Start your tax-year end preparations now

Start your tax-year end preparations now

Q. What are some of the biggest considerations for advisers as we approach tax-year end?

A. It does not seem so long ago that we were all celebrating the dawn of a new decade but, as ever, time does not stand still and our thoughts start to turn towards the end of the tax year.

This period is a busy time for advisers and, likewise, our pension technical team, with pension funding queries ranging from making use of unused annual allowance and carry forward questions and calculations.

I think it is fair to say that the introduction of the tapered annual allowance for high-income individuals in 2016-17 has only complicated matters further, so consequently it is important that planning is not left to the last minute. 

I think that it is also fair to say that information gathering is crucial to an accurate outcome when it comes to this area. 

Where there is a possibility of tapering, with a threshold income over £110,000, the individual’s tax returns are the best way to confirm their relevant income.

Pension input amounts should be available from product providers and scheme administrators, but may take some time to prepare.

Pension scheme administrators are obliged to inform members when their annual allowance has exceeded £40,000 in a tax year, although an individual can be over their tapered annual allowance with input below £40,000 and be none the wiser. 

Often historical problems are unearthed when an individual first seeks assistance, so early investigation is necessary.  

The message from our pensions team is to not leave the carry forward of unused annual allowance assessment too late. It is a big job.

I would like to finish with a gentle reminder regarding the deadline of April 5 2020 for individual protection 2016. 

We are now approaching four years since the introduction of IP16.

This form of lifetime allowance protection is based on the value of the client’s pensions on April 5 2016 and, from our experience, the client will often require assistance with the valuations.

Fortunately, provisions within HM Revenue & Customs’ rules mean that the scheme administrator must supply these valuations on request, but only if the scheme administrator receives the request before April 6 2020.

It should be noted that clients can still apply for IP16 after April 6 2020, but they may not receive the help they need from the scheme administrator with the valuations. 

As a result of this deadline, I would advise that those who wish to apply for IP16 obtain the valuations before April 6 2020.

Those in the industry know that the lead up to the end of the tax year is a busy time, whether it is working out the tapering of annual allowance for high incomes, making use of unused annual allowance or doing carry forward calculations for your clients.

My message to you as I finish this article is to not start these tasks too late and to make use of the wealth of technical experience available to you, whether that is from providers or your compliance service provider.