Year-end Capital Tax planning

Capital gains exemption, inheritance tax

Have you used your 2018/19 £11,700 annual capital gains exemption?  Consider selling shares where the gain is less than £11,700 before 6 April 2019. In addition, if you have any worthless shares, consider a negligible value claim to establish a capital loss. You may even be able to set off that capital loss against your income under certain circumstances which could save income tax of up to 45% of the loss.

As far as Inheritance Tax (IHT) planning is concerned, all individuals have a £3,000 annual allowance which means that gifts up to that amount each year are exempt from IHT. If you have not used your £3,000 allowance from 2017/18 you can make gifts of up to £6,000 before 6 April 2019 without the gift being liable to IHT. Also, consider making regular gifts out of your income to minimise the growth of your estate that will be liable to IHT. Gifts out of your surplus income are not subject to IHT if properly structured and we can assist you in keeping the necessary documentation.

Did you get a big tax bill and now want some back?

Many of you will have just paid your 2016/17 tax bill before the 31 January 2018 deadline, and some of you will also have paid 50% of next year’s tax on account. Here are a couple of tax planning ideas that can help you obtain a tax refund.

Invest in EIS or Seed EIS qualifying companies

Before 6 April 2018, individuals may invest in companies that qualify under the Enterprise Investment Scheme (EIS) and treat that investment as having been made in 2016/17. The tax relief is 30% of the amount invested.  So a £20,000 investment can reduce the 2016/17 tax liability by £6,000. Investing in a Seed EIS qualifying company is even better as there is a 50% tax relief.  Such companies tend to be riskier than EIS qualifying companies. You should therefore obtain specialist advice from an IFA if you are considering such investments.

Investing in an EIS qualifying company can also enable you to defer capital gains tax. In order to do so you must reinvest the amount of the gain within the 3 years following the date of the disposal giving rise to the gain. (The investment could also be within 12 months prior to the disposal).

Increase your Pension Savings before 6 April 2018 to reduce payments on account

Unfortunately investing more in your pension now will not reduce your 2016/17 tax liability, however if you invest before 6 April 2018 that payment can be taken into consideration in computing your 2017/18 liability and hence you might be able to claim to reduce your payments on account, if you make them.  The maximum pension contribution is generally £40,000 each tax year, although this depends on your earnings. It is also possible to add to this any unused relief brought forward from the previous three tax years.

4 ways to improve your farming business: 2. Understand tax and capital gains

Getting a better understanding of your tax liabilities is a fundamental tool in improving the financial success of your farm or agricultural business.

As we highlighted in our previous blog, it’s vital that you have a clear focus on maintaining positive cash flow and have profitability built into your farm’s business model.  And one of the key ways to reduce your costs and increase profits is to be on top of your tax and applying a consistent tax strategy for the business.

So, what impact does tax have? And how do you plan ahead to minimise the effect of tax costs on your farm’s profits?

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4 ways to improve your farming business: 1.Address your profitability and cash flow

When push comes to shove, you want your farm to turn a profit. All the early starts and long working days should translate into a healthy year-end profit – but that will only happen if you’ve got control over your spending, revenues and cash flow.

So, how do you address the issue of getting on top of your farm’s profitability and cash flow?

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Employment intermediaries and travel and subsistence

Income tax relief is no longer allowable on travel and subsistence where an individual personally provides services to a client via an employment intermediary.

In effect anybody operating under an umbrella company will be caught by the legislation unless it can be shown that the individual worker is not subject to, or a right of, supervision, direction and control as to the manner in which they provide the services:

  • Supervision is considered to apply where a person checks that work is being done to the specific standard.
  • Direction is ensuring work is carried out in a certain way by providing instructions.
  • Control means someone dictating what work a person does.

The legislation will also cover personal service companies (contractors) who are within the IR35 rules. Those working outside of IR35 will not be affected and provided they reasonably expect that they will not remain at the same site for more than 24 months then it will be regarded as temporary and travel and subsistence may be claimed.

Individuals who work through umbrella companies will see that travel and subsistence which has previously been paid tax and NIC free will now have tax and NIC deducted.

If you would like any assistance with any of the above, please contact us.

Tax Return and other important tax deadlines for January/February 2016


Date What’s Due
19 January PAYE & NIC deductions, and CIS return and tax, for month to 5/1/16 (due 22 January if you pay electronically)
31 January Deadline to file 2015 SA tax return online
31 January Income tax balancing payment for 2014/15, plus CGT for 2014/15
31 January Income tax 1st payment on account for 2015/16
1 February Corporation tax for year to 30/4/15

Have you submitted your tax return or paid any income tax/capital gains tax due for the tax year ended 5 April 2015?   If not these need to be received by HM Revenue & Customs before 31 January, 2016 to avoid incurring any penalties or interest.

You can pay any income tax due online at To do this you will need your UTR (unique taxpayer reference number) followed by a ‘K’.  This can be found on your Self Assessment bill or if you haven’t received a bill from HM Revenue and Customs, please contact us.   HM Revenue & Customs require cleared funds before 31 January, 2016 so please allow at least three bank working days for the funds to clear.  Please note that there is a fee for payments made by credit card but payments by debit card are free.

If you need any assistance in preparing your 2015 Tax Return please contact your local Saint & Co Office as soon as possible.

Scottish rate of income tax with effect from 6 April 2016

HM Revenue and Customs have announced that the Scottish rate of income tax will come into effect from  6 April 2016 and will affect all Scottish tax payers, and all employers with employees who live in Scotland.

HM Revenue and Customs have already started to contact customers living in Scotland, where their records show this as their main address, to inform them they have been identified as being a Scottish taxpayer.

What you need to know

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