Hornbeam Highlights 35
Tax Planning
The end of the Tax year is 5 April. Tax planning for that event is largely a case of reviewing your affairs to see if you have used up all of your allowances. For example, have all the members of your family used their personal allowances for income tax purposes (especially relevant to the self employed and owner managers)?, have all savers among you used up your ISA (tax free savings) allowances this tax year?, have self-employed and owner mangers made maximum use of pensions to save or eliminate income tax, have owner mangers made maximum use of dividends up to the limit of the basic rate band?, and for higher earners have you considered using employee benefit trusts, enterprise management incentive schemes, or Venture Capital Trusts? (If you would like to discuss any of the above please call myself, Andy or James).
Normally, I would also encourage wealthy or elderly clients also to consider if they are making full use of annual allowances for gifts (for Inheritance Tax avoidance), and annual exemptions from Capital Gains Tax. However Recessionary times provide an extraordinary series of opportunities to avoid or minimise these taxes.
Example 1 - The owner of a holding of bank shares may well decide that now is the time to gift them to his children, thereby creating a capital loss, which might in turn be used to shelter the (much reduced) gain on the further gift of an investment property. This scheme will be particularly attractive to those of you whose parents own large holdings of bank shares, and investment properties. |
Many of you who own small portfolios of investment properties may find that now is an ideal time to upgrade the portfolio.
Example 2 - Fred owns 6 properties, all valued last year at £125,000, all valued this year at £100,000. All initially cost £80,000. 5 properties are close to Fred’s home, are managed by him, and consistently bring in £6,000 per year rent. The other one is further away, and although the letting agent has been changed is plagued by void periods, and damages and has a net yield of around zero before interest. Fred has been thinking of selling the problem property and adding another property close to his home. Last year the minimum Capital Gains he would have had to pay was £2,500, this year by talking to Hornbeam first he can upgrade his portfolio without paying any Capital Gains Tax. |
Buy to Let
This year Hornbeam have a stand and a seminar (Tax Saving for Residential Landlords) at the Buy to Let show at Olympia on the 20th and 21st March. Maybe we will see some of you there?
Last Hornbeam Highlights
Many thanks to those of you who have let us know of their successes with deferring tax liabilities, or claiming old style child tax credits, as set out in the Hornbeam Highlights 34.
Beating the Recession
We were one of the first firms to issue a Beating the Recession Leaflet. Since then I have had the chance to read leaflets by various banks, accountants, and consultants. One of the best articles I have read considered positive things to do to meet the recession. Finding new sources of income, identifying and eliminating unprofitable product or service lines, improving buying, improving efficiency and getting funding right; all help with creating long term value as well as short term survival. Hornbeam have a Beating the Recession system to help our clients survive and prosper. Call myself or Andy if you would like us to work with you to survive and prosper through this recession.
DisclaimerMost of the information contained in this Hornbeam Highlights is of necessity greatly oversimplified. We are trying to bring to your attention tax planning and business management opportunities. However, you should not take action based upon this leaflet without obtaining specific professional advice.
Whether you are a client or not, if we can provide further help or advice concerning any of the matters covered here, please do not hesitate to contact us.
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