Taxing the House

1957: House of Numbers - Rouse

 Sophisticated financial planning, often involves making the best of the tax system. Independent Financial Advisers are not Accountants, but there is some degree of overlap. To generalise, an Accountant tends to work with historic tax, whereas an IFA or holistic financial planner will attempt to use tax allowances in the current tax year and be planning for tax in the future. A good financial plan will consider tax advantages where appropriate. Often we work with Accountants. That in mind, here are a couple of pointers about tax items currently in the media.

Firstly the Liberal Democrats are fairly keen to introduce a Mansion Tax. That is, a tax on residential properties worth £2m or more. This would be an annual tax of 1% of the value of the property (thus a minimum £20,000). So those with large homes need to consider the possibility of this being implemented by the Coalition Government. On a similar theme, the Chancellor, George Osbourne, is reviewing those people that are avoiding (not evading) the Stamp Duty on property purchases in the UK when the property is bought through an offshore company. This is something that seems to have become commonplace in London and the Home Counties over the last 10 years. The sums involved are significant as Stamp Duty on property valued at more than £1m is 5% (so a minimum of £50,000).

The 31st January 2012 is rapidly approaching for people to submit their tax returns online. There is a penalty of £100 for not doing so on time. However due to a planned strike by HMRC staff, the taxman has decided to provide an extra two days grace due to the strike which may have resulted in rather more people being fined. The taxman also warned people about paying tradesmen in cash as invariably this is not declared as income by the tradesman. As a consequence this is lost revenue to HMRC and therefore the rest of the UKplc. It is essentially a tax-dodge if someone does not declare their income correctly, this is illegal and known as tax evasion. The Spurs Manager, Harry Redknapp has been in court this week attempting to explain his own actions and I am sure that this is an experience the rest of us would wish to avoid. Mind you, it seems that some politicians do not appreciate that tax avoidance is legal and tax evasion is not.