March 2022 Newsletter | Cylchlythyr Misol Mawrth 2022
If you are a director-shareholder of your own limited company, remember that dividend tax rates are increasing by 1.25% across each tax band from 6 April 2022 onwards. Ensure that you process any upcoming dividend payments before the tax rate rise, provided there are sufficient profits and cash in the company and provided that the additional dividend does not tip you into a higher tax band.
All VAT registered businesses must use Making Tax Digital ('MTD') compatible software to submit their VAT returns from April 2022 onwards. If you have not yet signed up for MTD for VAT, please do so at the earliest opportunity.
Some banks continue to charge obscenely high percentage fees for administering relatively simple estates. One recent estate was due to be charged 2.5% of the value of the estate + VAT. For an estate of £720,000 this worked out at £21,600 of fees!
Faced with this situation, Huw arranged for the family to ask for the bank acting as executor to withdraw and he will now administer the estate charging by the hour.
For individuals who have successfully invested in cryptocurrencies:
- It is very straightforward to invest money digitally, but individuals may encounter a significant number of administrative problems when trying to withdraw money. Patience may be required.
- The sale of cryptocurrencies is a taxable event therefore be aware of potential capital gains tax implications. Contact your accountant if you are unsure of your potential tax exposure.
- Concerns have been raised by banks and conveyancers when individuals use crypto funds, specifically due to money laundering concerns. You may be required to evidence the source of the original money invested in cryptocurrencies.
- Make sure that someone whom you know and trust completely knows how to access your digital wallet, as there are instances of savings being lost forever when an individual passes away unexpectedly.
Ask Huw & Aled: I have read online that many celebrities have reduced their inheritance tax (IHT) exposure by using various tax planning strategies. Can you tell me a little about the different options available? We have already discussed “Deeds of Variation” and tax efficient investments.
The “Ronnie Corbett” loophole. The much-loved comedian whilst in good health downsized his property and gave substantial sums to his adult children. By surviving 7 years the gift was not subject to Inheritance Tax. You can also gift sums monthly tax free from income if they are affordable from your monthly income. Ensure that you have more than sufficient funds to meet your own needs.
