Mirandus Accountants

Run a side hustle business? Last week released HMRC released an announcement stating "Boost for side-hustlers as 300,000 people to be taken out of tax returns''. You may think this relates to you, but it's not as clear cut as the headline suggests. The lowdown below and what we know so far ⬇️ The current reporting requirements are: ➡️REPORTING: If you made over £1,000 from your side hustle you need to complete a self assessment tax return ➡️PAYING TAX: You may have to pay tax on profits over £1,000 depending on what other income you make in the same tax year of reporting The new rules - With no confirmed date yet ➡️REPORTING: If you made over £3,000 from your side hustle you need to complete a self assessment tax return ➡️ PAYING TAX: You may still need to pay tax on profits over £1,000 depending on what other income you make in the same tax year of reporting. So the reporting process has changed, not the amount of tax you may need to pay. The only benefit therefore if you make up to £3,000 per tax year is that you do not need to complete a tax return, but instead use a "new simple online service". 🤔Misleading headline from HMRC maybe? Any further clarity required, please get in touch

Trusts vs Family Investment Companies - Which One is Right for You? Estate planning can seem overwhelming, but understanding your options for passing on wealth efficiently is crucial for protecting your family's financial future. Here, we explore two popular vehicles for inheritance tax (IHT) planning: trusts and family investment companies (FICs).

Is it time to update your will? More than half of UK adults over 30 lack an up-to-date and over 52% of these adults have no will at all. Life changes often. Ideally, you should review your will every year. Major events like marriage, divorce, or the birth of a child are key times to update it or if a close member of your family dies. Not having a will leaves your estate vulnerable. If you die without a valid will, intestacy rules kick in. These rules decide how your assets are shared, not you. They often prioritise certain family members and creating potential creating disputes and stress for your family. Crucially, your loved ones could also end up paying unnecessary amounts of inheritance tax. Keeping your will current ensures your estate goes where you want it to. This gives you and your family peace of mind. Please get in touch to see how we can help.

The Spring Statement is being held in a month's time, on 26th March 2025. Will there be further tax rises? Unlikely. Will they reverse the Employers NICs increase, coming at us full force from April 2025? Hmm, jury is out. Will there be a further freezing of tax-free thresholds - very likely. The Chancellor has already intimated there could a rowing back of new dom rules, but how far will she go without losing credibility? Another real concern is limiting tax-free savings in ISAs, tax-free wrappers. Now is the time to review the end of year tax checklist and make sure you have all your ducks in a row before 5th April 2025.

Robert, age 65, is in his second marriage with Sarah, age 45. He has two adult children from his previous marriage. How can Robert ensure fairness and family harmony when considering financial planning in his lifetime and ensuring his loved ones inherit in a tax efficient manner?

UK interest rates gone down: HMRC reduces interest rate on late payments Starting 17th February, HMRC will charge 7% interest on late tax payments; this is down from the previous rate of 7.25%. HMRC calculates interest using the Bank of England's base rate plus 2%, Currently, the base rate is 4.5%, so the interest rate is 7%. What about HMRC refund rates? HMRC pays interest on tax refunds at the base rate minus 1%. This means from 17th February, this will be 3.5%. Taxpayers pay nearly double the interest compared to what HMRC pays on refunds. This difference aligns with global tax authority policies and commercial practices. The longer your tax bill remains unpaid, The higher the chances HMRC will scrutinize and investigate.

Venture Capital Trusts (VCTs) are a hidden gem. Instead of prioritising: • Traditional pensions • Capital Gains Tax exemptions • Inheritance Tax exemptions Consider the benefits of: • Tax-efficient growth • Potentially higher returns • Diversified investment options • Government incentives Recent tax changes have made VCTs a top choice for tax-efficient investments. 💡VCTs provide tax-free dividends and gains, unlike pensions. ➡️VCTs offer a flat 30% income tax relief. ➡️ Pensions have age restrictions and limited tax-free withdrawals. 💡VCTs are available to anyone over 18 paying UK income tax. 💡VCTs support innovative UK businesses and offer high annual allowances. VCTs have never been free from Inheritance Tax (IHT). They are part of the client’s estate when they die. However, the removal of IHT exemptions on other areas, particularly pensions, has put VCTs on a more even footing and worth a look.

How can you prepare for tax changes coming in April 2025? "How will the new CGT rates impact my asset sales?" "What should I do to protect my wealth under the new IHT policies?" "How can I make my business structure more tax-efficient?" The short version is: Act now :) The long version? ➡️Understand the new CGT rates → 18% and 24% from October 2024 ➡️ Plan asset sales early → Maximise reliefs before the new rates hit ➡️ Revisit Inheritance Tax (IHT) plans → New policies could impact family wealth ➡️Consider trusts or gifting → Reduce future tax burdens for your family ➡️Strengthen your business structure → Rising costs need a tax-efficient approach ➡️Think about incorporating → Optimise profit distribution and minimise tax ➡️Adopt a group structure → Adapt to changing conditions and ensure stability ➡️Seek expert advice → Don’t wait until the last minute to adjust your strategy ➡️ Prepare for increased NICs → Manage liabilities before policies impact your business ➡️Develop an effective estate plan → Make informed decisions with confidence

Good news for pensioners. A common issue for pensioners which has been going on for years: when you start claiming your pension, you might get taxed at the wrong rate. HMRC is planning to stop using emergency tax codes to solve the issue: ↳ From April 2025, new pensioners will get the right tax code faster, ↳ This change will reduce unexpected tax charges, ↳ Millions have been overtaxed by HMRC each year. To fix this, HMRC will: 1) Update tax codes for new pensioners automatically. 2) Inform taxpayers of changes by letter or digitally. 3) Ensure the right tax code is applied quicker. Outcome: → Over 200 million pounds of overpaid tax could be avoided each year. → Taxpayers will no longer face large over payments or underpayments. However, those taking ad-hoc lump sums from their pensions might still face issues. In Q4 2024 alone, £50m in overpaid pensions tax was reclaimed. To avoid over-taxation, you can: 1) Take a notional withdrawal first, 2) Fill out one of three HMRC forms for a quicker refund. → If you’ve emptied your pension pot and are still working or receiving benefits, fill out form P53Z. → If you’ve emptied your pot and are not working or receiving benefits, fill out form P50Z

Effective tax planning plays a pivotal role in saving for education for your children. ➡️Making the most of tax-efficient ISAs can lead to significant savings. The earlier you start, the better. Parents can contribute up to £20,000 annually into a Stocks & Shares ISA. For couples, this amount doubles to £40,000. ➡️Junior ISAs have an annual cap of £9,000, which can ease the financial burden of university tuition when accessed at age eighteen, for example. One key advantage of Junior ISAs is their flexibility. They allow parents, grandparents, and friends to contribute, benefiting from tax-efficient growth and withdrawals as the child enters adulthood. ➡️Grandparents often play a supportive role in education funding. Regular gifting from income – provided it does not impact the donor’s lifestyle – can mitigate Inheritance Tax (IHT) - double whammy, reducing your potential IHT liability and helping your grandchildren in your lifetime. ➡️Grandparents can gift up to £3,000 to help pay for fees annually without a tax event, or larger gifts are removed from IHT if you survives for at least seven years. ➡️For significant contributions, grandparents may consider setting up a trust. This offers additional safeguards. Advanced financial guidance is advisable for those wishing to explore this route. ➡️Financial planning should also encompass protection against unforeseen circumstances. Life insurance, critical illness cover, and income protection are essential safety nets. Without these, an illness, injury, or sudden death could jeopardize a child’s education savings plan. These policies provide peace of mind, ensuring your child’s future remains secure even in challenging situations. Education is one of the most significant and rewarding investments you can make for your child. By planning early and considering all available financial tools, you can position your family to meet the costs of both school and university education effectively. Whether your approach features a combination of tax wrappers, investment strategies, or simply careful budgeting, every financial effort lays a foundation for your child’s future. Please get in touch if you would like to learn more.