CGT may not be material in the scheme of things, there would be a very real risk that you would forget the year’s absence by the time you come to sell it (or not realise its relevance) and simply/reasonably expect a CGT free sale, which would result in you completing your Tax Return incorrectly and open you up to all sorts of potential penalties, interest and exposure to HMRC’s darker side.

Fortunately, since April 2015, the simple fact of renting a second property while your real house is being refurbished does not cause you to lose the CGT relief automatically so you no longer have to make the election.

The CGT Principal Private Residence relief can be very complex and with new rules from April 2020 requiring property disposals to be reported and the tax paid within 30 days of the sale, this will only become more difficult to get right so it is important to speak to your tax advisor about any change in living patterns or if you consider selling.

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