Knipe Whiting and Heath: March 2012 Tax Tips and News

Welcome…
To March’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

If you need further assistance just let us know or you can send us a question for our Question and Answer Section.

Come and visit us at our stand at the HEREFORD EXPO at the Hereford Leisure Centre on Wednesday 21 March.

Please contact us for advice in your own specific circumstances. We’re here to help! 

March 2012
· Spreading Household Income
· Tax Efficient Investments
· Working from Home
· Capital Exemptions and Losses
· March Question & Answer Section
· March Key Tax Dates

Spreading Household Income
This is a good time to look forward to 2012/13 and assess who will be earning what in your family. The level of personal allowances (tax free income) have increased significantly over the last two years, and are expected to increase again in 2012/13 to at least £8,105 per person.

This allowance cannot be transferred between family members, so if some people in your family are earning less than this, their personal allowance is going to waste.

Strategies you may consider to avoid wastage of the personal allowance include:

– Employing your spouse or children in your business, perhaps on a part-time basis.
– Transferring an income-producing asset, such as a let property or savings account into the name of the lower earning spouse.
– Taking on a family member as a partner in your business, so they can share some of the profits.
– Ensuring the higher earner makes all the Gift Aid donations to charities from the family. Read More

Tax Efficient Investments

Most allowances for tax efficient investments are fixed for each tax year and cannot be carried over to the next year if not used. If you have money to invest you may want to use your allowance for 2011/12, or in some cases wait until 2012/13 when new rules and new limits apply.

Here is a brief summary of the 2011/12 and 2012/13 investment limits:

EIS
Investors who subscribe for shares under the Enterprise Investment Scheme (EIS) can currently receive income tax relief at 30% of up to £500,000 invested in one year. This annual cap will rise to £1 million from 6 April 2012. However, any amount can be invested in EIS shares to defer tax due on a capital gain made in the period up to three years before the EIS shares were acquired, or to up to one year later. Read More

Working from Home

If you work from home as an employee or director of your own company, or for any other employer, you can claim £3 per week (tax free) to reimburse you for the costs of running your home as your work-base. This claim needs to be made to your employer directly, not to the Taxman.

If the additional costs of running your home while you work there exceed £3 per week you can put in a higher claim for the costs incurred, but you do need to back-up that claim with copies of energy bills etc. You also need to work out the additional costs quite precisely, which can be tricky, but is possible if you are methodical. We can help you calculate the amount to claim and advise on what evidence you need to keep. If you just claim the flat £3 per week, you don’t have to provide any calculations or evidence in the form of bills. Read More

Capital Exemptions and Losses

You can make up to £10,600 of capital gains in 2011/12 and pay no tax on that amount, as it should be covered by your annual capital gains exemption. If you have not used this annual exemption in 2011/12, check whether you can make any disposals which will crystallise gains before 6 April 2012. Individuals who have non-domicile status may not qualify for this annual exemption.

The annual exemption limit will be frozen in 2012/13 at £10,600. Any unused exemption for 2011/12 cannot be carried forward or passed on to a spouse. However, you can pass assets to your spouse or civil partner tax free. Then on the sale of the asset your spouse’s annual exemption can be set against the gain. Read More

March Question and Answer Section

Q. I’ve received a £100 fine for not submitting my tax return, but I don’t remember receiving a form to complete. All my income is taxed under PAYE, so surely I don’t need to complete a tax form, do I? Answer

Q. I hold the lease of a property comprising of a shop on the ground floor and offices above. The shop is vacant and only one of the offices is let. I’ve received a good offer from a property developer to purchase the lease of the whole building. If I invest in another commercial let property can I rollover the gain and avoid paying tax on the sale of the lease? Answer

Q. My bakery shop is VAT registered, but I don’t add VAT to the bread and cakes I sell. I’m going to start selling take-away filled rolls, fizzy drinks and hot pies. Will I have to charge VAT on these items? Answer

March Key Tax Dates

19/22 – PAYE/NIC and CIS deductions due for the month to 5/3/2012

31 – Last minute tax planning for the 2011/12 tax year. Ensure you use up all exemptions to which you are entitled.

Need Help?

Please contact us if we can help you with these or any other tax or accounts matters.

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If you are not already a client and are interested in becoming one, we would love to come to meet with you to discuss how we can help and provide you with a competitive quote for our services.

All new client consultations are provided free of charge and without obligation.

About Us

Knipe Whiting Heath & Associates Limited Accountants are based in Herefordshire, offering local business owners and individuals a wide range of services.

All clients are entitled to fixed fees, work delivered on time and unlimited phone support. Visit our website http://www.knipewhitingheath.com for more information.