HMRC expects everyone to take reasonable care over their tax affairs. You could go it alone but equally getting help from the professionals can make the world of difference to getting your tax details right.
It makes perfect sense to have a word or two with Ashdown Hurrey Chartered Accountants and Business Advisers to ensure that you are compliant and taking maximum advantage of the rules as they stand.
The January 31st tax return deadline has passed, but now it’s time to think about the current tax year and take steps to maximise any tax reliefs before 5th April when the current tax year ends.
An ISA can be good option when it comes to tax free savings, especially because the ISA limit is now £20,000 per year. Whilst the amount invested in an ISA does not benefit from tax relief, the income and gains are free from most taxes including income tax and capital gains tax. Eligible holdings include cash ISAs, stocks and shares ISAs and finance ISAs.
Account holders may make withdrawals at any time without the loss of tax relief. The £20,000 limit can be used in one account or split across some or all the available options.
It is possible for qualifying taxpayers to invest up to £4,000 of the £20,000 ISA limit in a Lifetime ISA. The Lifetime ISA is designed to help those aged between 18 and 40 to save for a new home or for their retirement. Under the scheme, the government provides a 25% bonus on yearly savings of up to £4,000 and once you start saving before you are 40, you can continue using the scheme until you turn 50.
The money invested in a Lifetime ISA can be used for other purposes but will be subject to a 25% withdrawal charge.
There are also junior ISAs available for under 18’s which were introduced to encourage children to save money.
But it needs to be done with reasonable care. Reasonable care is required by HMRC who expect taxpayers to do everything possible to ensure that their tax returns and other relevant documents are accurate and on time.
There is no legal definition of ‘reasonable care’ from a taxation standpoint, and HMRC will take your individual circumstances into account when considering whether you’ve taken reasonable care. HMRC generally accepts that ‘reasonable care’ cannot be identified without consideration of a person’s abilities and circumstances.
HMRC wouldn't generally expect the same level of knowledge or expertise from a self- employed unrepresented individual as they do from a large multinational company. There are also special rules that apply when considering what is reasonable care for inaccuracies relating to avoidance arrangements occurring on or after 16 November 2017.
But do be warned: there are penalties for inaccuracies made across all taxes. The penalties can range from 0% where a taxpayer has been found to have taken reasonable care but where an incorrect return is submitted, right up to 100% of the tax where an error is deliberate, and the taxpayer attempts to conceal it.
Ashdown Hurrey are on hand to advise their clients on all financial matters. They are a locally established firm of Chartered Accountants with over 30 years’ experience of supporting local businesses, individuals and charities in Hastings and Bexhill.
Member since: 23rd July 2014
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