Married – but whose is the main residence?


Property Clinic: our experts answer your questions about all aspects of buying, owning and selling a house. This week: nominating the main residence.

The Market

“In common with other recently married older couple, we each have our own house and choose not to live together full-time. I prefer being in town while my husband prefers the country. We maintain our properties independently, so feel it is impossible to choose one main residence. Our solicitor says he does not see why we have to, but my accountant says we must nominate one or the other within two years of our marriage. Who is right?”

Maggie Flemming writes

A married couple (or civil partners) can only have one property at a time between them qualifying for the principal private residence exemption. You can either wait and tell HM Revenue & Customs whether it is your main residence when you sell, or elect one of your homes as such ahead of time. The nomination must be made within two years of marriage. That sounds restrictive but it is actually incredibly flexible. You can vary the nomination as often as necessary, and backdate it by up to two years, which could save you a considerable amount of tax.


Tax Rates 2015/16 - Break down what the taxman gets!







Nothing’s as certain as death and taxes. Yet while there’s no doubt we’ll all be taxed, the rates can change rapidly. Will you pay 20% or will you end up in the 40% tax bracket?


This is an updated guide for the tax years starting 6 April 2015.


In this guide…

What’s my personal allowance?

What income tax rate will I pay?

What’s national insurance?

Capital gains tax

Pension contributions 

What’s my personal allowance?

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Each of us has a ‘personal allowance’, which denotes the amount we can earn without paying any income tax. If you earn more than your personal allowance, then you pay tax at the applicable rate on all earnings

above the personal allowance, but the allowance remains untaxed. Your specific personal allowance depends on your age and, in some cases, your salary.


What’s my 2015/16 personal allowance?

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 If you are married, and one partner was born before 6 April 1935, then you get an extra married couples’ allowance.

10% of this allowance is then subtracted from your annual income tax. If you were married before 5 December 2005, it is automatically worked out using the husband’s salary. For couples married on or after 5 December 2005, it uses the highest earner’s salary.

Born 6 April 1935 or before – married couples’ allowance 2015/16?

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Once you know your allowance, work out 10% of it. You will receive this amount in tax relief.


What income tax band am I in?

Once you know your personal allowance, anything extra earned will be subject to income tax. For the 2015/16 tax year, there are three marginal income tax bands, including the 40% tax bracket and the 45% ‘additional rate’ bracket (also remember your personal allowance starts to shrink once earnings hit £100,000).


What is my income tax rate 2015/16?

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 Marginal bands mean you only pay the specified tax rate on that portion of salary. For instance, if your salary puts you in the 40% tax bracket (over PA+£31,785 in 2015/16), then you only pay 40% tax on the segment of earnings in that income tax band. For the lower part of your earnings, you’ll still pay the appropriate 20% or 0%.


What’s national insurance?

In addition to plain old income tax, most UK workers also have national insurance contributions deducted from their pay. These kick in based on your earnings from the age of 16, and you stop paying when you reach state retirement age.

What’s my national insurance rate 2015/16?

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Some advanced national insurance rules, particularly for the self-employed, are very complicated. See the HMRC website for full rates.


Capital gains tax

Capital gains is the least common tax on income, and for many it won’t apply. However, if you sell or give away an asset worth more than £6,000, you could have to pay CGT. It doesn’t apply for main homes, cars or lottery/pools winnings, among other things.

Each year, individuals have an annual exemption amount that allows them to receive some gains tax-free. Above this, you pay capital gains tax on all gains.

Capital gains tax in 2015/16

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Your rate of capital gains tax will depend on your other taxable income. See the HMRC websitefor more on how to work this out.


Paying into a pension?

Pension payments get very complex indeed, yet the basic thing to remember is that most people don’t have to pay tax on the money they pay into their pension via their employer’s PAYE system. Instead, the tax relief is used to top up your pension contributions.

Nest Egg

If you aren’t a taxpayer, then you’ll be given an extra £20 for every £80 you pay into a pension up until you’ve contributed £2,880. This means the Government tops up your pension to £3,600.

However, there are some limits on the amount of tax-free contributions you can make (both in a year and over your lifetime).


Pension contribution limits 2014/15 & 2015/16

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 If you use the new pension freedoms to access your pension pot, then your annual allowance will drop to £10,000 for that year.


For this relief, much thanks

What are the different types of loss relief available? I am asked this by clients A LOT.

The main ways of relieving losses are to set them off against the total income of the same year; set them off against either total income or profits from the same trade of the previous year(s); carry forward any unrelieved losses to use against income/profits from the same source.

Claims are usually made on the self-assessment return for the loss-making period, and must be made within the normal time limit for amending that return.

General restrictions apply to all taxpayers to restrict loss relief (other than carrying forwards) where trades are not carried out on a commercial basis with a view to profit.

For hobby farmers and market gardeners (ITA 2007, s. 67-70), sideways loss relief is denied where losses (before deducting capital allowances) were made in the previous five tax years, unless there is a ‘reasonable expectation of profit’.

Trading losses

1. Individuals and trustees

(references are to ITA 2007 unless stated)

i) Current year trading losses

Section 64 allows the loss to be offset against the total income of the tax year in which the loss arises and/or the previous tax year, in whichever order you choose. This, along with early years’ loss relief under s. 72 (see iii below), are collectively known as sideways loss relief. In addition, once a s. 64 claim is made, a further claim can be made (under ITA s. 71 and TCGA, s. 261B) to set the unrelieved loss against the capital gains of the year(s) for which s. 64 claims are made.

This relief is given in priority to all other capital losses (see BIM75430). A claim under s. 71 may not be the best use of the loss because setting it against total income offers higher rates of tax relief.

Three-year carry-back (FA 2009, Sch 6), the 2008 pre-Budget report and the 2009 Budget provided provisions for trading losses to be carried back three years instead of one. For unincorporated businesses, it applies to losses arising in 2008-09 and 2009-10.

A claim under ITA s. 64 must be made first to use the loss against the total income of the loss-making year and/or the previous tax year (there is no limit to those claims) before the additional carry-back claims can be made. You can carry back a maximum of £50,000 of losses that arise in each of the 2008-09 and 2009-10 years.

The losses are set against profits from the same trade and against latest years first.

Important points to note

Loss relief claims cannot be restricted to preserve the personal allowance or CGT annual exemption. The amount of the loss claim is therefore the lower of:

 the unrelieved loss; or

 the total income/gains for the year against which the loss is to be set.

Loss relief for Class 4 NIC purposes operates in the same way as it does for income tax. However, where there were no profits liable to Class 4 in the year for which income tax relief is claimed, the Class 4 losses are carried forward to use against future profits that are liable to Class 4.

It is important to keep track of these amounts, since the self-assessment pages do not have boxes to track such losses. Adjustments must be made manually in boxes 101 (self-employment full) or 25 (partnership full).


ii) Losses brought forward

These losses must be set off against the first profits from the same trade, even if this means that personal allowances are wasted. The brought-forward loss is used in priority to any other reliefs.


iii) Losses in the first four years of trading

Losses in the first four years of trading can be relieved against the total income of the three years preceding the loss-making year, against earlier tax years first.


iv) Losses in the final 12 months of trading (terminal losses)

Terminal losses, including losses attributable to capital allowances and overlap relief, can be set against profits of the same trade in the previous three tax years, against later tax years first.


2. Partnerships

There are restrictions on sideways relief (and often qualifying loan interest) for losses arising:

To non-active members of any partnership, being those who work for fewer than 10 hours a week on average, and to limited partners of a limited partnership (s. 103B). The amount of sideways loss relief per tax year is the lower of:


i) £25,000 (s. 103C); or


ii) Their ‘contribution to the firm’, being the balance on their current and capital accounts at the end of the basis period, reduced by any earlier sideways loss relief to which these sections apply (s.104-105).

To non-active members of LLPs in the first four tax years of trading (s. 110). Relief is also limited to their ‘contribution to the firm’, as above.

As a result of certain film partnership losses (s. 74, s. 102-116).

It is important to note that previously these restrictions only applied to losses of trades and not losses of professions or vocations, but the restrictions were extended by HMRC Brief 66/09 to cover all such losses arising after 21 October 2009.


3. Companies

(references are to ICTA 1988 unless stated)

Corporation tax is charged by reference to accounting periods, which means the period covered by a corporation tax return (s. 12). The period for which the company draws up its accounts is known as the ‘period of account’ (s.832(1)). The total profits include a company’s chargeable gains. The legislation s. 393A requires current year trading losses to be set first against total profits of the current and then the preceding accounting period.

The three-year carry-back rules operate slightly differently for companies:

 It applies to losses made in accounting periods that end between 24 November 2008 and 23 November 2010 and a maximum of £50,000 of losses per 12-month accounting period can be carried back.

 The losses can be offset against total profits, not just trade profits.

Relief for brought forward and terminal losses operate as they do for individuals (see (1) (ii) and (1) (iv) above).

Special rules apply for group and consortium relief, successions and non-trading loan relationship deficits, which are beyond the scope of this article.

Land and property losses

Losses from UK property businesses, overseas property businesses and property losses from partnerships are treated as separate types of property businesses, and so losses on one type cannot be offset against gains from a different type.

Individuals can only offset losses from UK or EEA furnished holiday lets against their total income; however, this provision is expected to be abolished after 5 April 2010. The time limit for claiming is the same as for setting trading losses against total income.

Companies must also offset the same type of furnished holiday lettings losses, as well as other UK property losses, against their total profits of the same accounting period (ICTA s. 392A). Any unrelieved UK loss is carried forward and is treated as a loss of the following period. Overseas losses can only be carried forward to use against overseas rental profits.

Capital losses

Losses arising to individuals (but not trustees or companies) on the disposal of EIS shares or other shares in unquoted trading companies, where the shareholder was the original subscriber, can be set against the total income of the tax year of the loss and/or the previous tax year and in either order – see HMRC guidance HS286 and HS297.

All other current year capital losses must be offset against capital gains of the same year, even if this wastes the annual exemption. Any excess is carried forward and set against future capital gains, but only to the extent that they exceed the annual exemption.

Capital losses arising to companies are offset against current year capital gains with the excess carried forward to use against future gains.

Companies can also elect to have both capital losses and gains treated as if they had arisen to a different group company (TCGA s. 171A).

The Budget 2015 – Summary

We bring you a summary of the key changes announced on 25 March 2015

Before any General Election, ‘The Budget’ typically brings with it a number of headline grabbers and today’s was no exception, with major changes announced to impact savers. Unsurprisingly, it was intensely political, with George Osborne looking to out-manoeuvre the opposition ahead of May 7.

The changes bring both good and bad news for savers. We have provided a high level summary below but as always, please contact us if you wish to discuss how these might impact you personally.

Pension Lifetime Allowance to reduce from £1.25m to £1m

The current pension lifetime allowance of £1.25m will be reduced down to £1m from April 2016. However, from 2018, it will begin to rise in line with inflation. The change will be seen by many as going against the ethos of pension freedoms announced last year. As ever, we will wait to hear more on the detail and importantly, what protection the Government will offer savers with existing pensions close to or above the £1m threshold.

Retirees will be able to sell annuities from April 2016

Further to speculation this week, the Chancellor confirmed retirees will be allowed to sell their annuity contracts for cash from April 2016, without facing ‘punitive tax charges’. The government said, at present, people wanting to sell their annuity to a willing buyer face a 55% tax charge or up to 70% in some cases. Osborne said it would remove this ‘punitive’ charge so people are taxed only at their marginal rate of tax. The Government also said the Financial Conduct Authority (FCA) would be asked to introduce guidance and consumer protection measures to prevent mis-selling.

Flexible ISAs

A new fully flexible ISA will allow individuals to withdraw money from their ISA and put it back in, within the same tax year, without losing the tax free status. Under current ISA rules, whenever a person takes money from their ISA, they are not able to put it back in using the same allowance. For example, with the current ISA contribution limited to £15,000 per annum, a contribution of £3,000 would lower the remaining allowance to £12,000. If that £3,000 was taken back out, the allowance would remain at the lower level of £12,000. The changes, which make it possible to withdraw money without losing the full allowance, will come into effect from autumn this year.

The Chancellor also announced a new ISA scheme linked to the Government’s Help To Buy scheme.

Other changes

For basic-rate taxpayers, the first £1,000 of interest will be tax-free from April 2016. For higher rate taxpayers the first £500 will be tax-free. There is no change for top-rate taxpayers;

 The higher-rate tax threshold will increase to £43,300 from April 2017;

 Personal allowance to increase to £10,600 from April 2015, to £10,800 from April

2016 and to £11,000 from April 2017; and

 New measures will be reported in autumn this year around inheritance tax



The End Of The Hated Tax Return – Not Before Time?

Budget 2015 sees plans for the demise of the Tax Return.

Officials claim the online system will cut the time it takes to complete tax returns from an average of 40 minutes to just ten minutes a year.


The end of the hated annual tax return is in sight under plans for unveil digital tax accounts for millions who currently have to complete self-assessment forms. They will work like online bank accounts and keep an up-to-the-minute record of all the tax someone owes or has paid. Officials claim the system will cut the time it takes to complete tax returns from an average of 40 minutes to just ten minutes a year.

The accounts will allow tax to be paid at any time and will radically simplify the payment of various levies for businesses. Because the system will be automatically updated with information from employers, pension providers or banks, taxpayers will not have to submit duplicate information about their income.

New digital tax accounts are designed to end hassle for individuals but also boost business by significantly cutting down on red tape. Individuals and firms can already choose to fill in their annual tax return online, but this is simply the paper form on a website.

Once a year, and a year behind, taxpayers have to send HMRC information it already holds on income – meaning many people end up with tax affairs that are out of date and incorrectly coded.

They have only one opportunity a year to interact with tax officials to reconcile their account and notify them of any change of circumstances. The digital accounts will allow such updates at any time.

It will mean users can see all the taxes they need to pay without having to complete a tax return, and pay taxes they owe when it suits them – by linking to their bank account so they can pay in instalments or by direct debit, for instance.

There will be particular advantages for businesses, which currently have to pay different taxes at different times, including VAT, corporation tax, income tax and National Insurance.

By early 2016, all five million small businesses and the first ten million individuals will have access to digital tax accounts.

All businesses in the UK and 55million individuals will have one by the end of the next Parliament. Those who have difficulty gaining access to the internet will continue to be allowed to submit paper returns, or be offered support.

End Of Year Tax Planning For The Business Owner

As the economy recovers, what is your financial strategy for growth?

Whilst the UK economy continues to recover, the strength of the recovery may be relatively uncertain, especially given the indications of some other economies faltering. Businesses and companies which have a strategy in place to maximise growth will be well placed to benefit from any upward trend in sales and asset values but it continues to be important to maximise any reliefs and claims that are available to companies.

The Government are, however, clear about challenging any tax planning which they deem abusive.

Our year end guide summarises some key tax and financial planning tips which should be considered prior to the end of the tax year on 5 April 2015 or for companies prior to their accounting period end. The planning tips set out in this guide are all statutory reliefs which can be used as Parliament intended to assist businesses and companies to improve cash flow for growth.

Corporation Tax Rates

Corporation tax rates are currently

Main rate = 21%

Small profits rate = 20%

The main rate will drop further from April 2015, aligning the main and small company rates at 20%.

You may think that this alignment of the main and small company tax rates results in the associated company rules being redundant. They are however still applicable in certain circumstances, in particular when determining whether a company should make quarterly payments of its corporation tax liability and also when considering the availability of the £2,000 employment allowance. This is only given once to two or more associated companies.

Income and expenditure

The general tax planning strategy should normally be to defer income and make full use of all available allowances and deductions. The reduction in the main rate of corporation tax from 23% to 21% from 1 April 2014, and then to 20% from 1 April 2015 will increase the value of this strategy.


Income can be deferred in several ways;

 Ensuring that goods or services are sold in a later accounting period.

 Selling goods on consignment or on a sale or return, so that the income need not be recognised until the goods are actually sold.

 Investing surplus funds in investments that give rise to deferred income (outside the loan relationships regime) or capital gains.

 If a company has a second business, the company’s accounting period could perhaps be extended or shortened to maximise the availability of tax relief for loss-making periods. Care must be taken to comply with company law, because there are restrictions on how often a company can change its accounting period, and in any case it cannot be longer than 18 months.

 In some cases a company could consider changing its accounting policies for specialised trading activities, for example, builders with long-term contracts. The current policies might not be the most appropriate way of reporting income for tax purposes. In certain situations, a change in policy can defer income to later periods. However, the accounting policies must be applied on a consistent basis from one year to the next, and this could restrict such tax planning measures.


There are several ways in which a company can maximise deductions for expenses in an accounting period. Planned expenditure, for example on repairs, could be brought forward, or, in some instances, a provision could be made in the accounts for future costs. In general, tax relief is allowed for provisions made in accordance with generally accepted UK accounting practice. The following items merit particular review.

Bad debts

The debtors’ ledger should be reviewed in detail so that provisions and/or impairments can be made for bad debtors.


The company can make a specific provision against slow-moving, damaged or obsolete stock, but a general provision is not allowed against tax. The company might be able to change the way it values stock, but great care needs to be taken.

Closure / redundancy

To obtain a tax reduction for redundancy costs not yet incurred, redundancy notices should be issued before the end of the accounting period.


It might be possible to bring forward remuneration intended for the following year, thus advancing tax relief.

 Bonuses to directors and staff could be paid before the year end, but the PAYE and National Insurance implications for the company and this, together with effect on the overall tax liability for the individual concerned, must be considered.

 Alternatively, bonuses could be accrued, but they must then be paid within nine months of the end of the period, otherwise they will be deductible only in the accounting period in which they are paid.

Pension contributions 

If the company has a registered occupational pension scheme, tax relief is given for contributions actually paid in the year, rather than the amounts provided for in the accounts.

Action Point

As with all tax advice and specific opportunities, there has to be a balance met between the commercial objectives of the company and any implementation of the issues mentioned above. This should be spoken through with the tax department who specialise in ensuring advice is technically sound and commercially savvy.

Capital Allowances

The 100% Annual Investment Allowance (AIA) increased to £500,000 from April 2014 for a temporary period ending on 31st December 2015 (this increase is time apportioned across your accounts period but care must be taken as the amount of relief depends on the timing of the expenditure). The increase gives companies a time limited incentive to invest in plant and machinery with a benefit of tax relief to offset the cost of investment. It is important to consider investment strategies now as the current intention is for the AIA to reduce back to £25,000 from 1 January 2016.

It may be beneficial, in certain circumstances, for a company to change its accounting period to maximise the AIA available, although as mentioned previously (Income section, point 4) care must be taken to comply with company law.

If you are planning any capital expenditure in the near future, especially on or around the ‘straddling dates’ for AIA, talk to us to see how you can gain the maximum benefit from this relief.

Remember that certain new plant items can qualify for an immediate 100% deduction, in

addition to the AIA available. In general these items need to be included on government lists of approved plant or technology items and they would include:

 Energy efficient plant and equipment and water technology

 Low emission (currently less than 95g/km of CO2) or electronically propelled cars (see Green Cars, below)

 Zero emission goods vehicles

Capital allowances and Buildings

When buying or selling a commercial property, whether for use in your own business or for letting to a third party for use in their business, it is now more important than ever to consider capital allowances in advance of the transaction. All properties will contain items eligible for capital allowances, for example the electrical, plumbing and heating systems, air conditioning and lifts. Especially with the current increased levels of AIA available it is imperative that allowances on such items are maximised. Legislation in this area has changed in recent years and since April 2014 allowances for the purchaser can be lost forever if appropriate steps are not taken prior to the sale/purchase. If planning any such sales or acquisitions, talk to us to ensure that the best tax treatment is obtained.

Action Point

Both for capital allowances generally and purchase/sale of a property, the earlier capital allowance advice is sought, the more planning that can take place to ensure the best treatment is obtained. Especially when dealing with the purchase or sale of a commercial property, advice should be obtained at the onset of any discussions to ensure the new rules are considered.

Provide green company cars

To encourage the use of ‘green’ company cars, there are tax incentives for company cars which produce low amounts of CO₂/km. These incentives allow cars to be provided which can give little or no Benefit in Kind for the employee and give the company a full first year tax deduction for the cost of buying the car.

Many employers will opt for cash alternatives to company cars as an allowance is typically easier to administer. In addition, from 2014/15 the employer will be able to provide loans to employees of us to £10,000 without interest or a Benefit in Kind.

Claim enhanced tax reliefs available only to companies

A company may be able to claim enhanced tax reliefs which give a tax deduction of more than 100% for a range of expenditure which HMRC are seeking to encourage, including;

 Research & Development Tax Relief where relief can be up to 225% (230% from April 2015)

 Creative Sector Tax Reliefs were relief can be up to 200%

 Land Remediation Reliefs where relief can be up to 150% For loss making companies, the losses created by these reliefs can often also be surrendered to HMRC for a cash tax credit.

Research and Development

Companies should review their activities and consider whether any of these undertakings includes elements of Research & Development (R&D). Please talk to us in this regard; the R&D “net” can fall wider than you might think and the reliefs available can be extremely advantageous. Small and medium sized companies (SMEs) are given an enhanced deduction against tax of 225% of the actual eligible costs incurred, with the chance of actual cash refunds in loss making situations. For large companies, the basic tax relief is on 130% of the costs.

 R&D means activities treated as such under normal UK accounting practice – effectively if work is being carried out to overcome scientific or technical uncertainty a claim may well be possible. The eligible expenditure covers staffing costs, consumable stores, certain other costs such as power, fuel, water and software, or sub-contracted work. It must be related to a trade carried on by the company or be expenditure from which it is intended that such a trade will be derived.

 From April 2013, large companies may alternatively claim the R&D relief as a taxable ‘Above the Line’ credit (effectively a grant) at 10% of their eligible costs. Furthermore where companies are loss making, a large part of this can be taken as a cash payment from HMRC. From April 2016 the old system will cease and all large claims will be under this new scheme.

In the Autumn Statement, the Chancellor announced that he intends to increase the tax deduction for R&D expenditure for SME’s from 225% to 230% and increase the Above the line credit for large companies from 10% to 11% from 1 April 2015.

Patent box regime

In addition to R&D tax credits, the Patent Box provisions introduced in 2012 can also currently be utilised to reduce tax following R&D activities that culminate in patented innovations. The Patent Box regime allows qualifying companies to elect to effectively apply a 10% tax rate to all profits attributable to products, processes or royalties that carry or include a qualifying patent.

The rules are being phased in from 2013 with the low 10% tax rate intended to apply from the 2017 Financial Year. Discussions, however, are taking place as the regime is seen internationally as giving UK eligible companies an unfair advantage. It has been agreed that the patent box regime, as currently drafted, will be closed to new applicants from June 2016 and will stop operating from June 2021.

If your company could benefit from the current patent box provisions it is therefore important to act now to secure the relief’s. ‘Patent Box 2’ will replace the Patent Box and although the finer details have not been announced yet, it will likely be only available for R&D that has taken place in the UK. The two schemes will run in parallel with each other until 2021 when the original scheme will end.

Action Point

There are lots of companies who are partaking in R&D but not claiming any relief, simply because they are unaware of what they are doing is R&D. If you are doing anything bespoke, please come to speak to one of our R&D specialists who will usually be able to give you a quick answer if it is worth pursuing or not!

Auto enrolment

New workplace pension regulations came into force in October 2012, heralding the most significant changes to the pension sector in many years.

There are still a lot of employers who do not think that the new pension rules apply to them. However, whether you operate as a limited company, partnership or sole trader, if you have one or more employees then you will have to comply with the new regulations.

Failure to do so will mean financial penalties, and persistent offenders can be fined on a daily basis for ignoring the new regulations.

You will be required to establish a qualifying pension arrangement with effect from your ‘staging date’ and automatically enrol eligible employees.

Have you received notification of when your auto enrolment staging date is for the new pension legislation? Have you had any discussions about this to date?

Let us know when your staging date is and how many employees you have, and we can start to help with planning your pension scheme, in terms of set up and managing the extra costs involved.

Our Wealth Management teams have already been talking to clients, at no cost, to make sure that they are aware of the options. The feedback tells us that 12 months prior to the staging date is the right time to plan the process and to start to put plans into motion, because at the moment pension providers won’t look at anything with less than 6 months to the staging date.

Some End of Year Tax Planning Points for The Individual

End of Year Tax Planning for the individual

Income Tax

The starting point in tax planning is to understand where your income is likely to fall relative to the tax thresholds. For 2014/15, the tax free personal allowance is £10,000 and the next £31,865 is taxed at 20%. Higher rate tax of 40% is charged on income above £41,865 and additional rate tax of 45% is charged on income above £150,000.

The personal allowance is reduced by £1 for every £2 of income above £100,000. There is therefore no personal allowance at all where income exceeds £120,000. This also means that, over the income band £100,000 to £120,000, the effective rate of income tax is 60%. Or to put it another way, tax relief at 60% is available on pension contributions and Gift Aid payments in this income band.

To make the best use of tax allowances, sufficient income should be generated where possible to fully utilise the personal allowance and basic rate band. This may be done by careful planning of the timing of dividends from a private company or distributions from a family trust.

Married couples and civil partners have further opportunities for using their allowances and it should not be forgotten that children also have tax free allowances. It is also important to remember that child benefits get withdrawn by 1% for every £100 of income earned over £50,000 being reduced to nil once your income reaches £60,000. The effective rates can be over 70% in this band and can be mitigated by pension contributions and gift aid.

Action Point

Understand your income levels and the relevant bands during the year so you can have the choice to ensure your income does not fall within the bands if possible or to make pension contributions or gift aid payments to obtain better tax relief.

Seeking advice when preparing your tax return papers post the year end can usually be too late for the year already finished.

Capital Gains Tax

Use your Annual Exemption

The annual exemption for 2014/15 is £11,000. This is a ‘use it or lose it’ allowance; it cannot be carried forward to future years. It therefore makes sense to crystallise gains each year to the extent of the annual allowance, if possible.

Note that under the ‘bed and breakfasting’ rule, a gain does not crystallise for tax purposes if you sell shares and repurchase the same shares within 30 days. However, it is possible to repurchase the same shares through an ISA. Alternatively, a married couple can arrange for one partner to sell shares in the open market, and the other partner to buy the same number of shares.

Rates of Tax

The rate of Capital Gains Tax (CGT) is 18% where taxable gains plus taxable income are less than £31,865. Any excess is taxed at 28%. Where Entrepreneurs Relief applies, the rate is 10% (see below).

Crystallise and Use Capital Losses

Capital losses may be offset against capital gains in the same year. Unused losses may then be carried forward indefinitely and offset against future gains.

A formal claim is required. The claim must be submitted to HMRC within four years of the end of the tax year of the loss, otherwise it will be time-barred. Hence, claims must be made by 5 April 2015 in respect of 2010/11 losses, if claims have not already been filed.

When an asset becomes valueless or worth next to nothing, it is possible to make a “negligible value claim” in order to crystallise a capital loss. The claim can be related back up to two tax years in certain circumstances, allowing the loss to be offset against gains made in earlier years.

Can your capital gains qualify for Entrepreneurs Relief (ER)?

CGT is charged at 10% where ER applies, subject to a lifetime limit of gains totalling £10m.

ER applies to the sale of a business carried on as a sole trader or partnership, or to the sale of shares in an unquoted company. Entitlement to ER requires a number of conditions being met for a continuous period of twelve months up to the date when the disposal is made, so early advice should be taken to ensure that the gain qualifies for relief. With effect from 4

December 2014, ER does not apply to the sale of internally generated goodwill on the incorporation of a sole trader or partnership.

Action Point

Entrepreneurs’ Relief rules can easily be broken so if you are disposing of an asset and ER may apply, please seek advice as soon as possible. Some of the conditions need to be met for twelve months prior to the disposal so the earlier you seek advice, the more chance of ER being available.

Determine your Main Residence

The gain on your principal private residence is exempt from CGT. If you have more than one private residence, your ‘main’ residence is, by default, the one you spend more time in. But it is also possible to determine that matter by nominating one of them as your main residence.

This requires careful planning, since the flip side of a gain on one residence being treated as exempt is that a gain on the other residence will become chargeable. Written nominations must be submitted to HMRC within 24 months of any change in residences becoming available.

The main residence exemption is not available on development projects, where a property is acquired with the overriding motive of selling at a profit, particularly where improvement works are carried out.

From April 2015, further restrictions will apply to the ability to nominate your main residence.

These mainly affect non-residents with a UK property, and UK residents with a property abroad.

Proactively manage the challenge of cash

Everyone should keep some of their wealth in cash. After the economic turbulence of recent years, the need to hold some cash has never been clearer. The problem is that many so-called ‘savings’ accounts offer pitifully low interest rates. Others offer a high bonus rate which disappears after six months or a year. Overall, it is extremely difficult and time- consuming to keep your money in competitive accounts. Savers are also concerned about keeping their money safe, covered by a bank deposit guarantee scheme and want to avoid all the paperwork in opening and closing accounts.

The solution:

Use a Cash Management service

A Cash Management service is designed to ensure that:

• Your cash earns consistently competitive interest

• Your cash is secure

• You save time, effort and worry

This is achieved by regularly reviewing the UK savings market and the aim is to select competitive accounts from reputable institutions. Money is moved when rates change and new opportunities arise. Paperwork is arranged and you are kept informed. The difference it makes can be dramatic.

Utilise Individual Savings Accounts (ISAs)

ISAs are an excellent investment for higher rate taxpayers and the maximum allowance for 2014/15 is £15,000. From 2015/16, the income tax exemptions on ISAs will be preserved on death, where one spouse or civil partner leaves it to the other. They remain chargeable to Inheritance Tax (IHT), however.


April 2014 saw changes to both the annual and lifetime allowances that apply in respect to your retirement planning. While at first glance, and for various reasons, you may not see this as something that applies to you – think again.

The allowances apply to everyone regardless of the type of arrangements you have, experience to date tells us that the bigger issues lie with members of final salary pension schemes.

Annual allowance

The total you can invest in a suitable pension arrangement each year was reduced by £10,000 on 6 April 2014. If you are planning to maximise payments that you make to your pension payments by carrying forward unused annual allowances from up to 3 previous years, this will also reduce by:

£10,000 in 2014/15

£20,000 in 2015/16

£30,000 in 2016/17

The above figures are subject to your ‘pension input period’ being aligned to the tax year but this may not be the case. If you leave it until the last minute, it may be too late. Should you breach the rules you will be subject to an annual allowance charge. Payment of this charge is the individual plan holder’s responsibility and will be charged at your marginal tax rate.

Lifetime allowance

The amount you can accumulate during your lifetime within your pension plans, without being subject to an additional tax charge, reduced by £250,000 to £1.25 million on 6 April 2014. Where the value of your accumulated funds is above this amount, the lifetime allowance tax charge – currently 55% – will apply.

The rules of your final salary pension scheme dictate its value when calculating both the annual and lifetime allowances. If you plan using a company sponsored money purchase or personal arrangement, the end value is influenced by the growth of your fund as a result of sound investment decisions. In both cases your control is limited.

There are ways to manage the effect that both the annual and lifetime allowance charges may have, however you need to act early.

Consider investing in Enterprise Investment Scheme (EIS) and Seed EIS (SEIS) shares

Tax relief is available where you subscribe for shares qualifying for EIS or SEIS relief.

Under the EIS scheme, your tax liability for the year may be reduced by up to 30% of the sum invested (up to a maximum of £1m invested in the year). In addition, capital gains from disposals in the previous 36 months or following 12 months may be reinvested into EIS shares, resulting in a deferral of the gain.

The Seed EIS scheme offers another form of reinvestment relief for investors who subscribe for shares in small start-up companies. For 2014/15, the maximum qualifying investment is £100,000.

Income tax relief is given at the rate of 50% of the sum invested, and relief may be given against tax in 2014/15 or 2013/14. For investments made in 2014/15, the amount invested may be set against up to half of the gains made in 2013/14, but no offset against 2014/15 gains is available.

Both EIS and Seed EIS shares are normally exempt from CGT and IHT, subject to detailed conditions being met.

A number of professionally managed EIS and SEIS investment funds exist which invest in a broad range of EIS and SEIS companies on behalf of investors, so the tax benefits of EIS and SEIS investments are available to any UK tax payer.

Venture Capital Trusts (VCT)

VCTs are specialist tax incentivised investments that enable individuals to invest indirectly in a range of small higher risk trading companies and securities. VCTs are companies in their own right and, like investment trusts, their shares trade on the London Stock Exchange.

Shares in qualifying VCTs offer the following tax incentives:

 Up front income tax relief at 30% of the amount subscribed, subject to a maximum investment of £200,000 per tax year. The investment must be held for a minimum of 5 years in order to retain the income tax relief. Note that income tax relief on the purchase of VCTs is available only where new shares are subscribed, and not to shares acquired from another shareholder.

 Dividends received on VCT shares are income tax free (including shares acquired from another holder).

 Capital Gains Tax exemption on the VCT shares (including shares acquired from another holder).

 Note that gains from other assets cannot be rolled into purchases of VCT shares.

Married Couples and Civil Partnerships

Spouses (and civil partners) may transfer assets from one to the other without any charge to Capital Gains Tax. A higher rate tax payer may therefore transfer shares to a non-tax paying or basic rate tax paying spouse, to make best use of their total income tax allowances and basic rate tax bands.

Where property is owned jointly by a married couple, the property is in most cases deemed to be owned 50:50 for tax purposes. In order to move the income to the lower tax payer, it is necessary first to change the actual ownership proportions (e.g. through a declaration of trust) and then to make a declaration of the actual ownership proportions to HMRC. There are exceptions to this rule, so please check before taking action.

Action Point

Care must be taken as there are rules in place to stop abusive arrangements. There is however possibilities if careful planning is put in place and advice should be sought to ensure any pitfalls are circumvented.


Children are entitled to personal allowances and annual exemptions in the same way as adults. However, there are rules to prevent parents gaining a tax advantage by gifting large sums of money to their children. The income arising from such gifts is taxable on the parent, unless the income is less than £100 in the tax year. Gifts from other relatives, such as grandparents, are not caught by this rule.

Inheritance Tax

Plan for the freeze in Inheritance Tax (IHT) thresholds

The IHT threshold is currently frozen at £325,000 until 5 April 2018. As part of a person’s on-going Inheritance Tax planning, full use should be made of available exemptions. The exemptions are relatively small, but, over time the effect can be substantial:

 Annual Exemption – An amount of up to £3,000 can be given away each tax year and, if unused in a year, that amount can be carried forward for one year and utilised in that later year.

 Small Gifts Exemption – You can give up to £250 to as many people as you wish each tax year.

 Gifts out of Income – If your income regularly exceeds your expenditure, you can give away the excess every year. You do need to record the intention to make these gifts and you do need records of your income and expenditure.

 Lifetime Giving – A person may also consider making lifetime gifts in excess of the above exemptions. A person must survive such a gift by seven years for it to fall out of their estates entirely, and the donor must not benefit from the assets once they are gifted. The gifts might be absolute gifts to family members, or they could be gifts into trust. Trusts can be very beneficial, but specialist advice is needed.

 IHT Efficient Investments – Another alternative can be to place funds into IHT efficient investments, as such investments can pass free of Inheritance Tax after they have been owned for two years. Appropriate investment advice would be needed when considering such planning.

Action Point

There are possibilities to ensure estates are reduced during one’s lifetime to prevent a large

IHT liability on death. As part of the planning, your advisor would need to consider all sources of wealth and take into account many other factors. Early action can often lead to a large part of one’s estate being shielded from IHT.

Charitable Giving

If a higher rate or additional rate taxpayer makes a Gift Aid donation, further tax relief is available to the donor over and above the tax relief claimed by the charity.

A Gift Aid donation of £80 is worth £100 to the charity. A higher rate taxpayer will qualify for further tax relief of £20 so that the net cost of the donation is only £60. For an additional rate taxpayer, the further tax relief is worth £25, so that the net cost of the donation is only £55.

You should keep a record of Gift Aid donations made in the year and this can include sponsorship.

Finally please remember that if you are not a UK taxpayer, you cannot make Gift Aid donations.


In his March 2014 Budget, Chancellor George Osborne introduced “the most radical changes to pensions in almost a century”. The new measures come with extensive implications for an estimated 18 million people in the UK who have pension plans. It has been estimated that as many as ‘one in eight’ pensioners may seek to withdraw all the funds in their pension. In his speech, George Osborne clearly underlined the need for expert advice whatever your stage of life in order to benefit from the changes and ultimately enjoy a comfortable retirement. It should be noted that as the median pension pot is around £12,500, the advice which will be freely available to the average person will be necessarily limited.


Traditionally, those retiring with their own pension funds purchased annuities. However, returns had been falling dramatically over the last few years. This was due partly to the rise in life expectancy but more recently because of the lowering of interest rates during the recession. Those with larger pension funds had more options, such as flexible drawdown, but restrictions still applied. The common belief was that change was overdue.

Some things have not changed in that there are still restrictions on how much you can save both in each year and over your lifetime – this rule must never be forgotten!


Some changes have already come into effect. The limits on how much people can draw each year have been relaxed since March 2014. To access flexible drawdown, you need to have a secured annual income of £12,000 (previously £20,000). This requirement will be abolished altogether from April 2015. From April 2015, the following changes will come into effect…

Flexible access from age 55

Pension investors aged at least 55 (rising to 57 from 2028) will be able to access their pension fund as a lump sum if they wish. The first 25% will be tax free and the rest will be treated as taxable income and will be subject to income tax at their marginal income tax rate.

Basic-rate tax payers need to be aware that any income drawn from their pension will be added to any other income received, which could result in them paying tax at 40% or even 45%.

You can also choose to take your pension in smaller lump sums, spread over time, to help manage your tax liability.

Action Point

If you are in a Defined Contribution scheme (“DC”or Money Purchase), you should consider your options now.

Income drawdown restrictions to be relaxed

Those with larger pension pots have the ability to draw an income directly from their fund.

Using income drawdown means you can choose how much income to take and when, which, leaves your options open. The rest of the fund remains invested and gives your money the opportunity for further growth. From April 2015, some current restrictions will be removed. Fully flexible drawdown will offer considerable freedom but highlights the need for expert planning advice. Capped drawdown arrangements will continue, though are currently limited to 150% of a benchmark annuity rate. It should be noted that adopting these new flexibilities will restrict your future ability to invest more into your pension scheme – care is necessary!

Action point

If you are already in flexible drawdown prior to 6 April 2015, you can move to the new unlimited regime and draw more income than the current maximum.

Transferring a final salary scheme

If you have a final salary (e.g. Defined Benefit (“DB”)) pension fund, you may still be able to take advantage of the new rules to make unlimited withdrawals. However to do so, you would have to transfer some or all of your pension into a DC pension, such as a Self Invested Personal Pension (SIPP). You should seek financial advice before transferring benefits, as you could lose valuable benefits which need to be weighed against the new flexibilities.

Unfortunately, members of unfunded public sector Defined Benefit schemes, such as the NHS Superannuation scheme won’t be able to transfer to Defined Contribution schemes.

Action point

Speaking to an adviser before transferring benefits out of a Defined Benefit scheme will ensure you are aware of the full implications.

Reviewing your retirement plans

The new rules give considerable freedom of choice. Under the new rules, whilst nobody will be forced to buy an annuity at any age, those who wish to can do so at present and this may prove to remain the best answer for some people.

Clearly, it has never been more important to make the right choices about your pension fund both about how should you carry on saving as much as how you should take the benefits. These decisions will affect you for the rest of your life. It is essential, especially for those nearing retirement, to seek professional advice. Not only will an expert look at your pension fund, but they will consider your wider financial goals.

The In’s and Out’s of Employing Children – Things You Should Know

Can You Pay Your Children?

Paying salaries to your children is a good way to reduce your taxable profits but which children can you legally employ?

With some limited exceptions for specific jobs (e.g. acting or modelling), it is generally illegal to employ children under 13. This will rule out most businesses from employing very young children, although there will be exceptions.

The position for 13-year olds depends on local by-laws. Some areas allow them to do limited work, some allow them to do the same work as a 14-year-old and some do not allow them to work at all.

Children under school leaving age may do ‘light work’ (e.g. office work) provided that it does not interfere with their education or affect their health and safety. Certain types of work (e.g. factory work) are prohibited and any business employing children under school leaving age must obtain a permit from the local authority.

Subject to these points, children still attending school can work up to two hours most days. On Saturdays and weekdays during school holidays this is increased to eight hours (five hours if under 15). Working hours must fall between 7 am and 7 pm and are subject to an overall limit of 12 hours per week during term time or 35 hours during school holidays (25 hours if under 15). The child must also have at least two weeks of uninterrupted holiday each calendar year. 16 and 17 year olds over compulsory school age can generally work up to 40 hours per week and can do most types of work, although some additional health and safety regulations apply. Children aged 18 or more are mostly subject to the same employment rules as anyone else, including the working time directive.

In essence, therefore, you can generally employ any of your children aged 13 or more and pay them a salary which is deductible from your own business income.


How Much Can You Pay?

A salary paid to a child must be justified by the amount of work which they actually do in your business. If you employed your 15-year old daughter to answer your office phone one hour each evening, you could not justify paying her a salary of £30,000, but a salary of, say, £1,500 should be acceptable.

The national minimum wage applies to any employee aged 16 or more, with reduced rates for those aged under 21 or undergoing training.

Subject to this, however, there is no fixed rate of pay which applies to children. The rate paid must, however, be commercially justified – in other words, no more than you would pay to a non- family member with the same level of experience and ability in the job. For a child with no experience carrying out unskilled work, the national minimum wage for 16 to 17 year olds (currently £3.68 per hour) represents a good guide. Where the child has some experience, or the role requires some skill, a higher rate will often be justified.

Assuming that a rate of £5 per hour can be justified, the maximum salaries which a child could earn would be approximately as follows:

13/14 year olds: £3,780

15+ but still school age: £4,380

Over school age but under 18: £10,400

Subject to this, a salary of up to £8,105 could be paid tax-free to a child aged under 16 with no other income. For those aged 16 or more, any salary in excess of £7,488 will give rise to employer’s National Insurance at 13.8% and any salary in excess of £7,605 will also give rise to employee’s National Insurance at 12%.

Within these limits, every £100 of salary paid to a child by a higher rate tax-paying sole trader will save £42. Savings of up to £62 will be available in some cases.

Looked at another way, a higher rate taxpayer needs before tax income of £172.41 to be able to put £100 into a child’s hands as pocket money. Alternatively, you can get them to do some work, pay them £100 and be left with £72.41 to spare (£42 after tax).

Better still, if you’re also claiming Tax Credits, that £100 paid to the child could save you £83!

(£40 Income Tax, £2 National Insurance and £41 Tax Credits)


Freelance Children

Adult children may sometimes have their own business. In fact, although unusual, it is also possible for younger children to set up their own business.

For example, let us suppose that your 16 year-old daughter is particularly good with computers.

There is nothing to stop her setting up her own IT consultancy. You could then give her the contract for the maintenance of your office computers and pay her a normal commercial rate for the work.

You will get a deduction for the amount paid to your daughter. She will be taxable on her business profits in the normal way but this structure has one major advantage over employing her: National Insurance. She will only pay National Insurance at 9% on profits in excess of £7,605 and you will not have to pay any employer’s National Insurance.

Where one of your children provides services to your business, the usual rules on employment status will apply to determine whether they are employed or self-employed. There will, however, tend to be a higher burden of proof in borderline cases.

For children under 16, there is no National Insurance on any form of income, so it will probably be simpler to employ them in any case.


Junior Partners

Taking one of your children into partnership is a good way to reduce the overall tax burden on the family. This has important legal implications but using a Limited Liability Partnership (‘LLP’) is a good way to safeguard the family’s private assets.

For adult children, the position is much the same as taking a spouse into partnership and, once again, has the advantage of reducing the overall National Insurance burden from 25.8% to just 9% on profits between £7,605 and £42,475 allocated to the child (and from 15.8% to 2% on any excess) when compared with a salary.

In theory, there is nothing to prevent a minor child from being taken into partnership, even though they do not yet have full legal capacity to contract in their own right.

For a partnership to exist there must be an agreement for the partners to carry on in business together with a view to profit. This agreement may be express or implied and need not be written (except for an LLP), although this is generally advisable. It must, however, be acted upon and it is here that HMRC will concentrate their attention and declare the partnership to be ‘artificial’ and thus null and void if this is not the case.

In other words, any child you take into partnership must genuinely participate in the business at a sufficient level to justify their status as a partner. Hence, you could perhaps take your 17 year-old son into partnership in your sweet shop, but you are unlikely to be able to take an eight year-old into partnership in your publishing business.

HMRC Plans Additional Reporting for Serial Avoiders.

More Scrutiny From HMRC For Repeating Avoiders

PEOPLE INVOLVED in multiple tax avoidance schemes could face additional financial costs and reporting requirements, under new HM Revenue & Customs plans.
People involved in avoidance schemes already face the prospect of accelerated payments , where the disputed tax is paid up-front before going to tribunal, while the general anti-abuse rule (GAAR) and disclosure of tax avoidance schemes (DOTAS) regimes are designed to catch abusive structures.
Currently, the government believes, neither the threat of enquiry nor the burden of compliance are likely to carry weight with repeated avoiders.
But serial tax avoiders could now face a surcharge on the repeated or concurrent use of tax avoidance schemes that fail, HMRC has suggested in a consultation.
Special measures, too, could be introduced that would see them required to provide certificates about their use of tax avoidance schemes to show whether or not they have used a tax avoidance scheme in a particular period.
Similarly, they could be compelled to provide documents and information about their tax affairs, rather than waiting for an enquiry or information request from HMRC.
Conduct notices could also be introduced, requiring them to do – or refrain from doing – certain things in order to improve their tax compliance.
A history of engaging in avoidance schemes, the use of schemes marketed by high-risk promoters and failure to comply with DOTAS could all attract the use of these measures, HMRC said in its consultation.
Financial secretary to the Treasury David Gauke said: “The government introduced the accelerated payments regime last year to fundamentally reduce the incentive to engage in tax avoidance.

“HMRC has already issued notices worth over £1bn, requiring avoidance scheme users to pay their tax upfront, like the vast majority of taxpayers.
“Today, we are proposing further action, such as penalties, to tackle the small hard-core group of people who repeatedly use avoidance schemes.
“Our message is clear: it is time to get out of avoidance and start paying your fair share.”

Do You Really Need To Fill In A Tax Form?

Taxpayers who owe less than £3,000 in tax and filed returns, may not have needed to do so.

Those who owe less than £3,000 in tax may be needlessly filling in self-assessment forms, HM Revenue & Customs has said, as more than a million people face a rush to meet the deadline.
Record numbers are expected to file a return this year due to the rise in the number of higher-rate taxpayers.
However, people who owed small amounts of tax from savings income or occasional extra work possibly need not have bothered, HMRC said.
Instead of wasting hours compiling statements and invoices and completing forms, the money could have been deducted automatically from their pay packets from April.
Accountants accused HMRC of wasting taxpayers’ time by leaving them “in the dark” over the best way to pay.
Stuart Phillips, director of tax practice at The Private Office, the financial advisers, said: “It is a great shame that in this country we are incredibly honest when it comes to paying our taxes, but HMRC doesn’t seem to be able to tell people the easiest way to do so.”
The Revenue is able to recover up to £3,000 through the coding system, whereby tax debts are deducted the following year before a salary or pension is paid.
This applies to people with “simple” tax affairs, an HMRC spokesman said, giving the example of income arising from savings interest or freelance work.
As a result, a higher-rate taxpayer could feasibly earn as much as £7,500 from other work without needing to complete self-assessment forms.
The figures implied that a saver could hold as much as £1.5 million in a bank account paying one per cent interest without needing to file a return.
Yet the spokesman said that people who telephoned its helpline would be advised against filing a self-assessment return only if their untaxed income was less than £2,500.
Every year more than 400,000 people are advised to stop filing self-assessment returns, as it was no longer necessary, the Revenue said.
They are sent letters advising against filing again unless their circumstances change.
“People with slightly more complex affairs may have to fill in a tax return but it all depends on their personal circumstances,” the spokesman said.
“We don’t want anyone to fill in a tax return unless it’s absolutely necessary.”
The number of people undertaking unnecessary paperwork could rise this year as more people are dragged into the higher-rate banding and owe tax on money held in savings accounts or other income.
Others may be unaware that they may no longer need to file a self-assessment document if their tax bill has fallen below £3,000 due to lower returns on savings and investments.
More than a million people were yet to file a tax return on Saturday morning, estimates suggest. Those who miss the deadline face a fine of £100.
An extra 1,500 call centre staff will be deployed to cope with what HMRC said would be a “very busy day”, particularly given that its 281 walk-in inquiry centres were closed last year.
People who telephone the tax office for advice may need to ring “more than once”, the spokesman said.
Elaine Clark, director of tax practice at Cheapaccounting, said: “Taxpayers just want clear advice, but try ringing for an answer and you’ll spend 30, 40, 50 minutes waiting to talk to someone.
“Because of the £100 fine for late returns, most people decide not to take the risk of asking for one and spend huge amounts of time completing the paperwork.”
Anyone filing at the last minute has left it too late to opt out of the self-assessment system.
Taxpayers who owed less than £3,000 had until Dec 30 to request exemption, HMRC said.
“We automatically review the self-assessment system to ensure only those who genuinely need to complete a tax return have to do so,” the spokesman said. “Anyone who thinks their circumstances have changed so that they don’t need to complete a return should let us know.”
Workers who earn more than £100,000, the self-employed and investors who incurred capital gains tax after selling a property or shares are advised always to complete a self-assessment.
This also applies to those who earned income from abroad or acted as company directors.

From The Daily Telegraph 02.02.2015 By Dan Hyde