When selling a home, be prepared to pay any CGT due within 60 days of the completion date If you sell or give away a UK residential property, you must report and pay any CGT due to HMRC within 60 calendar days of the completion date. This is done via an online UK Property Account, with a separate declaration of the same gain also required if you have to submit a self-assessment tax return. If there is no tax to pay you don’t have to report the sale on the UK Property Account, but it may still be relevant to your tax return. Penalties may be charged for reporting late and/or paying the CGT late. If you or your partner receive child benefit, check whether you have to pay a tax charge to pay back some of the child benefit received Where the highest earner in the family has income over £50,000, the extra tax charge for that person is equivalent to 1% of the child benefit for every £100 of their income over £50,000. To mitigate the tax charge, you can halt your child benefit payments, but keep the claim alive to protect the claimant’s state pension entitlement. For 2023/24, some basic rate taxpayers will be caught by the charge as the basic rate threshold is £50,270. If the income of the higher earner has fallen below £50,000, you can ask HMRC to start paying the child benefit again. Don’t delay, as the payments can only begin from the Monday after you ask HMRC to reinstate them. Plan to minimise tax when selling your trading company by spreading the shareholding between you and your spouse If you both meet the 5% shareholding test for two years or more before the sale and are both either an officer of the company or employed by it, you should both qualify for the 10% rate of CGT on any gains made when the company is sold. This reduced rate of CGT applies to the first £1 million of gains made on the disposal of qualifying business assets during each person’s lifetime. Don’t pay too much income tax on account in July and January If your income is reducing, perhaps because you are winding down to retirement, the payments on account of tax due by 31 July and 31 January may be too high as they are based on your taxable income for the previous tax year. You can apply to reduce the payments on account through your personal tax account or on your tax return. If you believe you have paid too much tax on account for 2022/23 submit your tax return as soon as you can to receive an early tax repayment. Savings and investment – making themost of your money Contribute up to £9,000 into your child’s Junior ISA The fund builds up free of tax on investment income and capital gains until your child reaches 18, when the funds can either be withdrawn or rolled over into an adult ISA. Relatives and friends can also contribute to your child’s Junior ISA, as long as the £9,000 limit for 2023/24 is not breached. Make the best use of tax-free savings and dividend allowances For 2023/24, savings income of up to £1,000 is tax exempt for basic rate taxpayers, with a £500 exemption for higher rate taxpayers. The tax-free dividend allowance of £1,000 is available for all taxpayers. Married couples and civil partners can save tax by ensuring that each person has enough of the right type of income to make use of these tax-free allowances. TAX PLANNING TIPS | May 2023 4 EXAMPLE Anna receives child benefit in respect of her two children and until recently made an annual profit of £60,000 from her self-employment. Some years ago she asked HMRC to halt her child benefit payments so she didn’t have to pay the tax charge. Anna predicts her net profit will be around £45,000 for 2023/24. On 5 April 2023, Anna asked HMRC to restart her child benefit and those payments will be made from 10 April 2023. Tip Estimate your income for 2023/24 and if this is likely to be less than £60,000, ask HMRC to restart your child benefit payments.
RkJQdWJsaXNoZXIy MjM4MA==