Insights

Investment bonds transferred to children

Question. My wife, a non-tax-paying pensioner, holds some investment bonds in her name which she wants to cash in and gift the proceeds to our children. How do we calculate her tax liability and go about paying it? Answer.   Investment bonds are life insurance policies where you invest a lump sum in a variety of available funds. Some investment bonds run for a fixed term, others have no ...

Is it the end of the line for Disincorporation Relief?

Question.   Back in the early noughties, I changed my small plumbing business from operating as a sole-trader to operating as a limited company. I find the requirements of operating as a company onerous and I would prefer to be a sole-trader again. Can I use disincorporation relief to do this?   Answer.   Disincorporation relief was introduced on 1 April 2013 to help small companies, which no longer wanted ...

Paying Tax on an Inheritance

Question. I inherited a small property and some shares from an aunt who died recently. Do I have to pay tax on these assets?   Answer.   You don’t usually pay tax on anything you inherit at the time you inherit it. However, you may need to pay income tax on profit you later earn from your inheritance, eg dividends from shares or rental income from a property. You ...

Fear for gig economy workers as tax deadline looms

Question.   I started an internet business from my home at the start of this year and it is going really well – much better than I imagined. I have a full-time job and I am able to do this work in the evenings and the weekends. As I pay my taxes through my monthly wages, what do I need to do to with the money ...

The beginning of the end of the tax return?

Question.   As a pensioner with modest income to complete on my tax return, I have just received a Simple Assessment from HMRC. I believe this replaces the need to do a tax return. Is this right?   Answer.   Back in 2015, the Treasury announced a desire to abolish the tax return and last year it took a step toward that aim, introducing legislation for a new form of ...

Marriage Tax Allowance – Get a tax break worth up to £662

Question. I have read recently about a tax relief known as marriage allowance and I was wondering if it applied to my circumstances. I work full time and earn £40,000 a year and my wife works part-time earning £8,000 per year. Can I save tax by claiming this marriage allowance?   Answer.   If you’re married or in a civil partnership, you can register for the Marriage Allowance, a tax ...

Renting out my Spanish holiday villa and tax

Question.   I live in Northern Ireland and have recently bought a holiday villa in Spain which we used for 3 weeks during the summer. Now that the kids are back at school and university I am thinking of renting the apartment out for short term holiday lets during the winter months. I need to know whether I need to register it for tax purposes.   Answer.   Yes you ...

Using my business loss to reduce my tax bill

Question. I have a small self-employment business which has made a loss for the past 2 tax years. I am confident that it will be profitable again in the current tax year. My only other income is investment income. Are my trading losses wasted?   Answer. A profitable business will pay tax on its profits each year but when times are not so good it will need to ...

Charitable donations – in giving you receive

Question.   I am considering giving a substantial sum of money to a charitable cause. Can I claim tax relief on charitable donations and what do I need to do?   Answer.   Broadly, where an individual gives money to a charity or a community amateur sports clubs (CASCs), and a Gift Aid declaration is made, the gift is a Gift Aid donation. The amount donated is treated as if ...

Don’t get burnt by summer taxes

Question. My daughter is home for the summer from university and has been working full-time in a small local business to help pay for the costs of university life. She has just received her first month’s wages and there has been tax and national insurance deducted from her pay. Why is this when her pay is less than her annual personal allowance and can she claim ...