Tax Systems Share Discussion Threads

[the chairman elect] 18/10/2022 07:30

Away from politics and back to why this thread exists....



Jeremy Hunt has announced that "almost all" of the tax cuts set out in the mini-Budget are being reversed.

He said: "We will reverse almost all the tax measures announced in the Growth plan three weeks ago that have not started parliamentary legislation.

"So whilst we will continue with the abolition of the health and social care levy and stamp duty changes, we will no longer be proceeding with the cuts to dividend tax rates, the reversal of off-payroll working reforms introduced in 2017 and 2021, a new VAT -free shopping scheme for non-UK visitors or the freeze on alcohol duty rates."



Not good news for our DIVI's

So can anyone explain the actual tax consequences for a basic rate tax payer as well as a higher rate tax payer?

Additionally what are the tax positions on other income producing assets such as bonds either corporate or GILTS?

From a tax perspective which income producing assets are currently the most tax efficient?

Any input on the above would be much appreciated....



SKYSHIP17 Oct '22 - 14:58 - 6576 of 6589

TCE - Zero Dividend Prefs perhaps - Income / Gain is taken as Capital Gain.

So the NBPS discussed earlier gives a YTM of only 4.73%pa (to 10/24) - but that's tax free for most perhaps.



Reckon that the tax angles will become increasingly important between the various income producing assets out there. If there are any experts out there who could give a bullet point list of Divi's, corporate bonds, GILTS, Zero's etc....it would be most useful no doubt to all.

[waldron] 23/9/2022 11:52

UK chancellor unveils biggest tax cut in generation
23/09/2022

UK chancellor Kwasi Kwarteng has slashed the top rate of income tax for the highest earners, as his mini-budget unveiled the biggest tax cuts since 1972.

The new single higher rate of tax will now be 40%.

The chancellor said that the old 45% rate for those who earned over £150,000 was higher than countries like Norway, USA and Italy.

Now, he claims the UK will have one of the most competitive and pro-growth income tax systems in the world.

Kwarteng also introduced a new basic rate for income tax of 19% from April 2023.

The corporation tax rises were also cancelled, keeping it at 19% as the government sets its sights on a 2.5% trend rate of growth.

He revealed a package of major cuts to Stamp Duty Land Tax with the nil rate band being doubled from £125,000 to £250,000.

The government is going even further to support first time buyers, who will now pay no stamp duty up to £425,000, and increasing the value of the property on which first time buyers can claim relief, from £500,000 to £625,000.

The Annual Investment Allowance £1 million has been made permanent, rather than letting it return to £200,000 in March 2023.

This gives 100% tax relief to businesses on their plant and machinery investments up to the higher £1 million limit.

In another surprise move Kwarteng said he was shutting down the Office of Tax Simplification.

And, the IR35 rules have been simplified too.

The chancellor said he was repealing the 2017 and 2021 reforms, which he said created unnecessary complexity and costs to business.

For more see:

[waldron] 03/7/2022 17:12

UK PM and chancellor announce "single biggest tax cut in a decade"

Sun, 3rd Jul 2022 11:19


(Alliance News) - UK Prime Minister Boris Johnson and Chancellor Rishi Sunak have penned a joint article to outline what they are calling "the single biggest tax cut

in a decade" in a show of unity on the cost-of-living crisis.

Writing in the Sun on Sunday, Johnson and Sunak said when the National Insurance threshold rises overnight this coming Wednesday from GBP9,880 to GBP12,570 it will save 30 million British workers up to GBP330 a year.

They added that the historic tax cut will amount to GBP6 billion in value and lift 2.2 million people out of paying "any ­National Insurance or income tax on their earnings at all", with "around 70% of British workers" paying less National Insurance.

In the rare joint op-ed from the pair, they outline the billions the government is planning to spend to cushion the blow of inflation by also providing relief for council tax bills, fuel duty and energy costs.

It comes after the prime minister's denial that his government is being "complacent" about spiralling inflation and said the "cost of freedom" is "always worth paying" amid soaring costs exacerbated by the Ukraine war.


The prime minister said there is a "big chance" to fix unnecessary cost

pressures for people and businesses across the UK.

Speaking at a press conference at the close of the Nato summit in Madrid on Thursday, Johnson said the "very, very tight labour market" and difficult "balance of our energy mix" add to inflationary pressures.

Fears are continuing to mount that the cost-of-living crisis could tip the UK into recession, as defined by two quarters in a row of falling output, as rocketing inflation sees households and businesses rein in spending.

Inflation has already reached a 40-year high of 9.1% and is set to rise past 11% in the autumn.

Bank of England Governor Andrew Bailey said on Wednesday that soaring inflation will hit Britain harder than any other major economy during the current energy crisis and that output is likely to weaken earlier and be more intense than others.

New HM Revenue & Customs figures showed that some 6.1 million taxpayers are projected to be paying income tax rates at the higher rate of 40% or the additional rate of 45% in 2022-23.

By Alana Calvert and Sophie Wingate, PA

source: PA

[waldron] 12/5/2022 06:58

Aol.


‘Wake-up call’ for pension holders as thousands face potential tax charges


Press Association

Vicky Shaw, PA Personal Finance Correspondent

12 May 2022, 6:00 am

Thousands of pension savers potentially face tax charges as they have more than the lifetime allowance sitting in their personal pensions, figures indicate.

Around 2,300 people have been paying into personal pension schemes exceeding the lifetime allowance of £1,073,100, according to HM Revenue and Customs (HMRC) data.

InvestingReviews.co.uk obtained the figures from HMRC following a freedom of information (FOI) request.

The figures also show that around 100 people have been actively contributing into funds worth £4 million-plus.

The data covers the tax year ending April 2020 and specifically covers active contributions being made into certain pensions during that tax year, so the figures will not be fully complete.

The lifetime allowance is the maximum amount of pension saving subject to tax relief that a person can build up over their lifetime.

The rate of tax paid on pension savings above the lifetime allowance depends on how the money is paid. It can be as much as 55% if it is taken as a lump sum.

Experts have warned that people may find themselves sleepwalking into tax charges and some may want to consider alternative savings options, such as Isas.

InvestingReviews.co.uk chief executive Simon Jones said: “These numbers should serve as a huge wake-up call for pension holders across the country.

“With the taxman poised to swoop on anyone breaching the lifetime allowance, it’s never been more important for people to plan ahead and see how they can avoid losing big chunks of their retirement pots.”

People usually pay tax if their pension pots are worth more than the lifetime allowance. They will receive a statement from their pension provider saying how much tax they owe.

The amount that counts towards the allowance depends on the type of pension pot someone has, and if they are in more than one pension scheme they should factor in all the schemes they belong to.

In some cases, savers with funds above £1,073,100 may not be subject to a lifetime allowance charge.

The lifetime allowance has been reduced over time, and people may be able to apply to protect their lifetime allowance from the reduction.

[waldron] 19/4/2022 05:40

certainly an unpleasant learning curve experience

All i can suggest is ask advice from a local expert

good luck

take care

chuckle and cheers

[pinemartin9] 18/4/2022 21:05

edit: I see that gift aid contributions can be claimed back in last year's self assessment even if made in current tax year. That's something I may investigate.

[la forge] 29/3/2022 10:56

Published in:
Investing

29th March 2022

Share dividends tax: why taking action NOW could help you avoid next week’s hike


Updated:
29th March 2022

by
Karl Talbot

Share dividends tax: why taking action NOW could help you avoid next week’s hike


A new tax year begins on Wednesday 6 April. From this date, the tax on share dividends will increase by 1.25%.

However, if you’re worried about the tax hike, don’t despair.

Here’s how you might be able to avoid share dividends tax by taking action ahead of the changes.

What is share dividends tax?

Share dividends tax applies to dividends received on shares. It also applies to any income you pocket from funds that invest in shares.

For the current 2021/22 tax year, the dividends tax rate that applies to you depends on your income.

Here’s the lowdown:

Basic rate taxpayers pay 7.5% share dividends tax

Higher rate taxpayers pay 32.5%.

Additional rate taxpayers pay 38.1%.

Importantly, you only pay the above rates on any dividends above the £2,000 dividends allowance. The allowance will remain at this level for 2022/23.

How is share dividends tax changing from 6 April?

The new tax year begins on Wednesday 6 April. From this date, the share dividends tax will increase by 1.25%. So, from 2022/23, the following share dividends tax rates will apply:

Basic rate taxpayers will have to pay 8.75%.

Higher rate taxpayers will pay 33.75%.

Additional rate taxpayers will pay 39.35%.

Again, these rates only apply to dividends you receive over the £2,000 tax-free allowance.

How might you avoid the tax hike if you act now?

Taxes aren’t often easy to (legally) avoid. Yet, share dividends tax is relatively easy to dodge for most investors.

That’s because, aside from the £2,000 tax-free allowance, the share dividends tax does not apply to investments held within an ISA.

For example, if you have a stocks and shares ISA and you earn dividends from it, they aren’t subject to share dividends tax.

This applies even if the dividends you receive are in excess of £2,000.

So, if you currently have non-ISA investments that typically return dividends over £2,000, it’s well worth considering whether to move them into a stocks and shares ISA.

This is particularly important right now, given that the new tax year will also signify the end of the 2021/22 ISA allowance.

The ‘ISA allowance’ refers to the maximum amount you can put into any type of ISA within a given tax year.

If you don’t use your 2021/22 allowance before the tax year slams shut, you’ll lose it. In other words, you can’t carry it over to the 2022/23 tax year.

So, it’s possible that if you act before 5 April, you could potentially shield up to £20,000 of your investments from share dividends tax. And then, from 6 April onwards, you can put a further £20,000 into an ISA for the 2022/23 tax year.

This will protect more of your investments from share dividends tax and could even see you avoid it altogether.


How else can you shield your investments from share dividends tax?

Aside from putting your investments into an ISA wrapper, share dividends tax also does not apply to investments held within a pension.


So, if you have retirement savings, such as a workplace pension, you might wish to consider topping this up.

Are you looking to open an ISA before the end of the tax year? If so, take a look at The Motley Fool’s top-rated stocks and shares ISAs to find the right account for you.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future.


The content in this article is provided for information purposes only. It is not intended to be, nor does it constitute, any form of tax advice.

Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Don’t leave it until the last minute: get your ISA sorted now!


If you’re looking to invest in shares, ETFs or funds, then opening a Stocks and Shares ISA could be a great choice.

Shelter up to £20,000 this tax year from the Taxman, there’s no UK income tax or capital gains to pay any potential profits.

Our Motley Fool experts have reviewed and ranked some of the top Stocks and Shares ISAs available, to help you pick.

Investments involve various risks, and you may get back less than you put in. Tax benefits depend on individual circumstances and tax rules, which could change.



Karl Talbot

Karl is a writer specialising in investing and personal finance content. He regularly contributes articles on savings, bank accounts, mortgages, and loans. He was previously a Personal Finance Writer for MoneySavingExpert.

[waldron] 07/9/2021 21:35

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 gov.uk 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] 16/8/2021 18:54

I live in France but my earnings arise in UK: Where to pay income tax?

As France is where you reside, it is to France that you should be declaring your worldwide income and paying whatever tax is due – and the social charges – and not the UK

16 August 2021

'Double tax treaties prevent the paying of double taxes in two countries and they allocate the taxation of income to the country in which one is resident'

Reader question: I live in France and am paying income tax in the UK because all my income arises there. Should I be paying in France as well, despite not having any French income?

In short, no, not as well, though perhaps you should be paying it in France instead.

Double tax treaties prevent the paying of double taxes in two countries.

[waldron] 16/8/2021 16:45

UK TAX YEAR CHANGE



'Move the tax-year end to 31 December!' Businesses want the tax year to be brought in line with calendar year to fit with global trading partners

91% of medium firms support plans to shift tax year end to 31 December


Office for Tax Simplification considering change to 31 March or 31 December

Firms making business abroad to benefit particularly from the proposed change

By Camilla Canocchi for Thisismoney.co.uk

Published: 16:33 BST, 16 August 2021 | Updated: 16:33 BST, 16 August 2021





The vast majority of Britain's medium-sized businesses are in favour of shifting the end of the tax year to 31 December in line with its international peers, a new survey shows.

In most major countries, including the US, France and Germany, the end of the tax year coincides with the end of the calendar year. Ireland also moved its government accounting and tax year end from 5 April to 31 December in 2002.

Last month, the Office for Tax Simplification said it was considering moving the UK’s tax year, currently ending on 5 April, to either 31 March or 31 December.

Tax year end: Most UK firms would rather it coincided with the end of the calendar year


Tax year end: Most UK firms would rather it coincided with the end of the calendar year

A move which would prove popular among British firms, since over 90 per cent said they would support it, according to a survey of 500 British medium-sized businesses by accounting firm BDO.

However, they said the change would need to be planned carefully with longer filing deadlines to help businesses make the transition.

'Businesses are hoping that a rethink of the tax system can help them flourish following the challenges of Brexit and Covid-19,' said Paul Falvey, tax partner at BDO.

'Changing the tax year to 31 December is supported by businesses of all sizes and will be particularly helpful for those with international connections.'



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The UK’s tax year for individuals runs from 6 April to the following 5 April, and it has been like this for hundreds of years.

In contrast, accounting systems used by businesses have been developed around month and quarter ends.

The financial year for the UK government accounting and for companies runs from April 1 to March 31. That - and 31 December - are the two most popular dates for accounting for multinationals.

In June, the OTS said that if they were to make the end of the calendar year coincide with the end of the tax year, the transitional year would be shortened by three months and five days and run from 6 April to the following 31 December.

'Clearly there will be challenges associated with implementing this change, not least for the Government itself,' Falvey said.

'But in the long term, a 31 December year-end would also make life simpler for HMRC.

'Aligning the year-end with more of the international community will help taxpayers to calculate and HMRC to check that the correct amount of tax is paid by those doing business in more than one country.'

Medium sized firms would also like additional tax measures to encourage businesses to grow and scale-up in the UK, according to the survey.

More than half businesses said they would like the 'super deduction' policy introduced by the Chancellor at the Budget in March - which is set to end in March 2023 - to become permanent


More than half businesses said they would like the 'super deduction' policy introduced by the Chancellor at the Budget in March - which is set to end in March 2023 - to become permanent

Some 53 per cent said they would like the 'super deduction' policy introduced by the Chancellor at the Budget in March - which is set to end in March 2023 - to become permanent.

The super deduction allows companies to claim capital allowances at a 130 per cent rate for money spent on 'qualifying' machinery, meaning companies can cut their tax bill by up to 25p for every £1 they invest.

Businesses would also like further tax incentives introduced, with half saying that the government should introduce better research and development tax breaks for all sizes of business.

'The government has introduced a huge programme of Covid-19 support measures, but as we enjoy a summer with fewer restrictions, we should consider how tax incentives can be improved to inspire UK-based businesses to grow domestically,' Falvey added.

'Making the super deduction policy permanent as well as broadening R&D tax breaks would certainly be a good start to encourage further investment and innovation.'

[gaffer73] 30/7/2021 04:08

Phone them and they will cancel it if there is no specific reason for you to fill it out.

[zangdook] 30/7/2021 04:04

AIUI if they send you one (or write and tell you to complete it online) you have to complete it.

[gaffer73] 30/7/2021 03:37

Unless there is a specific reason for you to complete one you don't have to if you are PAYE.

[zangdook] 30/7/2021 03:28

How many years do you have to have no tax to pay beyond PAYE before HMRC stop wanting you to complete a tax return? I thought they were understaffed.

[mirandaj] 24/3/2021 12:11

Inheritance Tax refers:

[bluemango] 24/3/2021 11:24

Thanks waldron. I'm told the outcome would be it would lapse and he'd get nothing. As I expected, just hoped I was wrong ...

[waldron] 23/3/2021 23:16

blue

out of my depth

all i can suggest is

discuss with lawyer

[bluemango] 23/3/2021 22:18

Can any legal experts reading this help me with a simple question on Wills please?

I have a close relative whose Will mentions me specifically as main beneficiary (after some other legacies) but does not include the wording 'or his heirs'. Does that mean if I die before the Testator, and assuming no further changes are made to the Will, my son would not then become a beneficiary instead of me? The obvious answer is to ask for the wording to be made clearer to include 'or his heirs if he should predecease me' but the relationship is 'sensitive' and they are not kindly disposed to my son ...

I have googled this but come up with conflicting answers as to what would happen in this scenario. Thanks