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Stock Name Stock Symbol Market Stock Type
Tax Systems TAX London Ordinary Share
  Price Change Price Change % Stock Price Last Trade
0.00 0.0% 112.50 01:00:00
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waldron: Published in: Investing 7th September 2021 Tax on share dividends to increase by 1.25%. Here’s what it means for investors Updated: by Karl Talbot | 3 min read Tax on share dividends to increase by 1.25%. Here’s what it means for investors The government has announced a 1.25% increase in the tax on share dividends that will apply from April 2022. The news comes at the same time as it was announced that National Insurance contributions will increase by 1.25% next year. The government says the rises will help fund health and social care in England. Both announcements are subject to a vote in the House of Commons. So if you’re an investor, what does the new tax on share dividends mean for you? Here’s what you need to know. How much tax is currently paid on share dividends? If you’re an investor, you currently get a dividend allowance of £2,000. So, if you receive dividends worth £2,000 or less, you don’t have to pay any tax on them. For dividends of more than £2,000, the amount of tax you pay depends on your income tax band. This is unless your investments are held in an ISA, in which case your dividend payments remain tax free. For non-tax-efficient investments, you must pay 7.5% tax on any dividends over £2,000 if you’re a basic rate taxpayer. If you’re a higher rate taxpayer, you must pay 32.5%, and it’s 38.1% if you’re an additional rate taxpayer. You can find more information on income tax bands on the website. What are the changes to dividends tax? From April 2022, the government is implementing a 1.25% rise in the tax on dividends to help fund social care. Analysts expect that the move will raise up to £600 million, with the majority of payers coming from the top 10% of households. The new tax will not, however, apply to investments held within an ISA. Why has dividends tax increased? With a National Insurance hike of 1.25% also announced, many analysts feel that the dividends tax is a way for the government to show that it is keen to increase taxes on asset holders as well as those who rely on a working income. Critics of the National Insurance hike have repeatedly pointed to the fact that it will not apply to most pensioners, landlords or those living off income from assets, suggesting that only those relying on a working income face the burden. National Insurance, by definition, is also a regressive tax, meaning that an increase disproportionately impacts those on lower incomes. That’s because the amount of contributions you have to make, at a percentage level, decreases at higher incomes. However, critics of the dividend tax rise consider it a token gesture. That’s because the 1.25% rise won’t apply to investments held in an ISA. How has industry reacted? Commenting on the changes, Tom Selby, head of retirement policy at AJ Bell, says that investors should now take the time to examine their portfolios in order to ensure they aren’t inadvertently paying more tax than they need to. He explains: “The increase in dividend tax means people investing outside tax-sheltered wrappers like pensions and ISAs should review their portfolios to make sure they are making as much use as possible of their annual contribution allowances to keep their tax bills as low as possible.” Will the tax increase definitely go ahead? MPs will vote on the government’s health and social care plan, including the planned dividends tax rise, on Wednesday 8 September at 7pm. While a number of cross-party MPs do not approve of the proposals, the policy is expected to pass through the House of Commons.
waldron: HMRC overcharges pensioners £600m in tax – are you owed a refund? by Brean Horne from Moneywise | 1st May 2020 09:56 ‘Emergency tax’ applied to pension pots by HMRC hits retirement savings HM Revenue & Customs (HMRC) has refunded more than half a billion pounds in overpaid tax to retirees since the pension freedoms were introduced in 2015, according to new data. Pension freedoms were designed to give people more flexibility to control their retirement income by allowing over-55s to withdraw money from their defined contribution pension pots when they wanted. But the taxman has overcharged pensioners by £600.4 million on these withdrawals, and has been refunding it to people who make claims. Almost £33 million was paid back to pension savers in the first three months of 2020 alone, and more than 10,000 people made an application to claim back this cash from HMRC in this period. The average sum repaid was £3,141.23. A total of 242,188 pensions tax refunds claims have been made since the pension freedoms came into effect. These figures only represent the number of people who have made claims themselves. The total number of savers overcharged is unknown. Why are pensions being overtaxed? Under the new pension freedom rules, people aged 55 and over can withdraw the first 25% of their pension tax-free. After this, income tax is applied to the remaining 75% of their pot. Unless your pension provider holds an up-to-date tax code, an ‘emergency tax code’ will be applied to your first lump sum withdrawal. An emergency tax code treats the lump sum being withdrawn as though it will continue to be paid each month. This is often referred to as a ‘Month 1’ basis. For example, if you make a £10,000 withdrawal you could end up being taxed as though your annual income is £120,000. How to claim back overtaxed pension I you think you HMRC has charged you too much pensions tax, you will need to fill out one of the following three claims forms which can be found on the government’s claim a tax refund page. P55 If you have not withdrawn your entire pension pot and are not taking out regular payments, you will need to fill out a P55 form. HMRC received 6,286 of these claims from savers in the first quarter of 2020. P53Z A P53Z form should be filled out if you have withdrawn your entire pension pot and also receive other taxable income. A total of 2,973 claims were made in the first three months of this year. P50Z If you have drawn down your entire pension pot but have no other taxable income you will need to fill out the P507 form. Only 1,138 of these were made during the first quarter of 2020. This article was originally published in our sister magazine Moneywise. Click here to subscribe. These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
sarkasm: What Is The Common Reporting Standard For Expats? By Ryan Holder - July 29, 2018 0 23 The Common Reporting Standard is expected to swing into action in a few weeks – but how does this impact expats and the tax they pay? To find out, here’s a list of frequently asked questions about the standard: What is the Common Reporting Standard? The Common Reporting Standard or CRS is a network of international tax authorities working together to swap personal and financial data about each other’s citizens with bank accounts of investments in their countries. What is the CRS aiming to accomplish? The CRS establishes the tax residence of bank customers and investors who have offshore holdings. Financial institutions, which include banks, building societies, investment funds and trusts, must tell their local tax authority about any foreign customers and their holdings. The information is passed to the customer’s home tax authority to check against filings to make sure the right of tax has been paid on any interest, dividends or gains. When does CRS reporting start? It already has. Early adopters such as the UK and Spain started swapping tax data in September 2017, although the entire network is due to trigger from September 1, 2018. What is reported under CRS? Personal details requested by the financial institution expats deal with plus details about accounts and financial products, including the balance of an account or value of investment and the total of any interest or payments credited to them each year. How many countries are part of the CRS network? CRS has around 108 member countries with the notable exception of the USA. The UK, most European countries and the rest of the world’s leading financial centres are all involved. The list includes a host of notable places once considered as tax havens. Why isn’t the USA involved? The CRS is based on the US Foreign Account Tax Compliance Act (FATCA). FATCA already swaps data between the US Internal Revenue Service and foreign tax authorities and will continue to do so outside the CRS. How does this affect expat tax? It doesn’t unless an expat has undeclared offshore assets. If they are in a CRS member country, they will be fully disclosed to the expat’s home tax authority for comparison with tax filings. What do expats have to do under CRS? Expats do not have to take any action other than fully declaring their offshore assets. However, any financial institutions expats deal with offshore will ask for personal information, including tax identification numbers.
chimers: MIDAS SHARE TIPS: Tax is no burden for software firm Tax Systems that helps large firms submit data to the Revenue By JOANNE HART FOR THE MAIL ON SUNDAY The UK budget deficit – the difference between how much the Government spends and how much it receives in taxes – is expected to be more than £30billion for this financial year. The figure has been falling, but it is still too high for the Government's liking. Of course, Chancellor Philip Hammond does not want to increase taxes, but he is keen to collect more of them. One popular way of doing this is by making sure big companies pay the tax they owe. Tax Systems provides software to help large firms navigate the Government's increasingly complex demands. The shares are at 85½p and should rise as chief executive Gavin Lyons is driven, able and determined to expand the firm. Lyons ran cyber-security group Accumuli, which was recommended by Midas in 2013 at 12½p and taken over two years later at 33p. In 2016, he turned his attention to Tax Systems, then owned by a couple in their 70s, who had put the business up for sale. Backed by supportive investors, Lyons bought the firm and listed it on Aim. The company was already highly attractive, with about a thousand customers, including more than 100 firms in the FTSE 250 index and all but one of the UK's top 20 accountancy groups. But turnover had been static for three years and Lyons was keen to grow. The environment is conducive. In recent years legislation has been introduced to force companies to produce tax filings that are more detailed than ever before. And in April, the Government's 'Making Tax Digital' policy comes on-stream, requiring firms to file VAT returns online in the first instance. Tax Systems helps customers collect the relevant data, ensure they comply with regulations and manage the taxation process so they pay the right amounts at the right time in the right way. Lyons has also introduced new incentives for Tax Systems' sales people and strengthened top management, with the appointment of several directors who have worked successfully with him in the past. Early results of Lyons' strategy are encouraging. The company said in a trading statement last week, that it expected sales for the first half of 2018 to be 14 per cent ahead of the same period last year and directors were confident about earnings for the full year. Analysts expect 2018 profits of at least £5.8million, an 18 per cent rise on the year before. There is no dividend, as the firm took on about £30million of debt to pay the former owners for the business. But that has come down to £17.5million and should continue to fall over two to three years, at which point the company may start to pay dividends. Midas verdict: As anyone paying tax on account this week will testify, the Revenue is increasingly demanding. Tax Systems alleviates the burden and works with some of the UK's biggest firms and accountants, many of whom have been customers for years. Lyons is a seasoned operator with a history of delivering results. At 85½p, the shares are a buy.
waldron: Inheritance tax and ISAs: Unsuspecting Brits could face surprise bill By Kate Saines in Investments February 28, 2018 0 Few people are aware that ISAs are subject to inheritance tax (IHT), a survey by Octopus Investments has discovered. Research by the fund management company found that only 25% of those questioned knew the investments could form part of a person’s taxable estate and were therefore liable for IHT. This lack of understanding is leading to concerns many families could face an unexpected tax bill because they do not know the rules. It is not just the young who are unaware of the IHT implications of ISAs. The survey revealed just over a quarter (28%) of those aged 55 and over knew that ISAs were not exempt from the tax compared to 18% of 18 to 34 year olds. Over half of respondents (54%) said they didn’t know whether ISAs were exempt from IHT and a fifth (21%) incorrectly thought they were. Octopus said the results meant many Brits could be sleepwalking into an inheritance tax nightmare. Paul Latham, managing director for Octopus Investments, said: “This is not just a problem for the super-wealthy. Despite efforts to increase the current threshold, we still expect to see a rise in the number of estates subject to inheritance tax, particularly in London where the average property price currently stands at £484,000. “There are a number of options now available to those who currently have a stocks and shares ISA and who wish to pass on as much of it as possible to their children. “One of those options includes investing in AIM-listed shares.” He added: “By transferring a stocks and shares ISA to an ISA wrapper which holds a portfolio of AIM companies, investors can reduce their tax liabilities without locking away their money for the long term and continuing to benefit from the benefits of the ISA wrapper.”
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metier9: Hey MIATA, So as an investor I'm best to use the approx. £29k net dividends and the CGT allowance every year. Can I sell a share (non-ISA) and then buy the same amount in an ISA without being liable to CGT on the sale? I recently came back to the UK so most of my shares are outside an ISA and I am a whole generation away from SIPP drawdown etc... Thanks,
miata: I do not consider that you are self-employed. I consider that you are likely to be using the annual exempt amount and ISAs to minimise your tax liability as an investor. You can pay voluntary National Insurance contributions to qualify for pension years. It is difficult in the UK to be considered a professional trader (unlike in the US where it is difficult not to be). If you want to be the best way is to set up a limited company. Simplistically you improve your credit rating by having a track record of borrowing money and paying it back.
miata: Good question. In effect the answer is yes they are taxed, the reality is more complex. Regardless of whether shares are inside or outside an ISA the dividend payments are the same. The benefits of an ISA are no capital gains tax (but no allowance for losses) and gross income from bonds (eg TR25). From the HMRC website: " You can't claim the 10 per cent tax credit, even if your taxable income is less than your Personal Allowance and you don't pay tax. This is because Income Tax hasn't been deducted from the dividend paid to you - you have simply been given a 10 per cent credit against any Income Tax due." The point is that following the abolition of ACT many years ago, income tax is not deducted from share dividends. However as dividends are paid out from earnings which have (usually) suffered Corporation Tax, to prevent income being taxed twice a credit is given to persons to offset basic rate income tax. It was all part of the sophistry by Gordon Brown to reduce the amount repaid to overseas investors from 20% to 10%.
miata: The government has confirmed that from 5 August ISA investors will be able to invest in shares listed on non-traditional stock exchanges, including the Alternative Investment Market (AIM) and lesser-known ICAP Securities and Derivatives Exchange (ISDX). Investors will also be able to hold shares listed on alternative European stock exchanges. Allowing ISA investors to shelter AIM shares, which do not attract the 40% inheritance tax (IHT) charge if held for two years, could 'pave the way for the IHT-free ISA' (AIM shares in companies which are involved investment business and property development typically do not qualify for business property relief and are therefore not exempt from IHT).
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