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So here we are; the beginning of a new year. While everyone is still in a haze of ‘where did 2013 go?’ and ‘how are we in 2014 already?’ there will be many a tax adviser panicking about the looming 31 January tax deadline.
As most self employed folks know, 31 January is the deadline for online submission of your tax return for the year ended 5 April 2013. It is also the date for the balancing payment for the 2012/13 tax year to be paid and, if applicable, the date for the first payment on account for the 2013/14 tax year.
If a tax return is not submitted to HMRC by 31 January, a fixed penalty will be charged of £100. There will be interest charged on any unpaid tax too. If this is not paid 30 days after the deadline, there will be a 5% surcharge. Basically, it is a costly business not getting your tax affairs up to date!
The start of a new year is also the time for many people to start a fresh: take up a new hobby; start a healthier lifestyle or it could be the time to review your financial affairs.
After the 31 January deadline, there is a little over two months until the end of the tax year. This is the ideal time to take stock of your finances and ensure you are taking advantage of the tax planning opportunities available for 2013-14.
You should be thinking of reviewing your ISA contributions and making sure you take full advantage of the tax free savings by topping these up.
Do your pension contributions need a review to ensure you are maximising your contributions?
If you are thinking of selling property in the future, or disposing of some shares, are you aware of the of the Capital Gains Tax annual exemption? For this current tax year, 2013-14 this is £10,900, increasing to £11,100 after 5 April 2014.
Although Inheritance Tax may not be everyone’s favourite topic, each person can give £250 a year to any number of recipients, as well as £3,000 annually over and above that amount, free of Inheritance Tax.
They can also make regular gifts out of their income - not capital – which, provided the payments meet certain criteria, should be exempt and not be subject to the seven year clock. Speaking of the seven year clock, if you were thinking of gifting any assets to the next generation, the sooner the gift is made and the clock started, the sooner it will fall out of your estate for Inheritance Tax purposes.
If your income is likely to exceed £100,000 this tax year, have you considered the potential reduction or loss of your personal tax allowance?
Is it likely that you will have business tax losses for 2012-13? What would be the best way to utilise these?
Every individual circumstance is different and the above points are just a few of the things you should be thinking about.
If you are still to complete and submit your tax return for the 2012/13 tax year and you would like our help or, if you would like our advice regarding tax planning call Graham Poles on 01228 690200 or email firstname.lastname@example.org
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