Frequently asked tax questions for individuals

“You’ll usually face automatic penalties and interest, even if you’re only a day late. Unfortunately, unless you have a very good excuse for missing the tax deadline, HMRC won’t be offering any reprieve. That being said, the sooner you file and pay, the less it’ll cost you in penalties.”

– Yisroel Sulzbacher, Accounts Senior

“The word ‘avoid’ is a dirty term in our profession. You can’t avoid tax entirely, but careful planning – such as using annual gift allowances, trusts, and exemptions – can help you mitigate it.

“The earlier you start planning for Inheritance Tax, the easier it is to put systems in place to protect your wealth. I’d highly recommend speaking with an accountant as soon as possible if this is what’s keeping you up at night!”

– Adam Caplan, Partner

“There’s no tax on the inheritance itself for the person receiving it. However, Inheritance Tax (IHT) may be payable by the estate of the person who has passed away before the assets are passed on.

“Currently, the standard IHT rate is 40 per cent, charged on the portion of the estate above the £325,000 ‘nil-rate band’. There’s also a ‘residence nil-rate band’ of up to £175,000 if a main home is left to direct descendants.

“Anything above these allowances may be taxed, though exemptions and reliefs (such as gifts to spouses, civil partners, or charities) can reduce the bill.

“Once you’ve inherited the assets, any income or gains you make from them could be taxable under Income Tax or Capital Gains Tax rules as well.”

– Adam Caplan, Partner

“You’ll need to register with HMRC, gather your income and expense records, complete the online form, and pay by the deadline. An accountant can help you make sure you don’t miss anything but there’s also platforms and software out there which can lighten the load too.”

– Sam Bacall, Partner

“Dividends have their own annual tax-free allowance, currently £500. After that, they’re taxed at dividend rates which are lower than standard Income Tax rates but vary depending on your income band:

• 75 per cent for basic rate taxpayers
• 75 per cent for higher rate taxpayers
• 35 per cent for additional rate taxpayers

“Dividends are taxed on the date they’re paid, not when they’re declared, so timing can make a difference, especially if you’re close to crossing into a higher tax band.

“It’s also worth planning your mix of salary and dividends carefully to maximise allowances, reduce National Insurance contributions, and keep your overall tax liability as low as possible.”

– Ian Sluckis, Partner

“Really, this is a question I could write essays about, but essentially, we can help structure your estate so it’s tax-efficient and ensure trusts are set up and managed properly.

“The goal for us, when we work with you, is to ensure you pay the minimum tax possible whilst staying legally compliant.

“As with other aspects of Inheritance Tax, the key is to start planning early and keep maintaining your awareness of the issue, tweaking where necessary, throughout your lifetime.”

– Sam Bacall, Partner

“Fundamentally, you’ll want to make use of your annual exemption, considering timing of sales across tax years, and offsetting any losses where possible.

“This is quite a complex area of tax and can lead you into non-compliance issues if not done correctly. That’s why it’s always worth speaking to your accountant before taking action on Capital Gains Tax problems.”

– Ian Sluckis, Partner

“This is where your solicitor and your accountant should work together – that’s why we have so many partnerships with legal professionals.

“Your solicitor will execute the Will (along with your executors) but when writing your Will it’s always worth having your accountant involved in the process. They can guide you on tax-efficient ways to reduce your Inheritance Tax and ensure that all of your assets are covered within the document.”

– Yisroel Sulzbacher, Accounts Senior

“This is a complicated subject but your tax reliefs vary depending on your circumstances.

“Examples include:

• The Marriage Allowance, which lets one spouse or civil partner transfer part of their personal allowance to the other if they earn less than the threshold
• Tax relief on pension contributions, where the Government tops up what you save (with higher earners able to claim extra through their tax return)
• Gift Aid on charitable donations, which allows charities to reclaim basic rate tax and higher-rate taxpayers to claim back the difference.

“Other potential reliefs include the Blind Person’s Allowance, reliefs for certain job-related expenses, the Rent-a-Room scheme, and relief on investments under schemes like the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS).

“Knowing what’s available – and making sure you claim it – can save you a substantial amount each year.”

– Sam Bacall, Partner