1) Excluded cases
As HM Revenue & Customs has had software difficulties in 2017, if clients are an “excluded case” unable to file online, make sure they have left enough time for postal submission to avoid a £100 late filing penalty.
2) Due date
Tax payments are due by Wednesday 31 January 2018 in respect of any balance due for 2016/17 and to make your first payment on account for 2017/18.
Changes to payment processes mean that personal credit card payments will not be accepted after Saturday 13 January 2018, and payments at a Post Office are no longer possible.
3) Pensions
Pensions are getting mixed press but if you are investing for the next generation or grandchildren, don’t forget that you can start a pension pot for youngsters and non-earners and make contributions of up to £3,600 a year.
This will receive automatic basic rate tax relief meaning that you would only have to find cash of £2,880. By the time any children start to earn a salary themselves there is a good sized pot already set up in their name, which they cannot immediately access.
This is also a good strategy for non-earning spouses.
4) Isas
Isa millionaires are not unusual and it is easy to overlook the annual investment allowances.
These have now increased to £20,000 for UK resident individuals and junior Isa limits are £4,128. Isas are now transferable between spouses on death without losing their Isa tax free status, so use the allowance or lose it! The tax year end of 5 April is not too far away.
5) Are you a trustee or executor?
Make sure that you or your agent are meeting the obligations of the new Trust Registration Service (TRS) which has a deadline of Friday 5 January 2018 for registering new cases, or potentially as late as 5 March 2018 for re-registering those already notified to HMRC.
6) UK resident but non-UK domiciled?
The introduction of the changes to domicile from April 2017 has introduced the concept of long-term UK residence with associated tax implications.
If you are not yet deemed domiciled under the new rules (ie have been in the UK for less than 15 tax years) review offshore assets, especially trusts, as measures can be taken to protect them from UK taxation.
Rebasing may also be available in some circumstances to reduce the burden of capital gains on offshore assets.
7) Buy-to-let
Buy-to-let landlords have been hit hard by changes that restrict mortgage interest relief and replace wear and tear allowances with tax relief on the cost of replacement furnishings, appliances and kitchenware.
The recent budget did confirm that if you are a landlord travelling to check up on your property, you can claim business mileage rates of 45p a mile for the first 10,000 miles and 25p a mile thereafter. As usual, mileage logs need to be kept to back up any claims.
8) Rent-a-room reminder
Rent a room and Airbnb income may be taxable. Rent-a-room relief allows a taxpayer to let out a room to a lodger in their main home and not have to pay any tax if less than £7,500 per year is received, or £3,750 if let jointly.
Airbnb usually generates income from an investment property and so is unlikely to fall within the Rent a room regime. Don’t think that letting on an ad hoc basis via social media will avoid HMRC scrutiny – full disclosure needs to be made of any income sources.
9) Budding entrepreneur?
Budding entrepreneurs if you are part of the growing gig economy you still have to meet the usual requirements for notifying HMRC by 5 October following the tax year in which you start to trade.
Apart from registering with HMRC, you will need to keep books and records and if you are expecting a turnover in excess of £83,000 in the coming year you will also need to register for VAT.
10) Making gifts
Making gifts is a key focus this time of year and for most of us, the £250 limit on gifts to individuals will not create any tax issues. More generous gifts (unless between spouses) need to be documented, as they could be taxable if you pass away within seven years of making the gift and have exceeded your £3,000 annual exemption for IHT or your £325,000 nil rate band.
When making gifts to charity always try to use Gift Aid to increase the size of the donation to the charity and to provide higher rate tax relief for you as donor.
11) The family home
The family home is often the main asset in an estate. The new Residence Nil Rate Band increases the value of tax relief available when leaving your family home to direct relatives.
Review your will to ensure your assets and legacies are structured efficiently to take advantage of this relief which will be a tax saving of up to £140,000 per couple by 2020/21.
If the homeowner has to downsize or no longer owns their home at the time of their death then it is still possible to claim the relief, but as with everything tax related, documentary evidence will be required.
12) IHT planning
Inheritance tax planning is a minefield with relationship breakdown and increasing numbers of co-habiting couples. Don’t overlook the use of trusts to hold assets across the generations, but whatever strategy you follow, make sure that you have a valid will to avoid intestacy.
Lynne Rowland is a tax partner with accountants Kingston Smith
